BEVERLY, MA and TORONTO, ON--(Marketwired - Sep 16, 2016) - Hamilton Thorne Ltd. (TSX VENTURE: HTL) ("Hamilton Thorne" or the
"Company"), a leading provider of precision laser devices and advanced image analysis systems for the Assisted Reproductive
Technologies (ART) and developmental biology research markets today announced that it completed the acquisition of 100% of the
operating assets of Massachusetts-based Embryotech Laboratories, Inc. for total consideration of approximately US$7.25 million.
Hamilton Thorne estimates this transaction will be accretive to earnings in 2016 and is expected to add over US$5 million of
revenue and more than US$1.5 million to EBITDA in calendar year 2017.
Key Benefits of the Transaction:
- Significantly accretive to revenue, EBITDA, and net income
- Diversifies and increases recurring revenue to an estimated 40% of sales
- Expected to increase 2017 revenue by over 50% (vs. last 12 months actuals)
- Expected to increase 2017 EBITDA by over 100% (vs. last 12 months actuals)
- Establishes Hamilton Thorne as a leader in providing quality control products and services
- Opportunity to expand product offering in international markets
- Minimal dilution by using cash on hand and new 5-year term debt at 4.25% interest
- Sets the stage for additional acquisition opportunities
"Embryotech is the acknowledged US leader in providing quality control services and testing assays to the ART
community. In addition to acquiring a great brand, we will be strengthening the financial performance of Hamilton Thorne. Not
only will this acquisition increase our scale, we anticipate that it will diversify our revenue base from a predominantly
one-time sale of instruments model to a projected 40% recurring revenues from the sales of services and consumables," said David
Wolf, President and Chief Executive Officer of Hamilton Thorne.
"Combining Embryotech with Hamilton Thorne's portfolio of products and services provides Embryotech with increased
financial strength, marketing expertise, and access to the international markets served by Hamilton Thorne. This relationship
will bring greater resources to support our current operations and growth plans as well as provide greater opportunities to our
employees," said Eric Dorman, Embryotech's President. Mr. Dorman will continue to lead Embryotech Laboratories as its
President.
Transaction Details
Pursuant to the transaction, Hamilton Thorne paid US$6.075 million in cash and issued 7,759,154 common shares of
Hamilton Thorne at a deemed issuance price of Cdn$0.198 per share.
The aggregate share component of US$1.175 million was calculated based on a twenty-day weighted-average stock price
prior to agreement date and the average US to Canada foreign exchange rate for the prior five days. The share consideration will
be placed in escrow pending final calculation of certain closing adjustments and to satisfy any possible indemnity
claims.
Bloom Burton & Co. Limited acted as financial advisor to Hamilton Thorne.
Financing Arrangements
The aggregate cash component of this transaction was financed with the Company's cash and a new secured credit
facility from Middlesex Savings Bank. The new credit facility includes a term loan of US$5.5 million (the "Term Loan") plus a
line of credit of up to US$2.5 million (the "Revolver"), US$1.5 million of which was drawn at closing.
The Revolver bears interest at the Prime Rate (currently 3.5%), matures two years from the closing date, and is
renewable annually upon bank approval. The Term Loan bears interest at a rate of 4.25% per annum, includes an escalating
amortization schedule, and matures five years from the closing date.
This Facility replaces Hamilton Thorne's existing US$3.5 million bank line of credit, for net new borrowings of
approximately US$3.5 million.
About Hamilton Thorne Ltd. (www.hamiltonthorne.com)
Hamilton Thorne designs, manufactures and distributes precision laser devices and advanced imaging systems that reduce cost,
increase productivity, improve results and enable breakthroughs in assisted reproductive technologies (ART) and developmental
biology research markets. Hamilton Thorne's laser products attach to standard inverted microscopes and operate as robotic
micro-surgeons, enabling a wide array of scientific applications and IVF procedures. Its imaging systems improve outcomes in
human IVF clinics and animal breeding facilities and provide high-end toxicology analyses. Hamilton Thorne's growing
worldwide customer base consists of pharmaceutical companies, biotechnology companies, fertility clinics, university research
centers, animal breeding companies, and other commercial and academic research establishments, including Harvard, MIT, Yale,
McGill, Oxford, Cambridge, the Smithsonian Institution, Charles River Labs, Covance, ABS Global, Sexing Technologies, Merck,
Novartis, Pfizer, and Dow Chemical.
About Embryotech Laboratories (www.embryotech.com)
Embryotech is a leading provider of quality control testing services and materials to the ART market. It provides
manufacturers of growth media, labware, disposables and other devices that may come into contact with gametes or embryos in the
ART lab with a suite of quality control testing services for detecting toxicity. Embryotech also provides quality control assays
to ART laboratories that wish to do their own internal quality control testing as well as a range of products for training and
research purposes. The Embryotech facility has earned ISO 17025 certification and operates under strict GMP guidelines
Neither the Toronto Venture Exchange, nor its regulation services provider (as that term is defined in the policies of the
exchange), accepts responsibility for the adequacy or accuracy of this release.
The Company has included earnings before interest, income taxes, depreciation and amortization, ("EBITDA") as a non-IFRS
measure, which is used by management as a measure of financial performance. See section entitled "Use of Non-IFRS Measures" in
the Company's Management Discussion and Analysis for further information.
Certain information in this press release may contain forward-looking statements, including, without limitation, with
respect to the projected impact of the transaction on the Company's revenue diversification and future earnings. This information
is based on current expectations that are subject to significant risks and uncertainties that are difficult to predict. Actual
results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to
update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the
forward-looking statements unless and until required by securities laws applicable to the Company. Additional information
identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings
are available at www.sedar.com.