Investor Presentation

Transcription

Investor Presentation
May 2015 
A profitable, acquisition oriented home monitoring company listed on the TSX-V (PHM)
Forward Looking Statements & Statutory Rights
of Action
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FORWARD-LOOKING STATEMENTS
Certain statements in this presentation (the "Presentation") may constitute "forward-looking" statements which involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of Patient Home Monitoring Corporation and its predecessor companies ("PHM"), or
industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. When used
in this Presentation, such statements use such words as "may", "will", “estimate(d)”, "expect", "believe", "plan", "intend", "should", "anticipate" and other similar
terminology. These statements reflect current assumptions and expectations regarding future events and operating performance and speak only as of the date of this
Presentation. Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not
necessarily be accurate indications of whether or not such results will be achieved. A number of factors could cause actual results to vary significantly from the results
discussed in the forward-looking statements, including, but not limited to, the risk factors typical of businesses operating in PHM's industry. Although the forwardlooking statements contained in this Presentation are based upon what management believes are reasonable assumptions, PHM cannot assure investors that actual
results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this Presentation, and PHM assumes no
obligation to update or revise them to reflect new events or circumstances.
STATUTORY RIGHTS OF ACTION
If this Presentation is delivered to you for the purpose of assisting you in making a decision about investing in securities of PHM and you decide to purchase such
securities, this document may be considered an offering memorandum pursuant to securities laws applicable in the Province of Ontario. This means that if
this Presentation contains a misrepresentation and it was a misrepresentation at the time of purchase of securities by you, you will be deemed to have relied upon the
misrepresentation and will, as provided below, have a right of action against PHM for damages or, while still the owner of such securities, for rescission, provided: (a) an
action is commenced to enforce such right: (i) in the case of an action for rescission, not more than 180 days after the date of purchase; or (ii) in the case of an action
for damages, not more than the earlier of (i) 180 days following the date you first had knowledge of the misrepresentation and (ii) three years after the date of
purchase; (b) PHM will not be liable if it proves that you purchased the securities with knowledge of the misrepresentation; (c) in the case of an action for damages,
PHM will not be liable for all or any portion of the damages that it proves does not represent the depreciation in value of the securities as a result of the
misrepresentation relied upon; and (d) in no case will the amount recoverable in any action exceed the price at which you purchased the securities. If you elect to
exercise the right of rescission, then you will have no right of action for damages against PHM. The foregoing summary is subject to the express provisions of the
Securities Act (Ontario) and the regulations, rules and policy statements thereunder and reference is made thereto for the complete text of such provisions. The rights
of action described herein are in addition to and without derogation from any other right or remedy that you may have at law.
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PHM Investor Presentation - May 2015
Overview of Strategy
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Significantly positive macro tailwinds
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Positive demographic trends – 10,000 people turn 65 per day in the USA
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Massive cost pressure with the aging population – Medicare is reducing costs by shifting chronic disease
treatment into the home
Highly fragmented $250B market of over 10,000 companies offering niche home-based services for chronic
disease management provide limitless acquisition targets
• Target profile is private with revenues of $5 to $75 million, positive EBITDA and FCF positive
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Acquisitions are designed to be highly accretive
• Recent acquisitions increased EPS dramatically
• 9 candidates are in the pipeline under negotiations
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Post acquisition multiples will be optimized with “cross selling” strategy
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Acquisition targets often only offer one services to a patient data base with multiple needs
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PHM plans to increase revenue per patient by offering additional, profitable services post-acquisition
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Highly experienced management team with decades of experience in the home healthcare services markets and a
banking team with significant private equity and M&A expertise
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Current Status of PHM
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Financial Metrics (rounded)
o Annualized Run Rate Revenues: $62,000,000
o Annualized Run Rate Adjusted EBITDA: $11,500,000
o Reported Quarterly Adjusted EBITDA Growth FYQ2 2014 to FYQ2 2015: 255%
o Annualized Organic Growth Rate (Q2 2015): 40%
240%
Pipeline of potential acquisition candidates:
o Expected to Close: Executed LOIs with aggregate revenues exceeding $81 million.
o In Negotiation and May Not Close: Term sheet negotiations with 7 companies with aggregate
revenues exceeding $90 million.
o Pipeline of Qualified Sellers: Executed 85 non-disclosure agreements with potential sellers in
2015 to date.
Balance Sheet:
o Over $100 million in cash after bought deal financing closes May 2015.
o Only $8.65 million in debt.
* In calculating Adjusted EBITDA certain items are excluded from net loss including interest, taxes, amortization, noncash stock-based compensation.
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PHM Investor Presentation – May 2015
Strong Organic Growth From Acquisitions
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• August 2013: At the start of the roll-up, PHM had approximately $4 MM in annual
run-rate revenues and $650,000 in annual run-rate Adjusted EBITDA.
• Estimated exit 2015: Once all current LOIs are closed, PHM estimated run-rate
revenues in excess of $170 million and Adjusted EBITDA in excess of $35 million.
Current Status
May 2015 Annualized
Revenue: $62 MM
Adj. EBITDA: $11.5 MM
Inorganic Growth: TTM Revenue = $40.5 million; TTM Adj.
EBITDA= $7.5 million
Organic Growth: Annualized Revenue = $22 million;
Annualized Adj. EBITDA $4 million
* In calculating Adjusted EBITDA certain items are excluded from net loss including interest, taxes, amortization, non-cash stock-based compensation.
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A Massive and Growing Market Shift
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Market Shift – There is Trillion Dollar Cost Pressure on the US Healthcare System
Obesity and Age
10,000 US citizens a
day turn 65
Chronic illnesses
are increasing as a
result
Increasing costs on
the healthcare
system
The entire system is
threatened by this
rise in costs
The Solution: Medicare is Investing in Preventative Home-based Care to Reduce
Acute Treatment Costs
Resulting in new, fast-growing markets developed to avoid expensive
acute treatment of chronic illnesses
PHM is a profitable healthcare services company offering patients with chronic disease
several home-based services
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In-home Monitoring on the ramp-up
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US Healthcare is looking for ways to cut costs (currently 18% of GDP): In-home monitoring
significantly reduces Medicare’s expenses for monitoring chronic diseases (versus hospitals).
Catalysts of Home Monitoring:
- Federal policies: Hospital
readmission penalties
introduced by Medicare;
- Increasingly used by
healthcare and insurance
providers; Lowers cost, more
frequent diagnosis and
treatment reducing acute
illnesses
- Patient-driven demand is
increasing; greater conscious
of their fitness and disease
state.
Source: Lucas Mearian, Computer World, January 22 2013
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Patients With Multiple Chronic Illnesses
Need Several Services Concurrently
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The US patient with multiple chronic illnesses generally has several healthcare service
needs at the same time
• The top 5% of the patients generate 49% of the expense
• The 13% who are 65 and older account for 39% of the expense
• ~80% of the 65+ suffer from one chronic disease, ~50% from more than one.
• Overall, patients with multiple chronic conditions cost up to seven times as much as
patients with only one chronic condition
• Spending for those with five or more chronic conditions is 14 times greater than
spending for those without any chronic conditions
• Chronically ill patients require frequent monitoring and management to avoid acute
events, resulting in an annuity revenue stream model
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The Fragmented Market of Chronic Disease
Management Service Providers
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In this new market shift, over 10,000 new and small companies are scattered across the
landscape
Privately owned
by
doctors/nurses &
device/drug
sales
professionals
Few exit options,
small with only
one service
Company
Characteristics
Profitable, but
young – usually
less than 7 years
old
The Market is ripe for consolidation.
Offering a single
annuity service
line, usually the
expertise of the
owner
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Often regional in
scope or focus
The Acquisition Process
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Qualification of Potential Targets
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Potential acquisition targets generally have the following
attributes:
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3 years of profitability
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Un-monetized and un-marketed patient database
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Existing management willing to stay (usually willing to
accept PHM stock as part of acquisition)
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If in a new market location, sales of at least $6m
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Total consideration of less than 5x EBITDA
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Pipeline Process
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To date, PHM has closed 1 deal for every 30 qualified target companies reviewed
Qualify
Target
Company
NDA
Term
Sheet
Nonbinding
LOI
Execute PA/
Close
LOIs are generally announced to set the per share pricing for the target
company’s equity portion of consideration
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The Post Closing Organic Growth Plan – Cross
Sell Multiple Services to the Same Patient
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Increase Annual Revenue per Patient Post Acquisition
Potential Acquisition: Event
heart monitoring
CaliCardio:
Coumadin monitoring
HHC:
Supplies pharmacies
diabetic supplies, transplant drugs,
and flu shots
Potential Acquisition:
Preventative house calls by a
doctor
Potential Acquisition:
Complex Power Mobility
SC Companies/Care Medical: Home
services for patients with chronic lung
disease
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Current Business Units
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California Cardio
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Provides home testing monitoring, supplies and support for patients on blood thinning
medication (Coumadin).
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Owned Since: June 2010. This is the original business unit for PHM founded by Jaime Gerber,
MD.
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Annualized Revenue Run Rate: CAN$ - $5.6 million
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Average Gross Profit % - 66.7%
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Cross Sell Potential: 50% of all patients with sleep apnea suffer from atrial fibrillation, which
is treated by prescribing Coumadin. Pharmacy partners can recommend home testing and
provide patient training and support.
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Call center is in San Francisco, CA. Patient training and support covers the continental United
States.
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Logimedix
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Nationwide supplier to pharmacies of diabetic drugs, transplant drugs, and flu shots.
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Owned since September 2013. This was the first acquisition after Michael Dalsin and Roger
Greene took executive control of the business.
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Annualized Revenue Run Rate: CAN$ - $7 million
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Cross Sell Potential: Patient database utilized by call center to provide additional services.
Fill respiratory supplies orders for other divisions. Work with pharmacies to recommend
Coumadin patients and provide patient training and support.
•
Operations center and closed door pharmacy located in Davie, Florida. Serves pharmacies
and patients throughout the United States.
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Resource Medical
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Home services for patients with chronic lung disease.
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Owned Since: January 2014. CEO David Hayes, founded this company in 2004.
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Annualized Revenue Run Rate: CAN$ - $14 million
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is treated by prescribing Coumadin. Respiratory supplies may be ordered and filled through
Logimedix closed door pharmacy.
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Services patients in South Carolina through four locations and operates corporate call center.
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Care Medical
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Home services for patients with chronic lung disease and need for durable medical and
power mobility equipment.
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Owned Since: June 2014.
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is treated by prescribing Coumadin. Respiratory supplies may be ordered and filled through
Logimedix closed door pharmacy.
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Services patients in Georgia through five locations.
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Black Bear
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Home-based healthcare services, including mobility solutions.
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Owned Since: February 2015.
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Cross Sell Potential: Utilize patient database to provide additional respiratory and Coumadin
testing services.
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Services patients through three retail locations in Maine and New Hampshire.
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West Home Health
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Provides medical equipment and services for patients with chronic conditions, specializing in
mobility indications, home accessibility products and services including bath safety and
patient lifts.
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Owned Since: March 2015.
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Cross Sell Potential: Utilize patient database to provide additional respiratory and Coumadin
testing services.
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Services patients through two retail locations in Virginia.
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The Leadership Team: M&A and Private Equity
Group Expertise
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David Hayes (CEO): Prior to PHM, David was founder and president of Resource Medical.
David brings over 15 years of experience in the home-monitoring healthcare services market
and has been part of PHM’s leadership team since 2014.
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Jess Cuthbert (VP Operations): Co-Founder of Resource Medical, Jess has over 10 years of
experience in sales in the healthcare industry.
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Andrew Folmer (CFO): Former CPA with Ernst and Young with over 30 years of C-level
experience. Served as CFO and Operations Manager for private and public companies in
various industries including healthcare and pharmacy.
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Michael Dalsin (Chairman): Investment Banker; Portfolio Manager for Buy-out fund ; Former
Partner and Managing Director for Stanmore Capital Partners. University of Wisconsin BA
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Roger Greene (Vice Chairman): Investment Banker, General Counsel; served as General
Partner and General Counsel to several well-known investment funds, including Brazos, and
Lone Star. Harvard College AB, Harvard Law School JD
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Risk Mitigation
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 PHM does not take development risk on devices or technology.
 PHM does not have obsolescence risk on technology; if a better device comes
out, PHM will use it.
 PHM is not focused on acquisitions of companies that depend upon personal
relationships to keep customers. The patients rely upon a business process, not a
personal relationship, to receive monitoring and preventive care.
 PHM will focus on established and profitable private companies that have already
succeeded in their niche. PHM will not have to cut costs or improve operational
efficiencies to realize accretion to earnings. Rather, cross selling among disease
states is the key to improving profitability.
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Essentials
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Demand: Favorable US demographics and cost savings promotion through home care.
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Supply: Fragmented $250B market offering thousands of targets for acquisition.
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Experience: Management and Directors have 10+ years of healthcare M&A and private equity
industry knowledge.
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PHM Track Record: Since Sep. 2013, PHM acquired $40.5 million worth of revenue and $7.5 million
worth of EBITDA. Organic growth is $22 million in revenue and organic EBITDA growth of $3.9
million. (included in organic growth are costs are over $1m in annual overhead, building its M&A, IT,
and accounting capabilities)
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Catalyst: Effective roll-up strategy with several acquisitions completed and many to follow in the
near-term.
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Profitability and Pricing: FCF and EBITDA positive targets’ profile + addition of core competencies
at compelling acquisition price valuation.
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Contact & Info
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www.phmhometesting.com
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investorinfo@myphm.com
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Filings:
http://www.sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00
008298
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PHM Investor Presentation –May 2015

Investor Presentation

Transcription

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