SAN DIEGO, June 15, 2021 (GLOBE NEWSWIRE) -- Salona Global Medical Device Corporation (the “ Company ”, “ SGMD ” or “ Salona Global ”) (TSXV:SGMD) announced today that South Dakota Partners, Inc. (“ SDP ”), a business that operates a FDA-approved medical device and robotics facility that served as the Company’s first acquisition in its new acquisition strategy, has $6.4 million (US$5.2M) in standing purchase orders as of June 2021. SDP had audited 2019 revenues (pre-COVID) of $15.8 million (US$12M). The current order book is already 40% of the pre-Covid annual revenues for the unit with more than a full 11 months remaining during the earn-out measurement period under the purchase agreement for SDP, making it increasingly likely a full earn-out will be achieved.
“We are pleased to announce we have purchase orders booked for $6.4 million, giving us a huge head start on revenue for the year,” said Les Cross, Chairman and Interim CEO of SGMD. “We have a strong foundation with our first acquisition to build upon and the fact that they have standing orders for 40% of their earn-out revenue for the next 12 months gives me great confidence. The earn-out structure gives sellers a strong incentive to beat revenue and other financial targets making SGMD more valuable. We are working hard to close on additional acquisitions in the near future with a similar structure.”
The Company has posted its latest corporate presentation, along with a webcast led by Chairman & interim CEO Les Cross, at www.salonaglobal.com/investors .
Salona Global Today:
- Revenue: Salona Global’s first acquisition (SDP), has standing purchase orders for 2021 of $6.6M or 40% of its earn-out target. SDP had $15.8M in 2019 audited annual revenue (pre-COVID), generating positive operational cash flow.*
- Cap Table and Concurrent Financing : SGMD has approximately 63.8 million shares (on a partially diluted basis)** upon commencement of trading, with over 30 million shares either restricted or held by management or advisors. (See below share capital table.)
- Shares were sold in the Company’s December 2020 concurrent financing (post-consolidation) at as high as $0.85 per share.
- M&A Capacity : Salona Global has a deep and full pipeline of private firms that are discussing a potential acquisition by Salona Global – all medical device companies with between $5M - $20M in revenues with positive cash flow.
- The Salona Global team believes it has the capacity to close 1-2 acquisitions per quarter starting Q2 2021.
- Strong Balance Sheet, No Parent Debt: The Company has an estimated $13M in net assets, predominantly in cash and cash equivalents, with no parent debt. Management has earmarked between $4-6M in cash and 15-18M shares to close potential acquisitions in negotiations this quarter.
- The majority of consideration would be tied to performance over a future measurement period and could be financed with debt, as priority acquisition targets under consideration are cash flow positive and debt free.
- Experienced Wall Street Management Team: Les Cross (Chairman of the Board) is former Chairman of DJO Global (a medical device roll-up that was listed on the NYSE until Blackstone bought it for $2B); Jane Kiernan (Vice Chairwoman) is former Chair of the Audit Committee for American Medical Systems (purchased by Endo Pharmaceuticals for $3.5B).
- M&A advisors from PHM (Now Viemed on the Nasdaq/TSX and Quipt on the Nasdaq/TSXV).
*For more information on SDP and historical performance please see the Company’s Management Information Circular dated 01/26/2021 available on the Company’s Sedar Profile at www.sedar.com.
The SGMD post acquisition organic growth plan:
European Sales Expansion: SGMD is targeting companies that have quality products that have succeeded in the US medical device market, but have little or no revenue from Europe or other developed markets where SGMD executives have a history of marketing success.
Leveraging the Operational Platform: The State-of-the-Art FDA approved SDP facility, the building block of the SGMD plan, will be used to optimize production strategies, control costs and provide supply chain assurances to US customers who are wary of risks from trade tensions and poor-quality outsourced production methods.
Any questions related to the presentation and webcast, to be posted at www.salonaglobal.com/investors , or any other section of the investor information section of the website, can be directed to info@salonaglobal.com .
Share Capital and Balance Sheet
|
Shares |
|
| Shares* |
44,677,545 |
|
| Maximum shares reserved for issuance to SDP pending earn outs |
19,162,000 |
|
| Shares outstanding at listing (partially diluted)** |
63,839,545 |
|
| Net Assets (estimated) |
$13,000,000 |
|
* The Company completed a 7.37-for-10 share consolidation on 12/21/2020.
** Does not include the 15-18 million shares (described above) earmarked for potential acquisitions (with between $5m and $20m in sales) in advanced negotiations or shares issuable pursuant to options, warrants and Class A shares.
Medical Device Market Overview
- Expanding Market Opportunity: Aging global populations coupled with accelerated healthcare research has created a unique and growing opportunity for a global focused healthcare company. Small US companies with outstanding products want to tap the global market.
- High Margin IP Driven Businesses Command Superior Multiples: IP-driven medical device companies (Salona Global acquisition candidates) have strong margins. As a result, peers listed on presentation, trade in the range of 6-15 times revenue on Nasdaq.
- Further information available at www.salonaglobal.com/investors
| EXCHANGE |
COMPANY |
REVENUE
MULTIPLE |
2020 REVENUE |
MARKET CAP |
REV GROWTH |
EBITDA |
| NASDAQ |
Utah Medical |
7.2 |
US$42.2M |
US$304.8M |
-10% |
33% |
| NASDAQ |
Cerus Corp |
8.7 |
US$114.2M |
US$990.5M |
22% |
-47% |
| NASDAQ |
Zynex Inc |
6.9 |
US$80.1M |
US$556.2M |
76% |
13% |
| NASDAQ |
Tandem Diabetes Care |
11.6 |
US$498.8M |
US$5.796B |
38% |
-5% |
| NASDAQ |
iRhythym Technologies |
7.0 |
US$265.2M |
US$1.852B |
24% |
-16% |
Source: Yahoo Finance as of 6/14/21
For more information please contact:
Les Cross
Chairman of the Board and Interim Chief Executive Officer
Tel: 1 (800) 760-6826
Email: Info@Salonaglobal.com
Additional Information
There can be no assurance that any potential acquisitions will be completed as proposed or at all and no definitive agreements have been executed. Completion of any transaction will be subject to applicable directors, shareholder and regulatory approvals.
Neither the TSXV nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this release.
Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian and United States securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to the Company, including: information relating to the business plans of the Company, including the Company’s intention to create a European and worldwide sales division for the purpose of targeting sales outside the US; statements regarding anticipated revenue and positive cash of acquired companies; the Company’s acquisition strategy; future acquisitions and the structure and financing of such acquisitions; information with respect to future growth and growth strategies; the Company’s organic growth plan and strategy and the manner in which the Company proposes to accomplish it; anticipated trends in the Company’s industry; the SDP earn-out being fully achieved, and the Company’s intention to list on Nasdaq; are intended to identify forward-looking information. All statements other than statements of historical fact may be forward-looking information. Such statements reflect the Company's current views and intentions with respect to future events, and current information available to the Company, and are subject to certain risks, uncertainties and assumptions, including: the Company and a target being satisfied with due diligence; the Company successfully negotiating and executing definitive agreements for an acquisition; closing conditions being satisfied or waived; the Company obtaining all requisite approvals for a transaction; SDP orders resulting in revenue and the financials results of SDP continuing on a pace necessary full a full earn-out under the purchaser agreement, and the Company meeting all of the listing conditions for a Nasdaq listing. Many factors could cause the actual results, performance or achievements that may be expressed or implied by such forward-looking information to vary from those described herein should one or more of these risks or uncertainties materialize. Examples of such risk factors include, without limitation: credit; market (including equity, commodity, foreign exchange and interest rate); liquidity; operational (including technology and infrastructure); reputational; insurance; strategic; regulatory; legal; environmental; capital adequacy; the general business and economic conditions in the regions in which the Company operates; the ability of the Company to execute on key priorities, including the successful completion of acquisitions, business retention, and strategic plans and to attract, develop and retain key executives; difficulty integrating newly acquired businesses; the ability to implement business strategies and pursue business opportunities; disruptions in or attacks (including cyber-attacks) on the Company's information technology, internet, network access or other voice or data communications systems or services; the evolution of various types of fraud or other criminal behavior to which the Company is exposed; the failure of third parties to comply with their obligations to the Company or its affiliates; the impact of new and changes to, or application of, current laws and regulations; granting of permits and licenses in a highly regulated business; the overall difficult litigation environment, including in the United States; increased competition; changes in foreign currency rates; increased funding costs and market volatility due to market illiquidity and competition for funding; the availability of funds and resources to pursue operations; critical accounting estimates and changes to accounting standards, policies, and methods used by the Company; the occurrence of natural and unnatural catastrophic events and claims resulting from such events; and risks related to COVID-19 including various recommendations, orders and measures of governmental authorities to try to limit the pandemic, including travel restrictions, border closures, non-essential business closures, quarantines, self-isolations, shelters-in-place and social distancing, disruptions to markets, economic activity, financing, supply chains and sales channels, and a deterioration of general economic conditions including a possible national or global recession; as well as those risk factors discussed or referred to in the Company’s disclosure documents filed with United States Securities and Exchange Commission and available at www.sec.gov, and with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com. Should any factor affect the Company in an unexpected manner, or should assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. Any such forward-looking information is expressly qualified in its entirety by this cautionary statement. Moreover, the Company does not assume responsibility for the accuracy or completeness of such forward-looking information. The forward-looking information included in this press release is made as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law.
