PHM Announces Execution of Letter of Intent (LOI) with Acquisition Target with $14 Million in Annual Revenue; A Re-Alignment of Senior Management to Better Reflect Growth Strategy

SAN FRANCISCO, CALIFORNIA--(Marketwired - March 25, 2014) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN.

Patient Home Monitoring Corp. (TSX VENTURE:PHM) ("PHM") announced it has executed a non-binding Letter of Intent (LOI) to acquire a profitable, $14 million annual revenue company, servicing patients with chronic pulmonary illnesses. The purchase price is proposed to be less than 3.2 times 12-month Adjusted EBITDA. The acquisition of this growing and profitable company is expected be immediately accretive to the income statement and will substantially increase PHM's earnings-per-share (EPS). As a result of this acquisition, PHM's annual revenue run rate is expected to be over $28,000,000.

PHM also announced it is promoting Andrew Folmer, PHM's Chief Financial Officer to interim President, and Bob Kusher will shift from his current role as Chief Executive Officer and member of the Board of Directors to focus exclusively on increasing pharmacy sales within PHM subsidiary, Hollywood Healthcare. Mr. Kusher will also be leading the newly-formed Strategic Market Group within PHM.

Acquisition

PHM has agreed to pay an expected acquisition price of 3.187 times 2013 Adjusted EBITDA, subject to further due diligence. Based upon the LOI, PHM expects to close the acquisition with less than $1,000,000 in cash with the remainder of the consideration being paid in PHM common shares. For the equity portion of the consideration, the sellers have agreed to take PHM shares priced at US$0.26 per share. Key executives of the acquisition target company have agreed to join PHM in senior management roles. Shares issued as part of the acquisition are estimated to be less than 5% of the total common shares outstanding. PHM plans to assume less than $400,000 of debt as part of the acquisition. Closing the acquisitions will be subject to final due diligence and a binding purchase agreement.

When this company is added to PHM's current operations, the expected revenue run rate of all entities, based upon the combined 12-month trailing revenue, will be an increase of nearly 100% of the current PHM annual revenue run rate of $14,000,000. This acquisition is also expected to generate double digit Adjusted EBITDA growth from the prior reported quarter (subject to final due diligence). After the acquisition, PHM is expected to have cash in excess of $6,000,000 for future acquisitions.

The company is located in the southeastern United States and services patients with chronic pulmonary disease. This is an established company that has been profitable for many years, and is well positioned to thrive in the changing reimbursement environment. The acquisition is slated to give PHM additional locations and patients to increase organic growth through cross-selling opportunities with PHM's existing cardiology services and pulmonology drug distribution services. Combined, these businesses service thousands of patients with multiple chronic illnesses that may benefit specifically from PHM's Coumadin testing services and pulmonology drug distribution services.

"With this acquisition, we are finally moving toward some scale in the market," said Michael Dalsin, Chairman of PHM. "By almost doubling the size of PHM with this deal, we will have better access to pricing from suppliers and a sizable increase of our total patient database to increase cross-selling. These factors should contribute to increased profit growth. We have over a dozen additional deals in the pipeline and continue to believe we can close additional earnings accretive acquisitions with our current balance sheet of over $6,000,000 in cash."

Re-Alignment of Senior Executive Staff

The Board of Directors has decided to re-align the executive staff to better reflect the needs of the current business. Andrew Folmer, PHM's Chief Financial Officer, will assume operational leadership of PHM as interim President of the Company. Mr. Folmer will focus upon maintaining and improving current operations and profitability of existing and acquired businesses. PHM will also form a Strategic Market Group, comprised of PHM executives and staff, who will be charged with the crucial task of identifying markets for expansion, cross-selling, acquisition opportunities, organic growth opportunities and due diligence of acquisition targets post LOI. Bob Kusher will shift from his role as CEO and Director to Chair the Strategic Market Group. Mr. Kusher will also be charged with increasing revenues and gross profits through the pharmacy channel for products and services such as PHM's Coumadin testing program, complex COPD services, and Med B programs.

"These changes are a reflection of the recent strengthening of our management team," stated Bob Kusher. "I am comfortable handing over operational leadership to this capable group, and I look forward to dedicating my energy to building PHM's revenues through acquisitions and expanding our patient base by increasing our number of pharmacy relationships."

"I am very enthused to take on this leadership role," said Andrew Folmer, interim President and CFO of PHM. "A key component of success in acquisitions is integration. I am hyper-focused on ensuring we run a smooth and efficient operation as we acquire more and more companies."

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.