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ER Urgent Care Centers (OTC: ERUC)
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ER Urgent Care Holdings, Inc. is headquartered in North Miami Beach, Florida and provides medical care services through its network of three primary care facilities and eight urgent care facilities. The Company is a one-stop shop for healthcare, providing a gamut of urgent healthcare services and general health care programs, after physician office hours and at costs significantly lower than emergency room visits. The Company's services are aimed at successfully bridging the gap between the services provided by primary care physicians and hospital emergency rooms.
Urgent care centers are a rapidly growing business area with significant growth potential. The market for healthcare services provided outside regular physician office hours is largely underserved. These centers are becoming increasing popular options for patients with non-life threatening conditions who wish to avoid the high costs and long waits associated with emergency room visits. Urgent care centers allow patients to choose the type of treatment in liaison with their primary care physician.
TThe Company provides its services through a network of Urgent Care Centers, which give patients immediate access to medical care for the treatment of minor injuries and illnesses. Special packages are available for uninsured patients and the Company
accepts all kinds of health insurance coverage. The ER Urgent Care Centers typically operate between 4 p.m and midnight 365 days-a-year, providing care after normal physician office hours and treating non-life threatening medical conditions.
The broad range of services offered by the Company's Urgent Care Centers include physical exams needed to obtain health insurance coverage, treatment of work-related injuries such as sprains, fractures and lacerations, drug screening, testing for blood alcohol levels, spirometry, audiometry, PPD Tests and flu shots.
Patients who can't get an appointment with their physician during regular office hours can visit one of these centers to receive initial treatment and a medical exam. As a result, treatment begins sooner and the patient recovers more quickly. These centers also spare patients the high costs and long waits associated with hospital emergency room visits. The Company has also pioneered a new concept, issuing ID cards to patients. This saves them valuable time filling out insurance forms and enables them to obtain medical services and prescriptions more quickly and conveniently. The list of major health insurance companies using ER Urgent Care Center services include Amerigroup, Avmed, Humana, Aetna, Total Health Choice, United Health Care, Beech Street, Dimension Health, Assist Card, Cigna and Corvel.
In addition to its Company-owned locations, ER Urgent Care also plans to develop a network of centers owned by franchisees. The Company anticipates there will be huge demand for its franchises among medical professionals who realize they can eliminate the costs and administrative hassles involved in operating their own practice by purchasing a franchise location. ER Urgent Care will provide franchise owners with full support in setting up of their facility, including third-party financing, business development and advertising support.
National Expansion Plan
EU Urgent Care is aggressively pursing national expansion with the goal of becoming a leading player in urgent healthcare services. Over the past eight months, the Company has added six centers to its network and announced plans to add another 20 centers. The Company is focusing on expanding its geographic presence in South Florida, Southern Texas and Kansas City. It plans to raise additional capital to fund its growth initiatives through a 20 million share equity offering.
The Company began its expansion by purchasing a unit formerly owned by United Urgent Care Centers, which was the first in a series of four acquisitions recently completed. The Fort Myers, Florida location was acquired in September 2006. This purchase marked the Company's initial entry into the large Florida market, a region characterized by very high average per day patient counts. The completion of this acquisition will increase the total number of Urgent Care Centers to 12. Additionally, the Company acquired a primary care facility in Deland, Florida, which will be supported by a soon-to-be-opened Urgent Care Center and cater to this area's large employers, including Tyco, Budweiser Distribution, the Municipal Airport, and the Department of Transportation.
In April, the Company announced the opening of its Miami Beach location. Miami Beach has the 26th highest population density in the US and the 2nd highest housing density following New York City. Its population rank increases to 3rd in the nation during the winter when most of the vacant second and third homes are occupied. ER Urgent Care expects the Miami Beach location to add approximately $800,000 to revenues during the first year.
Solid Financial Projections
The Company expects to generate significant top- and bottom-line growth by expanding its network and increasing revenue contribution from existing locations. By adding the four new centers (St. Pete, Tampa, Deland and Miami Beach), the Company expects to add approximately $4.8 million to annualized revenues and ER Urgent Care may generate over $7.0 million in revenues in FY2007. Management is targeting $1.70 million per unit increases from its existing facilities. Overall margins are expected to rise to approximately 30 percent. The Company expects to generate annualized revenues exceeding $15.0 million within five years.
Strategic Alliances and Agreements
ER Urgent Care is also expanding its business by entering into strategic alliances and agreements with the objective of creating multiple revenue streams. A new contract structure is expected to boost patient reimbursements by approximately 25%. The renegotiation of its existing contract with Aetna will position the Company to serve Aetna's 13.6 million medical members.
ER Urgent Care's alliance with Physicians Healthcare Management Group, Inc is helping the Company establish its footprint in the fast-growing Las Vegas market. In addition, the diversification of ER Urgent Care into the HMO segment of the healthcare service industry will help position the Company as a full-service healthcare service provider and create new revenue streams. The Company has hired an advertising agency to help enhance its visibility.
Significant Increase in Customer Base
ER Urgent Care is substantially expanding its customer base and enhancing its prospects for recurring revenues. It has entered into an agreement with RMA, a major provider of managed risk contracts, managing members of Humana and Careplus Health Plans. Careplus has close to 54,000 members in South Florida and a rapidly growing membership in the Tampa Area. The purchase of the Deland, Florida practice provides a customer base of 3,200 patients while the renegotiation with Aetna will provide access to 13.6 million new patients. The Company also recently announced an agreement with the City of Hallandale Beach to see its workman's comp patients; this agreement encompasses approximately 475 city employees, including police, fire and municipal workers. Additionally, the Company is aggressively negotiating with a
number of healthcare providers who include Suncoast Physicians Health Plan, Citrus Health Plan and Pro Medical Plan. All of these care providers have large numbers of patients who could benefit from access to ER Urgent Care clinics.
Physician Referral Program
The Company is in the process of negotiating a referral program agreement with Primary Care Physicians and General Practitioners which will increase the volume of patients visiting its Urgent Care centers. Physicians who belong to that group will earn commissions on each referral, thus creating an incentive to refer their patients to ER Urgent Care Centers. . Management believes word-of-mouth advertising through this type of referral network is an extremely effective tool for increasing patient traffic and gaining greater visibility in its markets.
Aggressive Promotional Strategy
EU Urgent Care is leveraging multiple promotional platforms, including print, broadcast and special promotions to improve the visibility and brand recognition. The Company has budgeted approximately $500,000 for 2007 marketing and promotional activities. It is reaching out to new potential patients through print, radio and cable television advertisements, organizing promotional and special events, sponsoring free health checkups, conducting blood donation drives and sponsoring marathon events promoting better child care. The Company also hosts seminars and conferences which attract private care physicians, independent medical groups and health insurance providers.
Technology Upgrades
The Company has upgraded its technology and is converting its platform into a virtual private network. The new technology platform is expected to significantly reduce operating costs by centralizing certain administrative functions and accelerating invoice processing. It will also lead to faster receivable turns and reduced billing expenses by generating invoices electronically. The new technology also enables faster access to patient information. Patients are issued a credit card-sized photo ID card carrying detailed records from the previous visit and a reminder for the next visit. In the future, the new system will facilitate central data warehousing of patient records. The medical history of each patient will be instantly available to all the doctors across this network.
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