Protech Home Medical

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PHM ANNOUNCES ACCRETIVE ACQUISITION OF RESPIRATORY SERVICES FOCUSED BUSINESS

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, Ohio – September 18, 2018 –Protech Home Medical Corp. ("PHM" or the "Company") (TSXV:PHM.VN), 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."



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PHM Admin