Convalo Health International, Corp.
TSX VENTURE : CXV

February 17, 2015 09:00 ET

Convalo Health International, Corp. to Commence Trading on the TSX Venture Exchange

LOS ANGELES, CALIFORNIA--(Marketwired - Feb. 17, 2015) -

NOT FOR DISSEMINATION IN THE UNITED STATES OR FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES AND DOES NOT CONSTITUTE AN OFFER OF THE SECURITIES DESCRIBED HEREIN.

Convalo Health International, Corp. (Convalo) (TSX VENTURE:CXV) has commenced trading on the TSX Venture Exchange today, February 17, 2015, under the trading ticker symbol CXV. Convalo is pleased to be the first US addiction services company to go public on the TSX-V. The details of the transaction can be viewed on SEDAR.

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.

A Fast Growth Market

The drug, alcohol, and addiction market in the US exceeded $35 billion in 2014 and continues to grow rapidly as other addictions, such as internet addiction, sex addiction, anxiety disorders, prescription drug addition, eating disorders and post-traumatic stress disorders become covered by insurance under recent legislation.

The Patient Protection and Affordable Care Act and the Mental Health Parity and Addiction Equity Act (the "Care and Parity Acts") requires every American to have health insurance and requires health insurance providers to cover addiction services under their insurance coverage in the United States.

Prior to the Care and Parity Acts, young adults between 18 and 28 may not have had insurance to pay for their treatment. If they did, access to insurance covered treatment was limited. As a result, treatment was largely paid for out-of-pocket and many went untreated. The passing of these Acts has created a favorable supply/demand imbalance and fueled growth in the US addiction treatment market.

Acquisition Pipeline

Convalo has a deep pipeline of potential acquisitions which operate across the US. Generally, these undercapitalized companies are small and limited in their ability to serve the fast growing market. Convalo plans to acquire them at attractive multiples and increase their revenues and profits with a five-point plan.

Five Point Post Acquisition Organic Growth Plan

  1. Build-out new luxury location within in close proximity to current, clinical office location and move all patients to the new center.
  2. Secure highest level of facility licensing to accept all types of patient conditions and charge insurance carriers the highest possible rates.
  3. Re-brand the location to young adults, including an internet-based marketing approach.
  4. Expand marketing relationships and increase the number of referrals by hiring and training a marketing/sales team.
  5. Retain owner, clinical staff and revenues.

Current Operations

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.

Financial and business highlights at listing:

- Annualized revenue in excess of $4,000,000.
- Annualized organic growth from first acquisition of over 200%.
- Operationally profitable and cash flow positive on an enterprise basis.
- In excess of $5,000,000 in cash for immediate use on future acquisitions and capex.
- No debt and Accounts Receivable in excess of $500,000.
- First center capacity of 100 patients per month (currently at 33%).
- Second center in Los Angeles scheduled to open shortly with capacity of 75 patients.

"Through our listing, we are in a position to execute on our roll up plan for 2015," said Michael Dalsin, Chairman and CEO of Convalo. "This market is highly fragmented and very fast growing because of the insurance reimbursement now available to millions of Americans. We are at the very beginning of our process. We have plenty of cash to execute on several acquisitions. We have a number of accretive acquisitions lined up. Our first acquisition has been quite a success. After just 8 months of ownership, we have increased sales from $80,000 a month to over $300,000 a month."

Capitalization

At listing, 106,059,550 common shares of Convalo are outstanding,74,138,400 common shares are reserved for issuance and 39,445,834 common shares were subject to escrow or hold periods with 10% of those shares released as of February 11, 2015.

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 acquisitions, 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, low profit market segments as well as general economic, market and business conditions, and could differ materially from what is currently expected.

Neither 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.

This press release does not constitute and the subject matter hereof is not, an offer for sale or a solicitation of an offer to buy, in the United States or to any "U.S. Person" (as such term is defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "1933 Act")) of any equity or other securities of Convalo. The securities of PHM Convalo not been registered under the 1933 Act and may not be offered or sold in the United States (or to a U.S. Person) absent registration under the 1933 Act or an applicable exemption from the registration requirements of the 1933 Act.

Contact Information