Rennova Health will separate its software and diagnostic divisions from its rural hospital operations via an all-stock deal with TPT Global Tech as they look to create a new telehealth subsidiary, the companies announced Friday.
Rennova, the struggling West Palm Beach, Fla.-based lab test company that pivoted into the hospital business after insurance carriers cut off most of their payments for its urine toxicology tests, said the new subsidiary "will combine telehealth with EHR like capabilities and facilitate a patient's immediate access to healthcare." The deal is expected to be completed in the third quarter.
"Rennova has previously disclosed its intention to separate its technology and software divisions. This agreement with TPT finalizes these plans and the technology being contributed to the project by TPT creates an exciting opportunity to revolutionize the way patients access healthcare and continued aftercare," Rennova CEO Seamus Lagan said in prepared remarks. "We see first-hand the need our rural hospitals have to secure and retain patients."
Rennova owns three rural hospitals in Tennessee, including Jamestown Regional Medical Center, which closed in June 2019, the day after CMS cut off its Medicare payments.
CMS inspection reports found that vendors stopped delivering key supplies to all three of Rennova's hospitals due to late payments. Recent CMS inspection reports show Jamestown and Big South Fork Medical Center are currently in compliance, but that both had shut down their laboratory services after being cut off from vendors.
After Sen. Marsha Blackburn (R-Tenn.) questioned whether Rennova could adequately run rural hospitals, citing reports that the company was behind on payroll, Lagan replied that he hopes to finish ongoing discussions that he believes will raise "significant and adequate capital."
Rennova reported a $163 million loss through the nine months ended Sept. 30, 2019 on about $13 million in revenue, according to its most recent financial report. Rennova also reported a total stockholders deficit of $68 million over that span.
The company said that it could not file its 2019 annual report or the first-quarter report of 2020 due to the COVID-19 pandemic, invoking Section 36 of the Securities Exchange Act in securities filings. In those filings, Rennova reported receiving $7.4 million in COVID-19-related grants from the federal government, some of which went to the closed Jamestown hospital.
Christopher Diamantis, a Rennova board member, resigned on Feb. 26. Rennova owes him $22.3 million, according to securities filings.
Tara Bannow contributed to this report.
