Digital Ally Inc. (NASDAQ: DGLY) stock continues to rise, and in the last session, the stock was up 14.44% after the company announced Digital Ally Healthcare Inc. formation to pursue healthcare industry opportunities.
Digital Ally forms JV with Nobility
This endeavor is part of Digital Ally’s strategic objective to expand its product offerings targeting high growth potential areas. Digital Healthcare aims to generate recurring income streams, increase profit margins, produce long-term positive cash flow, and drive future growth.
Last week the company’s wholly-owned subsidiary, Digital Healthcare, formed a joint venture with Nobility LLC, a revenue cycle management (“RCM”). Digital Healthcare is investing $13.5 million in the venture to help it pursue its business plan of acquiring RCM companies. Digital Healthcare will hold 51% of the venture as part of the agreement, entitling it to 51% of the venture’s distributable cash. On the other hand, Nobility will earn a management fee and 49% of the distributable cash.
Digital Healthcare and Nobility LLC to purchase another RCM
The partnership is negotiating the purchase of another RCM portfolio and has two target acquisitions under the letter of intent. The total revenue run rate of the purchases is $5.0 million per year, with high-profit margins predicted if cost savings and economies of scale are implemented. The target acquisitions will cost $5.0 million, with cash at closing estimated to be 75% of the purchase price and the rest paid once milestones are met. In the coming few months, the closing will be subject to final due diligence and the finalization of a formal agreement.
Stan Ross, Digital Ally CEO, said that last year, they added Shield Health Protection Products to address the health and wellness market sections. Ross said that the venture with Nobility is an expansion into the healthcare market.