LOS ANGELES, CALIFORNIA--(Marketwired - Jan. 25, 2016) - 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 November 30, 2015.

Convalo's 2015 fourth quarter financial statements and accompanying Management's Discussion & Analysis (MD&A) are available at www.sedar.com. All amounts are in Canadian dollars and are based on our interim consolidated financial statements and accompanying MD&A for the quarter and twelve months ended November 30, 2015 and related notes prepared in accordance with International Financial Reporting Standards (IFRS), unless otherwise noted.

Financial Highlights:

  • For the 4th fiscal quarter ending November 30, 2015 revenues exceeded $8 million, an increase of 42% from the previous quarter.
  • Revenue growth trend since launch:
    • $5.7 million of revenue generated for the 3rd fiscal quarter ending August 30, 2015.
    • $2.3 million of revenue generated for the 2nd fiscal quarter ending May 31, 2015.
    • $1.2 million of revenue generated for the 1st fiscal quarter ending February 28, 2015.
    • $345,000 of revenue generated for the 4th fiscal quarter ending November 30, 2014.

  • Increased investment in sales and marketing spending by $1 million over the prior quarter in advance of establishing a national footprint by the end of 2016.
  • Adjusted EBITDA(1) before investment in sales and marketing for the fourth quarter was $2.8 million, a more than 70% increase in profit for the second consecutive quarter.
  • Adjusted operating margin(2), which excludes general and administration costs, consisting primarily of corporate overhead such as public company costs, were in excess of 37% for the quarter.
  • Cash on the balance sheet as of November 30, 2015, was $24 million.

"We have now seen five consecutives quarters of revenue and profit growth as we enter our second year of business," said Michael Dalsin, Chairman of Convalo. "The results have been quite impressive. Revenue went from about $345,000 in our first quarter to over $8 million in just five quarters. This aggressive revenue growth was accompanied by superior profit margins, resulting in $5.7 million of adjusted operating margin just in the last two quarters.

"After demonstrating success in California, we are deep in the process of extending our model to new locations. To achieve our growth targets, we have hired several senior positions, including a VP of Pod Launch, to exclusively focus on opening new locations quickly. I look forward to the financial results in the quarters to come as we build out the new facilities in each city," continued Mr. Dalsin. "As an update on our current progress, we expect to have four full "pods" in California by the spring time. Pods consist of a large outpatient center, 12-18 bed detox center, a lab, and an intake office facility. The four California pods, three of which have been launched, are expected to generate over $50,000,000 in annual sales by the end of the year and draw from the major cities in the state including Los Angeles, San Francisco and San Diego."

"In the summer, we plan to move to other major cities in the West and Midwest before establishing an East coast operation," continued Mr. Dalsin, "all on our way to creating a nationwide footprint with a dozen pods."

In addition to posting Convalo's fourth fiscal quarter results, the company would also like to welcome Stampp Corbin as its new Chief Executive Officer (CEO).

Stampp Corbin, CEO

Mr. Corbin has more than 10 years experience as a healthcare services senior executive leader. Previous to his healthcare experience, Mr. Corbin was the CEO of several successful venture-backed technology companies. Mr. Corbin has an B.A. in Economics from Stanford University and an MBA from Harvard Business School. Mr. Corbin previously served as the Vice Chairman of the Board of Trustees for Mount Carmel Health System, a $1.8 billion healthcare organization with hospitals in Central Ohio.

"We are pleased to add Stampp to our senior executive team," said Mr. Dalsin, non-executive Chairman. "We are fortunate to attract his experience and talent. It is a testament to the potential this business has that we can attract this level of executive. Roger Greene and I will transition to non-executive Vice Chairman and Chairman, respectively."

Convalo will establish the quarter ending February as its last quarter in its fiscal year effective immediately. This change is being made to give the investment community better metrics with which to compare quarters. For details regarding the length and ending dates of the financial periods, including the comparative periods, of the interim and annual financial statements to be filed for Convalo's transition year and its new fiscal year, reference is made to the Notice of Change of Fiscal Year End filed by Convalo and available at www.sedar.com.

Additionally, Convalo was recently added to the TSX Venture Select Index.

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. In May 2014, Convalo made its first acquisition of a small, local addiction rehabilitation center in Los Angeles. Since August 2014, 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.

Non-GAAP Measures

Convalo uses a number of financial measures to assess its performance and are intended to provide additional information to investors concerning Convalo. Some of these measures, including, adjusted EBITDA and adjusted operating margin, are not calculated in accordance with Generally Accepted Accounting Principles (GAAP), which are based on International Financial Reporting Standards (IFRS), are not defined by GAAP and do not have standardized meanings that would ensure consistency and comparability between companies using these measures. These non-GAAP measures are used throughout this news release and are defined below:

(1) Adjusted EBITDA is defined as EBITDA plus Stock Based Compensation, excluding new facility start-up cost and transaction costs. Adjusted EBITDA and Adjusted EBITDA before sales and marketing are reconciled to net income/loss as follows:
Months Ended
November 30, 2015
Months Ended
November 30, 2014
Months Ended
November 30, 2015
Months Ended
November 30, 2014
Net Income (loss) $ 132 $ (693 ) $ (499 ) $ (1,882 )
Add back:
Depreciation and amortization 96 2 149 5
Interest expense/(interest income) 37 - 20 -
Provision for income taxes - - - -
Stock based compensation 801 250 2,339 1,060
Transaction costs - - 350 -
Severance costs 95 - 95 -
Adjusted EBITDA $ 1,161 $ (441 ) $ 2,454 $ (817 )
Add back:
New facility start-up costs 95 - 572 -
Adjusted EBITDA before new facility start-up costs $ 1,256 $ (441 ) $ 3,026 $ (817 )
Sales and marketing 1,498 242 3,158 543
Adjusted EBITDA before sales and marketing $ 2,754 $ (199 ) $ 6,184 $ (274 )
(2) Adjusted operating margin is reconciled to Adjusted EBITDA above as follows:
Adjusted EBITDA before new facility start-up costs $ 1,256 $ (441 ) $ 3,026 $ (817 )
Add: General and administrative 1,813 242 4,237 389
Transaction Costs - - 350 -
Severance Costs 95 - 95 -
Adjusted Operating Margin $ 2,974 $ (199 ) $ 6,818 $ (428 )

Forward-Looking Statements

Information in this news release that is not current or historical factual information may constitute forward-looking information within the meaning of securities laws, including Convalo extending its model to new locations, having four full "pods" in California by the spring time, the four California pods generating over $50,000,000 in annual sales by the end of this calendar year, Convalo moving to major cities in the West and Midwest by the summer, and Convalo creating a nationwide footprint with a dozen pods. 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, such as reimbursement rates, certain costs and exchange rates. 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 operations, 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, difficulty integrating newly acquired businesses, low profit market segments as well as general economic, market and business conditions, and could differ materially from what is currently expected.

Neither the 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.

Contact Information:

Convalo Health International, Corp.
Dennis Wilson
Corporate Affairs
(323) 844-1298