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Press Release

PHM Announces Accretive Acquisition of Respiratory Services Focused Business


Posted on: 18 Sep 18

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.

CINCINNATI, Sept. 18, 2018 (GLOBE NEWSWIRE) -- Protech Home Medical Corp. (“PHM” or the “Company”) (TSXV: PHM), a healthcare services company with operations in the U.S., is pleased to announce that it has closed the acquisition of Coastal Med Tech Inc.(“CMT”), a bolt-on acquisition focused on providing respiratory services to patients in the Northeast market where the Company’s Black Bear Medical division (“Black Bear”) currently operates.

Acquisition Details

CMT is a leader and top provider of respiratory services in the State of Maine. It has 5 locations, and when combined with the current operations of Black Bear, PHM will expand its geographical footprint substantially and will be in a position to provide its services to most of the State of Maine. CMT has a substantial patient count of more than 1,500 that are actively renting more than 2,000 pieces of equipment annually. Under the terms of the definitive purchase agreement, PHM has acquired CMT for total cash consideration of approximately $875,000.

The acquisition is expected to increase PHM annual revenues by approximately $4 million and increase annual Adjusted EBITDA by approximately $1 million. When combined with existing operations, PHM expects annualized run-rate revenue to exceed $85 million and Adjusted EBITDA to exceed $15 million, before any expected additional revenue generated from organic growth, cross selling and corporate synergies. Additionally, the Company anticipates that after an initial transition and integration period, its Adjusted EBITDA margins will increase to above 18.3%, as was reported in the Company’s most recent quarterly report, dated August 28, 2018.

“This type of tuck-in asset purchase is an example of the types of strategic acquisitions we're going to continue to pursue,” said Greg Crawford, Chairman and CEO of PHM. “The acquisition is immediately accretive, increasing revenue and EBITDA as we use our regional expertise and infrastructure to achieve revenue and profit growth through our integration platform. These asset purchases are an easy way to increase market penetration in our existing markets for marginal costs and will continue to be one of our core strategies to augment our growth. We are particularly delighted by the target’s product mix which is largely focused on the respiratory market, which we have a particular affinity towards given its extremely positive market fundamentals.”

M&A Pipeline Update

As previously announced, the Company is focused on the implementation of its revised corporate strategy that incorporates technology, organic growth and strategic acquisitions to continue to improve upon its recent financial results. Post this acquisition, the Company has more than $4 million in cash to continue to pursue additional acquisitions that will focus on strategic geographic locations driven by product mix, distribution volumes and the ability to consolidate distribution channels to drive operating efficiencies and maximize earnings accretion.

“We continue to build our pipeline of qualified acquisition targets,” said Hardik Mehta, CFO of PHM. “We have a pipeline of several companies with which we are in active negotiations, and we are executing NDAs with new potential targets. PHM is actively working on additional acquisitions and growth opportunities, most of which are under LOI. With many excellent acquisition targets to choose from, we will continue to be extremely disciplined with respect to the acquisitions we pursue and focus on those where we can achieve favorable pricing and optimal accretion.”

ABOUT PROTECH HOME MEDICAL CORP.

The Company provides in-home monitoring and disease management services for patients in the United States healthcare market. The primary business objective of the Company is to create shareholder value by offering a broader range of services to patients in need of in-home monitoring and chronic disease management. The Company’s 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.

For further information please visit our website at www.protechhomemedical.com, or contact:

Hardik Mehta
Chief Financial Officer
Protech Home Medical Corp.
859-300-6455
investorinfo@myphm.com

Forward-Looking Statements

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 the Company, including financial projections and proposed acquisitions, are intended to identify forward-looking information. All statements other than statements of historical fact may be forward-looking information. Such statements reflect the Company's current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties and assumptions include, without limitation: PHM’s ability to increase gross margins at or below 70%; PHM’s ability to increase patient compliance and collections; PHM’s ability to decrease SG&A compared to trailing twelve months pre-acquisition and PHM achieving organic revenue growth of at least 5%. 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. Examples of such risk factors include, without limitation: credit; market (including equity, commodity, foreign exchange and interest rate); liquidity; operational (including technology and infrastructure); reputational; insurance; strategic; regulatory; legal; environmental; capital adequacy; the general business and economic conditions in the regions in which the Company operates; the ability of the Company to execute on key priorities, including the successful completion of acquisitions, business retention, and strategic plans and to attract, develop and retain key executives; difficulty integrating newly acquired businesses; the ability to implement business strategies and pursue business opportunities; low profit market segments; disruptions in or attacks (including cyber-attacks) on the Company's information technology, internet, network access or other voice or data communications systems or services; the evolution of various types of fraud or other criminal behavior to which the Company is exposed; the failure of third parties to comply with their obligations to the Company or its affiliates; the impact of new and changes to, or application of, current laws and regulations; 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; the overall difficult litigation environment, including in the U.S.; increased competition; changes in foreign currency rates; increased funding costs and market volatility due to market illiquidity and competition for funding; the availability of funds and resources to pursue operations; critical accounting estimates and changes to accounting standards, policies, and methods used by the Company; and the occurrence of natural and unnatural catastrophic events and claims resulting from such events; as well as those risk factors discussed or referred to in the Company’s disclosure documents filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com. Should any factor affect the Company 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, the Company 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 the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.

Non-GAAP Measures

This press release refers to “Adjusted EBITDA” which is a non-GAAP and non-IFRS financial measure that does not have a standardized meaning prescribed by GAAP or IFRS. The Company’s presentation of this financial measure may not be comparable to similarly titled measures used by other companies. This financial measure is intended to provide additional information to investors concerning the Company’s performance. Adjusted EBITDA is defined as EBITDA excluding stock based compensation and gains/losses on financial derivatives. 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, good will impairment and gain/losses on financial derivatives.

Management uses these non-GAAP measures as key metrics in the evaluation of the Company’s performance and the consolidated financial results. The Company believes these non-GAAP measures are useful to investors in their assessment of the operating performance and the valuation of the Company. In addition, these non-GAAP measures address questions the Company routinely receives from analysts and investors and, in order to assure that all investors have access to similar data, the Company has determined that it is appropriate to make this data available to all investors. However, non-GAAP financial measures are not prepared in accordance with GAAP, and the information is not necessarily comparable to other companies and should be considered as a supplement to, not a substitute for, or superior to, the corresponding measures calculated in accordance with GAAP.

Neither the 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.

GlobeNewswire
globenewswire.com

Last updated on: 18/09/2018

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