Shareholder Update - Veltex Corporation - Veltex Recovery Group Operations

Rhea-AI Summary

Veltex (OTCQB: VLXC), a Health and Wellness Acquisition Firm, announces that its subsidiary, Veltex Recovery Group (VRG), has received approval to operate 64 licensed residential treatment beds at its facility in Mount Hope, WV. VRG is also seeking approval to expand to 250 beds. The facility has dedicated four beds for detox treatment, which began on June 10, 2024, with services priced at $425 per day for up to 10 days. VRG has become cash-flow positive, with reimbursement received from various Medicaid MCOs, totaling $264,589.36 in the last 60 days. Additionally, VRG has signed a contract with Highmark Blue Cross Blue Shield, effective July 1, 2024. The company faced and resolved delays in claim processing due to a cyber attack and internal billing issues. Veltex is also pursuing litigation against Armor Revenue Cycle Management for breach of contract and fraudulent misrepresentation. Furthermore, Veltex Properties has secured a five-month option to purchase additional land for expansion.

Positive

• Veltex Recovery Group approved to operate 64 licensed residential treatment beds.
• Expansion efforts underway to increase capacity to 250 beds.
• Detox services launched on June 10, 2024.
• Facility became cash-flow positive.
• Received $264,589.36 in reimbursements from various Medicaid MCOs in the last 60 days.
• Contract signed with Highmark Blue Cross Blue Shield, effective July 1, 2024.
• Secured a five-month option to purchase additional land for expansion.

Negative

• Delays in claim processing due to a cyber attack on Change Healthcare.
• Issues with MCO Unicare and The Health Plan caused delayed reimbursements.
• Internal billing software issues extended delays in receipt of reimbursement.
• Litigation against Armor Revenue Cycle Management for breach of contract and fraudulent misrepresentation.

CHICAGO, June 19, 2024 /PRNewswire/ -- Veltex Corporation ( OTCQB:VLXC) ("Veltex"), a Health and Wellness Acquisition Firm, is pleased to announce its wholly owned subsidiary Veltex Medical, Inc. d/b/a Veltex Recovery Group ("VRG"), is currently approved to operate sixty-four (64) licensed residential treatment beds at its Licensed Behavioral Health Center ("LBHC") in Mount Hope, WV.  Veltex continues to develop the latest modalities in the areas of health wellness, and recovery, specifically targeting substance use disorder ("SUD") treatment in the State of West Virginia.  To do this, VRG utilizes the Living in Balance Curriculum and the Dr. Harry Haroutunian treatment model, in combination with the Recovery Dynamics program, a course providing guided instruction for navigating the twelve-steps of Alcoholics Anonymous and/or Narcotics Anonymous for any instructor.  This curriculum provides a roadmap to our clients to plan for their future success. 

With respect to further expansion efforts, VRG has worked to obtain a Certificate of Need ("CON") Exemption Letter from the State of West Virginia Healthcare Authority ("WVHA") for an additional one-hundred eighty-six (186) beds, which may be added to our existing property for a total of two-hundred fifty (250) beds.  Because VRG operates a Residential Adult Services Licensed Behavioral Health Center for the treatment of substance use disorder, VRG is exempt from the Certificate of Need requirement, but must obtain correspondence from the WVHA to complete an application with West Virginia Office of Health Facility Licensure and Certification ("OHFLAC").  Veltex General Counsel, Micah T. Reeves through his efforts has obtained the CON Exemption Letter and completed an application with West Virginia OHFLAC.  In response, OHFLAC has requested a complete set of architectural blueprints from a West Virginia Architect. VRG obtained these blueprints through the retention of Traci Stotts at Pickering and Associates ("Pickering").  The office has indicated the preliminary drawings from Pickering appear acceptable, but must contain HVAC, Electrical, Structural, Plumbing, etc. to be a complete set of architectural prints.  VRG is currently in negotiation with Pickering, and other potential Architects to complete this process and obtain a permit to construct these designs.  According to the WVHA, no other entity has requested a Certificate of Need Exemption for Residential Treatment.  Therefore, VRG stands as the only Residential Adult Services Licensed Behavioral Health Center in Fayette County, WV.

VRG's existing facility has dedicated Four (4) of its treatment beds to detox (LOC 3.7). Detox treatment is typically 5-10 days at $425 per day, per resident.  Detox clients can then filter to VRG's lower level of care programs, LOC 3.5 (approximately thirty [30] days at $225 per day), and LOC 3.1 (Approximately ninety [90] days at $175 per day). Clients move through our program based on analysis and recommendations of VRG's clinical and medical staff.  Detox is an instrumental program for VRG, as prior to its implementation, VRG was receiving clients with positive test results for substances requiring Detox.  Those clients had to be sent to other Detox centers prior to their admission at VRG.  VRG would send the clients to a Detox center, but they would not return.  VRG believes Detox will serve as the best way to increase its client census quickly.  Detox implementation was delayed based on difficulty in obtaining qualified Licensed Practical Nurses ("LPN") to provide 24/7 nursing care as required by the West Virginia Bureau of Medical Services ("BMS"), The West Virginia Office of Health Facility Licensure and Certification ("OHFLAC"), and the West Virginia 504 Medicaid Manual.  LPNs must also undergo extensive training in appropriate use of VRG's KIPU and Collaborate MD software, as well as training to gain a proficient understanding of VRG's internal policies and procedures.  Detox was fully staffed by June 07, 2024, and opened June 10, 2024. 

Additionally, VRG has become cashflow positive and is now fully credentialed and receiving payment from traditional Medicaid and all West Virginia Medicaid Managed Care Organizations ("MCOs") (Anthem Unicare of West Virginia, Aetna Better Health of West Virginia, and The Health Plan of West Virginia).  These payments include clients from our current census as well as retro billing from July 01, 2023, to the present.  On July 01, 2024, Highmark Blue Cross Blue Shield ("Highmark") will become the fourth MCO for the State of West Virginia.  VRG has signed a contract with Highmark to join its network as a provider July 01, 2024. VRG has received $264,589.36 in reimbursement from various payers within the last sixty (60) days.  A significant portion of this money was received from Aetna and Traditional Medicaid.  All taxes, outstanding service debts, and recurring facility bills are currently caught up thanks to this cash influx.  VRG's billing process has also become more consistent through KIPU EMR and Collaborate MD.  Billing is transmitted each week on Thursday and has already fallen into a reliable rhythm with payers.

In February of 2024 United Healthcare Group and its subsidiary Change Healthcare experienced a cyber-security attack compromising their clearing house system entirely.  Change Healthcare has 1/3 of the entire market for providers throughout the nation.  Change Healthcare did not become operational again until late March 2024.  Until that time, VRG was unable to submit or process any claims resulting in significant delay of receipt of reimbursement for services rendered.  VRG also faced issues with MCO Unicare and The Health Plan.  Despite receiving completely accurate information form VRG during the application process pursuant to a Change of Ownership to VRG from Med-Surg Physician Group, Inc. d/b/a Elena Behavioral Health Services, Unicare kept the wrong provider's name in their portal and documentation.  Documentation in the portal listed "Elena Behavioral Health S" as the provider with VRG's Tax ID and NPI (1902582802).  Checks were issued in the wrong provider's name and have yet to be reissued.  Working with Unicare to resolve this issue has been difficult and has taken over one (1) month.  However, VRG is now enrolled in Electronic Funds Transfer so reissued checks will be deposited directly to VRG's JP Morgan Chase Checking Account.  Similarly, the Health Plan was processing claims to our individual provider NPI rather than VRG's group NPI and Tax ID.  This issue has been resolved and claims are processing correctly today.  Moreover, in Mid-May 2024, KIPU Collaborate MD, VRG's electronic medical record and billing software, had an internal issue where claims were automatically rejecting. This extended a delay in receipt of reimbursement for services rendered and negatively affected the claim submission order causing the denial of claims under traditional Medicaid.  Many claims had to be resubmitted and are currently pending resolution.  VRG has worked swiftly to resolve all issues with payers and billing software and has now begun receiving reimbursement each week from all payers. 

VRG has brought litigation against Armor Revenue Cycle Management, LLC, and Paula C. Bean ("Collectively referred to herein as Armor Bean") alleging Breach of Contract and Fraudulent Misrepresentation.  VRG first demanded repayment from Armor Bean in the total amount paid to her.  Armor Bean did not respond to VRG's Demand for settlement.  With respect to this case, VRG alleges Armor Bean agreed to complete credentialing for VRG as a "one-stop shop" price per month, while implementing VRG's KIPU/Collab MD operating system.  Furthermore, VRG alleges Ms. Bean indicated she was working on this process, but it was never completed.  Moreover, VRG contends Armor Bean purported to be experts in Managed Care Contracting (e.g., credentialing).  The allegations ultimately argue Armor Beans failed to do their job and misrepresented their abilities, resulting in significant delay in completion of the credentialing process and significant damage to VRG's operations.  The litigation against Armor Bean for breach of contract and fraudulent misrepresentation is currently pending in the Circuit Court of Cook County Law Division. 

Veltex Properties, Inc. has negotiated an Option to purchase the land directly across from VRG's existing structure.  The Option is arranged, as follows, to give Veltex Properties, Inc., a five (5) month Option expiring September 23, 2024, to purchase land, 5.76 acres, at $135,000.00, plus all closing costs related to the transaction. This property is currently owned by First Options of Chicago, Inc.  This adjacent land is ideal for expansion efforts and the ultimate sale of this company.

President and CEO, Andreas Mauritzson said, "We are incredibly excited about the progress of Veltex Recovery Group's Mount Hope Campus, we remain uniquely positioned to assist in helping solve the chemical dependence problem currently facing West Virginia.  Mr. Mauritzson continued, "The recovery industry is one with many unexpected hurdles, and our management team has overcome each and every one of them to make this company cash flow positive." Mr. Mauritzson went on to say, "Veltex Recovery Group looks to set the bar for addiction recovery in West Virginia and beyond, and with the addition of detox services, we move one-step closer to our goal of providing a complete continuum of care for our clients, while unapologetically increasing our revenue to advance the latest treatment modalities at the highest level of quality care." 

R. Preston Roberts, Chairman of the Board of Veltex reported, "We are very excited to see the fruits of our labor ripening. The Company is proud to have this ideal property and complex situated directly in the center of the opioid crises."  Mr. Roberts continued, "The extensive effort exerted to expand our facility has truly made Veltex a diamond of hope in Wild and Wonderful West Virginia. This expansion effort remains consistent with the Company's strategy to develop and quickly become the leading health care provider for chemical dependency in this region. Our management group and general counsel did an excellent and outstanding job executing the team's ongoing business plan and navigating the complexities of West Virginia Behavioral Health Care."

Veltex Corporation's wholly owned subsidiary, Veltex Properties, Inc., a Delaware Corporation, leases the 35,000 sq.ft. facility and approximately five (5) acres of land to Veltex Corporation's wholly owned subsidiary, Veltex Medical, Inc., d/b/a Veltex Recovery Group, a Delaware Corporation. 

Veltex Corporation continues its effort to collect on its March 26, 2012, legal judgment entered by the United States District Court for the Central District of California in the principal amount of $100,078,621 in favor of Veltex in the suit entitled Veltex Corporation v Javeed Azzia Matin, et al., Case No. CV 10 1746 ABC (PJWs). This Judgment continues to accrue interest since it was entered March 26, 2012.

About Veltex Corporation

Veltex Corporation, ( OTCQB: VLXC), incorporated in Utah September 17, 1987, is a public holding corporation, which maintains its corporate headquarters in Chicago, Illinois.  Veltex's common shares trade OTC Markets under the symbol VLXC.  Veltex is a premier Health and Wellness Acquisition Firm, specifically targeting substance use disorder ("SUD") treatment.  Veltex Medical, Inc. d/b/a Veltex Recovery Group ("VRG"), a Delaware corporation and Veltex Properties, Inc. ("VPI"), a Delaware corporation are both wholly owned subsidiaries of Veltex.  VMI operates an approximately 30,000 Sq. Ft. out-patient substance use disorder treatment facility at 101 Martin Drive, Mount Hope, WV 25880, with plans in action to expand in-patient SUD treatment soon. 

For additional information, please visit our corporate website: Veltex.com, and our VRG website: Veltexrecoverygroup.com

Safe Harbor Statement

Forward Looking Statement

Safe Harbor Statement: Certain of the above statements contained in this press release are forward-looking statements that involve a number of risks and uncertainties. Such forward looking statements are within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those indicated in the forward-looking statements as a result of various factors. This press release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as Veltex or its management "believes," "expects," "anticipates," "foresees," "seeks," "forecasts," "estimates" or other words or phrases of similar import. Similarly, statements herein that describe Veltex's business strategy, outlook, objectives, plans, intentions, or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements. Any statements made in this press release which are not historical facts contain certain forward-looking statements; as such term is defined in the Private Security Litigation Reform Act of 1995, concerning potential developments affecting the business, prospects, financial condition, and other aspects of the company to which this release pertains. The actual results of the specific items described in this release, and the company's operations generally, may differ materially from what is projected in such forward-looking statements. Although such statements are based upon the best judgments of management of the company, Veltex, as of the date of this release, significant deviations in magnitude, timing and other factors may result from business risks and uncertainties including, without limitation, the company's dependence on third parties, general market and economic conditions, technical factors, the availability of outside capital, receipt of revenues and other factors, many of which are beyond the control of the company. The company disclaims any obligation to update information contained in any forward-looking statement. This press release shall not be deemed a general solicitation.

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SOURCE Veltex Corporation

FAQ

What is Veltex 's stock symbol?

Veltex 's stock symbol is VLXC.

What are the recent operational expansions of Veltex Recovery Group?

Veltex Recovery Group has received approval to expand its licensed residential treatment beds from 64 to potentially 250 beds.

When did Veltex Recovery Group start offering detox services?

Veltex Recovery Group started offering detox services on June 10, 2024.

How much reimbursement did Veltex Recovery Group receive recently?

Veltex Recovery Group received $264,589.36 in reimbursements from various Medicaid MCOs in the last 60 days.

What issues has Veltex Recovery Group faced with claim processing?

Veltex Recovery Group faced delays due to a cyber attack on Change Healthcare and internal billing software issues.

What legal actions is Veltex currently involved in?

Veltex is pursuing litigation against Armor Revenue Cycle Management for breach of contract and fraudulent misrepresentation.