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Tapping into the Potential US$16.85 Billion Post-operative and Recovery Market

Jocelyn Aspa Jocelyn Aspa, The Market Herald
9 Comments| July 29, 2021

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The overarching physiotherapy equipment market is booming and expected to grow at a compound annual growth rate ofClick to enlarge 6.09 per cent between now and 2026 — fueled in part by changing lifestyles and the impact of COVID-19.

According to a report from Mordor Intelligence, the post-operative and recovery market was valued at US$11.97 billion last year and is projected to reach US$16.85 billion by 2026.

Other factors driving market growth include an increase in chronic diseases, rising demand for rehabilitation therapies due to the increasing prevalence of non-communicable diseases, and favorable reimbursement initiatives.

Conditions such as arthritis and Parkinson’s in the aging population and the rising number of trauma patients will also contribute to market growth.

In line with this growth, companies like Salona Global Medical Device Corp. (TSXV: SGMD, OTC Pink: LNDZF, Forum) are looking to tap into the market through mergers and acquisitions domestically and internationally.

Case in point, the company just announced its plans to acquire an ergonomics and physical therapy clinic equipment business with $11 million in revenue.

SGMD to acquire ergonomics and physical therapy clinic equipment business

In a press release, the company said a non-binding letter of intent has been executed detailing the terms and conditions of the potential acquisition of the unnamed company.

According to the terms of the agreement, Salona Global will acquire 100 percent of the stock of the business, which is an organization founded over a decade ago with proprietary brands and products that specialize in ergonomic equipment and fittings.

The unnamed company also has a wide range of medical tools that are distributed to physical therapy clinics.

“This company adds several key components to our growth platform: both significant domestic distribution at the clinical level and a small but lucrative group of products that we can extend into the European and global market — all while being tremendously accretive,” Les Cross, interim CEO of Salona Global Medical Device, said in a release.

When the transaction closes, Salona Global will make a down payment of US$3.2 million and over 3.8 million restricted common shares, which will then be followed by an earn-out payment that is expected 13 months after the closing for an estimated total of $1.5 million, split between 61.5 per cent cash and 38.5 per cent shares.

Cross also said that because of Salona Global’s plans to acquire IP-driven companies, the potential acquisition of this company will help Salona Global extend into the European market.

“Our plan is always to surround our customer, whether in the U.S. or globally. We remain focused on several potential acquisitions of high-tech IP-driven devices to leverage our platform,” he added.

Once the transaction is complete, the acquisition will boost Salona Global’s organic growth in the US for future acquisition candidates. Additionally, Salona Global plans to expand some of the unnamed business’ branded products globally and into European markets.

The investment opportunity

Since going public, Salona Global Medical Device has been busy. In June, the company announced that its first acquisition, South Dakota Partners, had $6.4 million in standing purchase orders. Similarly, Salona Global announced in early July that it had secured its first European sales contract.

With the company’s new potential acquisition, Salona Global Medical Device is putting itself in a strong position to maintain its mission as a long-term growth strategy company.

In line with this, shares of Salona Global are up over 139 per cent year-to-date to C$1.15 as of market close on July 28. With a market cap of $53.86 million, the company currently has just over 46 million shares outstanding.

To compliment its future growth intentions, the company has a strong management team led by interim CEO Les Cross, who is the former CEO of DJO Global, a medical device company formerly listed on the New York Stock Exchange until a US $2 billion purchase by Blackstone.

As the company continues to make acquisitions — while expanding its current European sales contracts — Salona Global Medical Device will be a company poised to deliver results to investors.

FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.


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