Convalo Health International, Corp.
TSX VENTURE : CXV

Convalo Health International, Corp.

December 12, 2016 09:00 ET

Convalo Health International Appoints New Chief Operations Officer; Executive Vice President of Sales and Marketing; Provides Details on Third Quarter Improvements

LOS ANGELES, CALIFORNIA--(Marketwired - Dec. 12, 2016) -

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Convalo Health International, Corp. (Convalo) (TSX VENTURE:CXV), a company in the addiction recovery industry in the U.S., today announced it has promoted Jason Monroe to Chief Operations Officer. Mr. Monroe was previously the General Manager of the San Diego, California location since its founding. Prior to working with Convalo, he was the Operations Manager with a senior health care company, Home Care Assistance.

Additionally, the Company announced it has promoted Chris Heath to Executive Vice President of Sales and Marketing. Mr. Heath was previously the Director of Marketing and was instrumental in building the strategy that propelled Convalo from less than $9.3 million in annual sales to today's revenue in less than 18 months. Prior to working with Convalo, he was the Marketing Manager with a company serving the healthcare industry.

Both Mr. Monroe and Mr. Heath are now senior officers of the Company and report to the Board of Directors.

Update on Progress for Revenue Growth

Facilities Build-out Close to Completion:

2016 Facility Build-Out Details:
Facility
Month Launched
San Diego IOP April
Portland IOP April
Corona Detox Facility May
Los Angeles Detox Facility May
Internal Laboratory May

Based upon historical data, the typical financial timeline for a center is:

Launch quarter: Heavy investment and expenses to build. For the above facilities, most of the heavy investments have already been made.

Second quarter: State licensing and other certifications and accreditations.

Third quarter: Begin full operations and heavy initial investment in sales and marketing for the facility.

Fourth quarter: Cash flow improvement.

Fifth quarter: Margin improvement as the facility increases occupancy.

Increased Capacity:

All facilities are open and operating today. All facilities are expected to be fully built-out by the end of the current quarter, taking total capacity to above 330 beds and seats for 2017, as compared to about 150, as an average over the previous year.

"Now that we have the capacity to fill, we are working to ramp up our marketing to patients nationwide," said Mr. Chris Heath, EVP of Convalo. "I expect we will see revenue numbers finally jump next year after this long build out period. It will be gratifying to move our company to the next level with this new capacity."

Operational Improvements:

Increasing length of stay and higher level of care for each client. Insurance companies authorize a certain number of treatment days, at each level of care, in advance of treatment based on a variety of factors including the symptomology of the patient. Once the client uses those authorized days, the insurance company either extends authorization at that level of care or authorizes additional treatment days at a lower level of care, again based on a variety of factors. Convalo has seen the number of authorized treatment days increase across all levels of care by a weighted average of 12.57% using available data.

"Clinical success is known to be correlated with longer lengths of stay," said Jason Monroe, COO of Convalo. "We are striving to improve by making sure that the insurance companies covering our patients understand their treatment needs and, that we are communicating those needs effectively, resulting in ever increasing lengths of stay for our patients. This has both a benefit to our patient's long term survival and our bottom line."

Subject to TSXV approval, Convalo will issue 234,684 shares to Todd Reber as a part of his employment agreement with Convalo.

Convalo also announces that on December 2, 2016 it filed for dismissal of its action against the former owners of Hollywood Detox, which was described in a press release on February 25, 2016. Convalo filed the claim in large part because it received claims from a private carrier demanding reimbursement of payments made to Hollywood Detox prior to acquisition of the company by Convalo. Convalo has worked with the carrier and has yet to be required to make a repayment, although, despite the passage of time, a risk remains that it may still be owed. While this was favorable to Convalo, it reduced the potential damage award for proceeding with the action against the former owners. In the meantime, the cost of litigation, and the time and management required to pursue the litigation was outweighed by the reduced prospects of a large damage award. As always, there remain risks that carriers may bring actions against any subsidiaries of Convalo, including Hollywood Detox, in the future, but this risk was balanced against the cost of continuing litigation and issues relating to the expiration of the representations and warranties. Hollywood Detox has and will continue to operate in its current form.

About Convalo

Convalo Health International, operating under the brand name BLVD Centers (www.blvdcenters.com), is a leader in the highly fragmented addiction rehabilitation market. Led by a seasoned executive management team with experience in US healthcare, Convalo is well positioned for continued national expansion by launching pods in cities across the US. A pod consists of a residential, detox, and mental health facility (detox facility) and an intensive outpatient (IOP) facility. Convalo, under the BLVD brand, is focused upon becoming the largest national provider of a range of mental health services, including addictive and co-occurring disorders. In conjunction with the 12-Step approach, BLVD also offers supplemental insurance-reimbursed services catering to a variety of communities: gender specific, creatively-oriented, meditation/mindfulness, trauma and LGBT affirmative.

Forward-Looking Statements

Certain statements contained in this press release constitute "forward-looking information" as such term is defined in applicable Canadian securities legislation. The words "may", "would", "could", "should", "potential", "will", "seek", "intend", "plan", "anticipate", "believe", "estimate", "expect" and similar expressions as they relate to Convalo, Convalo's facilities expected to be fully built-out by the end of the current quarter, taking total capacity to above 330 beds and seats for 2017, are intended to identify forward-looking information. All statements other than statements of historical fact may be forward-looking information. Such statements reflect Convalo's current views and intentions with respect to future events, and current information available to Convalo, and are subject to certain risks, uncertainties and assumptions, including, all facilities receiving accreditation, completion of the Build Phase II on schedule, completion of the Revenue Growth Phase II on schedule, all facilities contributing cash flow and profits. Material factors or assumptions were applied in providing forward-looking information. 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. These factors include, without limitation, changes in law, the ability to implement business strategies and pursue business opportunities, state of the capital markets, the availability of funds and resources to pursue operations, decline of reimbursement rates, dependence on few payors, possible new drug discoveries, a novel business model, dependence on key suppliers, granting of permits and licenses in a highly regulated business, competition, difficulty integrating newly acquired businesses, the outcome and cost of any litigation with the sellers of Hollywood Detox, the outcome and cost of any litigation with insurance providers, low profit market segments, as well as general economic, market and business conditions, as well as those risk factors discussed or referred to in Convalo's annual Management's Discussion and Analysis for the year ended February 29, 2016, filed with the securities regulatory authorities in certain provinces of Canada and available at www.sedar.com.
Should any factor affect Convalo 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, Convalo 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 Convalo undertakes no obligation to publicly update or revise any forward-looking information, other than as required by applicable law. Convalo's results and forward-looking information and calculations may be affected by fluctuations in exchange rates. All figures are in Canadian dollars.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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