Health care technology company ActiveCare Inc. is looking for debt or equity financing to offset its struggles.
Negative cash flows and recurring net losses have plagued the Orem, Utah-based business, which develops technology and services that help health care providers and payers monitor diabetes patients with the aim of providing accountable prevention.
ActiveCare announced in a Jan. 5 filing with the U.S. Securities and Exchange Commission that it sold contracts and equipment leased to customers used for its CareServices segment to Security Systems Inc. for about $479,000. Because of the sale, ActiveCare discontinued operations of that segment.
The company also indicated in its latest quarterly filing with the U.S. Securities and Exchange Commission on Nov. 12 that there is substantial doubt about its ability to continue as a going concern, or without the threat of liquidation. Positive cash flows from operating activities would mitigate the situation, but ActiveCare still needs to raise money to meet its projected capital investment needs.
Management's current plan includes offering debt or equity securities and increasing sales of ActiveCare's products.
In 2014, ActiveCare brought in about $3.58 million through securities offerings. If it isn't able to raise more cash, SEC filings indicate that product development would cease and ActiveCare may go out of business.
So far, however, the company has been able to increase revenue. The nine months ended June 30, revenue was about $5.4 million compared with $4.95 million for the same period in 2013.
For the previous edition of Turnaround Tuesday, see Struggling Drug Developer Immune Pharma Looks to Sell, License Products.
For more troubled companies, see Mergers & Acquisitions Distressed Company Watch List.
Generally, health care technology companies have been attractive M&A targets. As the Affordable Care Act brings more patients into the U.S. health care system, providers have looked to technology as a way to pare down costs. For more, see 5 Technologies That Drove Health Care M&A in 2014.