Kovo HealthTech Corporation Completes Acquisition of Midwest Medical Billing, Service Inc.
9th Successful Acquisition Expected to Increase Annualized Revenue Run Rate to Approximately USD$5M Upon Closing
Vancouver, British Columbia--(Newsfile Corp. - July 6, 2021) - Kovo HealthTech Corporation (TSXV: KOVO) ("Kovo" or the "Company"), a leader in Revenue Cycle Management ("RCM") and healthcare technology, announced today it has completed the acquisition of Midwest Medical Billing, Service Inc. ("Midwest Medical" or the "Seller").
Acquisition Expected to Increase Revenues by Approximately 34%
The acquisition, which was previously announced on June 14, 2021, is expected to be immediately accretive to Kovo as Midwest Medical Billing recorded Trailing Twelve Month (TTM) revenues of $1.123 million USD with EBITDA of approximately 17% net of synergies.
"New Efficiencies" Advance Kovo's Strategic Acquisition Strategy
"Midwest Medical is a trusted name with long-standing clients. Working together, as the newest member of the Kovo family, we expect to introduce new efficiencies and digital technologies that will empower the Midwest team and its clients to continue to provide quality healthcare experiences. For Kovo and our shareholders, this is an important step in our long-term, acquisition growth strategy — and showcases the company's focus on results," explains Kovo CEO Greg Noble.
Omaha, Nebraska-based Midwest Medical is a Revenue Cycle Management specialist firm that has been in business for more than 11 years and provides RCM services for more than 100 clients. Under the terms of the acquisition, the Company has, through a wholly-owned subsidiary, purchased substantially all of the assets of Midwest Medical Billing, including associated trademarks, trade names, brand names goodwill, customer lists and customer contracts.
Under the terms of the acquisition, Kovo: (i) paid to the Seller cash consideration of USD$50,000; and (ii) issued 1,111,881 common shares of the Company (the "Consideration Shares") at a price per Consideration Share of USD$1.01 (approximately CAD$1.20 per Consideration Share). All Consideration Shares will be subject to a four month hold under applicable securities laws. In addition, the Company granted 500,000 incentive stock options to the Seller, which are exercisable at CAD$0.77 per share for a period of five years — and will be subject to a four month hold under applicable securities laws.
These shares represent approximately 3.5% pro forma dilution at today's outstanding share count for an increase in revenue of approximately 34% — based on Kovo's trailing twelve month revenue up to March 31, 2021 of USD$3.281 million — and the additional USD$1.123 million gained through the acquisition.
Revenue Cycle Management (RCM)
Kovo HealthTech Corporation is a growing healthcare technology company that specializes in RCM services and software for US healthcare clinics, hospitals and private practices. RCM is a process used by healthcare providers in the US and globally to digitally track and manage patient care registration, services, billing and payments in a seamless way. Effective RCM practices are essential to ensure health care settings maintain the financial viability that allows them to provide ongoing quality care for their patients.
The Company's focus is organic growth of its core RCM business and acquiring profitable RCM related businesses and systems within the US. Kovo optimizes acquired businesses by leveraging its over 20 years of operating experience and proprietary technology.
To date, Kovo has completed nine successful acquisitions and achieved approximately 366% revenue growth on its RCM revenue in the last fiscal year, not including the Midwest Medical acquisition. Prior to the Midwest Medical acquisition, Kovo was processing approximately $71M USD annually in RCM claims and its customers service approximately 2.6 million patients. The Company worked with Lawrence Evans & Co LLC on this acquisition and related fees of approximately eight per cent are associated with the transaction. The Company is not assuming debt as a result of this acquisition.
The securities referenced herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "1933 Act"), or any U.S. state securities laws, and may not be offered or sold in the United States without registration under the 1933 Act and all applicable state securities laws or compliance with the requirements of an applicable exemption therefrom. This news release shall not constitute an offer to sell or the solicitation of an offer to buy any such securities in the United States, nor shall there be any sale of any such securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.
About Kovo HealthTech Corporation
Kovo is a leader in healthcare technology and Revenue Cycle Management services. Kovo creates, acquires and grows businesses to better the healthcare experience within the patient encounter continuum. To learn more about Kovo and to keep up-to-date on Kovo news, visit www.kovo.co.
For more information:
Greg Noble, CEO
Forward-Looking Information and Statements
This press release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") concerning the Company and its subsidiaries within the meaning of applicable securities laws. Forward-looking information may relate to the future financial outlook and anticipated events or results of the Company and may include information regarding the Company's financial position, business strategy, growth strategies, acquisition prospects and plans, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. Particularly, information regarding the Company's expectations of future results, performance, achievements, prospects or opportunities or the markets in which the Company operates is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects", "budgets", "scheduled", "estimates", "outlook", "forecasts", "projects", "prospects", "strategy", "intends", "anticipates", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", or "will" occur. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances.
Many factors could cause the Company's actual results, performance, or achievements to be materially different from any future results, performance, or achievements that may be expressed or implied by such forward-looking information, including, without limitation, those listed in the "Risk Factors" section of the final prospectus of the Company dated May 26, 2021. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance, or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this press release.
Forward-looking information, by its nature, is based on the Company's opinions, estimates and assumptions in light of management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors that the Company currently believes are appropriate and reasonable in the circumstances. Those factors should not be construed as exhaustive. Despite a careful process to prepare and review forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. These factors should be considered carefully, and readers should not place undue reliance on the forward-looking information. Although the Company bases its forward-looking information on assumptions that it believes were reasonable when made, which include, but are not limited to, assumptions with respect to the Company's future growth potential, results of operations, future prospects and opportunities, execution of the Company's business strategy, there being no material variations in the current tax and regulatory environments, future levels of indebtedness and current economic conditions remaining unchanged, the Company cautions readers that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, and the development of the industry in which the Company operates may differ materially from the forward-looking statements contained in this press release. In addition, even if the Company's results of operations, financial condition and liquidity, and the development of the industry in which it operates are consistent with the forward-looking information contained in this press release, those results or developments may not be indicative of results or developments in subsequent periods.
Although the Company has attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to the Company or that the Company presently believes are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information, which speaks only as of the date made (or as of the date they are otherwise stated to be made). Any forward-looking statement that is made in this press release speaks only as of the date of such statement.
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