RETRANSMISSION: Kovo HealthTech Corporation Signs Non-Binding Acquisition LOI; Announces Private Placement of Up to $2.5 Million

Company Enters Diligence Phase on 10th Acquisition

Funds to be Used Accelerate Kovo’s Acquisition and Growth Strategy

Vancouver, British Columbia–(Newsfile Corp. – September 7, 2021) – Kovo HealthTech Corporation (TSXV: KOVO) (“Kovo” or the “Company“) — a leader in Revenue Cycle Management (“RCM“) and healthcare technology — announced today has entered into a non-binding letter of intent (the “Non-Binding LOI“) to acquire an RCM specialist firm based in the US Midwest (the “Seller“).

The Company also confirmed it has entered into a marketed placement offering agreement with Research Capital Corporation (“RCC“) to provide financing of up to CAD$2.5 million. The net proceeds are intended to be used to complete prospective acquisitions in support of Kovo’s growth strategy.

Building Value with Immediate, Accretive Acquisition Revenue and Earnings Growth

“Kovo selects its acquisitions based on the anticipated ease of integration of the target’s revenues into our platform, and an expected 20-50% operational efficiency gain in EBITDA,” explains Kovo CEO Greg Noble.

Noble says the company’s focused acquisition strategy was a significant factor in its ability to generate 43% year-over-year organic growth on its core RCM software and services business for the quarter ending June 30, 2021.

Proposed Deal Enters Due Diligence

Under the terms of the Non-Binding LOI, the Company has the option to, through a wholly-owned subsidiary, purchase substantially all of the assets of the seller, including associated trademarks, trade names, brand names goodwill, customer lists and customer contracts.

The completion of the acquisition is subject to due diligence and the satisfaction of a number of closing conditions, including receipt of the approval of the TSXV.

Provided that all closing conditions are satisfied, the acquisition is expected to close in Fall 2021. Detailed terms and conditions will be disclosed in further press releases and online at www.sedar.com as the proposed transaction proceeds. There can be no assurance that the transaction will be completed on the terms contained herein or at all.

Private Placement Partnership with RCC

Under the terms of the agreement, RCC will act as lead agent and sole book runner on a marketed private placement offering (the “Offering“) of units of the Company at a price to be determined by the market context for gross proceeds of up to CAD$2.5 million.

Each unit will consist of one common share of the Company and one-half of one common share purchase warrant that will entitle the holder to purchase one common share at an exercise price and expiry term to be determined in the context of the market. The Company is granting RCC an option (the “Over-Allotment Option“) to increase the size of the offering by up to 20% in units, exercisable at any time up to 48 hours prior to closing.

The Offering is subject to certain conditions including, but not limited to, the receipt of all necessary approvals including the approval of the TSX Venture Exchange. The units to be issued under the Offering will have a hold period of four months and one day from closing of the Offering.

The securities described herein have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act“), or any state securities laws, and accordingly, may not be offered or sold within the United States except in compliance with the registration requirements of the U.S. Securities Act and applicable state securities requirements or pursuant to exemptions therefrom. This press release does not constitute an offer to sell or a solicitation to buy any securities in any jurisdiction.

About Kovo HealthTech Corporation

Kovo is a leader in healthcare technology and Revenue Cycle Management software and 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.

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.

This press release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company’s results of operations from management’s perspective. The Company’s definitions of non-IFRS measures used in this release may not be the same as the definitions for such measures used by other companies in their reporting. Non-IFRS measures have limitations as analytical tools and should not be considered in isolation nor as a substitute for analysis of the Company’s financial information reported under IFRS. The Company uses non-IFRS financial measures, including “EBITDA”, “Adjusted EBITDA” and “Adjusted EBITDA Margin” to provide investors with supplemental measures of its operating performance and to eliminate items that have less bearing on operating performance or operating conditions and thus highlight trends in its core business that may not otherwise be apparent when relying solely on

IFRS financial measures. “EBITDA” means net income (loss) before amortization and depreciation expenses, finance and interest costs, and provision for income taxes. *”Adjusted EBITDA” adjusts EBITDA for stock-based compensation expense, transactional gains or losses on assets, asset impairment charges, interest income, net foreign exchange gains or losses, income tax expense or recovery, forgivable one-time government financial payments related to the COVID-19 pandemic (“PPP Loans”), and any transactional expenses. Specifically, the Company believes that Adjusted EBITDA, when viewed with the Company’s results under IFRS and the accompanying reconciliations, provides useful information about the Company’s business without regard to potential distortions. By eliminating potential differences in results of operations between periods caused by factors such as depreciation and amortization methods and restructuring, impairment and other charges, the Company believes that Adjusted EBITDA can provide a useful additional basis for comparing the current performance of the underlying operations being evaluated. The Company believes that securities analysts, investors and other interested parties frequently use non-IFRS financial measures in the evaluation of issuers. The Company’s management also uses non-IFRS financial measures in order to facilitate operating performance comparisons from period to period.

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.

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.

For more information:

Greg Noble, CEO
[email protected]
1-866-558-6777

Debra Quinn
[email protected]
1-866-558-6777

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/95709

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