Salona Global Medical Device Corporation (the
“
Company”, “
SGMD” or
“
Salona Global”) (TSXV:SGMD) is pleased to
announce that it has received final approval from the TSX Venture
Exchange for its previously announced Change of Business and will
commence trading on Wednesday, June 9th, 2021.
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 on commencement of
trading:
-
Revenue: Salona Global’s first acquisition
(SDP), which has now closed, 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.
- 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)
the 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) the 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, 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 (the Salona Global acquisition candidates)
have strong margins. As a result peers, listed below, trade in the
range of 6-15 times revenue on the 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$303.0M |
-10% |
33% |
NASDAQ |
Cerus Corp |
8.1 |
US$114.2M |
US$923.3M |
22% |
-47% |
NASDAQ |
Zynex Inc |
6.9 |
US$80.1M |
US$548.9M |
76% |
13% |
NASDAQ |
Tandem Diabetes Care |
11.1 |
US$498.8M |
US$5.532B |
38% |
-5% |
NASDAQ |
iRhythym Technologies |
7.1 |
US$265.2M |
US$1.875B |
24% |
-16% |
Source: Yahoo Finance as of 6/7/21
“We have a very powerful business model, where
we can leverage several advantages by virtue of our listing on the
TSXV,” said Les Cross, Chairman & interim CEO of Salona Global.
“First, we have developed a deep pipeline of IP-driven medical
device companies with the potential to acquire at attractive
private company multiples. We are discussing structures with a
minority down payment in cash and stock with the remainder of the
consideration tied to performance, and due 12-24 months after
close. Upon completing an acquisition, we would endeavor to expand
sales in Europe, Asia and Australia using our long-term
relationships with international distributors we spent decades
cultivating at DJO Global, where I was Chairman & CEO.
Downstream payments could be financed with debt by virtue of the
cash flow from acquisition targets, reducing the need for equity
financings. In addition to revenue growth, we would plan to
integrate these businesses into our state-of-the-art FDA approved
facility to increase free cash flow over time.”
"This market is highly fragmented and ripe for
aggregation,” continued Mr. Cross. “With over 5,000 potential
targets, we feel confident we can quickly acquire, integrate and
grow the targets on our way to a Nasdaq listing. Timing is always
difficult to predict with sellers, but my experience is that
success in closing deals can accelerate sellers’ appetites to close
quickly. We look forward to providing the market in the near term
with updates as we aim to swiftly enter into definitive
agreements.”
For more information please contact:
Les CrossChairman of the Board and Interim Chief
Executive OfficerTel: 1 (800) 760-6826Email:
Info@Salonaglobal.com
Additional Information
There can be no assurance that any of the
potential acquisitions in advanced negotiations 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; 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; 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; 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.
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