Patient Home Monitoring (PHM-V) Sept 20, '16 today announced that its Board of Directors has approved plans to separate into two companies traded on the TSX Venture Exchange:
Viemed ("Viemed"), which will comprise PHM's market-leading provider of equipment and home therapy to service a wide array of respiratory diseases including patients that suffer from Chronic Obstructive Pulmonary Disorder ("COPD"), Chronic Respiratory Failure ("CRF") among other neuromuscular diseases;
And
Apparo Home Care, Corp. ("Apparo"), which will comprise PHM's market-leading Durable Medical Equipment (DME) company that specializes in delivering and servicing home-based medical equipment, including oxygen therapy, sleep apnea treatment and mobility equipment.
Immediately following the closing of the transaction, which is expected to occur by the end of 2016, shareholders of PHM will own one common share in the capital of each of Viemed and Apparo for each one PHM share currently held. The transaction is intended not to generally give rise to incremental Canadian federal income tax liabilities for most PHM shareholders.
This strategic step is expected to provide each Viemed and Apparo with the focus, financial resources and flexibility to adapt quickly to the recent reimbursement rules and U.S. healthcare market dynamics while generating long-term value for shareholders.
Highlights of the Transaction:
Viemed:
Viemed will be the nation's largest independent leader in home therapy of patients suffering from respiratory diseases that require a high level of service. The Company is currently operating in 21 states with its primary services being comprised of ventilators, oxygen, CPAPs and home sleep testing. These 21 states represent a high density of COPD patients in the U.S.
Casey Hoyt will be Chief Executive Officer of Viemed; the Board of Directors will be announced in advance of the shareholder vote.
On a revenue basis, Viemed will retain business units representing 30% of current revenue and is expected to generate positive adjusted EBITDA upon the split.
Apparo Highlights:
Apparo will be a nationwide leader in home respiratory and other medical equipment, including oxygen therapy, sleep apnea treatment and mobility equipment. The Company is currently operating in 9 states and serves more than one hundred thousand patients each year.
Greg Crawford will be Chief Executive Officer of Apparo Home Care, Corp., the Board of Directors will be announced in advance of the shareholder vote.
On a revenue basis, Apparo will retain 70% of the current revenue and is also expected to generate positive adjusted EBITDA upon the split.
PHM, in its current form, expects revenue for the quarter ending September 30, 2016 will be approximately $33 million with positive adjusted EBITDA.
Today's announcement comes as PHM completes its three-quarter restructuring plan in light of the reimbursement rate changes during the calendar year of 2016. Over this time, PHM has executed successfully against its efficiency objectives, while keeping patients and their doctors or healthcare providers at the forefront. PHM has reduced overhead, streamlined operations and strengthened its revenue and profit growth capabilities. PHM is now positioned to accelerate performance, drive sustained growth and demonstrate clear industry leadership in key areas.
"The work during the past three quarters has significantly strengthened PHM's businesses to the point where they can more aggressively go after the growth opportunities created by the changing U.S. healthcare market," said Michael Dalsin, outgoing Chairman of PHM. "The decision to separate into two market-leading companies is the final step in the restructuring plan. It will provide each new company with the independence, focus, financial resources, and flexibility they need to adapt quickly to market and customer dynamics, while generating long-term value for shareholders. In short, by transitioning now from PHM to two new companies, created out of our successful restructuring efforts, we will be in an even better position to compete in the market, support our patients and their healthcare providers, and deliver maximum value to our shareholders."
Both companies will have capital structures optimized to reflect their distinct growth opportunities and cash flow profiles. The separation into independent publicly traded companies is expected to provide each company with its own, more focused equity currency, and provide investors with the opportunity to invest in two companies with compelling and unique financial profiles well suited to their respective businesses. Details of the transaction will be in the information circular sent in advance of the shareholder vote to ratify the split.
More on Viemed
The companies comprising Viemed have been in existence for approximately 10 years and the management operating these businesses since inception will continue to operate them after the separation. Viemed's business model is designed to serve primarily a COPD patient population which is the fastest growing cause of death in the U.S. Viemed is a leading provider of respiratory service programs designed specifically for payors to have the ability to treat patients in the home for less total cost and a superior quality of care. The Company employs more respiratory therapists than any other independent U.S. provider to assure the high service model is accomplished in the home. Viemed expects to continue to be a solution to the rising U.S. health costs by offering more cost effective home based solutions while increasing the quality of life for patients fighting serious respiratory diseases including COPD and CRF.
Viemed is expected to use an organic growth model whereby expansion is done through existing areas as well as new regions through a cost efficient launch that reduces location expenses. By focusing overhead costs to personnel that service the patient rather than physical location costs, the Company can efficiently scale the business in regions that are currently not being effectively serviced. The continued trend of servicing patients in the home rather than hospitals is aligned with Viemed's vision and strengths and should continue to offer growth opportunities for the Company.
"I am very excited about the new structure of the companies that will afford us all the ability to focus our time and capital allocation on the businesses and products that each management team has a history of success," said Casey Hoyt, CEO of PHM and expected CEO of Viemed. "While there has been tremendous progress made during our integration period, this restructuring will add the most value for shareholders as the new companies will be laser focused on the growth and profitability of businesses that have different profiles, both from a capital and service perspective."
More on Apparo Home Care
Apparo Home Care, Corp. is a diversified, multi-regional home and durable medical equipment (DME) business. Aparro will continue to capitalize on opportunities arising from the consolidation of the U.S DME markets. The Aparro growth strategy will include add-on acquisitions of DME companies in the U.S., in addition to sustainable, well-diversified organic growth. Throughout the summer months, the DME businesses, going forward as Apparo Home Care, have been financially rationalized by the Company's leadership team to ensure sustained profitability and highly accretive operating leverage, with core operating and financial functions centralized.
Apparo will be comprised of seven companies that were sold to PHM over a three-year period. These companies have generally been in existence for over 25 years. Apparo's business model is designed to serve an aging patient population with a comprehensive product offering including home respiratory therapy and complex mobility products. Apparo also is one of only a few companies in the United States which is certified to conduct PTINR testing, which provides a crucial testing for patients on Coumadin, due to the high barriers of entry from competitors seeking to enter the market.
"I am thrilled about the new entity structure and excited about the chance to achieve the kinds of profitability and growth that a laser-focused leadership team can create in the DME business," says Greg Crawford, Apparo's CEO. "There are numerous acquisition opportunities that are, and will be, worth pursuing. And there are still significant opportunities to improve the profitability of our current operating businesses."
Transaction Details
Subject to legal, tax and financial review, PHM proposes to complete a court approved plan of arrangement under the Business Corporations Act (British Columbia) pursuant to which PHM will spin-out its wholly-owned sleep management business (Sleep Management, LLC and Home Sleep Delivered, LLC) and $2.5 million of cash under Viemed, which will be a newly formed non-affiliated company, Apparo Home Care will retain the remaining assets and business. The arrangement must be approved by the Supreme Court of British Columbia and by the affirmative vote of 66 2/3% of PHM's shareholders who vote in person or by proxy at the shareholders' meeting which will be called to approve the transaction. On the closing of the transaction, shareholders of PHM will receive one share of Viemed for each one share held in PHM, and will continue to hold their investment in Apparo, formerly PHM. The Company intends to apply for a listing of the shares of Viemed on the Exchange. Any such listing will be subject to Viemed fulfilling all of the requirements of the Exchange. The transaction is currently targeted to be completed by the end of calendar 2016, subject to certain conditions, including, among others, execution of a definitive arrangement agreement, and Exchange and shareholder approval. There can be no assurance that this transaction will be completed. Additional details of the spin-out transaction (including the composition of the respective boards of directors and senior management) will be announced upon the execution of the arrangement agreement and included in an information circular to be mailed to shareholders of PHM in connection with the shareholders' meeting referred to above.
Patient Home Monitoring Corp.
Todd Zehnder
Chief Strategy Officer & Investor Relations
(337) 504-3802
Investorinfo@myphm.com
www.phmcompanies.com |
