Convalo Health International, Corp.
TSX VENTURE : CXV

Convalo Health International, Corp.

July 22, 2015 09:00 ET

Convalo Health International (Convalo) Posts Record Quarterly Revenue; Provides Growth Update; Appoints Chief Financial Officer

LOS ANGELES, CALIFORNIA--(Marketwired - July 22, 2015) -

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Convalo Health International, Corp. (Convalo) (TSX VENTURE:CXV), a company focused on rolling up the highly-fragmented addiction recovery sector in the US, today posted its financial results for the quarter ending May 31st, 2015.

Full results are available on Sedar.

Quarterly Financial Highlights:

This quarter, as with last quarter, included only BLVD Centers single outpatient center in Hollywood. For the upcoming quarter ending August 31, 2015, the quarterly financials will include the acquisition of Hollywood Detox and ARTS.

Quarterly Revenue

  • Revenue for the second fiscal quarter of operations (ending May 31st, 2015) was $2,318,458, as compared to $1,201,225 last quarter, an increase of 93% quarter over quarter.
  • July 2015 revenue is expected to be in excess of $2.2 million or over $26 million annualized current run rate revenue due to the acquisition of Hollywood Detox and ARTS.

Quarterly Profitability & Balance Sheet

  • Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), excluding new facility start-up costs, for the quarter was $458,695(1) .
  • Cash as of July 20th, 2015 was an excess of $24,500,000; Cash at the end of the quarter was $30,631,957.
  • Accounts receivable at the end of the quarter of $1,320,480 and accounts payable and accrued liabilities associated with the listing process at the end of the quarter of $1,022,900.

Expansion

  • Convalo's wholly-owned subsidiary, BLVD Centers acquired a second outpatient center in West Los Angeles with a slightly larger capacity than the Hollywood Center which is expected to be finished and fully operating by end of August 2015.
  • Convalo acquired Hollywood Detox and ARTS during the current quarter, companies with trailing 12 month revenues of $14 million.

"Although we're very happy to see the tremendous organic revenue and EBITDA growth the Hollywood center generated since last quarter, these numbers are a bit out-dated," said Michael Dalsin, Chairman and CEO of Convalo. "Since the acquisition of Hollywood Detox and ARTS, we have almost tripled our reported revenues run-rate. But the financial results for this quarter provide transparency for one location, demonstrate the power of our model in the context of a single center, and highlight our tremendous organic growth rate. When we first invested in BLVD about a year ago, we had less than $1 million in annualized sales. Now, for this same location, we have in excess of $8 million in annualized sales."

"We are now in the process of extending our model to our new locations. I look forward to the financial results in the quarters to come as we both build out new centers and close additional acquisitions," continued Mr. Dalsin. "We got started just over a year ago and our return on invested capital has been outstanding. We have ample cash for growth and acquisitions, and a service in high demand with superior margins."

In addition to releasing Convalo's second quarter results, the company would also like to welcome Allan Dicks as their new Chief Financial Officer (CFO).

Allan Dicks

Allan is a CPA with more than twenty years of experience in accounting and finance with public and private Fortune 500 companies. He previously worked for PricewaterhouseCoopers in London, Johannesburg and Los Angeles, where he was part of the audit practice before transitioning into PwC's mergers and acquisitions practice. Here he advised on over 50 transactions in both Silicon Valley and Los Angeles, working with clients including Yahoo!, Activision, Universal Studios, as well as several large Private Equity funds. In 2003, Allan left PwC to join Dole Food Company, where he worked as CFO of Dole's Packaged Foods division, a billion dollar global business. He has since held VP Finance and CFO positions at large divisions of Fortune 200 businesses, including White Cap (a division of HD Supply) and Moark (a division of Land O' Lakes). Most recently Allan was the CFO of Universal Services of America, a private equity backed billion dollar business focused on the manned security industry in the US. Allan holds two degrees from the University of the Witwatersrand in South Africa.

"We are pleased to add Allan to our senior executive team," said Mr. Dalsin. "We are fortunate to attract his experience and talent. It is a testament to the potential this business has that we can attract this level of executive."

About Convalo

Convalo is an acquisition-oriented company focused on rolling up the US outpatient addiction rehabilitation market led by seasoned management with experience in both US healthcare acquisitions and healthcare service asset management. In May 2014, Convalo made its first acquisition of a small, local addiction rehabilitation center in Los Angeles. Since May, the business has operated under the brand name BLVD Centers (www.blvdcenters.com) in a luxury Hollywood, California location. BLVD offers patients access to a wide range of services, including addictive and co-occurring disorders, helpful to the recovery process. 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.

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.

(1) Adjusted EBITDA is defined as EBITDA plus Stock Based Compensation, excluding new facility start-up cost and transaction costs.

Forward-Looking Statements

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws. Implicit in this information, particularly in respect of the future outlook of Convalo and anticipated events or results, are assumptions based on beliefs of Convalo's senior management as well as information currently available to it. While these assumptions were considered reasonable by Convalo at the time of preparation, they may prove to be incorrect. Readers are cautioned that actual results are subject to a number of risks and uncertainties, including 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, low profit market segments as well as general economic, market and business conditions, and could differ materially from what is currently expected. This press release refers non-GAAP and non-IFRS financial measures that do not have standardized meaning prescribed by GAAP or IFRS. Convalo's presentation of these financial measures may not be comparable to similarly titled measures used by other companies. These financial measures are intended to provide additional information to investors concerning Convalo's performance.

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