Covalon CEO Brian Pedlar said, “I am very excited about this acquisition. AquaGuard’s sales team and specialized product line are a perfect synergistic fit for Covalon’s business. AquaGuard’s sales team has built strong relationships with clinicians and hospital staff throughout the United States that make decisions on the very same products Covalon makes—vascular access dressings, surgical site management products, and advanced wound care dressings.”
Under the terms of the definitive agreement, Covalon will acquire all of the assets and staff dedicated to the AquaGuard business from Cenorin LLC. Covalon anticipates the transaction will close in less than 60 days and is subject to customary closing conditions and TSX Venture Exchange and lender approval. The consideration of $16.1 million is comprised of the following:
- $4.7 million in cash on closing
- $650,000 of shares of Covalon issued on closing and held in escrow for up to two years
- $3.32 million, payable 12 months from the closing date
- $6.5 million, payable 24 months from closing date
- $920,000 of assumed liabilities payable to management and key staff of AquaGuard by issuance of shares of Covalon on closing
- In addition, there is potential contingent consideration of up to $1.17 million payable upon achievement of certain revenue targets by Dec. 31, 2018.
AquaGuard President Gerry Arambula stated, “The AquaGuard sales and operations teams are very excited about joining forces with Covalon. Our AquaGuard team has built a profitable and growing business that is well-positioned to represent and sell many of Covalon’s infection management products, such as IV Clear, immediately into our customer base. We are looking forward to working with the Covalon team to transform Covalon’s business in the United States. Products will be made available through AquaGuard’s established distribution channels at key hospitals and group purchasing organizations across the United States, as well as through third-party distribution partners, including Amazon.”
Arambula and existing AquaGuard leadership will continue to play key roles in leading the business going forward. Following the closing of the transaction, Covalon will have in the United States a customer base of over 1,500 hospitals and clinics. Covalon also anticipates an opportunity to sell AquaGuard’s products through Covalon’s international distribution channels.
During its last fiscal year ended Dec. 31, 2017, the AquaGuard business recorded $11.1 million in revenue and $683,000 in profit before taxes.
Covalon’s Board of Directors unanimously approved entering into the agreement. Acting as financial and legal advisors to Covalon are Morrison Park Advisors, and Stikeman Elliott LLP, respectively.
AquaGuard specializes in infection protection products that protect surgical incisions, intravenous (IV) sites, catheters, PICC lines, and other dressings from water and other moisture while a patient showers. AquaGuard’s family of products provide protection for sites and dressings all over the body, and can be applied by most patients without the need of assistance from medical professionals.
Covalon Technologies Ltd. researches, develops, and commercializes new healthcare technologies that help save lives around the world. Covalon's patented technologies, products, and services address the advanced healthcare needs of medical device companies, healthcare providers, and individual consumers. Covalon's technologies are used to prevent, detect, and manage medical conditions in specialty areas such as infection control, vascular access, surgical procedures, advanced wound care, and medical device coatings.