Protech Home Medical

  • Simplifying the Patient Experience!

  • 859-300-6455

    cole.stevens@myphm.com

  • 1019 Town Drive

    Wilder, KY 41076

PROTECH ANNOUNCES EXECUTION OF AN LOI TO ACQUIRE A PROFITABLE RESPIRATORY CARE BUSINESS IN THE MIDWESTERN U.S.


  •   8:00AM EST

TARGET HAS $5 MILLION IN ANNUALIZED REVENUES AND WOULD EXPAND PROTECH’S OPERATING FOOTPRINT IN MIDWEST AND INCREASE ACTIVE PATIENT COUNT BY MORE THAN 3,000

Cincinnati, Ohio – August 11, 2020 – Protech Home Medical Corp. (“Protech” or the “Company”) (TSXV: PTQ), (OTCQX: PTQQF), a U.S. based leader in the home medical equipment industry, focused on end-to-end respiratory care, today announced it has executed a non-binding letter of intent (the “LOI”) to acquire a private respiratory care company in the Midwestern United States reporting unaudited trailing 12-month annual revenues of approximately $5 million, positive adjusted EBITDA, and positive net income.

Acquisition Details

The target company is a leader in the respiratory home care services industry in the Midwestern United States. The target will enhance Protech’s presence in the Midwest, including adding a significantly large new market, and would increase Protech’s active patient count by over 3,000. The target focuses on all aspects of home respiratory equipment with a detailed focus on non-invasive ventilation therapy and sleep devices with a large ALS and COPD patient base. The target has a high acuity respiratory program and provides non-invasive ventilation in a 90-mile radius. This program makes up just over one third of the target’s overall revenue and is also the fastest growing segment of its business. The CMS has removed non-invasive ventilators from the 2021 competitive bidding program, allowing for a clearer margin outlook. Protech feels strongly about bolstering its non-invasive ventilator volume as a percentage of its product mix given the strong market fundamentals. The target is well-entrenched in the community, with a strong, clinical services background that focuses exclusively on high-tech services, and Protech looks forward to leveraging this platform. The target has great diversification amongst referral sources, with no more than one source contributing 10%, and a very strong and diversified payor base, with minimal Medicare exposure. Furthermore, the target has a long recurring revenue cycle which fits hand in hand with Protech’s business model.

According to the LOI, Protech expects to close the acquisition for cash at a reasonable multiple that would immediately be accretive to EBITDA and net income. Closing of the acquisition is subject to final due diligence, final negotiation and execution of a definitive purchase agreement and all necessary approvals. Closing is anticipated to be within the next 30 days.

The acquisition is expected to increase Protech’s annual revenues by approximately $5 million. Leveraging existing infrastructure, Protech expects to achieve additional revenue generated from organic growth, cross selling and corporate synergies.

“We are thrilled to have executed an LOI to add a substantial Midwest based respiratory care provider to the Protech family," said Greg Crawford, Chairman and CEO of Protech. “The acquisition would be immediately accretive to Protech’s EBITDA and overall profitability and would continue to build scale on the top-line which has now reached a run-rate of $100 million. We are excited about the target’s diverse payor mix with minimal Medicare exposure, strong recurring revenue base, and product mix. We will use our operational expertise, leveraging our first-rate infrastructure to achieve profit growth through our integration platform. We will continue to be active on the acquisition front as we focus on increasing market penetration in our existing markets and adding new markets into the system.”

Chief Financial Officer, Hardik Mehta added, “We look forward to a potential closing on this exciting respiratory care company that strategically assists us in further penetrating the Midwest regions in which it serves and upon a successful closing will work diligently to integrate the business onto the Protech platform. Our acquisition pipeline is robust, which includes larger revenue opportunities that can assist the company to gain scale at an accelerated pace. As always, we will continue to be extremely prudent and decisive in our approach and focus on the right deal at the right consideration.”

Additional information will be released by the Company as it occurs. There can be no assurance that any acquisitions (including the particular acquisition contemplated herein) will be completed or the timing of any acquisitions.