Covalon Announces First Quarter Fiscal 2020 Results

Covalon Technologies Ltd. (the "Company" or "Covalon") (TSXV: COV; OTCQX: CVALF), an advanced medical technologies company, today announces its first quarter fiscal 2020 results.

Brian Pedlar, Covalon’s President and CEO, said, “I am pleased that Covalon’s first quarter performance is very much on track in executing on our fiscal 2020 plan. The entire Covalon team is working diligently to achieve increased sales, operational efficiencies, and technological advances in response to changes that occurred to our Middle East business in 2019. We are adapting as quickly as possible and are making progress. Our lifesaving products continue to be well received by medical practitioners and patients alike. At the same time, we continue to advance our technology portfolio. I plan to make our shareholders more aware of these achievements during 2020.

“This quarter’s revenue was heavily influenced by our success in the United States, which accounted for 81% of our revenue in the first quarter of 2020, compared to 76% last year in the same quarter. Our revenue in the United States was up 17% compared to last year and represents growth in both our sales to hospitals and our advanced wound care distribution channel. We are continuing to build awareness of our infection prevention products in our new 1,900 United States hospital and medical centre customer base.

“Our Middle East business, at $0.9 million, was down in the first quarter by $0.7 million compared to last year. It is still very difficult to predict the volume and timing of business in Saudi Arabia, particularly in light of the current regional uncertainty. We continue to plan as if all shipments to Saudi Arabia are upsides and not part of our base operating plan. We are taking steps to strengthen our business in the region and I look forward to providing further updates as they occur.

“Many companies have recently announced that they have been, or expect to be, negatively impacted by the effects of coronavirus COVID19 on their supply chain, workforce, and customers. Fortunately, the majority of our infection prevention products, including IV Clear, AquaGuard, and our ColActive Plus family of advanced wound care products, are manufactured in the United States, and the supply chains for these products are not anticipated to be adversely affected by COVID-19. Some of our CovaWound line of advanced wound care products are manufactured in China, and we have experienced some delays in shipments. In fiscal 2019, approximately 8% of our revenue was derived from products manufactured in China. Covalon continues to assess the impact that a prolonged pandemic outbreak may have on our business.”