Source - RNS
RNS Number : 7662I
Constellation Healthcare Tech, Inc
02 September 2016
 

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.  THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF Article 7 of EU Regulation 596/2014.

 

2 September 2016

 

Constellation Healthcare Technologies, Inc.

("Constellation Healthcare Technologies", "CHT", "Company" or the "Group")

 

Interim Results for the Six Months Ended 30th June 2016

 

 

Key Performance Indicators

 




Interim 2016

Interim 2015

FY- 2015

REVENUE


+78%

$57.0

*

$32.0

*

$76.7

*

Income from Operations


+92%

$14.5

25%

$7.6

24%

$19.2

25%

Profit Before Tax


+267%

$15.4

27%

$4.2

13%

$11.4

15%

EBITDA


+121%

$21.1

37%

$9.6

30%

$23.9

31%

RCM Revenue


+110%

$43.6

76%

$20.7

65%

$50.1

65%

RCM EBITDA


+139%

$16.8

29%

$7.0

22%

$16.1

21%

CASH FROM OPERATIONS

+160%

$10.9

19%

$4.2

13%

$15.5

20%

* % of revenue

All amounts USD$M

 

Highlights

 

·     Revenue Increased by 78% to $57.0M ($32.0M in 2015)

·     22% organic growth in the RCM business

·     Cash from Operations increased by 19% to $10.9M ($4.2M in 2015)

·     Debt facility paid down in full from internal cash generation

·     10,000+ US Physicians currently being serviced

·     RCM business revenue increased by 110% to $43.6M ($20.7M in 2015)

·     RCM EBITDA increased by 139% to $16.8M ($7.0M in 2015)

·     Successful acquisition and integration of MDRX Medical Billing

·     Further strengthening of the board with the appointment of Dr. Shawn Zimberg

 

Paul Parmar, Chief Executive of Constellation Healthcare Technologies, commented, "CHT has built a robust platform based on its efficient RCM processes and technologies. Coupled with a tried, tested and matured methodology of integrating and transitioning new clients and new business onto this highly scalable platform, this platform and experience allows CHT to rapid growth.

 

We are now starting to see the benefits of this investment as evidenced by the 78% increase in revenues with 22% of the revenue coming from organic growth and very strong cash generated from operations as evidenced by a 160% increase as compared to the same period last year. We strongly believe that our platform and our integration methodology along with the experience we have gained, uniquely places us to grow the business rapidly through organic growth and M&A.

 

 

 

 

At this point in time we feel very confident having delivered above  expectations for the first half of 2016, that we will meet the markets guidance on revenue as well as profits for the full year 2016.

 

 

 

 

 

 

Enquiries:

 

Constellation Healthcare Technologies

Paul Parmar, Chief Executive Officer /

Sotirios 'Sam' Zaharis, Chief Financial Officer

c/o Redleaf Communications

+44 (0)20 7382 4730

Redleaf Communications - PR adviser

Charlie Geller / Sam Modlin 

+44 (0)20 7382 4730

[email protected]

finnCap - Nominated Adviser and Joint Broker

Julian Blunt / Scott Mathieson - corporate finance

Simon Johnson - corporate broking

+44 (0)20 7220 0568

Stifel Nicholas Europe Limited - Joint Broker      

Jonathan Senior / Ben Maddison

+44 (0)20 7710 7600

 



 

 

Chief Executive's Review

 

2016 started with the closing of the MDRX transaction. The planning both around the acquisition itself and post-acquisition has paid off well. The integration of the business into the CHT platform has been seamless, both from the perspective of the customer and technology interface. The Company has also been focused on building a pipeline of future M&A opportunities to grow the Company and Shareholder value. When analysing a potential acquisition opportunity a lot of time goes into what happens post acquisition. This, I believe, is a key factor in the success of our M&A strategy. Importantly, CHT has never been reliant only on M&A for its growth and I am glad to report that the Company continues to win clients organically with 15 new clients won in H1 2016.

 

With a focus on optimising our capital structure, I was pleased to report to the market earlier in the year that we had paid off our debt facility in its entirety from internal cash generation. This would save the Company approximately $1.4M in interest expense on a yearly basis and the savings can be utilised in our M&A programme which yields a far greater return to stakeholders.

 

Earlier in the year we appointed Dr Shawn Zimberg to our Board of Directors. Dr. Zimberg brings with him a wealth of experience especially on the business side of the US healthcare industry and his insight has already been valuable to us when analysing M&A targets. We will be adding more U.S. based director's to complement our business later in the year.

 

The U.S. healthcare system is going through tremendous change at the moment. This provides a company like CHT significant opportunities, especially in an environment where there is significant cost pressure as well as new rules based changes. Both Physicians and their practices and hospitals need a partner like CHT to allow them to significantly cut costs and make their business more efficient, ultimately benefiting the patient.

 

 

Financial Performance

 

The CHT business continues to outperform with each one of our business segments showing robust growth in revenue and earnings over the course of the year. We anticipate that this will continue throughout the year. The business is very strong and whilst maintaining organic growth, it can easily be scaled with new acquisitions which will further cement our earnings for the coming years.

Our first half revenues increased by 78% from the same period last year and income from operations increased by 92% to $57M and our Income from Operations was up by 92% to $14.5M. CHT's EBITDA increased by a staggering 121% to $21.1M vs the same period in 2015. Our EBITDA margins have also increased by 7% to 37% based on the same period last year. Finally, cash from operations increased by 160% to $10.9.0M.

 

Strategy

 

CHT is focused on acquiring healthcare service businesses across the U.S. and improving revenue generation and profitability by utilizing CHT's proprietary technology. This is coupled with our efficient processing operation giving CHT a competitive edge. This acquisition strategy is complemented with the organic growth, which is a key driver going forward. CHT continues to increase the number of doctors using its platform and as of December 2015, it has over 10,000 independent practicing and hospital/contracting Physicians groups using its various service offerings.  We expect that number will continue to grow this year and next.

 

Outlook

 

The U.S. healthcare system remains complex and is likely to continue to evolve to cater for the ever changing demographic as well as the newly insured, while containing costs at each level. CHT is well placed to take advantage of this new paradigm. The next few years remain exciting for our business as we build a truly scaled healthcare technology platform.

 

Paul Parmar

Chief Executive Officer

Constellation Healthcare Technologies

 



 

Constellation Healthcare Technologies, Inc. and Subsidiaries

Consolidated Balance Sheet

 





June 30, 2016


June 30, 2015








 Current assets







Cash and cash equivalents


 $       21,901,330


 $            16,812,125



Accounts receivable,  net


          22,522,077


                 10,918,116



Inventory


               262,868


                    231,002



Prepaid expenses and other current assets


               621,898


                    873,974



Deferred tax asset


               252,000


                    252,000


 Total current assets


          45,560,173


               29,087,217








 Property and equipment, net


            9,195,254


                 9,713,553








 Other long-term assets







Intangible assets, excluding goodwill


          30,135,334


               26,158,611



Goodwill


          68,949,211


               17,643,127



Deferred tax asset


            4,610,011


                 3,816,630



Other assets, net


               291,334


                    205,136


 Total other long-term assets


       103,985,890


               47,823,504



Total assets


$      158,741,317


 $            86,624,274








 Current liabilities







Accounts payable


$          6,156,568


 $              4,163,003



Accrued expenses


            3,694,203


                 2,019,152



Income taxes payable


            5,872,756


                 1,907,646



Current portion of capital lease obligation


                   552


                     15,198



Current portion of long-term debt


           4,836,376


                 4,828,367



Current portion of contingent consideration


2,713,733


-



Payable to related party


800,000


-



Payable to Sellers


            1,346,881


                            -


 Total current liabilities


          25,421,069


               12,933,366








 Long-term liabilities







Long-term debt, net of current portion


            7,516,447


               12,137,754



Contingent consideration


           5,574,124


                        884,412  



Deferred rent liability


               637,427


                    493,282



Deferred tax liability


            7,541,322


                 4,086,029


 Total long-term liabilities


          21,269,320


               17,601,477








 Commitments and Contingencies












 Stockholders' equity (deficit)







Common stock, par value $0.0001; 150,000,000 shares authorized at June 30, 2016 and 111,226,912 shares authorized at June 30, 2015; 83,829,435 shares issued and outstanding at June 30, 2016 and 64,990,623 shares issued and outstanding at June 30, 2015.


                   8,384


                       6,500



Additional paid-in capital


          91,333,963


               49,163,636



Retained earnings


          20,730,019


                 6,919,295



Accumulated other comprehensive loss


           (126,426)


                            -  









 Total stockholders' equity


       111,945,940


               56,089,431


 Non-controlling interest in consolidated entity


               104,988


                            -  



Total liabilities and stockholders' equity


$      158,741,317


 $            86,624,274


Constellation Healthcare Technologies, Inc. and Subsidiaries

Consolidated Statements of Operations

 




Six months ended



Six months ended




June 30, 2016



June 30, 2015








 Net revenues

 $            56,990,373



 $              31,991,628








 Operating expenses:







 Salaries and benefits

              18,584,944



                 9,934,320



 Facility rent and related costs

                1,990,286



                  1,468,338



 Depreciation

                1,457,093



                  653,572



 Amortization

                5,128,200



                  1,338,551



 Professional and consulting fees

              8,494,722



                 6,085,660



 Insurance

                   370,386



                     199,399



 Provision for doubtful accounts

                   327,352



                     207,417



 Vaccines and medical supplies

                2,095,383



                  1,946,348



 Office and computer supplies

                   182,228



                     109,065



 Postage and courier

                978,342



                  922,127



 Other

                2,893,252



                  1,566,941


 Total operating expenses

              42,502,188



                 24,431,738

 Income from operations

              14,488,185



                 7,559,890








 Other income (expenses):







 Interest expense

               (994,590)



                 (1,375,865)



 Change in fair value of contingent consideration

              2,115,774



                              -  



 Other expense, net

               (247,805)



                      (2,014,967)


 Total other income (expenses), net

               873,379



                 (3,390,832)








 Income before provision for income taxes

              15,361,564



                  4,169,058


 Provision for income taxes

                6,351,330



                     1,816,874

 Net income

 $             9,010,234



 $                2,352,184

 Loss from consolidated entity attributable to non-controlling interest

                   (144,380)



                              -  

 Net Income attributable to the company

                9,154,614



                  2,352,184

 Other Comprehensive gain, net of tax






 Foreign currency translation adjustments

                   (46,907)



                              -  

 Other Comprehensive gain

                   (46,907)



 Comprehensive Income

 $             9,107,707



 $                2,352,184








 Income per common shares







 Basic







 Common Stock

 $                      0.11



 $                        0.04



Diluted







Common Stock

 $                      0.11



 $                        0.04








Weighted average number of shares for basic







 Common Stock

              83,330,704



                  57,066,420

Weighted average number of shares for Diluted







 Common Stock

              83,330,704



                  57,066,420

 

 



 

Constellation Healthcare Technologies, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

 





Six months ended



Six months ended





June 30, 2016



June 30, 2015

Cash Flow from operating activities:






Net Income

 $                 9,750,755



 $             2,352,184


Adjustments to reconcile net income to net cash provided by operating activities:







Provision for doubtful accounts

                       327,352



                  207,417



Depreciation

                    1,457,093



                  653,572



Amortization

                    5,128,200



               1,338,551



Deferred Tax

                       1,018,264



                  131,086



Change in fair value of contingent consideration

(2,115,774)



-



Amortization of deferred finance fees

                       170,605



                  164,947



Foreign currency exchange loss

(46,907)



-



Changes in operating assets and liabilities:








Accounts receivable

                  (8,372,253)



              (2,524,532)




Inventory

                       (13,435)



                  151,742




Prepaid expenses and other assets

                       (16,153)



                 (210,332)




Deferred offering cost




                             -




Other assets

                       (13,178)



                    28,376




Accounts payable, accrued expenses

                     1,371,055



                  181,018




Income tax payable

                    3,040,458



               1,685,788




Other liabilities

                               -  



                           -  

Net cash provided by operating activities

                    10,945,561



               4,159,816









Cash flows from investing activities






Cash outlay for property and equipment

                     (273,132)



              (6,196,762)


Development of software tool



              (2,409,584)


Cash Paid for Acquisition

                 (31,800,000)



            (12,800,000)

Net cash used in investing activities

                 (32,073,132)



            (21,406,346)









Cash flows from financing activities






Payments of capital lease obligations

                         (1,620)



                   (13,909)


Payments on long term loan

                  (2,431,465)



              (3,739,395)


Payments on acquisition note payable

                    (36,805)



                             -


Loan from related party

800,000   



               -


Contribution from parent

-



1,000,000


Proceeds from sale of stock, net of related fees

                  42,182,412



              18,675,622

Net cash provided by financing activities

                  40,512,522



              15,922,318









Net increase/(decrease) in cash and cash equivalents

                  19,384,951



              (1,324,212)









Cash and cash equivalents, beginning of period

                    2,516,379



              18,136,336

Cash and cash equivalents, end of period

 $               21,901,330



 $           16,812,125

















Supplemental Cash Flow Information






Cash Paid for interest

 $                    823,985



 $             1,210,918


Cash Paid for Income Taxes

 $                 2,240,354



 $             1,050,000












CONSOLIDATED STATEMENT OF STOCKHOLDER'S EQUITY

SIX MONTHS ENDED JUNE 30, 2016

 

 



Common Stock













Shares


Amount


Paid-in Capital


Retained Earnings


Accumulated other comprehensive loss


Non-controlling interest in consolidated entity


Total

 Balances, January 1, 2015


 

    55,615,056

 $

                5,562

 $

        29,488,952

 $

              4,567,111

 $

                        -  

 $

                        -  

 $

         34,061,625

 Proceeds from sale of stock, net of related fees


      9,375,567


    938


18,674,684


               -


                        -  


                        -  


 18,675,622

 Contribution from parent


                -  


             -


  1,000,000


                -


                        -  


                        -  


   1,000,000

 Net income for the period ended June 30, 2015


                -  


             -


             -  


  2,352,184


                        -  


                        -  


   2,352,184

 Balances, June 30, 2015


64,990,623

$

    6,500

49,163,637

$

  6,919,295

$

-  

$

                        -  

$

56,089,431
















 Balances, January 1, 2016


    64,990,623

$

                6,500

$

        49,163,637

$

            11,575,405

$

                (79,519)

$

                249,368

$

         60,915,391

 Proceeds from sale of stock, net of related fees


    18,814,962


     1,881


42,120,329


                -


                        -  


                        -  


 42,122,210

Shares issued towards NEMS contingent consideration


23,850


3


49,997


-


-  


-  


 

50,000

 Other Comprehensive Loss


                -  


            -


              -  


               -


                  (46,907)


                        -  


      (46,907)

 Non-controlling interest in consolidated entity


                -  


             -


              -  


                -


                        -  


                  (144,380)


    (144,380)

 Net income for the period ended June 30, 2016


                -  


             -


             -  


 9,154,614


                        -  


-


   9,154,614

 Balances, June 30, 2016


    83,829,435

 $

                8,384

 $

        91,333,963

 $

            20,730,019

 $

                  (126,426)

 $

                104,988

 $

        112,050,929


 

1.       Segment reporting information

 


Six months ended           June 30, 2016


Six months ended           June 30, 2015

Revenue Cycle Management




Revenues

 $                    43,552,541


 $                   20,738,066

Depreciation and amortization

                         5,506,518


                       1,973,763

Operating income before depreciation and amortization

                       16,778,130


                       7,030,222





GP & Corporate




Revenues

                         4,417,982


                       2,445,129

Depreciation and amortization

                         1,077,032


                          15,299

Operating income before depreciation and amortization

                         3,473,914


                       1,895,069





Practice Management:




Revenues

                         9,019,850


                       8,808,433

Depreciation and amortization

                               1,743


                             3,061

Operating income before depreciation and amortization

                           821,434


                          626,723

 

 

Corporate expenses that are incurred for the Company's general administration have not been apportioned to other business segments. These costs are grouped under General Purchasing and Corporate segment  

 

The operating segments are identified and reported on the basis of internal reports about components of the group that are regularly reviewed by the Management Board to assess the performance of the segments.

 

The group's internal management reporting is structured primarily on the basis of the market segments in which the 3 operating segments - Revenue Cycle Management, Practice Management and General Purchasing (GP) & Corporate - operate.

 

Management assesses the performance of segments based on the measures of revenue and earnings before depreciation, interest and taxes (EBITDA), whereby the EBITDA measure includes allocations of expenses from supporting functions within the group.

 

Company runs shared services for each of its three segments.  All resources, who form part of general management & administration, HR, finance and accounting, IT, call center are part of shared services that are used by one or more segments and have been included in the reallocation.

 

Such allocations have been determined by the best management estimates based on number of resources served, volume of transactions processed and or relevant measures that reflect the level of benefits of these functions to each of the operating segments. As the 3 operating segments serve only external customers, there is no inter-segment revenue. Interest income and expenses and tax are not allocated to the segments. There is no measure of segment (non-current) assets and/or liabilities provided to the Management Board.

.



 

 

Reconciliation of reportable segment revenues and profit to the consolidated totals

 


Six months ended           June 30, 2016


Six months ended           June 30, 2015

Total Revenues for reportable segments

 $                    56,990,373


 $                   31,991,628

Total Consolidated revenues

                       56,990,373


                     31,991,628





EBITDA for reportable segments

 $                    21,073,478


 $                    9,552,013

Depreciation & amortization

                       (6,585,293)


                      (1,992,123)

Interest expense

                          (994,590)


                      (1,375,865)

Change in fair value of contingent consideration

2,115,774



Other income (expense), net

                       (247,805)


                      (2,014,967)

Provision for income taxes

                            (5,610,809)


                      (1,816,874)

 Net income

 $                      9,750,755


 $                    2,352,184

 

2.       Intangible Assets, excluding Goodwill, net

 

Intangible assets, excluding goodwill, net consist of the following at June 30, 2016 and 2015:

 


June 30, 2016



June 30, 2015

Software tool - work in progress

 $               17,083,401



 $                 14,608,919

Client relationships

                 11,862,138



                    11,673,787

Management service agreements

                   2,000,000



                     2,000,000

Group Purchasing agreements

                      600,000



                        600,000

Trade Name

                   3,349,536



                     1,450,869

Non-Compete

                   6,598,047



                          15,000


                 41,493,122



                    30,348,575

Less accumulated amortization

                (11,357,788)



                    (4,189,964)

Net amount

 $            30,135,334



 $              26,158,611

 

Estimated future annual amortization of our identifiable intangible assets is as follows:

 

Period ending:

Six months ended December 31, 2016

 $         5,128,206

Year ended December 31, 2017

          10,256,411

Year ended December 31, 2018

            9,242,392

Year ended December 31, 2019

            2,754,694

Year ended December 31, 2020

            1,356,958

Thereafter

            1,396,673

Total

 $          30,135,334

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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