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TICKERS: PHGI; PHGRF; 6PH

Small-Cap Firm Announces Major Medical Technology Acquisition
Contributed Opinion

Source:

Ron Struthers Ron Struthers of Struthers Resource Stock Report profiles an innovative medical firm in Canada that just announced the acquisition of a medical technology firm, a move that will expand its reach across Canada.

Canada's healthcare system is the envy of many places around the world but it has some serious issues. Free healthcare is great but in many cases you have to be a patient who is very patient. It is very difficult to find a family doctor if you do not have one and if you do, waiting times for appointments is normally lengthy. Many people end up going to emergency rooms or clinics if they need same day care and wait day to all day in most cases. Simply put, our healthcare system is severely overburdened.

When an associate of mine told me about a company that had a solution for this, I became very interested both personally and as an investor. I was planning to feature the company in January, but with news out today, you need to be aware now.

Premier Health Group Inc. (PHGI:CSE; PHGRF:OTCQB; 6PH:FSE), Recent Price $0.95

Shares outstanding 61.1 million, Fully diluted 65.1 million.

Innovative healthcare approaches that combine human skill based expertise with emerging technologies. Premier Health's subsidiary, HealthVue, is focused on developing proprietary technology to deliver quality healthcare through the combination of connected primary care clinics with telemedicine and artificial intelligence (AI). HealthVue currently has an ecosystem of over 100,000 active patients and plans to rapidly increase that number both domestically and internationally.

The market for this enormous, projected at $10 trillion by Accenture.

The management team has deep clinical, financial and operational expertise and a passion for improving healthcare for all patients. The company is headed up by its CEO and COO:

Dr. Essam Hamza, MD CEO, completed his MD and Family Practice degree at the University of Alberta. He founded Premier Health in 2005 and has since grown the business to include four interconnected high-tech clinics serving over 100,000 patients.

Kanchan Thindal, MBA COO, left a position at Scotiabank's Head Office to join the Premier Health team. She has previously worked with startups in the healthcare and technology spaces. Kanchan holds an MBA from the Rotman School of Management at the University of Toronto.

This slide from Premier's presentation gives a great overview of its HealthVue solution.

Patient charts are available online so any clinic could access your most recent information. Patients would have their own primary care doctor but can get care from any HealthVue clinic. There is also 24/7 online booking. PHGI started in British Columbia with the acquisition of HealthVue Ventures in August of this year. Currently it has 4 clinics, 22 Health Care professionals and about 125,000 patients.

On average each appointment is billed $50 and in B.C. this is covered under the Canadian health system. Since the acquisition there is only one quarter of revenue under Premier's belt and the annual run rate is currently about $1.7 million in revenue. This is poised to rise dramatically.

In November, PHGI announced plans to expand into the Cannabis space. Its platform is a perfect fit here.

Last week, as part of its growth strategy to cover the major verticals associated with primary care, Premier Health Group Inc. has signed a binding letter of intent (LOI) to acquire a pharmacy based in Vancouver, B.C. The company expects the acquisition to close in or about Q1 2019.

"We are excited for this opportunity to acquire our first pharmacy, and thereafter being able to prepare and deliver prescription and non-prescription pharmaceuticals and other health products to patients. In doing so, the pharmacist will play an integral role in our team-based patient centric model," said Dr. Essam Hamza, chief executive officer of Premier. "Premier has engaged with patients, pharmacies and technology providers to not only introduce pharmacy services as a component of our comprehensive telemedicine app, but also to explore and implement efficiencies in fill and fulfillment."

Under the terms of the LOI, the total consideration payable by Premier is $1.35 million, which will be paid as follows: (i) $200,000 deposit paid on signing of the LOI, (ii) $350,000 due on signing of a definitive agreement, (iii) $650,000 due on closing, (iii) $150,000 due six months after closing.

Pharmacy prescriptions will become another revenue source for PHGI and I can tell you that pharmacies are a profitable business.

What I call the granddaddy announcement was made this morning. PHGI announced that as a part of its technology platform, it has signed an agreement to acquire Cloud Practice. Premier shall acquire all of the issued and outstanding securities of Cloud Practice from their shareholders.

"We are ecstatic at the opportunity to build on our patient centric technology platform through the integration of Cloud Practice's proprietary software. They have a strong team of developers whom are just as enthusiastic as our team about the future of healthcare. This partnership will facilitate our vision of integrating Telemedicine, online booking and other premium services with our EMR. Furthermore, Cloud Practice already has a tremendous standalone and growing business serving thousands of clinicians and millions of patients," said Dr. Hamza. "The collective ecosystem of over 3,000,000 patients creates an opportunity to become a key player in the telehealth space in Canada," added Dr. Hamza.

HIGHLIGHTS

  • Cloud Practice is an EBITA1 positive company offering cloud-based SAAS (software as a service) electronic medical records software applications for physicians in British Columbia, Alberta, Ontario and Saskatchewan
  • Products include: Juno EMR, a cloud based EMR solution; ClinicAid, a medical billing software; and MyHealthAccess, an online patient portal
  • Juno EMR system is currently used by 287 clinics, over 3,000 licensed practitioners, 1,500 staff and 2,870,000 registered patients
  • ClinicAid processes upwards of $30,000,000 in payments to over 3000 health providers on a monthly basis
  • Cloud Practice's founders and entire team, comprised of several software developers and sales staff led by Jordan Visco, to join Premier's technology team on closing

We simply cannot extrapolate potential revenues because at this time PHGI's HealthVue System can only be billed through Canadian Health Insurance in B.C. There are pilot projects in other Canadian provinces and it is coming, but the exact timeline is unknown.

However, significant revenue from Cloud Practive will be accredited to PHGI and this positions PGHI extremely well in three other Canadian provinces and importantly the largest one: Ontario.

In consideration for the purchase of all of the issued and outstanding Cloud Practice securities, Premier shall pay to the Cloud Practice shareholders (pro-rata) aggregate consideration of up to $5.0 million as follows: (i) $500,000 in cash upon execution of the agreement, (ii) $500,000 in cash payable on closing, (iii) $500,000 in cash payable 90 days following closing, (iv) $500,000 in cash payable within six months subject to the completion of a milestone, and (v) an aggregate of $3.0 million in commons shares of Premier at a deemed price per share of $0.76.

This acquisition is going to vault PHGI into a major player in Canada's healthcare. The company also has plans to expand internationally.

Last financials at September 30, reveal $2.1 million in cash so the company is in good shape, but I expect it will boost the treasury sometime in 2019.

This is a new company with not a lot of trading history. It made its first acquisition and really just got started this past August, but the uptrend in the stock is quite obvious. There has been two break-away gaps and consolidation and I would not be surprised if we see another break-away gap with this news. That said, nobody knows for sure and I am hoping with the XMAS holiday season approaching, that this will not get too much notice and we can buy around $1.00.

The stock is also trading good volume on the OTC, but the listing is just 6 weeks old.

Ron Struthers founded Struthers' Resource Stock Report 23 years ago. The report covers senior and junior companies with ample trading liquidity. He started his Millennium Index of dividend stocks in 2003 - $1,000 invested then was worth over $4,000 end of 2014 and the index returned 26.8% in 2016. He retired from IBM after 30 years in customer service, systems and business analyst, also developing his own charting software. He has expertise in junior start-ups and was a co-founder of Paramount Gold and Silver.

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Disclosure:
1) Ron Struthers: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company currently has a financial relationship with the following companies mentioned in this article: None. Additional disclosures below. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Premier Health Group Inc. Please click here for more information.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Premier Health Group Inc., a company mentioned in this article.

Charts and images provided by the author.

Struther's Resource Stock Report: All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author's control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Because of the ever-changing nature of information & statistics the author/publisher strongly encourages the reader to communicate directly with the company and/or with their personal investment adviser to obtain up to date information. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial adviser & is not acting as such in this publication.

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