LAFAYETTE, LOUISIANA--(Marketwired - March 30, 2016) -
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Patient Home Monitoring (PHM) (TSX VENTURE:PHM), a healthcare service company in the US and Canada, is providing guidance on revenue for the current quarter and revenue growth estimates for the remainder of 2016, including details on winding down the pharmacy business.
Guidance for the Current Quarter and Operation and Integration Update
For the second fiscal quarter ending March 31, 2016, PHM expects revenue to exceed $32,000,000 with limited Adjusted EBITDA(1). Annualized revenue growth for the third and fourth quarters are expected to be in excess of 10% with a rise in Adjusted EBITDA(1) margins.
In early 2016, due to continuing Medicare reimbursement reductions and market dynamics impacting all providers in the industry, the business experienced a decline in revenues. Beyond the reimbursement challenges that the business is addressing, it has become clear to the new leadership team that a business acquired in September 2013, Logimedix, is simply not a good fit any longer. So, going forward, to drive core business focus, Logimedix will be closed to allow the leadership team to focus their efforts on the core competencies that will best drive revenue and earnings growth. It is anticipated that there will be a total cost in the current quarter of approximately $3 million to eliminate assets and clear any liabilities in the geographic areas in which the business operates. This type of business activity is a clear example of the actions being taken to focus, execute and grow our core business to previous levels of financial success.
Additionally, recent competitive bidding activity for Medicare patient services across our subsidiaries is serving as a strong process to drive focus on margin improvement. The process is allowing us to prune across the business those services that over time have proven to have low profitability. Initially, this will have some minor impact on top line revenue, but more importantly over time this will have a much more substantial impact on our product investments and business performance and profitability.
The leadership team has worked diligently to lower the cost structure throughout the company this quarter. In addition to these short-term actions, management plans to continue to address longer-term actions that will drive business integration, eliminate duplication of activity across the business, reduce ongoing expenses, improve base cost productivity and drive improved margin performance. All this activity is focused on both protecting and improving PHM's strong balance sheet, which has more than $15 million in cash and limited debt, while rebuilding quarter to quarter performance.
The Company expects all these actions, coupled with organic growth initiatives that should drive subsequent annualized revenue growth in the third and fourth quarter, to have a positive impact on moving the margin performance back to levels attained prior to the January challenges. It is clear that these operating results must be driven by our operational expertise with a real focus on the integration, accountability and execution of all the entities acquired under the PHM logo. We do visualize a strong growth culture across these various business units, but it will be more measured and market oriented than the previous topline growth that was acquisitively driven. However, PHM's capabilities and strong market presence may afford some limited acquisition opportunities.
PHM has also appointed Mike Moore as the Interim Chief Financial Officer in addition to his current role as President.
"Because of Medicare reimbursement cuts and other market factors, this quarter has been a reset quarter for us," said Casey Hoyt, CEO of PHM. "We continue to restructure our operations to reflect the new market reality. We see multiple growth opportunities in the respiratory business that we feel can reestablish our pattern of generating record quarters of revenues and profits. In the end, we are completely committed to this path," continued Mr. Hoyt, "And we do believe that our return to solid and predictable performance will be driven by organic growth, strong cost management and limited capital investment to protect our strong balance sheet. The days ahead will be challenging, but exciting relative to PHM's future. Lastly, contrary to recent speculation, the management team and Board of Directors are committed to recapturing the revenue growth and margins we expected when we joined PHM through the sale of Viemed and we are not currently seeking to sell the Company."
About PHM
The explosive growth in the number of elderly patients in the US healthcare market is creating pressure to provide more efficient delivery systems. Healthcare providers, such as hospitals, physicians and pharmacies, are seeking partners that can offer a range of products and services that improve outcomes, reduce hospital readmissions, and help control costs. PHM fills this need by delivering a growing number of specialized products and services to achieve these goals. PHM is a positive cash flow and profitable company that serves patients with heart disease and other chronic health conditions; this operation is a platform for acquisitions and organic growth. PHM is focused on a highly fragmented and developing market of small privately-held companies servicing chronically ill patients with multiple disease states caused mainly by age and obesity. Because of the new and highly fragmented nature of the market, PHM is actively working to identify and evaluate profitable, annuity-based companies to acquire their patient databases and technical expertise at favorable prices. PHM's post acquisition organic growth strategy is to increase annual revenue per patient by offering multiple services to the same patient, consolidating the patient's services and making life easier for the patient. The expected result is growing EPS with each acquisition and growing revenue and profits from the cross selling efforts.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
(1) Adjusted EBITDA is defined as EBITDA excluding Stock Based Compensation, gains/losses on financial derivatives and certain one-time charges.
Adjusted EBITDA is a Non-IFRS measure the Company uses as an indicator of financial health, and excludes several items which may be useful in the consideration of the financial condition of the Company, including interest expense, taxes, depreciation, amortization, stock based compensation, good will impairment and gain/losses on financial derivatives.
Forward-Looking Statements
Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of PHM and anticipated events or results, are assumptions based on beliefs of PHM's senior management as well as information currently available to it. While these assumptions were considered reasonable by PHM at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including the availability of funds and resources to pursue operations, decline of reimbursement rates, dependence on few payors, possible new drug discoveries, a novel business model, dependence on key suppliers, granting of permits and licenses in a highly regulated business, competition, difficulty integrating newly acquired businesses, low profit market segments as well as general economic, market and business conditions, and could differ materially from what is currently expected. This press release refers non-GAAP and non-IFRS financial measures that do not have standardized meaning prescribed by GAAP or IFRS. PHM's presentation of these financial measures may not be comparable to similarly titled measures used by other companies. These financial measures are intended to provide additional information to investors concerning PHM's performance.