|By Marketwired .||
|December 1, 2016 07:30 AM EST|
SCOTTSDALE, ARIZONA -- (Marketwired) -- 12/01/16 -- Certive Solutions Inc. (OTCQB:CTVEF)(CSE:CBP) and its wholly-owned subsidiary Certive Technologies Arizona Inc. - (collectively "Certive" or the "Company") wishes to provided a detailed corporate update on the status of both its core business and the previously disclosed acquisition.
For the quarter ended August 31, 2016, the Company recorded gross revenues of US$1,516,300, of which US$1,146,383 was recorded by our Titan Division, representing our Zero Balance service offering. The Titan Division had an exceptional quarter recording a gross profit of US$657,378 or 57.3% of gross divisional revenues and a net operating divisional profit of US$399,049 or 34.8% of gross divisional revenues. On a consolidated basis, Certive recorded an average 38% gross margin across all divisions compared to a 24% gross margin for the preceding quarter ended May 31, 2016. We recorded an operating loss of US$430,034 for the three months then ended or an average of US$143,344 per month, represented wholly by the operating costs of the parent company.
Resulting from a significant US$3,000,000 debt conversion secured from both our vendors and investors subsequent to the quarter end, our working capital deficiency was completely eliminated and therefore at that date we had a positive working capital position in excess of US$150,000.
The Company continues to expand its current core business development activities, while finalizing the timing of the acquisition as described in various press releases over the past several months.
With respect to our expanding business activities the following significant developments are of importance;
a. Our Titan Division continues to increase sales volumes and divisional profitability month over month. Our Zero Balance audit and collections service customer base has expanded and we continue to develop profitable relationships with medium sized hospital customers, thus reducing our reliance on any one large hospital system. b. Our Omega Division recorded revenues in the month of November in excess of US$200,000 of which US$177,000 was collected in less than 25 days. This is significant insofar as our accounts receivable aging is now less than 30 days enabling a better utilization of cash flow. Equally as important, we have commenced providing our Lost Charge Recovery services to a major hospital system in the northwestern United States. There are 9 hospitals in this system which represents an estimated US$21 million in potential revenues to us over the following three years. Concurrently, we have commenced a sales plan with small critical access hospitals located throughout the United States and in particular those located near outdoor recreational facilities. We are in the final stages of securing contracts with 10 such locations that will add an additional estimated US$450,000 per month in gross revenue in addition to that which is currently being generated. The Omega Division operates profitably with revenues in excess of US$150,000 per month, and requires no additional staffing or occupancy costs to support revenues up to US$650,000 per month. The result is that any revenues in excess of US$150,000 accrete directly to EBITDA, divisionally. c. Given the current status of our two divisions, we are of the opinion that Certive on a consolidated basis, and notwithstanding our intended acquisition referred to above, will be operating at above breakeven on a consolidated basis in the first calendar quarter of 2017. d. We are also expanding our Zero Balance business into small markets where we have established connectivity by way of our Lost Charge Recovery Business.
With respect to the status of our previously disclosed acquisition, we report as follows;
a. The terms of the acquisition remain consistent with previously disclosed terms and are reiterated as US$12 million in cash on closing and US$8 million in notes being taken by the vendor. b. We have secured a conditional US$7 million commercial financing commitment, subject to final documents, from a local bank in Arizona. The terms generally are US$7 million, interest at 4.5%, for a term of three years. The funds will be used, in part, to complete on the acquisition purchase price. c. We have secured commitments for a total of US$5 million in bridge financing that will also be utilized to complete the transaction. d. In the course of securing the commercial bank facility an independent valuation commissioned by the lender of the consolidated enterprise confirmed a post acquisition enterprise value of US$47 million or US$0.69 per share.
Additional information will be provided as it becomes available.
About Certive Solutions Inc.
Certive Solutions Inc. (Scottsdale, Arizona) provides revenue cycle management solutions to the U.S. healthcare market. Certive's claim audit and recovery services, billing services, and software solutions help providers work with payers to efficiently manage the reimbursement process and improve financial performance. Certive's highly skilled and experienced management team, combined with proprietary workflow and analytics, audit and identify, and bill and collect, underpayments in accordance with contractual obligations between the public or commercial insurance carrier and the designated provider. The healthcare market is changing. Certive works with clients to provide efficient and effective solutions aligned with reform initiatives to improve healthcare and reduce costs.
FORWARD-LOOKING AND OTHER STATEMENTS
This press release contains forward-looking statements. These statements relate to future events or future performance and reflect our expectations and assumptions regarding our growth, results of operations, performance and business prospects and opportunities. Such forward-looking statements reflect our current beliefs and are based on information currently available to us. In some cases, forward-looking statements can be identified by terminology such as "may", "would", "could", "will", "should", "expect", "plan", "intend", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other similar expressions concerning matters that are not historical facts.
A number of factors could cause actual events, performance or results, including those in respect of the foregoing items, to differ materially from the events, performance and results discussed in the forward looking statements.
Factors that could cause actual events, performance or results to differ materially from those set forth in the forward-looking statements include, but are not limited to:
- the effect of continuing operating losses on our ability to obtain, on satisfactory terms, or at all, the capital required to remain a going concern;
- the ability to obtain sufficient and suitable financing to support operations, development and commercialization of our services;
- the risks associated with the development of our technology;
- the risks associated with the increase in operating costs from additional development costs and increased staff;
- the timing and nature of feedback from customers; and
- our ability to successfully compete in our targeted markets.
Although the forward-looking statements contained in this press release are based on what we consider to be reasonable assumptions based on information currently available to us, there can be no assurance that actual events, performance or results will be consistent with these forward-looking statements, and our assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this press release. Forward-looking statements made in this press release are made as of the date of the original document and have not been updated by us except as expressly provided for in this press release. As required by securities legislation applicable to reporting issuers, it is our policy to update, from time to time, forward-looking information in our periodic management discussions and analyses and provide updates on our activities to the public through the filing and dissemination of news releases and material change reports.
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