|By Marketwired .||
|July 3, 2014 01:10 PM EDT||
SCOTTSDALE, ARIZONA -- (Marketwired) -- 07/03/14 -- The Board of Directors of Certive Solutions Inc. (CSE:CBP) (the "Company") is pleased to announce that effective July 3, 2014, the Company has successfully completed the purchase of the assets comprising, among other things, material contracts, intellectual property, management contracts, and employees of Titan Health Management Solutions Inc. ("Titan"), with offices in Scottsdale and Tucson, Arizona.
The terms of the acquisition are summarized as follows:
The purchase price for the assets is USD$2,711,000 and will be paid in two cash installments, USD$100,000 due upon signing and USD$208,000 due on September 1, 2014; a secured convertible promissory note for USD$1,800,000; the issuance of 1,000,000 common shares at $0.30 per share; and the issuance of 1,250,000 preferred shares at a deemed price of $0.30 per share.
The Company contemplates the payment of a finder's fee for the introduction of Titan to the Company. The finder's fee has been disclosed to Titan and will be paid in shares of the Company and in strict compliance with the rules governing the payment of finder's fees as set out by CSE policy guidelines.
The Purchase Agreement provides for a transitional period commencing July 3, 2014 and concluding on September 1, 2014, at which time the remaining cash portion of the purchase price will be paid, the Titan employees will become the Company's employees, the contracts between Titan and their customers will transfer to the Company with the customer's approval, and all other operationally driven components of the transaction will be effected. During the transitional period the Company will operate the business pursuant to a Transitional Services Agreement which defines the collaborative role of each entity as the transition is completed. The Company will also enter into employment agreements with Mr. Thomas Hoehner and Mr. Todd Hisey, principals of Titan, on terms and conditions to be negotiated and mutually agreed upon between the Company and each of Mr. Hoehner and Mr. Hisey. As a subsequent condition post-Closing, Titan and the Company agree to finalize the terms of such employment agreements on or before September 1, 2014. The majority of the Company's 50 employees are located at the Company's Tucson campus.
The Company is a cloud provider of claims audit and recovery solutions in the revenue cycle management segment of the U.S. health care market. The Company's solutions combine deep domain expertise, industry connectivity and cloud technologies that drive efficiency, scalability and insight into the claims audit and recovery process generating significant revenues in a low-friction revenue sharing business model. The Company's current focus is on U.S. hospitals. The Company's solutions utilize workflow technologies and analytics that increase both the speed and amount of revenue recovery, and enable scaling of existing collection efforts.
The Company's cloud business process management software solutions are based on a combination of licensed and proprietary platforms that utilize a combination of workflow technologies, analytics, and business intelligence processes. The Company has assembled a proven, highly credentialed executive team with targeted experience in business process management software.
U.S. hospitals write off between 3% and 17% of their annual revenues to denied claims from coding errors, lack of pre-approvals, lapsed coverage and timed out claims as well as incorrect classification codes. More than 50% of these claims are written off by hospitals without any intervention. Denied claims are forecast to grow by over 400% in the next four years driven by increasing complexities of payer reimbursement methodologies in both public and private insurance systems, adding to already increasing financial pressure hospitals experience from several factors including:
-- Decreasing reimbursement rates from both government and commercial payers. -- An aging population that reduces their ability to shift costs between younger commercially insured patients and older government insured patients, and the impact from the Patient Protection and Affordable Care Act (PPACA), "Obamacare", that decreases Medicare Advantage, lowering the threshold for Medicaid eligibility, and creating dual eligibility membership in Medicare and Medicaid. -- Diseases are classified by the World Health Organization as International Classification of Diseases (ICD) codes. The U.S. market will be moving from ICD-9 to ICD-10 codes in 2015 which will increase the number of billing codes by a factor of 6, significantly increasing the complexities of claims reimbursements. -- Vast inefficiencies of the U.S. medical systems.
The total addressable denied claims U.S. market size from hospitals is estimated to be USD$50 billion annually. Historical data shows that about one in every two denied claims is overturned, however recent trends indicate that approximately 67% of all denials are appealable, a result closer to two in every three claims.
In the past several years, gross charges denied by payers have grown to over 10% of the billing value of all claims submitted and is trending higher.
With the acquisition of Titan, the Company expands its capabilities as a fully credentialed supplier of claims audit and recovery solutions to U.S. hospitals. There are innumerable sources of "hidden" cash in virtually every hospital or system that can be captured through the claims audit and recovery process of referring difficult denials from difficult payers to skilled and trusted external providers who have experience in denial management process. Over the past 12 years Titan has provided these services to hospitals delivering improved claims recoveries and better positioning hospitals to negotiate with payers.
Van Potter, CEO of the Company, stated that "the completion of the Titan acquisition will pave the way for executing on the Company's long-term objectives which include identifying new opportunities to provide an expanded range of services to our existing customers enabled by our proprietary technology and to move aggressively on further acquisitions in this market."
Thomas Hoehner, CEO of Titan, commented "with access to both capital and technology resources, the consolidated group will now be positioned to rapidly expand both core services to existing customers and to broaden the Company's scope and depth in all categories of denied claim recovery."
The Company's offering of convertible promissory notes announced on June 24, 2014 continues to be sold and will be utilized to fund working capital needs for the consolidated entity.
ON BEHALF OF THE BOARD OF DIRECTORS OF CERTIVE SOLUTIONS INC.
Van Potter, President, CEO, Director
About Certive Solutions Inc.
Certive Solutions Inc. (Scottsdale, Arizona) provides cloud revenue cycle management solutions to U.S. hospitals, delivered collaboratively, utilizing proprietary workflow document management and analytics technologies tailored to healthcare business processes. Certive is currently focused on the denied claim segment of revenue cycle management. Certive's solutions enhance the efficiency and effectiveness of denied claims recovery in a revenue sharing relationship that improves hospital net operating results.
The forward-looking information contained in this press release is made as of the date of this press release and except as required by applicable law, the company does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. By its very nature, such forward-looking information requires the company to make assumptions that may not materialize or that may not be accurate. This forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information. Neither the company nor the Canadian Securities Exchange accepts responsibility for the adequacy or accuracy of this release.
Certive Solutions Inc.
Chief Financial Officer
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