Certive Solutions Inc. (CSE: CBP) Announces Acquisition of Titan
Health Management Solutions Inc.
SCOTTSDALE, ARIZONA--(Marketwired - Mar 31, 2014) - The Board of
Directors of Certive Solutions Inc. (the "Company or Certive")
(CSE:CBP) is pleased to announce the signing of a letter of intent
to acquire substantially all of the assets of Titan Health
Management Solutions Inc. ("Titan") of Tucson, Arizona.
Titan specializes in partnering with hospitals to enhance their
revenue cycle management. Titan provides a wide range of services,
including zero balance audit and recovery, denial management, early
out / insurance accounts receivable collections, third party
liability collections, and billing and collection support services.
Titan has developed expertise and unique processes that enhance
revenue and assist hospital financial services staff, recovering
over USD$10,000,000 annually for its hospital partners. Titan has
established credibility as a valuable resource to hospitals and
works diligently to identify and recover previously unidentified
sources of revenue without impacting the hospital's already
overburdened administrative staff. With over 40 employees engaged
in the revenue cycle process at Titan's Arizona offices, and over
25 hospitals currently under contract, Titan is a valuable resource
to its hospital partners. Titan was proud to celebrate its 12th
year of operations in February.
On March 11, 2014 Certive announced a strategic relationship
with Titan and on March 20, 2014, Certive and Titan jointly
announced the launch of a claims recovery collaboration for a group
of medical practitioners located in Phoenix, Arizona. During this
period of time, it became apparent that Titan and Certive could
mutually benefit by combining technology, business development,
financing, and domain expertise.
The combination brings to Certive a legacy business with
quantified revenue and customers, established credibility in the
U.S. hospital revenue lifecycle recovery market, as well as deep
connectivity with senior executives and decision makers presently
employed by U.S. hospitals. Titan presently generates approximately
USD$2,000,000 in gross revenues annually and is on track to achieve
an annualized revenue run rate of approximately USD$6,000,000 by
December 31, 2014.
For Titan, the combination represents access to technologies
that will provide immediate and long-term scale to its business and
the capital necessary to effectively expand sales and marketing
efforts that drive significant growth.
Certive and Titan will enter into a definitive acquisition
agreement whereby the consideration for the acquisition of the
operating assets and intellectual properties of Titan (Titan
Assets) will be paid for by cash, a convertible note, common shares
by way of a bonus and preferred shares that are convertible into
common shares on the occurrence of certain stated events. The
consideration contemplated in the definitive acquisition agreement
will include a convertible promissory note setting out the terms
upon which conversion into common shares of Certive may occur and
the deemed exercise timing and price. The definitive acquisition
agreement will also include the timing for payment of the cash
portion and other consideration for the transaction. The note will
define default provisions with respect to payment terms.
Certive anticipates the acquisition to close on or about June
30, 2014.
The transaction is proposed on the following basis:
- The agreed purchase price for 100% of the scheduled operating
assets and intellectual properties of Titan shall be paid in cash,
bonus shares, convertible notes and preferred shares secured by the
acquired assets and evidenced by a security agreement and a UCC-1
filing. The purchase price shall be payable in cash in the amount
of USD$237,000, a convertible note in the amount of USD$1,800,000,
a 20% bonus of 1,000,000 common shares on closing, and 1,250,000
preferred shares which will be convertible into 1,250,000 common
shares at a deemed price of $0.35 per share.
- Prior to December 31, 2014 the note may be converted at
Certive's discretion, a per the stated terms and conditions, into
2,250,000 common shares of Certive at a deemed conversion price of
$0.80 per share, subject to the conversion condition noted below in
this paragraph. The note may be converted on or after December 31,
2014 at Titan's discretion, however interest accruals will cease on
that date. The note will bear interest at the rate of 5% per annum,
which interest can be paid in cash or shares on a quarterly basis
at Titan's sole option. If interest is paid in shares, the shares
will be issued at prevailing market prices from time to time
subject to regulatory approval. In the event that the market price
for Certive's shares is less than CDN$0.80 on the date at which
conversion is elected, the conversion price shall be that
prevailing market price at the close of trading on the day
immediately preceding notice of conversion or a minimum of CDN$.40
per share. In the event that the prevailing market price for
Certive's shares in greater than the CDN$0.80 price then the
conversion price shall be CDN$0.80 per share.
- That part of the acquisition price to be paid by way of the
bonus shares will be issued based upon a factor of 20% of he face
value of the convertible note, converted to shares at a deemed
price of $0.35 per share for rounded total of approximately
1,000,000 shares, subject to regulatory approval.
- That part of the acquisition price to be paid in preferred
shares, which are convertible into common shares, shall be
convertible based upon the following:
- For every USD$4.00 in cumulative Capital Cost Recovery revenue
generated by Titan Assets, Titan will be entitled to convert 1
preferred share of Certive to 1 common share of Certive. Titan
Assets shall have three years to achieve these milestone set out in
this clause.
- For incremental increases in monthly revenues exceeding a base
monthly revenue of USD$160,000 (USD$2,000,000 annually) and
totalling USD$125,000 per month incrementally for a period of three
months or more, Titan shall be eligible to convert 625,000
preferred shares to 625,000 common shares of Certive. Titan shall
have three years to achieve the milestone set out in this
clause.
- Concurrent with closing Titan will be entitled to nominate one
member to the Board of Directors.
- As a condition of the acquisition, employment agreements or
consulting contracts will be negotiated on an acceptable basis to
both parties.
The acquisition is conditional upon execution of a definitive
acquisition agreement, form of convertible promissory note,
issuance of common shares contemplated by the bonus, and approval
of the issuance of all preferred shares subject to the Earnings
Performance Test.
The Company proposes to pay a finder's fee in connection with
the acquisition, in accordance with governing regulatory
policies.
The transaction is subject to prior regulatory approval. Insofar
as the transaction does not represent a change of control or a
change of business, shareholder approval is not required.
As part of this acquisition, Certive welcomes the addition of
two key Titan executives to the Certive team:
Thomas J. Hoehner, JD MBA, Titan Chief Executive
Officer, brings a wealth of knowledge and over 18 years
of experience in the health care profession. He led the turn-around
in operations for Health Net of Arizona, significantly
improving all customer service metrics and assisting with the
financial turnaround of the plan. He also served at Aetna
U.S. Healthcare, where he served as Chief of Staff for Aetna's
Western Division. Prior to this position he served as a Director of
Operations where he was responsible for 1,400 employees involving
data entry, claims, billing and eligibility, customer service,
finance, and internal consulting. Thomas has also served
in financial positions at Prudential Healthcare, Daniel
Freeman Medical Center, and Centinella Hospital Medical Center in
the Los Angeles area. Thomas has a Juris Doctorate degree from the
University of Florida College of Law, and has his MBA and
Bachelor's degrees from Michigan State University. Thomas has 20
published articles in various medical journals, is a member of the
International Law Society at the University of Florida, and holds
membership in the California Bar, the American Bar Association, and
the John Marshal Bar Association.
Todd E. Hisey, MHA, Titan Chief Operating Officer, has
over 15 years of management experience in a diverse array of health
care organizations including health plans, medical groups, and
physician offices. Prior to founding Titan Health
Management Solutions, Inc., he served as the Director of Operations
Services for Health Net of Arizona, where he was responsible for
Medical Claims Review, Claims Recovery, Audit/Quality, Operational
Reporting, Policy and Development, Training, and Project
Management. He has also held operational, strategic planning, and
financial positions at Aetna US Healthcare, HealthCare
Partners Medical Group, and PacifiCare Health Systems. A
consistent focus throughout his career has been on controlling and
managing health care costs, including critical review of
Provider/Health Plan contract reimbursement language, and
maximizing the nuances of claim coding standards to minimize
medical expenditures. Todd holds a Masters in Health Administration
from the University of Southern California and a Bachelors of
Science degree from UCLA.
Titan Health CEO, Thomas Hoehner, stated that the transaction
represents the opportunity we have been looking for, in which to
combine strategically with an aggressive, well-funded, cloud based
technology organization, thus injecting the technology and capital
necessary to drive significant growth in revenues as we add a new
dimension in scalability to our existing business.
Van Potter, CEO of Certive, commented that "Titan brings to
Certive connectivity within the Revenue Life Cycle Management
market, customer access, established relationships, and the
infrastructure and all regulatory compliance to enable us to
rapidly scale our healthcare cloud based solutions. We will
leverage this attractive acquisition to seek other opportunities
for customer growth over the following months."
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 Canadian Securities Exchange) accepts responsibility
for the adequacy or accuracy of this release.
Certive Solutions Inc.Brian CameronChief Financial
Officer480-922-5327bcameron@certive.com
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