The 9th successful acquisition is expected to increase the annualized revenue run rate to approximately US$5 million at closing
Vancouver, British Columbia–(Newsfile Corp. – July 06, 2021) – Kovo HealthTech Corporation (TSXV: KOVO) (“Kovo“or the”Company“), a leader in Revenue Cycle Management (“RCM”) and healthcare technology, announced today that it has completed the acquisition of Midwest Medical Billing, Service Inc. (“Midwest Medical“or the”Seller“).
The acquisition is expected to increase revenue by about 34%
The takeover, that was previously announced on June 14, 2021is expected to attract Kovo immediately as Midwest Medical Billing recorded Trailing Twelve Month (TTM) revenue of USD $1.123 million with EBITDA of approximately 17% excluding synergies.
“New Efficiencies” Advancing Kovo's Strategic Acquisition Strategy
“Midwest Medical is a trusted name with long-standing customers. Working together, as the newest member of the Kovo family, we look forward to introducing new efficiencies and digital technologies that will empower the Midwest team and its customers 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 demonstrates the company's focus on results,” explains Kovo CEO Greg Noble.
Headquartered in Omaha, Nebraska, Midwest Medical is a specialty revenue cycle management company that has been in business for over 11 years and provides RCM services for over 100 clients. Pursuant to the terms of the acquisition, the Company, through a wholly owned subsidiary, has purchased substantially all of the assets of Midwest Medical Billing, including its related trademarks, trade names, trade names, customer lists and customer contracts.
Pursuant to the terms of the acquisition, Kovo: (i) paid the Seller a consideration of USD 50,000 in cash; and (ii) issued 1,111,881 common shares of the Company (the “Award Shares”) at a price per Purchase Share of USD 1.01 (approximately CAD $1.20 per Exchange Share). All Consideration Shares will be subject to a four-month hold under applicable securities laws. In addition, the Company granted 500,000 stock options to the Seller, which are exercisable at CAD$0.77 per share over 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 to today's total shares outstanding for revenue growth of approximately 34% — based on Kovo's trailing twelve-month revenue through March 31, 2021 of $3.281 million — and the additional $1.123 million acquired through the acquisition.
Revenue Cycle Management (RCM)
Kovo HealthTech Corporation is a growing healthcare technology company specializing in RCM services and software for clinics, hospitals and private practices in the US. RCM is a process used by healthcare providers in the US and worldwide to digitally track and manage patient care enrollment, services, billing and payments in a seamless manner. Effective RCM practices are essential to ensure that healthcare facilities maintain the financial viability that allows them to provide continued quality care to their patients.
The Company is focused on organically growing its core RCM business and acquiring profitable RCM-related businesses and systems within the US. Kovo optimizes acquired businesses by leveraging over 20 years of operating experience and proprietary technology.
To date, Kovo has completed nine successful acquisitions and achieved revenue growth of approximately 366% over its RCM revenue in the last fiscal year, excluding the acquisition of Midwest Medical. Prior to the acquisition of Midwest Medical, Kovo processed approximately US$71 million annually in RCM claims and served its customers approximately 2.6 million patients. The Company partnered with Lawrence Evans & Co LLC for this acquisition and related fees of approximately eight percent are associated with the transaction. The Company assumes no debt as a result of this acquisition.
The securities referred to herein have not been and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”), or any US state securities law, and do not may be offered or sold in the United States States without registration under the 1933 Act and all applicable state securities laws or compliance with the requirements of an applicable exemption therefrom. This press release will not constitute an offer to sell or solicitation of an offer to buy such securities in the United States, nor will there be any sale of 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 improve the healthcare experience in the context of the patient encounter. To learn more about Kovo and stay up to date with Kovo news, visit www.kovo.co.
For more information:
Greg Noble, CEO
investors@kovo.co
1-866-558-6777
Debra Quinn
deb@kovo.co
1-866-558-6777
Forward-Looking Information and Statements
This press release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking information”) relating to the Company and its subsidiaries within the meaning of applicable securities laws. Forward-looking information may relate to the Company's future financial prospects and expected events or results and may include information about the Company's financial position, business strategy, growth strategies, acquisition prospects and plans, markets, budgets, operations, financial results, taxes, dividend policy, plans and objectives. In particular, information about the Company's expectations for 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 may be identified by the use of forward-looking terminology such as “plans,” “goals,” “expects,” “budgets,” “planned,” “estimates,” “outlook,” “forecasts,” “projects “, “outlooks”, “strategy”, “intends”, “expects”, “believes” or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “will”, ” could” or “will” appear. In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements that contain forward-looking information are not historical facts, but represent expectations, management's estimates and forecasts regarding future events or circumstances.
Many factors could cause the Company's actual results, performance or achievements to differ materially from any future results, performance or achievements that may be expressed or implied by such forward-looking information, including, without limitation, those set forth in “Risk Factors” section of the Company's final prospectus dated May 26, 2021. If one or more of these risks or uncertainties materialize or if the assumptions underlying the forward-looking statements prove incorrect, the actual results, performance or achievements may differ 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 understanding of historical trends, current conditions and anticipated future developments, as well as other factors that the Company at this time believes that it is appropriate and reasonable in the circumstances. These factors should not be construed as exhaustive. Despite the careful process of preparing and reviewing forward-looking information, there can be no assurance that the underlying opinions, estimates and assumptions will prove to be correct. These factors should be carefully considered and readers should not place undue reliance on forward-looking information. Although the Company bases its forward-looking information on assumptions it believes were reasonable when made, which include, but are not limited to, assumptions about the Company's future growth potential, results of operations, future prospects and opportunities, the execution of the Company's business strategy, as there are no material deviations in the current tax and regulatory environment, future debt levels and current economic conditions remain unchanged, the Company cautions readers that forward-looking statements are not guarantees of future performance and that the actual results of our operations, financial condition and liquidity and growth 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 results of operations, financial condition and liquidity of the Company and the development of the industry in which it operates are consistent with the forward-looking information contained in this press release, such results or developments may not be indicative of results or developments in subsequent periods.
Although the Company has attempted to identify significant risk factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be other risk factors that are not currently known to the Company or that the Company currently currently believes that they are not material that could also cause actual results or future events to differ materially from those expressed in this forward-looking information. There can be no assurance that this information will prove to be accurate, as actual results and future events may differ materially from those anticipated in this 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 otherwise stated). Any forward-looking statement made in this press release speaks only as of the date of this statement.
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