Protech Home Medical Reports Record Third Quarter Fiscal 2020 Financial Results Run-Rate Revenue Reaches $100 Million Posts Revenue Growth of 28% and Adjusted EBITDA Growth of 47%
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CINCINNATI, Ohio – August 17, 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 its third quarter
fiscal 2020 financial results and operational highlights for the period ended
June 30, 2020.
Protech will host its Quarterly Earnings Conference Call on Tuesday, August 18, 2020 at 10:00 a.m. (EDT). The dial-in number is 1 (800) 319-4610 or 1 (604) 638-5340. The live audio webcast can be found on the investor section of the Company’s website through the following link: https://protechhomemedical.com/conference_calls
• Revenue for Q3 2020 was $25.9 million compared to $20.2 million for Q3 2019, representing a 28% increase in revenue year-over-year and a 7% increase quarter over quarter; most of which was organic.
• Run-rate revenue reaches previously stated goal of $100 million prior to year-end.
• Adjusted EBITDA for Q3 2020 was $5.5 million (21.4% margin), compared to $3.8 million (18.7% margin) for Q3 2019, representing a 47% increase year-over-year.
• Gross margin in Q3 2020 was 71%, up from 70% in Q3 2019, as a result of continued margin enhancement efforts, including patient intake and distribution optimization.
• Gross profit for Q3 2020 was $18.4 million as compared to $14.1 million for Q3 2019.
• Cash flow from operations was $19.4 million for the nine months ended June 30, 2020 compared to $(1.7) million for the nine months ended June 30, 2019.
• On June 29, 2020, the Company completed a “bought deal” equity financing, a concurrent brokered private placement, and a non-brokered private placement to the Company’s Chief Executive Officer and an Independent Director of the Company, for total gross proceeds of $31.8 million.
• At June 30, 2020, the Company had cash on hand of $44.7 million, compared to $4.2 million as at June 30, 2019.
• The Company’s customer base increased 19% year-over-year from 31,306 unique patients served in Q3 2019 to 37,128 unique patients in Q3 2020.
• Through the Company’s continued use of technology and centralized intake processes, respiratory resupply set-ups and/or deliveries increased to 14,436 for the three months ended June 30, 2020, compared to 11,034 for the same period ended June 30, 2019, an increase of 31%.
• The number of equipment set-ups increased to 57,551 in the quarter ended June 30, 2020 from 52,007 in the quarter ended June 30, 2019, an increase of 11%.
• During the second half of Q3 2020, the Company’s sleep business increased as stay-at-home orders were lifted across the U.S. states the Company operates and the Company expects this to continue to increase.
• Strong demand continued for the Company’s respiratory equipment, such as Ventilators, and Oxygen Concentrators, as well as the CPAP resupply and other supplies business.
• The Company continues to expand its sales reach across ten U.S. states by the addition of experienced sales personnel.
Subsequent Events to the three months ended June 30, 2020:
• Completed DTC Eligibility for the Company’s common shares (including those traded on OTCQX) as announced on August 10, 2020.
• DTC is a subsidiary of the Depository Trust & Clearing Corporation, a U.S. company that manages the electronic clearing and settlement of publicly traded companies.
• DTC eligibility is expected to create a seamless process of trading and enhance liquidity of the Company's common shares in the U.S. over time.
• The ability to have Protech’s shares electronically cleared and settled in the U.S. is far more convenient and reduces the costs incurred in trading the Company’s shares.
• With Protech’s shares now having the ability to be traded electronically, existing investors are expected to benefit from greater liquidity over time and increased execution speeds, while new investors are expected to be far less restricted from participating in trading Protech’s shares.
• Executed a non-binding letter of intent to acquire a private respiratory care company in the Midwestern U.S. as announced on August 11, 2020 with the following attributes:
• Unaudited trailing 12-month annual revenues of approximately $5 million, positive adjusted EBITDA, and positive net income.
• Enhances the Company’s presence in the Midwest, including adding a new market, and will increase the Company’s active patient count by over 3,000.
• The target company focuses on all aspects of home respiratory equipment with a detailed focus on PAP, PAP resupply and non-invasive therapy with a large ALS and COPD patient base.
• The target company has a high acuity respiratory program providing non-invasive ventilation in a 90-mile radius. This program makes up just over a third of the target’s overall revenue and is also the fastest growing segment of the business.
• Excellent diversification amongst referral sources, with no more than once source contributing 10%, and a very strong and diversified payor base, with minimal Medicare exposure.
• Closing of the acquisition is subject to final due diligence, final negotiation and execution of a definitive purchase agreement and all necessary approvals.
• Protech qualified as an essential business pursuant to the policies of the U.S. government and has operated at full efficiencies during the COVID-19 pandemic serving over 85,000 active patients with exceptional service while managing increased demand from over 17,000 referring physicians.
• The Company continues to ensure the health and safety of its employees by providing them with the appropriate personal protective equipment for patient-facing employees.
• The Company’s supply chain for critical equipment has remained strong and the Company has ensured its inventory levels are aligned with the increased demand for certain respiratory related products, and the Company is well prepared in the event of a second wave of the virus.
“The third quarter of 2020 was full of milestones for Protech, and I am so proud of the entire team for their extraordinary dedication to demand operational excellence across the entire organization, in the midst of the challenges felt from the COVID-19 pandemic. Our third quarter results showcase the continued strength and robust nature of our business model, and I could not be more excited for the future,” said CEO and Chairman Greg Crawford. “The acceleration of the need for in-home healthcare solutions is being felt across the industry, and powerful tailwinds continue to be felt at our front door. With the strongest balance sheet in our history, we are poised to take advantage of opportunities to significantly scale our business. We believe this pandemic has underscored the importance of our mission, which is to be a dynamic home healthcare provider, focused on end-to-end respiratory care, providing the communities in which we serve incredible high-touch service, education, and easy access to the extraordinary care the company provides.
In addition to our operational excellence, we are also very pleased to have concluded an oversubscribed offering and our Independent Director, Mark Greenberg, and I are excited to have participated alongside our fellow shareholders, underscoring our confidence in the future of Protech. Furthermore, I am very delighted to report that we have reached an important milestone of $100 million in run-rate revenue, ahead of our initial timing expectations, whilst at the same time delivering record Adjusted EBITDA margins. We are also confident that our planned acquisition of a profitable Midwest based respiratory care company, which we recently announced, will assist us to further penetrate existing markets in the Midwest as well as open a new market to us, and we will continue to be laser focused on growing our system. I’d like to once again thank the entire Protech team for their hard work each and every day as well as our stakeholders for all of their continued support.”
Chief Financial Officer, Hardik Mehta added, “We are excited to see our top-line growth continue to accelerate, with revenue growing at 28% year-over-year and 7% sequentially. Moreover, our Adjusted EBITDA margin has breached the 21% level and we remain confident in this trend continuing. On the acquisition front, our pipeline is very robust, with some potential opportunities having larger revenue bases than our previous typical acquisition size. With our significantly enhanced balance sheet, continued margin expansion and improving cash flows, we are in a position to be very aggressive in the event the right acquisition, at the right consideration, presents itself. As always, we will remain prudent as it relates to our acquisition approach and will focus on building long-term shareholder value.”
The financial statements of the Company for the three and six months ended June 30, 2020 and 2019 and accompanying Management Discussion & Analysis (MD&A) are available at www.sedar.com.