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.
Acquisition
Details
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.