Source: Salona Global Medical Device Corp.
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  • Salona Global Medical Device Corporation (SGMD) has acquired Simbex, LLC
  • Simbex is an IP-based business with a portfolio of revenue-generating products ranging from wearable technology to products for physical stability
  • An initial payment of US$3,500,000 will be followed by a contingent payment in January 2023 of up to US$3,500,000, and up to 6,383,954, based on Simbex’s 2022 performance
  • In order to receive the entire cash component of the earn-out, Simbex will require 2022 profits in excess of US$641,025
  • Salona Global Medical Device Corp. is a US-based, acquisition-focused medical device company
  • Salona Global Medical Device Corporation (SGMD) opened trading at C$0.92 per share

Salona Global Medical Device Corporation (SGMD) has acquired Simbex, LLC.

Simbex is an IP-based business with a portfolio of revenue and royalty-generating products ranging from wearable technology to products for physical stability. Simbex generated over $8,000,000 in audited revenues in 2020 with reported gross margins of 50 per cent and was cash-flow positive. With the closing of Simbex, management estimates Salona’s annualized run-rate revenue will top $24,000,000.

SGMD has plans to continue building out both the intellectual property portfolio and the domestic and international sales channels. SGMD has approximately $11,500,000 of enterprise net tangible assets.

Les Cross, Chairman and interim CEO of SGMD commented on the acquisition.

“We are excited that our second acquisition is finally in place. Navigating acquisitions through two regulatory regimes, US and Canadian, has been a bit frustrating for the management team and the shareholders. Our public listing took much longer than expected as has the acquisition process, but I am happy to say we have improved our regulatory efficiency without an increase to overhead and we look forward to the next set of acquisitions. I feel confident we can execute on our acquisition-oriented business plan with our existing balance sheet and we are looking forward to inviting more companies into the Salona family.”

“Simbex is promising because it develops IP and designs cutting edge medical devices in very specific, targeted markets. A significant revenue stream for Simbex is from wearable technology, including in football helmets, deployed at all levels of play from youth to professional in the U.S. to monitor and educate players and coaches around concussion injuries. Simbex also continues to develop technology for clients not operating in our market. As Simbex generates revenue and cash flow by designing products and creating IP for its clients, it simultaneously gains the expertise applicable to specific medical device markets we intend to serve. One key aspect of this acquisition is the commercialized expertise or IP rights that Simbex retains for products in markets their clients do not address, specifically the global healthcare market for recovery medicine that we do target.”

“With each accretive acquisition, we aim to increase EPS, and we are one step closer to becoming a global medical device company,” concluded Mr. Cross.

“With our previous announcement in July to acquire a company with a wide base of clinical customers in the U.S., we stand to benefit greatly as we aim to sell IP-driven products into that channel. We are planning to build a fully integrated company with a strategy of acquiring platform businesses that are already cash flow positive, and then improving our results through revenue enhancement and operational synergies. Our M&A team is working diligently so we can meet our goal of frequent and accretive deals.”

Payment for the acquisition will be largely performance-based.

An initial payment of US$3,500,000 followed by a contingent payment in January 2023 of up to US$3,500,000 and up to 6,383,954 shares will be based upon profitability milestones. In order to capture the entire cash component of the earn-out, Simbex will have to have 2022 profits in excess of US$641,025 and in order to earn the entire share allocation, profits in 2022 will have to be in excess of US$1,400,000. SGMD would close this transaction with existing cash on the balance sheet.

Salona Global Medical Device Corporation (SGMD) opened trading at C$0.92 per share.

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