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Protech Announces Execution of LOI to Acquire a Profitable Leading Supplier of Respiratory Therapy Products and Services in the Southeastern U.S., Target has $13 Million in Annualized Revenues

  •   10:00AM EST

Would Expand Protech’s Operating Footprint in the Southeast With 5 New Locations, Including Several New Market and Would Increase Active Patient Count by More Than 15,000

CINCINNATI, Sept. 08, 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, is very pleased to announce it has executed a non-binding letter of intent (the “LOI”) today to acquire an arm’s length private respiratory care company in the Southeastern United States reporting unaudited trailing 12-month annual revenues of approximately $13 million, significant adjusted EBITDA, and positive net income.

Acquisition Details

The target company has been a leader in the respiratory home care services industry in the Southeastern United States for over 15 years. The target would significantly enhance Protech’s presence in the Southeast with 5 new locations, including adding several new markets, and would increase Protech’s active patient count by over 15,000. The target has a strong management team, that will continue to be apart of the Protech family post-closing, along with an exceptionally strong professional team that is continually updated in the latest in respiratory technology through attendance at national seminars, participation in factory training programs, and in-house education. Additionally, the target is highly concentrated on sleep therapy with a very strong re-supply business, which Protech intends to significantly expand post-closing. The target offers superior service through their dedicated patient care and education team, as well as their sleep therapy specialists. Like Protech, the target offers high-quality service, equipment, and supplies with a strategic focus on their sleep business and resupply program. Moreover, the target has a successful Oxygen Therapy program led by attention to patient education and compliance. Finally, the target has great diversification amongst referral sources, and a very strong and diversified payor base resulting in long recurring revenue cycles which fit hand in hand with Protech’s business model. The target does not have any, thus Protech will not assume any, long term debt.

According to the LOI, Protech expects to close the acquisition for cash at a reasonable multiple that would immediately be accretive to Protech’s 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 and is expected to occur within the next 45 days.

The acquisition is expected to increase Protech’s annual revenues by approximately $13 million. Leveraging existing infrastructure, Protech expects to achieve additional revenue generated from organic growth, cross selling and corporate synergies.

“We are extremely excited to have executed an LOI to add a Southeastern based leader in respiratory care to the Protech family,” said Greg Crawford, Chairman and CEO of Protech. “The acquisition would immediately accelerate our scale in the Southeast region with the addition of 15,000 active patients, 5 new locations, and would add a new and exciting market for us. This acquisition would be immediately accretive to Protech’s EBITDA, overall profitability and would add $13 million to the top-line which would put us closer to our next stated goal of $125 million in run-rate revenue. Post-closing, we also see a significant opportunity to increase the targets current re-supply business and will use our operational expertise, leveraging our first-rate infrastructure to achieve profit growth through our integration platform. I am pleased to report that our acquisition pipeline continues to be robust and we expect to remain extremely active on the M&A front as we close out 2020, with a particular focus on increasing scale through market penetration in our existing markets and by adding new markets into the system.”

Chief Financial Officer, Hardik Mehta, added, “Our focus continues to be on larger accretive transactions which further our goal of creating scale within our organization at an accelerated pace, and this acquisition reflects this strategy. This target is a prime example of our ability to execute on our stated long-term vision for Protech and we look forward to a potential closing on this exciting respiratory care company that strategically assists us in further penetrating the Southeast region. As always, we will work diligently to integrate the business onto the Protech platform and are excited to welcome the targets management team to Protech. We expect to be busy on the acquisition front, and look forward to updating shareholders on our progress as appropriate.”

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 as proposed or at all or the timing of any acquisitions.