Skyline Medical saw shares surge upwards nearly 30% after announcing a joint venture with Electronic On-Ramp, providing the company with access to bids on procurement contracts for up to $550 million or more in federal funds.
The companies expect the joint venture to be in operation by the end of the year, with 51% of the JV owned by EOR. The venture will bid on supplying medical products for mobile operating rooms and other uses. Financial details of the deal were not disclosed.
“We are very excited to enter into this new joint venture with EOR as it provides access to significant federal, state and local funds some 18 months ahead of Skyline’s previous plan, and advances our strategy to increase our operating room footprint. EOR has pre-negotiated contractual terms with the General Services Administration for two contracts that afford Skyline immediate entrée to two schedules that provide access to highly efficient sales tools, entering a market for contractor awards of more than $15.8 billion in contracts last year alone,” interim CEO Dr. Carl Schwartz said in a press release.
The joint venture is subject to majority approval by Skyline Medical’s shareholders, with a special stockholders meeting planned for September 15. Stockholders will also vote on doubling the number of common shares as well as effecting a reverse stock split, which the company announced earlier this month.
“In addition to the joint venture bringing immediate access to existing contract vehicles, EOR and Skyline will work together to add contract vehicles specifically targeting environmental services and medical devices, a market with awards of $6 billion last year. These joint efforts will culminate in access to the market for $33 billion that federal, state and local government buyers spent through GSA schedule contracts in the fiscal year ended September 30, 2015,” CEO Schwartz said in a prepared release.
Through the venture, EOR will look to promote sales through 2 primary contracts, including the $14.5 billion GSA Information Technology Schedule 70 contract and the Security and Life Safety Schedule 84, which received more-than $1.3 billion during its fiscal year 2015.
“The Streamway System will be the anchor product in our new venture, and utilizing our deep expertise working as a government contractor we foresee exciting opportunity. We look forward to tapping into Skyline’s medical device expertise to become a powerhouse supplier to the U.S. government not only of Streamway, which is clearly needed in mobile operating rooms to mitigate exposure to contaminated body fluid waste, but also to identify and source additional medtech product opportunities,” Electronic On-Ramp prez William Pullen said in a prepared statement.
Shares have skyrocketed for Skyline, up 28.6% to trade at 21¢ as of 2:42 p.m. EDT.