Salona Global Medical Device Corporation Announces $6.4 million Order Book for Recently Acquired SDP Business Unit
June 15 2021 - 7:30AM
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 |
REVENUEMULTIPLE |
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 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 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.
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