SAN FRANCISCO, CALIFORNIA--(Marketwired - July 5, 2016) -
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Inspira Financial Inc. (TSX VENTURE:LND) ("Inspira") a company focused on providing revolving lines of credit to the highly fragmented U.S. mental health and addiction services market, provided an update on its most current financial position and announced that Marc Hecksel, Inspira's current Chief Executive Officer, will take on the role of interim Chief Financial Officer until the position is permanently filled.
As of June 30, 2016, Inspira had in excess of $14 million in cash and cash equivalents, an approximate 20% increase since year end, with no debt outstanding other than trade payables due in the normal course of business and its 4% non-convertible unsecured $2,228,750 senior debenture. As of June 30, 2016, the lending operation is generating free cash flow(1) on a monthly basis. Management has decided to focus on lending exclusively to companies in the mental health and substance abuse industry in the future. In addition, Inspira has made the decision to focus on offering additional revenue streams to its client base through the anticipated acquisition of RBP Healthcare Technologies ("RBP") (previously announced on May 31, 2016), a company with proprietary business systems and a billing and collections processing platform.
"We continue to generate monthly cash flow and currently have more than $14 million in cash on hand with little debt," said Marc Hecksel, CEO of Inspira. "Our strengthening balance sheet makes us well positioned to take advantage of the demand for small revolving lines of credit in the mental health market as well as capture software revenue with the anticipated acquisition of RBP. Due to the additional return on capital the software business is expected to provide, we anticipate having excess cash on our balance sheet. We are actively discussing ways for our shareholders to benefit from the significant cash balance that we do not plan on deploying in the form of loans."
Inspira also announced that it has appointed Marc Hecksel to the role of Interim Chief Financial Officer in addition to his current role as Chief Executive Officer.
"I've temporarily stepped into this role as we search for a qualified replacement," continued Mr. Hecksel. "There will be no change in the day-to-day operations of our accounting department, but it is important that we have clear and consistent communication going forward, and have a permanent Chief Financial Officer with experience in the intricacies of IFRS revenue recognition for both software and lending."
About RBP Healthcare Technologies - Mental Health Billing and Practice Management Software
Due to the significant increase in demand for addiction treatment caused by health insurance coverage through the passage of the Parity Act, many growing addiction treatment companies now have difficulty with patient tracking, billing and collections from insurance companies. The large and permanently elevated volume of claims(2) has led health insurers to implement more complex reimbursement requirements for the mental health sector, similar to those imposed upon service providers in the physical healthcare sector. Treatment centers tend to use several software applications and a non-automated billing company to document services provided and bill insurance companies. This cumbersome process slows down the tracking, billing and collection process as the customer's billings increase, and was not designed to handle the volume or level of detail now required for prompt payment.
The RBP process platform incorporates every aspect of the new insurance reimbursement process to admit, diagnose, track, bill, and collect revenue specific to patients in the addiction recovery market, RBP has existing contracts in place expected to generate up to $3 million in annualized revenue.
About Inspira Financial
The mental health and substance abuse market in the U.S. is a rapidly expanding industry, with current spending exceeding $35 billion.(2) Within this industry, thousands of businesses have annual revenues in the $1 million to $50 million range.(3) Due to the significant increase in addiction treatment as a result of the Parity Act, the large and permanently elevated volumes of claims has led Payors to impose upon facilities in the mental health sector similarly complex reimbursement requirements as those imposed in the physical healthcare sector. Substance abuse facilities tend to use several software applications and a non-automated billing company to document services provided and bill insurance companies. This cumbersome process slows down the tracking, billing and collection process as the customer's billings increase, and were not designed to handle the volume, or level of detail, now required by Payors for prompt payment. As a result, across the mental health and substance abuse industry there are collection delays and consequently a need for capital.
Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to Inspira, the RBP acquisition successfully closing, Inspira capturing software revenue with the anticipated acquisition of RBP, the additional return on capital the software business is expected to provide, Inspira having excess cash on its balance sheet, as well as the acquisition of RBP generating up to $3 million in annualized revenue for Inspira, are intended to identify forward-looking information. All statements other than statements of historical fact may be forward-looking information. Such statements reflect Inspira's current views and intentions with respect to future events, and current information available to Inspira, and are subject to certain risks, uncertainties and assumptions, including Inspira generating free cash flow based on a pro forma analysis of Inspira's lending operation, RBP's existing contracts remain in place, that the software operations have a higher return and better margins than the lending business, that RBP is profitable, the proposed acquisition closing as contemplated, Inspira achieving, sustaining and/or increasing profitability, Inspira being able to fund its operations with existing capital and/or raising additional capital to fund operations, the demand for addiction treatment continuing to increase, the new service line being complimentary to existing Inspira clients, Inspira expanding its revenue and profit because of the acquisition, and Inspira being successful in its integration of RBP. Material factors or assumptions were applied in providing forward-looking information. Many factors could cause the actual results, performance or achievements that may be expressed or implied by such forward-looking information to vary from those described herein should one or more of these risks or uncertainties materialize.
These factors include changes in law, competition, the ability to implement business strategies and pursue business opportunities, state of the capital markets, the availability of funds and resources to pursue operations, dependence on debt markets and interest rates, demand for the lending products Inspira offers at interest rates higher than at which Inspira can borrow, a novel business model, granting of permits and licenses in a highly regulated business, difficulty integrating newly acquired businesses (including RBP), risks of performance by the target, new technologies, risk of billing irregularities by borrowers, low profit market segments, as well as general economic, market and business conditions, as well as those risk factors discussed or referred to in Inspira's annual Management's Discussion and Analysis for the year ended February 29, 2016 filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com. Should any factor affect Inspira in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, Inspira does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and Inspira undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.
The majority of Inspira's revenues and expenses are in United States dollars, however, all figures are in this press release are in Canadian dollars based on an exchange rate of 1.2932.
(1) Free cash flow is a management prepared, pro forma analysis of Inspira's lending operation. It is calculated as adjusted cash flow from operations minus capital expenditures.
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