Convalo Health International, Corp.

Convalo Health International, Corp.

September 30, 2015 09:00 ET

Convalo Health International Highlights Record Revenue and EBITDA for the Quarter Ending August 31, 2015

LOS ANGELES, CALIFORNIA--(Marketwired - Sept. 30, 2015) -


Convalo Health International, Corp. (Convalo) (TSX VENTURE:CXV), a company focused on the US addiction rehabilitation market, is pleased to announce a record quarter of revenue and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter ending August 31, 2015.

Total quarterly revenue exceeded $5.6 million, as compared with revenue of $2.3 million for the previous quarter ending May 31, 2015, a 145% growth rate quarter over quarter, and an annualized growth rate of over 580%. This quarter included only two months of revenue from the acquisition of Hollywood Detox and ARTS.

September annualized run rate revenue is expected to exceed $30 million.

Adjusted EBITDA rose to over $1 million for the quarter, an increase of more than 127% from the previous quarter. Excluding corporate overhead, such as public company cost, operating margins were in excess of 22%.

Full results are expected to be posted on SEDAR before their due date of October 31, 2015. The Convalo management team will hold an earnings call to review the quarter in detail in early November.

Cash on the balance sheet as of September 15, 2015, was $24 million.

"This quarter is a turning point for Convalo," said Michael Dalsin, Chairman of Convalo Health International. "Two of the three months of this quarter represent a fully integrated addiction services company, or what we call a 'pod' in the heart of Los Angeles. That includes a detox center, a men's and women's residential center and an outpatient center. We have finally moved from the start-up phase to the fast growth phase of this company. We have systematized our growth plan, bolstered our executive team and have visibility into the next few years of our business. We have launched our second pod in West Los Angeles and expect to launch our third pod in San Francisco very soon. I expect the impact of these investments to be reflected in next quarters financials."

"Most gratifying of all, this quarter, and the subsequent month since, has proven our investment thesis. We can launch a pod with a limited capital investment and create a high margin, vertically integrated business that can get to full capacity in a very short period of time, in the case of central Los Angeles, under one year. The result is a very high return on equity. We have over $24 million in cash on the balance sheet which is certainly enough, without debt, to launch four additional pods in other cities around the United States. I expect each pod can generate significant revenue and earnings under the current reimbursement rates. I believe we are at the beginning of a huge market expansion and I expect that in the next 18 months, we will be able to launch these additional pods while the market is still young, maximizing our operating margins."

Pursuant to the news release dated May 20, 2015, Convalo has confirmed that the expiry date of the warrants outstanding, exercisable for 43,125,000 common shares of Convalo at $0.50 per share, will be accelerated to November 11, 2015, pursuant to the terms of the warrant certificates. The acceleration is a result of Convalo's share price achieving a volume-weighted average trading price greater than $0.60 for 20 consecutive trading days around the time of closing of the Hollywood Detox Center and Accredited Rehab and Treatment Services (ARTS) acquisition which was announced on May 20th, 2015. The warrants were originally issued pursuant to Convalo's bought-deal private placement of 43,125,000 units (with each unit consisting of one common share and one warrant) for gross proceeds of $17.25 million, which closed on April 22, 2015.

About Convalo

Convalo is focused on the US outpatient addiction rehabilitation market led by seasoned management with experience in both US healthcare acquisitions and healthcare service asset management. Through various brands and locations, Convalo 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.

Forward-Looking Statements

Certain statements in this press release about our current and future plans, expectations and intentions, results, levels of activity, performance, goals or achievements or any other future events or developments constitute forward-looking statements. The words "may", "will", "would", "should", "could", "expects", "plans", "intends", "trends", "indications", "anticipates", "believes", "estimates", "predicts", "likely" or "potential" or the negative or other variations of these words or other comparable words or phrases, are intended to identify forward-looking statements. Forward-looking statements are based on information currently available to us and on estimates and assumptions made by us regarding, among other things, general economic conditions and the competitive environment within the behavioral health industry in the United States, in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors that we believe are appropriate and reasonable in the circumstances, but there can be no assurance that such estimates and assumptions will prove to be correct. Many factors could cause our actual results, level of activity, performance or achievements or future events or developments to differ materially from those expressed or implied by the forward-looking statements, including, but not limited to, the factors discussed in the "Risks and Uncertainties" section of the Corporation's management's discussion and analysis for Fiscal 2014 (available on SEDAR at, 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.

These factors are not intended to represent a complete list of the factors that could affect us; however, they should be considered carefully. The purpose of the forward-looking statements is to provide the reader with a description of management's expectations regarding the Corporation's financial performance and may not be appropriate for other purposes; readers should not place undue reliance on forward-looking statements made herein. Furthermore, unless otherwise stated, the forward-looking statements contained in this press release are made as at September 30, 2015 and we have no intention and undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement.

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.

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 news release does not constitute an offer for sale of securities for sale, nor a solicitation for offers to buy any securities. 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.

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