Certive Solutions Inc. (CSE: CBP) Announces Closing the Purchase of Titan Health Management Solutions Inc.
04 July 2014 - 3:09AM
Marketwired Canada
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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Certive Solutions Inc.
Brian Cameron
Chief Financial Officer
480-922-5327
bcameron@certive.com
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