Patient Home Monitoring (PHM-V) has executed letters of intent (LOI) to acquire two additional companies servicing patients with chronic illnesses. Based upon their trailing 12-month earnings, the acquisition of these growing and profitable companies will be immediately accretive to the income statement and will substantially increase PHM's earnings-per-share (EPS). PHM also released an updated investor presentation.
PHM has agreed to pay a price of less than four times 2013 Adjusted EBITDA. The majority of the purchase price will be paid in PHM common shares with the remainder in cash. The owners of the businesses have agreed to exchange ownership in their company for PHM shares priced at $0.27 per share. The key executives of both companies have agreed to join PHM in senior management roles to continue to grow the companies, as well as to assist in growing other elements of PHM's business. PHM can close both acquisition opportunities with cash-on-hand from its current balance sheet and plans to issue additional shares as part of the acquisitions. Because the sellers have agreed to a $0.27 share value, shares issued as part of the acquisition are estimated to be less than 10% of the total common shares outstanding. PHM plans to assume a small amount of debt as part of the acquisition price. Closing the acquisitions will be subject to final due diligence and purchase agreements and TSX Venture Exchange review and approval.
When these companies are added to PHM's current operations, the expected financial results of all entities combined 12-month trailing Adjusted EBITDA will be an increase of over 400% in EBITDA growth from the prior reported quarter or in excess of $3,000,000(i) subject to final due diligence. In addition, the cross-selling potential is expected to further drive EBITDA growth.
The companies are located in the southeastern United States and service patients with chronic pulmonary disease. They are established companies that have been profitable for many years, and are well positioned to thrive in the changing reimbursement environment. The acquisitions would give PHM additional service lines 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.
The updated investor presentation can be found at phmhometesting.com
"With these acquisitions, PHM's services will now cover drug delivery, essential medical equipment, home monitoring and clinical support services, making us a more complete patient home service business. The result will be healthier patients, lower costs and improved healthcare delivery," said Bob Kusher, CEO of PHM. "We expect strong revenue growth in our service lines to continue as health care providers scale back budgets and are being forced out of providing niche, high value added products and services. I believe the willingness of the key executives who have built these businesses over the course of a decade to take a majority of their payment in PHM common shares is a testament to the opportunity they see in PHM and the transaction structure is advantageous to existing PHM shareholders."
"We are excited to move to the next stage with the acquisition targets," continued Mr. Kusher. "I view this transaction both as an earning accretive deal and an acquisition of talent, as the key executives who have built these businesses over the course of a decade see the opportunity to join forces with PHM as the way to grow revenues and profitability. Their willingness to take a majority of their payment in stock is a testament to the opportunity both they and I see in PHM. The future executives will realize an increased value from this transaction by growing the PHM share price from their starting point of 27 cents. Best of all, this transaction structure aligns incentives for all PHM shareholders."
Nov 20, 2013 - News Release |
