SAN FRANCISCO, CALIFORNIA--(Marketwired - May 31, 2016) -
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Inspira Financial Inc. (TSX VENTURE:LND) ("Inspira") a company focused on providing revolving lines of credit to the highly fragmented U.S. healthcare market of physician groups and healthcare service providers, today provided unaudited financial highlights of its fiscal fourth quarter, ending February 29, 2016, highlighting that both revenues and profits from operations increased quarter-over-quarter.
The company also announced its planned expansion to include Software-as-a-Service (SaaS) based revenue management and business intelligence services through the proposed acquisition of RBP Healthcare Technologies ("RBP") (www.rbphealth.com), a company with a revenue management technology platform specific to the mental health and addiction services industry. This new lucrative service line has high growth potential, is complimentary to existing Inspira clients operating in the addiction industry, and creates an opportunity for a substantial competitive advantage in Inspira's most rapidly growing sector. With an ever-increasing level of claims caused by the passage of the Parity Act, health insurers (Payors) are implementing more complex reimbursement requirements, similar to those imposed upon service providers in the physical healthcare sector. The new and changing insurance claims and reimbursement processes have created a great opportunity to solve the billing and collections problem emerging within this sector.
Further, Inspira announced that its net cash and asset backing on a per share basis was approximately $0.81 as of May 30, 2016.
Fiscal Fourth Quarter Financial & Business Highlights with Loan Book Metrics
Financial Highlights (unaudited)
- Net cash and asset backing on a per share basis was approximately $0.81 as of May 30, 2016, with approximately $30 million in net cash and assets and 37,292,747 shares outstanding.
- Revenue was in excess of $2.5 million compared to $1.6 million in the previous quarter, an increase of more than 52% quarter-over-quarter.
- Net profit from operations for the quarter was in excess of $1.4 million as compared to $875k in the previous quarter, an increase of more than 60% quarter-over-quarter.
Business Highlights
- After 18 months of operations, management has determined less than 1% of its lending facilities should be viewed as potentially uncollectible.
- Going forward, management sees the fastest growing demand for financial services in the mental health and additional services industry.
- The company is transitioning its U.S. headquarters near Silicon Valley for better talent recruitment and retention.
Planned Acquisition of RBP Healthcare Technologies; Cross Selling Opportunities to Offer Existing Clients New Services and Technology
With the acquisition of RBP, Inspira plans to enter the lucrative revenue cycle management services industry for addiction treatment and mental health centers. Enhancing its existing technology with a SaaS-based platform focused on end-to-end revenue cycle management will provide Inspira the opportunity to layer in predictive business intelligence, making for an even more profitable service offering.
The Board of Directors has identified this as an explosive area for revenue and profit growth as a result of inquiries by several of Inspira's clients in the mental health and addiction treatment sector. These clients initially requested increases in their revolving lines of credit, and Inspira quickly identified their lack of technology as a major obstacle to timely payment from insurance companies. Improved technology would give Inspira even greater visibility into client performance, and improve loan servicing at a lower cost.
The Market for Revenue Cycle Management Software (Patient Tracking, Billing and Collections) - Underserved and Growing
Due to the significant increase in demand for addiction treatment, caused by health insurance coverage through the passage of the Parity Act, many growing addiction treatment companies now have difficulty with patient tracking, billing and collections from insurance companies. The large and permanently elevated volume of claims has led health insurers (Payors) to implement more complex reimbursement requirements for the mental health sector, similar to those imposed upon service providers in the physical healthcare sector. Treatment centers tend to use several software applications and a non-automated billing company to document services provided and bill insurance companies. This cumbersome process slows down the tracking, billing and collection process as the customer's billings increase, and was not designed to handle the volume, or level of detail, now required for prompt payment.
About RBP Healthcare Technologies
RBP has developed a process platform that incorporates every aspect of the new insurance reimbursement process to admit, diagnose, track, bill, and collect revenue specific to patients in the addiction recovery market. Although RBP has limited sales and marketing staff, the company has revenue contracts in place which are expected to generate more than $3 million in annualized revenue by year end.
By acquiring RBP, Inspira plans on leveraging its sales and marketing expertise and current customer base in the mental health industry. Using its highly sophisticated financial technology systems, applications and talent, Inspira also plans to fully automate and scale RBP's existing platform with an aim at increasing profit margins as revenues grow.
"Suffering from their disparate software systems and low-tech billing vendors, several of our clients have expressed interest in an end-to-end revenue management and business intelligence service," expressed Dave Costine, CEO of Inspira. "With this acquisition, Inspira will transition into a company able to offer a comprehensive suite of revenue cycle management technologies alongside its traditional working capital solutions to quickly and efficiently perform the billing and collection functions, replacing the need for external billing companies entirely."
"I am pleased with our performance this last quarter," continued Mr. Costine. "We have seen an increase in revenues and profits and virtually no at risk debt. However, lending alone is not an explosive enough product line for us as a public company. Adding Software-as-a-Service (SaaS) to our stable of offerings, along with its inherent scalability in revenues and profits, can make Inspira a much more valuable company."
Terms of the Non-Binding LOI with RBP Healthcare Technologies
According to the letter of intent, Inspira will acquire the business for total consideration valued at $8.5 million with 6,375,000 shares, representing 75% of the purchase price, valued at $1.00 per share, a more than 20% premium to the net cash and asset backing of Inspira. The remaining 25% of the purchase price will be payable in cash for a total of $2,125,000. Closing of the acquisition will be subject to TSX Venture Exchange ("TSX-V") approval, final due diligence, and a binding purchase agreement which is expected soon.
About Inspira Financial and the Fast Growing Market
The healthcare market in the U.S. is a rapidly expanding industry, with spending expected to exceed $4.5 trillion by 2020. Within this industry, over 1 million businesses have annual revenues in the $1 million to $50 million range. The emerging reimbursement trend towards more usage-based procedures, along with the fact that healthcare providers are being forced to increase patient volumes to maintain or grow profit levels, creates a need for increased efficiency and greater front-end investment in technology and larger staff sizes. These factors, as well as the realities that insurance providers are taking longer to pay than before and that patients are now bearing increased financial responsibility for medical bills, contribute to significant financial pressure and net working capital challenges for the average, smaller sized healthcare practice in the U.S.
Overall, traditional banks continue to reduce their risk profiles, term lenders require personal guarantees and first security over all assets, factoring lenders charge 25%+ annual interest and equipment providers have all but eliminated financing programs. The increasingly limited number of options for obtaining revolving lines of credit and loans for smaller healthcare providers creates a supply shortage in the market. This imbalance represents an opportunity for alternative lending companies catering to this demographic to capitalize upon. By targeting the 1 million+ healthcare providers in the U.S., Inspira believes it can generate high returns on government (Medicare/Medicaid) and large healthcare insurance receivables. Inspira plans to acquire debt and increase profitability through cross selling of financial services.