- Third acquisition under the Kingsway Search Xcelerator
Program
- Expected to be immediately accretive, adding $19.7 million of unaudited revenue, $2.6 million of U.S. GAAP income before income
taxes and $2.7 million of unaudited
non-GAAP adjusted EBITDA
- Capital light, recurring revenue business
CHICAGO, Nov. 21, 2022 /CNW/ - (NYSE: KFS) Kingsway
Financial Services Inc. ("Kingsway") today announced the
acquisition of the privately-held company Secure Nursing Service,
Inc. ("SNS"), the third such acquisition completed under the
Kingsway Search Xcelerator Program. SNS, based in Los Angeles, California
(www.securenursing.com), employs highly skilled and professional
per diem and travel Registered Nurses, Licensed Vocational Nurses,
Certified Nurse Assistants and Allied Healthcare Professionals with
multiple years of acute care hospital experience. SNS places
these healthcare professionals in both per diem assignments, and in
short-term and long-term travel assignments in a variety of
hospitals in southern California.
"The acquisition of SNS marks Kingsway's third business
acquisition under the Kingsway Search Xcelerator program. For
the last sixteen years, SNS has answered the growing demand for
medical staffing driven by the increasing need for healthcare
services combined with a persistent nursing shortage across the
country. The business meets our criteria of recurring
revenue, strong margins, and low capital demands, making it a great
fit for our model," said Kingsway
President and CEO, J.T.
Fitzgerald. "It truly is a pleasure to support our
'Operator-in-Residence', Charles
Mokuolu, in this transaction. We're excited to work with
Charles as he transitions into the CEO role at SNS."
"We are thrilled to partner with a group that embodies the four
pillars of success at SNS: commitment, competency, integrity and
reliability," said Roman Gofman,
former President and CEO of SNS. "Both our company and our
customers are in good hands with Kingsway."
"Roman Gofman and his team have
built a leading company by providing the highest level of service
in the healthcare industry, with qualified and compassionate
healthcare professionals," said Charles
Mokuolu, newly appointed President and CEO of SNS. "I am
delighted to welcome an SNS team that shares our high-level of
standards to the Kingsway family of companies. I look forward to
working with the talented SNS team to continue to deliver the
highest level of service to our clients and our healthcare
professionals."
For the twelve-month period ending June
30, 2022, SNS had $19.7
million of unaudited revenue, $2.6
million unaudited U.S. GAAP income before income taxes and
$2.7 million of unaudited non-GAAP
adjusted EBITDA. A reconciliation of U.S. GAAP income before income
taxes to non-GAAP adjusted EBITDA is presented on the attached
schedule. Even after taking into consideration the anticipated
effects of purchase accounting, Kingsway expects the acquisition to
be immediately accretive.
The transaction was structured as a purchase of SNS' assets and
assumption of certain liabilities. The purchase price was
$10.9 million (subject to customary
adjustments) at close. The closing purchase price was financed with
a combination of debt financing provided by Signature Bank and cash
on hand. Pegasus Acquirer Holdings LLC and Pegasus Acquirer LLC,
subsidiaries of Kingsway, borrowed a total of $6.5 million, in the form of a term loan, and
established a $1 million revolver
(together, the "Loan") that was undrawn at close. The Loan has a
variable interest rate equal to the Prime Rate plus 0.50%, with a
floor of 5.00%. The Loan requires monthly principal and interest
payments, and the term loan matures on November 18, 2028.
Eversheds Sutherland (US) LLP served as legal counsel to
Kingsway and Lagerlof LLP served as legal counsel to the sellers in
connection with the transaction.
About Kingsway
Kingsway is a holding company that owns or controls subsidiaries
primarily in the extended warranty, business services, asset
management and real estate industries. The common shares of
Kingsway are listed on the New York Stock Exchange under the
trading symbol "KFS."
Forward-Looking Statements
This press release may include "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 that are not
historical facts, and involve risks and uncertainties that could
cause actual results to differ materially from those expected and
projected. Words such as "expects," "believes," "anticipates,"
"intends," "estimates," "seeks" and variations and similar words
and expressions are intended to identify such forward-looking
statements; however, the absence of any such words does not mean
that a statement is a not a forward-looking statement. Such
forward-looking statements relate to future events or future
performance but reflect Kingsway management's current beliefs,
based on information currently available. A number of factors could
cause actual events, performance or results to differ materially
from the events, performance and results discussed in the
forward-looking statements. For information identifying important
factors that could cause actual results to differ materially from
those anticipated in the forward-looking statements, please refer
to the section entitled "Risk Factors" in Kingsway's Annual Report
on Form 10-K for the fiscal year ended December 31, 2021 (the "2021 Annual Report").
Except as expressly required by applicable securities law, Kingsway
disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information,
future events or otherwise.
Additional Information
Additional information about Kingsway, including a copy of the
2021 Annual Report and filings on Forms 10-Q and 8-K, can be
accessed on the EDGAR section of the U.S. Securities and Exchange
Commission's website at www.sec.gov, on the Canadian Securities
Administrators' website at www.sedar.com, or through Kingsway's
website at www.kingsway-financial.com.
Kingsway Financial
Services Inc.
|
Reconciliation of SNS
U.S. GAAP income before income taxes to Non-GAAP Adjusted
EBITDA
|
For the Twelve Months
Ended June 30, 2022
|
(in thousands)
(UNAUDITED)
|
|
SNS GAAP
Income before Income Taxes
|
$2,647
|
|
|
Non-GAAP Adjustments:
|
|
Depreciation
|
-
|
Amortization
|
-
|
Interest
|
-
|
Wages and
benefits (1)
|
38
|
Transaction expenses
(2)
|
58
|
Other income
(3)
|
(45)
|
Total Non-GAAP Adjustments
|
51
|
Non-GAAP Adjusted EBITDA
|
$2,698
|
|
|
(1)
|
Wages and benefits not
expected to be incurred post-close.
|
(2)
|
One-time expenses
incurred by SMS related to the sale.
|
(3)
|
Other income not
expected to recur post-close.
|
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SOURCE Kingsway Financial Services Inc.