The United States revamping its healthcare system coincides with a paradigm shift towards remote health care and patient monitoring in a bid to contain costs through better preventative care. Using diabetes for example, keeping a person with pre-diabetes from progressing to full-blown diabetes is a substantial reduction in lifetime costs.
On the same point, better management of diabetes by strictly adhering to a care plan can greatly reduce expenses not only pinned to diabetes, but also a litany of costly and debilitating co-morbidities. Being the most expensive chronic disease makes diabetes useful for a simple example, but monitoring technologies are capable of delivering value across the full spectrum of chronic and acute illnesses.
San Francisco-based and Toronto Venture Exchange-listed Patient Home Monitoring, Inc. (TSX-Venture:PHM) is focused on expanding its operations by acquiring small, privately-held companies that service patients with chronic illnesses. Initially focused on diseases brought on by aging and obesity, the company is attune to the ongoing evolution of the home health-care and monitoring industry that is being encouraged by major insurance providers, including Medicare, because it is less expensive than physician or hospital visits and can decrease other medical events, such as hospital re-admittance and more, which saves on costs.
PHM currently offers monitoring services to the more than four million patients that undergo Coumadin therapy in the U.S. each year.
PHM closed its first acquisition in September, buying Hollywood Healthcare Corp. and its $1.5 million in cash, accounts receivable and inventory in a deal initially valued at about $1.3 million, paid in cash and shares. HHC sells diabetes supplies, immunosuppressant specialty drugs and influenza shots to pharmacies. If specific performance milestones are met in the future, PHM will owe up to $466,000 more to the sellers.
The final revenue figures have not yet been released by PHM for the fourth quarter that will add some color to how well the acquisition is paying-off, but the company did say in December that it is on pace for record revenue and EBITDA for the three-month period ended December 31. In October and November combined, PHM generated more than $1.65 million in sales and continued to operate profitably with a positive cash flow. HHC’s pharmacy channel diabetes program has hit a milestone in December by servicing its 30,000th patient.
On Wednesday, PHM said that it has signed definitive purchase agreements to put four more companies under its umbrella. PHM will be acquiring pulmonary disease services company Resource Medical Group through a payment of 7.62 million shares; Palmetto Medical Holdings, LLC (which provides home-based sleep apnea and COPD treatments) for $888,891 in cash; social media direct-to-patient marketer HeartHealth4Me.com for 750,000 shares; and RMGC, LLC, a company focused on home-based healthcare logistics and services for $653,275 in cash and 5.15 million shares.
Cumulatively, the companies have generated $5.7 million in revenue in the past 12 months and EBITDA of $1.35 million.
"This wave of acquisitions propels PHM to a new level," said Bob Kusher, chief executive of PHM, in a statement today. "It takes us to a strong and growing eight figure revenue stream and increases our profitability substantially upon closing. It also adds significantly to our breadth of services offered to the market, and to our sales and marketing capabilities.
The markets are responding favorably to the news, with shares of PHM up 7.4% to 29 cents in Wednesday trading with more than 1.1 million shares in volume. The stock has started trading with some regularity since last May, with lows at only six cents per share. After hitting 38 cents in September, the stock has pulled back some, but is now pushing on some resistance at 30 cents, a level it hasn’t been above since briefly touching 30.5 cents last October.
With the new sources of revenue and a chart in an uptrend, technical and fundamental traders may be keeping an eye on PHM to see where things will go. Proper due diligence is, as always, encouraged.
