Patient Home Monitoring Corp.

June 09, 2015 15:41 ET

PHM Announces Execution of Final Binding Purchase Agreement to Acquire Louisiana-Based Sleep Management

Increases Annualized Run-rate Revenue to over $115,000,000 and Annualized Run-rate Adjusted EBITDA to over $30,000,000

LOS ANGELES, CALIFORNIA--(Marketwired - June 9, 2015) -


Patient Home Monitoring (PHM) (TSX VENTURE:PHM), a profitable company focused on rolling-up annuity-based healthcare service companies in the U.S. and Canada, announced that today it executed a final, binding purchase agreement to acquire Sleep Management, a company operating in 19 states and headquartered in Louisiana.

The business had annualized revenues of more than $42,500,000 and Adjusted EBITDA of more than $18,000,000. PHM retained its external auditor to conduct an independent financial review of Sleep Management.

When combined with existing operations, PHM expects annualized run-rate revenue to exceed $115,000,000 and Adjusted EBITDA to exceed $30,000,000, before any potential revenue from organic growth and cross selling.

Sleep Management currently provides home based medical services in 19 states across the US. The Company focuses on providing high margin ventilators to patients with chronic pulmonary obstructive (COPD) conditions. The business has a substantial amount of active patients that PHM will now offer new services and products. PHM plans to start immediately cross-selling its existing service lines across all of the acquired locations.

Final Terms of the Agreement

PHM will increase revenues by nearly 60% and increase EBITDA by more than 150%. Total consideration paid is $36 million in cash and 42.75 million shares, representing less than 15% of PHM's total outstanding common shares. The shares will be released from holds over a three year period. Closing of the acquisition will be subject to approval by the TSX Venture exchange and other standard conditions.

All three owners are taking a portion of their consideration in stock and will stay on with PHM as senior executives post-acquisition.

"We wanted to focus on closing our largest deal first," said Michael Dalsin, Chairman of the Board for PHM. "When you take into consideration the size of this company, in terms of patients, geographical spread, growing revenues, and significant profits, we have doubled the run rate profitability of PHM overnight with this transaction. It gives PHM immediate access to more than a dozen new states to start cross-sell additional services. Additionally, we have two more LOIs we are working to close with combined trailing 12 month revenues of $35 million, along with several smaller deals that have combined revenues of $15 million."

"When closed, this acquisition will be EPS accretive. It is expected to increase run rate EBITDA by more than 150% before any organic growth," continued Mr. Dalsin. "We continue to invest in M&A activities and are, with each additional deal, getting closer to our exit revenue run rate goal for 2015 of $175 million."

Additionally, the PHM Board of Directors approved the issuance of performance stock compensation in the form of options to several key personnel. PHM issued (a) 3,000,000 options each to Michael Dalsin and Roger Greene as Chairman and Vice Chairman, respectively; (b) 500,000 options to Nitin Kaushal as non-executive Director; and (c) 250,000 options to David Costine as non-executive Director; all options are issued at a market strike price of $1.46.

The transaction with Sleep Management is arms length.

About PHM

The explosive growth in the number of elderly patients in the US healthcare market is creating pressure to provide more efficient delivery systems. Healthcare providers, such as hospitals, physicians and pharmacies, are seeking partners that can offer a range of products and services that improve outcomes, reduce hospital readmissions, and help control costs. PHM fills this need by delivering a growing number of specialized products and services to achieve these goals. PHM is a positive cash flow and profitable company that serves patients with heart disease and other chronic health conditions, this operation is a platform for acquisitions and organic growth. PHM is focused on a highly fragmented and developing market of small privately-held companies servicing chronically ill patients with multiple disease states caused mainly by age and obesity. Because of the new and highly fragmented nature of the market, PHM is actively working to identify and evaluate profitable, annuity-based companies to acquire their patient databases and technical expertise at favorable prices. PHM's post acquisition organic growth strategy is to increase annual revenue per patient by offering multiple services to the same patient, consolidating the patient's services and making life easier for the patient. The expected result is growing EPS with each acquisition and growing revenue and profits from the cross selling efforts.

These Adjusted EBITDA figures are unaudited and may change subject to due diligence and closing procedures. They are intended only as an estimate of trailing twelve month Adjusted EBITDA of the combined entities and are not meant to convey forward looking information. Adjusted EBITDA is a Non-IFRS measure the Company uses as an indicator of financial health, and excludes several items which may be useful in the consideration of the financial condition of the Company, including interest expense, taxes, depreciation, amortization, stock based compensation, and owner compensation.

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of PHM and anticipated events or results, are assumptions based on beliefs of PHM's senior management as well as information currently available to it. While these assumptions were considered reasonable by PHM at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue operations, decline of reimbursement rates, dependence on few payors, possible new drug discoveries, a novel business model, dependence on key suppliers, granting of permits and licenses in a highly regulated business, competition, low profit market segments as well as general economic, market and business conditions, and could differ materially from what is currently expected.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This press release does not constitute and the subject matter hereof is not, an offer for sale or a solicitation of an offer to buy, in the United States or to any "U.S. Person" (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "1933 Act")) of any equity or other securities of PHM. The securities of PHM have not been registered under the 1933 Act and may not be offered or sold in the United States (or to a U.S. Person) absent registration under the 1933 Act or an applicable exemption from the registration requirements of the 1933 Act.

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