SAN DIEGO, Feb. 09, 2023 (GLOBE NEWSWIRE) -- Salona Global Medical Device Corporation (“Salona Global,” “SGMD ,” or the “Company”) (TSXV:SGMD) today provided an update to its acquisition plans and pipeline. The Company is also publishing an up-to-date presentation for upcoming meetings with U.S. institutional investors.
In addition to the pending acquisition of Biodex Medical Systems, Inc. (“Biodex”), previously announced November 29, 2022, that the Company is currently working to close, the Company announced it has executed a non-binding term sheet to acquire a recovery science medical device sales and distribution business with prior year annual unaudited revenues of approximately US$2.6M and 35% gross margins. This business has client relationships with physical therapy clinics across Midwestern United States and management expects that adding Mio-Guard and Biodex products to this channel will drive annual revenue growth. The owner of the business would join the sales team, and the proposed terms for the acquisition involve an all-stock purchase, consisting of 1,000,000 common shares of the Company at closing and one additional common share of the Company for every US$1 in EBITDA achieved by the target during the 12 months post-closing, subject to a cap of 500,000 additional common shares of the Company.
The Company is posting an updated investor presentation document on the Company’s website. The presentation includes updates about the Company’s business, including the following important information:
- Businesses acquired by Salona to date, which had approximately US$24 million in Annualized Revenues (defined below) at the time of acquisition, have increased by approximately US$8 million in Annualized Revenues, representing post-acquisition growth of approximately 33%.
- Mio-Guard, the medical device sales and marketing business acquired in March 2022, has generated 29% in revenue growth in the nine months since acquisition, accelerating the Company’s medical device revenues as management reduces focus on contract services revenue.
- The enterprise is expected to generate positive Adjusted EBITDA (defined below) for the first quarter ending March 31, 2023 even while maintaining an above standard cost structure in anticipation of the Biodex acquisition.
- The Company has expanded independent sales representatives in the U.S. to 40 representatives covering 25 states.
- The Company has invested US$550,000 in developing the product IP portfolio it acquired April 2022.
- The Company has projected revenues for the calendar year 2023 to reach between US$50 million and US$52 million, with a gross margin of US$17.0 million to US$18.0 and an Adjusted EBITDA of US$2.5 million to US$3.0 million. This includes the expected Biodex revenues assuming the closing of the Biodex acquisition by March 31, 2023.
“I am pleased to be starting the process of a potential move to the U.S. capital markets. This is the transformational pivot we have hoped and planned for when we started the Salona Global journey,” said Les Cross, Executive Chairman of Salona Global. “Given our growing order book and the current state of the U.S. economy as a whole, we think it would be wise to reduce our reliance on senior debt in favor of alternative financing and are working with U.S. investors and bankers to find the most suitable structure given the current environment to fund our future growth. We are at an exciting time as we strategize towards a potential U.S. listing as a fully integrated, U.S. listed medical device company.”
“We are pleased to highlight our financial success since listing,” said Luke Faulstick, CEO of Salona Global. “With our current and growing pipeline of deals, I am confident that we can continue to find great acquisitions at reasonable prices. Our business model drives revenue and margin growth post acquisition. With SDP and our design and manufacturing platform, we can keep the profits from design, manufacturing and sales of IP protected devices all within the Salona family. We feel more confident acquiring established medical device businesses knowing we have an opportunity to use our services division to grow profitability. I am looking forward to working with potential new U.S. investors to ensure we are well capitalized to take full advantage of the market opportunity.”
Grant of Options to Key Employees and Officers
On February 8, 2023, the Company’s Board of Directors approved a grant of stock options under its 2021 Stock Option Plan to a total of four employees and one officer exercisable for an aggregate of 780,000 common shares of the Company. These options are granted effective on February 10, 2023, at an exercise price equal to the closing price of the common shares of the Company on the TSX Venture Exchange on February 10, 2023, and expire five (5) years after the grant date.
For more information please contact:
Luke Faulstick
Chief Executive Officer
Tel: 1 (800) 760-6826
Email: Info@Salonaglobal.com
Non-GAAP Measures
This press release refers to “Annualized Revenue” and "Adjusted EBITDA" which are non-GAAP and non-IFRS financial measures that do not have a standardized meaning prescribed by GAAP or IFRS. The Company’s presentation of these financial measures may not be comparable to similarly titled measures used by other companies. These non-GAAP financial measure assist the Company’s management in comparing its operating performance over time because certain items may obscure underlying business trends and make comparisons of long-term performance difficult, as they are of a nature and/or size that occur with inconsistent frequency or relate to discrete acquisition plans that are fundamentally different from the ongoing operating plans of the Company. The Company’s management also believes that presenting these measures allow investors to view the Company’s performance using the same measures that the Company uses in evaluating its financial and business performance and trends.
Annualized Revenue as used in this press release is calculated as a target’s annual revenues as at the time of closing, and for Salona based on its total revenues for the three months ended November 30, 2022 multiplied by four.
Adjusted EBITDA is defined as net loss excluding: stock based compensation, amortization, depreciation, interest expense, foreign exchange gain, change in fair value of earn-out consideration, change in fair value of contingent consideration, and income tax expense. Company is unable to provide a reconciliation to the most directly comparable GAAP measure without unreasonable efforts due to the unavailability of computations of stock-based compensation, foreign exchange gain, change in fair value of earn-out consideration, and change in fair value of contingent consideration.
Additional Information
There can be no assurance that any acquisition (including with the targets referenced herein and with the targets Salona Global is currently negotiating within its pipeline) will be completed or the timing of any acquisitions. Completion of any transaction will be subject to, amongst other things, identifying available acquisition targets that meet our investment criteria, negotiation and execution of definitive agreements, the validation of financial information through a due diligence investigation; applicable director, shareholder and regulatory approvals, and the successful completion and integration of such acquisitions which could require additional financing.
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" within the meaning of the Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. These statements can be identified by the use of forward-looking terminology such as "expects" "believes", "estimates", "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", and "anticipate", and similar expressions as they relate to the Company, including: the Company successfully financing and closing the acquisitions disclosed herein; moving to U.S. capital markets, including the qualification for a proposed U.S. listing; the generation of positive Adjusted EBITDA in the quarter ended March 31, 2023; the effect of the Company’s order book on the Company’s revenues in future quarters; the Company’s financial projections for calendar year 2023; the Company’s expectation that adding Mio-Guard and Biodex products will drive annual revenue growth; the Company closing the Biodex acquisition by March 31, 2023; and the Company being confident that it can continue to find great acquisitions at reasonable prices. 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 successful closing of the Biodex acquisition on or before March 31, 2023; organic revenue growth from cross-selling and market share improvement; new product sales from IP development; growth in margins resulting from product mix; and operating expenses scaled against growing revenues. Salona cautions that the forward-looking statements contained herein are qualified by important factors that could cause actual results to differ materially from those reflected by such statements. Such factors include but are not limited to the general business and economic conditions in the regions in which Salona operates; the ability of Salona to execute on key priorities, including the successful completion of financings, acquisitions, business retention, and strategic plans; the ability to attract, develop and retain key executives; the difficulty integrating newly acquired businesses; ongoing or new disruptions in the supply chain, the extent and scope of such supply chain disruptions, and the timing or extent of the resolution or improvement of such disruptions; the ability to implement business strategies and pursue business opportunities; disruptions in or attacks (including cyber-attacks) on Salona' 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 Salona is exposed; the failure of third parties to comply with their obligations to Salona 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 Salona; 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 Salona'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 Salona 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, Salona 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.
