It may not be obvious, but something big is in play this morning in shares of Progressive Care Inc. (OTCMKTS:RXMD). The stock has been heating up in recent action, apparently running ahead of the company’s announcement that it has improved the terms of its most important strategic process in play in 2019.
Breaking it Down
The new deal represents significantly improved terms by which the company will acquire a hugely important asset, and will save shareholders over a million bucks in the process.
As noted in the release, on November 8, 2019, the company entered into an amended version of its Stock Purchase Agreement with the Seller, pursuant to which the company has agreed to modified terms and an adjusted purchase price of $1,900,000 for 100% of the issued and outstanding shares of common stock of the Seller. That’s about $1.1 million less than the original agreement – a drop of about 36% in total acquisition cost.
Another plus in this renegotiation is that the company has already put $2.3 million into escrow to handle the transaction, a million of which has already been transferred to the seller.
Now, because the total price tag has been stepped down, the final $900K payment is going to leave about $400K as a remaining pile of cash. According to the release, the company will direct these funds to be returned to Iliad Research and Trading, thus reducing the balance on existing and outstanding liabilities with Iliad.
And, it gets even better: the deal also includes provisions to modify the terms of related employment agreements, rescind shares issued to the Seller as part of the original agreement (which will be returned and canceled by the company), and to forgo collection of a currently outstanding Accounts Receivable balance owed by the company to the Seller.
A Little Background
Progressive Care, Inc., through its subsidiary, Pharmco, LLC, provides prescription pharmaceuticals to individuals and institutions in south Florida.
The company operates a retail pharmacy that specializes in the sale of anti-retroviral medications and related patient care management; the sale and rental of durable medical equipment (DME), such as hospital beds, oxygen supplies, power wheelchairs, scooters, walkers, and other related equipment and accessories; and the supply of various prescription medications to long term care facilities.
It also provides long term care solutions to skilled nursing facilities, assisted living facilities, retirement centers and communities, doctors’ offices, and clinics, which is a huge factor given the massive migration of the baby boomers into the later stages of life. In addition, the company purchases, repackages, and dispenses prescription and non-prescription pharmaceutical products for its long term care customers.
It also offers computerized maintenance of patient prescription histories; third party billing; and consultant pharmacist services consisting of evaluation of monthly patient drug therapy and monitoring the institution’s drug distribution system, as well as home service and maintenance, defective product replacements, and free home installation and instruction services.
In other words, this is a company that is making the healthcare system work for all parties involved, including its own stakeholders. The company provides prescription pharmaceuticals, compounded medications, tele-pharmacy services, anti-retroviral medications, medication therapy management (MTM), prescription medications to long-term care facilities, and health practice risk management.
Creating New Possibilities
Shares of the stock have been moving sharply higher since mid-week last week, and for no obvious reason. Perhaps news of this amendment has circulated among major interested parties. It certainly appears to be a game-changer.
“We are pleased that we have been able to resolve these combination issues so amicably and quickly,” said S. Parikh Mars, Chief Executive Officer of Progressive Care Inc. “The Company and the Sellers both agreed that expediting the closure of escrow and coming to a more conducive workflow structure was in our best interests. To accomplish this, together we made modifications to the Stock Purchase Agreement that yielded the best result for all involved, especially our current shareholders.”
In other words, this amended version of the deal is about 1000% more advantageous for RXMD than the original deal. And the deal, generally speaking, is a huge factor for the company going forward. Hence, we would expect to see this announcement have a dramatic impact on shares today.