Salona Global Medical Device Corporation (the
“
Company” or “
Salona Global”)
(TSXV:SGMD) today provided a corporate update including information
on the pace of potential acquisitions post commencement in trading,
anticipated shortly.
The Company will be posting its latest corporate
presentation, along with a webcast led by Chairman & interim
CEO Les Cross, at www.salonaglobal.com/investors after market close
today.
Salona Global on commencement of
trading:
- Revenue: Acquired
target (SDP) had $15.8M in 2019 audited annual revenue (Pre-COVID),
generating positive operational cash flow.*
- M&A
Capacity: Salona Global has a deep and full pipeline of
potential acquisition targets – 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 two 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.
- The majority of consideration would
be tied to performance over a future measurement period and could
be financed with debt, as all 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 (former NYSE listed company sold to
Blackstone for $2B); Jane Kiernan (Vice Chairwoman) is former Chair
of the Audit Committee for American Medical Systems (sold to 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 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 made little or
no efforts to sell in Europe or other developed markets where SGMD
executives have had success. SGMD will create a European and
worldwide sales division to grow SGMD sales worldwide. Worldwide
sales opportunities could more than double the available market to
companies acquired by SGMD.
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,
may be directed to info@salonaglobal.com.
Share Capital and Balance
Sheet
|
Shares |
Shares* |
44,677,545 |
Shares reserved for issuance to SDP pending earn outs |
19,162,000 |
Shares reserved and outstanding at listing** |
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 on presentation, trade in
the range of 6-15 times revenue on Nasdaq.
EXCHANGE |
COMPANY |
REVENUEMULTIPLE |
2020 REVENUE |
MARKET CAP |
REV GROWTH |
EBITDA |
NASDAQ |
Utah Medical |
7.4 |
US$42.2M |
US$312.8M |
-10% |
33% |
NASDAQ |
Cerus Corp |
8.5 |
US$114.2M |
US$973.7M |
22% |
-47% |
NASDAQ |
Zynex Inc |
6.6 |
US$80.1M |
US$530.4M |
76% |
13% |
NASDAQ |
Tandem Diabetes Care |
10.7 |
US$498.8M |
US$5.341B |
38% |
-5% |
NASDAQ |
iRhythym Technologies |
8.3 |
US$265.2M |
US$2.200B |
24% |
-16% |
Source: Yahoo Finance as of
5/28/21
“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 structure these deals 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. Once acquired, we plan 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 can be financed with
debt by virtue of the cash flow from acquisition targets, reducing
the need for dilutive financings. In addition to revenue growth, we
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 companies that
serve as 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; the performance of SDP in 2021;
statements regarding anticipated revenue; 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;
resumption of trading on the TSXV; 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.
The securities referred to in this news release
have not been, nor will they be, registered under the United States
Securities Act of 1933, as amended, and may not be offered or sold
within the United States or to, or for the account or benefit of,
U.S. persons absent U.S. registration or an applicable exemption
from the U.S. registration requirements. This press release does
not constitute an offer for sale of securities, nor a solicitation
for offers to buy any securities in the United States, nor in any
other jurisdiction in which such offer, solicitation or sale would
be unlawful. Any public offering of securities in the United States
must be made by means of a prospectus containing detailed
information about the company and management, as well as financial
statements.
Figures herein assume the exchange rate of USD
to CAD to be 1.295, the 12 month trailing exchange rate provided by
the Bank of Canada.
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