Get out of the closet and tell the world you're a life insurance agent!
Hooper Holmes on August 15 entered into a definitive agreement to sell its Portamedic brand and other assets comprising the Company's Portamedic service line to American Para Professional Systems, Inc. (APPS) for $8.4 million in cash, subject to adjustments.
According to a release, the sale also includes the transfer of certain Portamedic branch offices and call centers to APPS.
By selling its underperforming Portamedic businesses, Hooper Holmes noted, it is creating a streamlined health care company that is well positioned to capitalize on growing healthcare trends. Hooper Holmes' continuing operations include the Company's Health and Wellness service line, which provides biometric screenings for national wellness companies, employers and government customers, and Heritage Labs International, Inc., the Company's clinical reference laboratory located in Olathe, KS.Heritage Labs will continue to support the life insurance market through its lab business with carriers. Hooper Holmes also retains its outsourced underwriting and other non-paramedical exam insurance services operations in Lenexa, KS and Omaha, NE.
The transaction provides Hooper Holmes with capital to invest in its Health and Wellness and Lab service lines. Hooper Holmes retains its existing Portamedic working capital, which at June 30, was estimated to be $5.0 million, giving the Company $13.4 million of working capital from the transaction from the Portamedic service line as it focuses on growth supporting wellness programs, clinical research and government studies. Heritage Labs' testing and risk assessment services for insurance companies are expected to continue and grow. On a projected basis, Hooper Holmes' remaining service lines are expected to generate approximately $50 million of revenue in full year 2013.
The market for Hooper Holmes' wellness services is growing. According to the 2013 Towers Watson - National Business Group on Health Employer Survey, more employers are considering offering employees and spouses financial rewards to encourage participation in health management programs. These programs require biometric screenings and lab tests such as those provided by Hooper Holmes.
"Management and the Board feel strongly that selling Portamedic will improve shareholder value. The transaction provides the Company with needed capital, as well as allows us to shift the focus from turning around Portamedic to growing our health care related service lines," said Ronald V. Aprahamian, Chairman of the Board of Hooper Holmes.
"Our biometric screening services and other assets will allow us to capitalize on the rapidly-growing U.S. health care market. Through our improved capital position and high growth business strategies, we believe we have the potential to profitably grow revenues to $100 million in annual sales over the next four to six years," said Henry E. Dubois, President and CEO of Hooper Holmes.
The transaction is expected to close late in the third quarter of 2013 or early in the fourth quarter.
Cantor Fitzgerald & Co. is acting as the financial advisor to Hooper Holmes.
Hooper Holmes is a company focused on collecting personal health data and transforming it into useful information.
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