PROTECH ANNOUNCES EXECUTION OF LOI TO ACQUIRE A PROFITABLE LEADING SUPPLIER OF RESPIRATORY THERAPY PRODUCTS AND SERVICES IN THE SOUTHEASTERN U.S.
TARGET HAS $7 MILLION IN ANNUALIZED REVENUES AND WOULD ADD OVER 10,000 ACTIVE PATIENTS. OVER 5,000 PATIENTS WOULD ENTER PROTECH’S EXISTING SUBSCRIPTION BASED RESUPPLY MODEL
Cincinnati, Ohio – January
5, 2021 – 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 Southern United States reporting
unaudited trailing 12-month annual revenues of approximately $7 million,
positive adjusted EBITDA, and positive net income.
The target company has been a leader in the respiratory home care services industry within the area it operates in the Southern United States for over 20 years. The target company would serve as an entry for Protech into the new Southern State, adding over 10,000 active patients and a location within 10 minutes of a major metropolitan hub. Protech would begin to build its presence in this new geography by organically leveraging its existing infrastructure and looking for additional bolt-on opportunities. The target company has a heavily weighted respiratory product mix at over 85%, possessing a large selection of respiratory and home medical equipment to meet the needs of today's patients at home. The staff delivers on a high touch service model, aligned with Protech’s existing model, and is continually educating their patient base to ensure strong compliance of equipment. Moreover, the target company has a stable and diverse payor mix with no more than 50% coming from a particular payor source. In addition, the target company would give Protech the opportunity to add over 5,000 patients from its patient base to Protech’s existing subscription-based resupply program and Protech expects it would derive strong revenue synergies from this initiative.
The acquisition is expected to increase Protech’s annual revenues by approximately $7 million. Leveraging existing infrastructure, Protech expects to achieve additional revenue and EBITDA generated from organic growth, cross selling and corporate synergies.
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.
“We are extremely excited to have executed an LOI that would expand our geographical footprint further into the Southern portion of the United States,” said Greg Crawford, Chairman and CEO of Protech. “The acquisition would give us a foundation to build from in the new State with over 10,000 active patients, and a location near a major metropolitan hub, which we would plan to grow both organically and inorganically over time. Post-closing, we would plan to seize on a significant opportunity by adding over 5,000 patients to our existing robust subscription-based resupply model. This acquisition would be immediately accretive to Protech’s EBITDA, overall profitability and adds $7 million dollars to the top-line which would bring us to over $130 million in run-rate revenue. We remain focused on strategically layering on complimentary respiratory focused businesses to our strong infrastructure where we can quickly deploy our technology driven model to enhance sales, margins, and patient count over time. At this time, our acquisition pipeline remains robust and we expect 2021 to be a very busy year for Protech as we scale our organization by further penetrating existing markets as well as entering new markets.”
Chief Financial Officer, Hardik Mehta added, “We are delighted to have executed on yet another LOI for a profitable respiratory focused company, which would help us strategically scale our business into a new State. Our focus continues to be on profitable $5 to $20+ million-dollar top-line companies, and we have a very deep pipeline of targets at various stages of due-diligence. Post-closing, our balance sheet would remain in exceptional condition and we will continue to be aggressive in our acquisition plan. We look forward to a potential closing on this exciting respiratory care company and will work diligently to integrate the business onto the Protech platform.”
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.