Practice Equity Program (PEP)
One of the most unique and valuable aspects of Health Professionals Alliance (HPA) is our ability to transfer dormant practice value into a diversified, liquid, and appreciating asset. Through our innovative, industry-first Practice Equity Program (PEP) we help independent medical and dental practices find untapped value in their practice. At HPA we recognize that one of the primary reasons a doctor chooses to sell his or her practice to a private equity (PE) group or hospital is the aspect of liquidity – receiving cash value from the sale of the practice. However, this short-term gain comes with many long-term consequences including a loss of control, autonomy, and independence, as well as high taxes on cash received, and diminished future earnings. HPA’s Practice Equity Program (PEP) is an innovative way to realize otherwise dormant practice value in a far more advantageous way and has been referred to by many doctors as an “anti-private equity model”. PEP puts the value into the doctors’ hands.
- Retain 100% ownership and control of your practice
- Lever dormant, illiquid practice value into an appreciating, liquid, publicly tradable stock
- Improved tax advantage, both in the form of significant tax savings and tax deductions*
- Low-risk, high-reward ratio, with no personal guarantees or obligations
- Liquid and appreciating asset uncorrelated to the number of patients seen
- Ownership in a company that is serving you, your practice, and binding together independent doctors and dentists across the country into a powerful alliance to combat negative trends in healthcare.
How the PEP Works
Our Practice Equity Program (PEP) works like this: Using an industry-leading valuation model we conduct a valuation of your practice. Based upon that valuation HPA issues a note (loan) to the practice enabling it to buy an allotment of shares in HPA at a discounted pre-Public price. Those shares are paid for over time from the practice operations, rather than requiring the doctor to write a check upfront. The doctor retains full-ownership, autonomy, and independence of his or her practice but has used what is otherwise dormant value to create a diversified, appreciating, and liquid second asset, HPA shares.
The doctor becomes an owner in HPA along with countless other physicians and dentists, in a business that is supporting him or her, their practice, and binding together independent-minded professionals. The doctor benefits from the relationship by having a marketable security that can be sold off over time or retained based upon his or her appetite and needs. Taxes are only paid when shares are sold. The practice benefits by having time and cost-saving resources through the HPA membership which helps enhance revenues, improve efficiencies, and profitability. The note repayment is conducted from the practice with no personal guarantee or obligation to the doctor while giving the practice an investment interest tax deduction*.
How the PEP Works
An Industry First
HPA’s Practice Equity Program (PEP) is an industry-first and a vitally important aspect to our company’s model, its mission, and value proposition in the market. It is an innovative model within the healthcare space, but one that is built upon proven, industry-standard practices in finance and real estate. It may help to better understand this innovative finance model by thinking of the PEP structure like a real estate opportunity.
For example, a mortgage allows the homeowner to amortize the cost of buying a home over a term (typically 15-30 years), and to own all the equity in that home from day one. Equity value increases in two ways, (1) from appreciation of the home, and (2) from paying down the principal on the loan. The PEP works the same way, except rather than a slowly growing home value you own shares in a rapidly growing healthcare company.
Another comparison to real estate is a home equity line of credit (HELOC), which allows the homeowner to access value in the home that is otherwise dormant unless and until the home was sold, and to put the funds from the HELOC into something useful and valuable. Likewise, the PEP allows the independent doctor or dentist to convert otherwise illiquid and dormant practice value into a diversified, liquid, and appreciating asset that grows in value regardless of how hard he or she works, how many patients are seen, cases and procedure completed, and hours worked.
Finally, another example also within real estate that many doctors and dentists identify with is the value in owning the building. The practice pays a mortgage payment on the building which the doctor or dentist owns, giving him or her a double value down the road when the time comes to retire because now, hopefully, there is value to be realized in both the practice and the real estate. Similarly, PEP allows the doctor or dentist to leverage the practice to make a payment into a secondary asset (HPA shares) which, come retirement or some future occasion, can be sold separately giving that doctor double the value from the same amount of work.
Power of an Alliance
Through the PEP structure, the Alliance transcends a transaction level of services and value, into an aligned, doctor-owned, doctor-led organization. Physicians and dentists can retain 100% full ownership and independence of their practice, collectively own a piece of the company that is serving them, and bind together to create a collective voice, opportunity, and market position to preserve independence and put control back into the hands of Doctors.
The HPA shares intend to be publicly traded on NASDAQ**, which means the company is subject to disclosures and reporting the same as any public company. Therefore, the value of that security is certifiable, marketable, transparent, and liquid. Owning equity in HPA gives doctors a tax-advantaged way to create liquidity as they need over time and on their timeline. HPA Membership and the HPA Practice Equity Program (PEP) bring great value at the individual doctor/practice level and the market level as the share price grows over time. While there are many factors both internally and externally that drive share price on the public market, the HPA model has several distinct features that bode well for the future value of the stock price. Here are a few of those:
- Debt Free Model: Share price is driven by the interest income to the company on PEP note payments, membership fees, and profits on all the other services HPA offers. HPA does not have to borrow in order to issue PEP loans; the company can operate debt free.
- Diversification of Assets & Holdings: Through internal development, acquisition, and strategic partnership, HPA is investing in other profit generating holdings that directly serve the membership and will increase share value.
- Market Multiplier: Unlike a therapeutic, which is subject to lengthy and costly research and development, followed by trials, FDA approvals, and complex marketing mechanics, HPA uses proven financial models commonly found in finance and real estate, building a diversified portfolio of loans to economically viable and creditworthy professionals, physicians and dentist, similar to an e-commerce bank. This should help give HPA a strong market multiplier from Wall Street because it will be easily understood despite being innovative and disruptive within the healthcare vertical.
- Member Influence: The members and shareholders themselves can directly impact revenue growth through utilization of services, participation in the PEP, and referral of colleagues into the Alliance, all of which should be additive to the share price over time.
HPA will add members into the alliance indefinitely into the future. However, HPA’s Practice Equity Program (PEP) has tiers of opportunity which correlate to the price at which the shares are secured in the note and limiting the number of available shareholding opportunities. The first tier, Founder Members, is capped at the first 40 practices to join HPA as an equity partner. The next tier, Ambassador Members, is comprised of the next 100 practices to join HPA as an equity partner. These two initial tiers come with 40% and 20% discounts, respectively, on the share value. Beyond that, equity participation in HPA’s Practice Equity Program (PEP) will come with a modest discount off of the then trading price of the stock.
Power of an Alliance
Learn More, Join the Alliance
There are many aspects of the HPA’s Practice Equity Program (PEP) which warrant deeper discussion and exploration. To learn more contact us today or join us for an upcoming Model Presentation to see if Membership and HPA’s Practice Equity Program (PEP) are right for you.
COMMON STOCK WILL ONLY BE SOLD TO ACCREDITED INVESTORS PURSUANT TO RULE 506 (c) OF REGULATION D. THIS SUMMARY DOES NOT CONSTITUTE AN OFFER TO SELL AND IS NOT A SOLICITATION OF AN OFFER TO ACQUIRE ANY SECURITY. ANY OFFER MAY ONLY BE MADE TO ACCREDITED INVESTORS PURSUANT TO THE AUTHORIZED PRIVATE PLACEMENT MEMORANDUM.
The materials presented do not constitute an offer by Health Professionals Alliance Inc. to sell, solicit or make an offer to sell any securities and Health Professionals Alliance Inc. does not give or offer any business advice, investment advice, tax or legal advice to anyone viewing these materials. Any offer may be made only to accredited investors through the authorized Private Placement Memorandum. Health Professionals Alliance Inc. is not a registered broker-dealer, investment company, investment advisor or crowdfunding portal and does not engage in any conduct requiring such registrations.
The securities offered through the Private Placement Memorandum will be offered pursuant to the exemption from registration under the Securities Act of 1933, as amended (“Securities Act”) pursuant to Rule 506 (c) under Regulation D promulgated by the Securities and Exchange Commission (“SEC”). All prospective investors must certify that they are accredited investors, and provide either supporting documents or third-party verification, eligible for this type of illiquid investment, and must acknowledge that they have received and read all investment materials. The securities offered are speculative and are NOT insured by the FDIC or by any other Federal Government Agency, are NOT Bank deposits, are NOT guaranteed by any person or entity, and MAY lose value. Neither the SEC nor any federal or state securities commission or regulatory authority has recommended or approved any investment or reviewed the accuracy or completeness of any of the information or materials presented. Neither Health Professionals Alliance Inc. nor any of its directors, officers, employees, representatives, affiliates or agents shall have any liability whatsoever arising, for any error or incompleteness of fact or opinion in, or lack of care in the preparation or publication, of the materials or communications presented or the or that the valuation of any securities offering is appropriate. Prior results are not indicative of future performance and “forward looking statements” may be used in the materials; actual results may vary materially. All investors must make their own determination of whether or not to make any investment, based on their own independent evaluation of the investment and their risk tolerance.
Fluctuations in the value of healthcare industry business assets are to be expected. There can be no assurance that Health Professionals Alliance Inc. will be able to pay dividends in the future. Additional risks exist due to operations and liabilities. There is a potential for loss of part or ALL of investment capital. Any financial projections or returns shown in the materials are illustrative examples only, and there can be no assurance that any figures provided are accurate or in agreement with market or industry valuations. Offers to sell, or the solicitations of offers to buy, any security can only be made through the authorized Private Placement Memorandum that contains important information about the investment, management and certain risks.