Covalon (TSX-V: COV / OTCQX: CVALF) Fireside Chat with Mathieu Martin, Rivemont MicroCap Fund
Summary
Company Pitch: Covalon Technologies (COV) is a Canadian medtech focused on helping patients heal faster and preventing costly complications, with ~$33M CAD revenue and strong EBITDA.
Wound Care: The company’s collagen dressing is sold via an OEM model in a fragmented $10B market, driving low SG&A and meaningful growth runway in the US.
Vascular Access: Hospital-focused portfolio shows high growth with consistent sequential gains, highlighted by the Valguard product addressing critical catheter use cases.
Infection Prevention: Clinical data at Montefiore showed a >50% reduction in catheter-related bloodstream infections overall and 100% reduction in pediatric critical care, underscoring strong clinical and economic value.
Competitive Landscape: Competes against large players (e.g., 3M spinoff, BD, J&J Ethicon, Smith & Nephew) and smaller entrants, with product differentiation and agility cited as advantages.
AI Strategy: Management is deploying AI as a revenue force multiplier to scale customer-facing capabilities, in contrast to peers primarily using AI for cost reduction.
Capital Allocation & Outlook: Announced a $0.15 special dividend amid rising cash, with continued investments in automation and openness to tuck-in M&A, buybacks, and future dividends.
Transcript
love to introduce our next presentation here at the Planet Micro Cap Showcase Toronto in partnership with Micro Cap Club. We're doing a fireside chat hosted by Matthew Martin, portfolio manager at Remon Micro Cap Fund and it is with Kovalon Technologies. >> Okay. Uh thank you Bobby. Uh okay, let's start with the elevator pitch. Brent, uh you know, tell us more about what Kablan does. >> Sure. Hey, thanks a lot Matthew and uh good afternoon to everyone here. So Brent Ashton, I'm the CEO for Kovalon Technologies and really we're all about helping patients heal faster with less pain and uh we'll talk in a bit about preventing complications and how important that is. Uh so we're a about a 20-year-old company. Uh we we're headquartered here just outside of Toronto in Missaga. uh and uh trade on the uh the Toronto Stock Exchange, the Ventures, as well as the OTCQX in the US. Uh in the last 12 months, we've uh done about $33 million Canadian of revenue and about $4 million of adjusted EBA. And uh yeah, uh you know, on the preventing complications front, it's it's really a big part of our focus and and all of us want you know, a lot of these companies have different plays in different spaces. One of the things that's unique about medical is everyone here in this room watching online. Uh you you will probably be a customer of ours at some point or you have or will be. Um and uh that's our goal for sure. Uh but uh these complications can be really challenging. These are things like infections and skin tears caused by adhesives. And we really help our customers uh clinicians, different medical providers uh prevent those from happening uh saving lives uh and uh and making the overall patient experience a lot better. >> That's awesome. Great uh great mission. Um Brent, tell us more about your background. You know, I like to get started with an overview of the the management team. So, you know, how did you get involved with Colon and and what did you do before? >> Yeah. So uh you know I've I've spent most of the last 20 years almost 20 years in medtech. Uh the majority of that time uh prior to Kovalon with two really large multinational healthcare companies 3M healthcare which is now known as Sventum. Uh they spun off from 3M a couple years ago and Beckton Dickinson BD. And so at those at those companies I was running hundred couple hundred million to half billion dollar individual businesses and then the last call it five years before joining Kovalon kind of portfolios uh in the range of a billion and a half to two billion and a half. Uh so big large multinationals very global businesses. Um but when I was trying to think about okay well like what what did I want to do next? I really felt there was an opportunity to make a bigger impact uh with a smaller company and I'd known Kovalon for about 10 years dating back to when I was running 3M's vascular access business and uh I always saw them as a company that had some amazing technology. It's a really cool technology. Uh some very loyal customers uh making a big impact, but they just hadn't quite unlocked their full potential and I really felt like I could help guide our team uh to to achieving that. And so I joined Kovalon uh almost two years ago and uh it's been an amazing journey. Uh it's obviously uh going from you know bill billion dollar2 billion dollar slices of 2030 billion companies to a company the size of Kovalon. It's a it's a big difference. I've learned a ton. Uh I think I've made a big difference and uh it's just been great working with the team, working with our customers. It's one of the the benefits of of the medtech world. I've also worked in electronics and in the medtech world, nurses give you hugs and high fives and just are so grateful for the products we bring to them to help them, you know, save lives and make the patient experience better. The electronics side, you know, I didn't get a lot of hugs. Uh I got uh, you know, maybe a firm handshake was the best I got. So, it's been a great journey. What what were some of the key lessons that you learned at at uh you know 3ML care and BD that could apply to Kovan and and that you've applied coal on so far? >> Yeah, it's it's absolutely a case of uh have been applying them and I'd say there's a few uh one that that really jumps out. It was around prioritization and focus and uh you know at at 3M at BD this was this was critical. It's even more critical at Kovalon. I'll share that in a bit. But, you know, it was kind of an adage of just because you can do something doesn't mean you should. And I'd say where in my past where I've seen things get off the rails, it was when you were trying to do too much, spread too thin, and just really not knocking a smaller number of things out of the park. And when I came into Kovalon and and talked to our our management team, existing team, that that was a theme. There was a lot of like so many things we could do. we were candidly spread too thin doing too much and so pretty early on we really focused down we put a really big focus on our US product side of things uh so that's on the wound care side and on the uh vascular access side and uh it's paid off we've had some really strong success there so that prioritization and focus is one key I'd say and and this is kind of a yin-yang thing um optionality is another thing I learned and I'd say, you know, I was I was running a surgical business at 3 ammos, about a billion half dollar portfolio of uh different surgical uh surgical products and consumables, hardware, whatnot. And that was that was in like 2020. What what happened in 2020? COVID. So uh I I prior to getting into the surgical space I wouldn't have guessed but elective surgical procedures in the US uh and and maybe to a lesser extent around the world uh 60% of the mix. So overnight 60% of my business just went away. Uh but fortunately we had some other things. We had a hand sanitizer business and uh and that obviously picked up and we were able to quadruple our manufacturing output within I think it was 4 months. Uh so having those options is key. And so fast forward to Kovalon, I'd say it's been really helpful even though we're we're we're really dialing in the priorities uh and and focusing having options for the future and we've built up I think we've doubled or tripled the size of our kind of idea pipeline and there's so many things we could do in the future and you know things change circumstances change. I certainly hope we don't go through another co but uh as things change I think we have some good options for the future. So those are a couple of the big ones. >> Totally makes sense. Um okay, let's let's give people uh a bit more details on you know your two businesses uh you know wound care vascular access. What's the difference? Uh tell us more about about those. >> Absolutely. Thank you Matthew. uh very different businesses and I've I've been fortunate at my time at 3M and then BD was a little bit on the vascular access side as well but I ran both those businesses at at 3M healthcare so know the industry well you know the wound care business for us is uh it's a it's a bigger part of our revenue uh than uh it's more than half our revenue uh the vascular access side a little less than half and uh it's it's one where in the US which is you very a very very high percentage of our our geographic mix for that business small you know mid singledigit number of of customers. So we make products uh you can see them on the screen there the far right. So we make a collagen dressing uh that really helps wounds heal uh wounds chronic wounds that aren't going to heal on their own. It'll jumpst start their healing and uh uh small number of customers OEM type model uh which was smart. It was predated my time in the business, but it was a great decision by the company because that business is really fragmented, especially in the US where care gets given. It's it's uh wound clinics, hospitals, uh podiatry offices, general, you know, long-term care, etc. And so having someone else with a broader portfolio that can help cover has been has been really helpful. Uh so that's a a low SGNA model which fuels a lot of EBID for our company. Um it's a massive space overall. You know, it's like a $10 billion space. Uh and the the the market we play in directly is probably around 150 $200 million. So there's there still a lot of growth, a lot of headway there. Um we've had a lot of success in that space. On the vascular access and and surgical side, very different business, different model. Uh and for us, it's more of a traditional medtech model where, you know, we we own the sales and marketing, we drive that. So, it's a little more within our direct control and uh and uh it's it's one that has really grown super strong. I think our our keer over the last uh three or four years is uh like in the high 40s. Uh so some really strong growth there making a huge difference. Uh but that's more of a hospital business for us as well. Um uh a very high I think it's 90% plus of our customers are today are hospitals and that's been our area focus. uh we do see a lot of growth opportunities outside the hospital that we're looking to crack as we go on. So, two very different businesses. We've had a lot of success with both of them. Uh but uh it's it's kind of that optionality as well. It's good to have uh kind of different different business plays to uh to consider for the future as well. >> And to to follow up on that, uh can you talk about the competitive landscape in both of these businesses and and you know what makes Kolon unique in the space? Yeah, for sure. Uh, it's an interesting mix on the competitive front. Uh, it's a mix of large companies and small companies. Some overlap between the two spaces even though they're different. So, you know, my my old friends at 3M uh, Sventum uh, are big players in both of those spaces. Uh, Medline, Smith and Nephew, uh, J&J Ethicon, uh, BD all play. And then we also see some smaller players, a number of them kind of coming out of China. And uh that's been a an interesting evolution for for them uh that uh that have emerged. Uh so uh it's it's a mix uh large and small geographically. You know a lot kind of headquartered in North America, some in Europe, some in in Asia. Um you know what what when I think about what really makes us unique, I'd say three big things. One is on a product level. Uh our products have some really unique differentiation. Uh, our wound care product as an example has four main ingredients that combine just make a a really big difference, a different way of jumpstarting that healing, excuse me, than the competition uh that in some cases are just a single collagen. So, we have four different uh ingredients there that uh really drive strong outcomes for for our our providers. Um then we have some products like our Valgard where there really isn't that's on the vascular access side. There really isn't any direct competition. Uh there's some alternative uses of different products but really a big green field opportunity and and that's a product that's done really well for us. Uh over the past uh couple years I think we've had seven of our last eight quarters have had quarterly sequential growth. not just annual growth, quarterly, sequential quarteron-quarter growth. Uh, and it's it's averaged 11%. So, that one is really scaling and and we're really excited about the future for that. And then the third I'd say is more of a company level and that is, you know, as we compete with these larger players, uh, they're the aircraft carriers, we're the destroyers. We we can pack a pretty good punch, uh, but we're not as big and and, uh, bulky as they are. We don't displace as much uh as much water in the in the ocean. But uh we are also a lot more agile and and so we can respond to customers a lot quicker than they can. Uh and so that's been key. And then I'd say another one that's emerging is we're really going hard on the AI front and and so are these larger competitors. Uh I see them using uh artificial intelligence more on a cost not cost out. uh we've got a this is they've got a you know 100 person customer service team and they want to use AI to get that down to 60 or 50 people. We're using it and we're in the early stages but we're using it as a a massive force multiplier on the revenue line and how can we show up you know we have a small team. how can we show up uh as a as a much larger uh presence for our customers and uh again it's early but uh we're seeing some really cool things and uh I think there's a bright future there so little bit around how we're different and unique >> super interesting I I didn't expect to hear about AI in a couple of presentation um I want to talk a bit more about your Valgar product you know you've published some recent clinical evidence on this product and I think might be something that that people have overlooked a little bit uh this announcement. So tell us why it's important. >> Yeah, this this is huge and this is uh another area I learned from my past that I've brought to Kova and that's the area of market development. So that includes generating clinical evidence. It includes working with key opinion leaders and uh on this specific Valgard example um I guess it starts with the problem we're trying to solve and the problem that our customers face are bloodstream infections caused by catheterss catheter associated bloodstream infections. And these these are just these are not you do not want to get one of these. These are all too common. Um, if you get it, best case, you're going to end up with another 2 weeks in the ICU in a hospital getting fed uh antibiotics introvenously and you've got probably a 15 20% chance of dying. Just flat out dying. That's that's obviously your worst case scenario. So, best case, worst case, it really sucks. Um, these these infections cost hospitals 40 to $50,000 and they don't get reimbursed. uh in the US they don't get reimbursed by Medicare for it. So, it's a big cost driver as well. And we were fortunate to partner with the children's hospital at Monte Fiory, a big uh big hospital system uh in the east in uh New York City. And uh they collected data pre using our product and after. and uh you know to to get down it it represented a um 50s something% decrease overall uh in their uh in their two acute care units and 100% decrease in infections in their pediatric critical care unit. So those are just numbers right um I like to put things in terms of kind of the human element. So on a numbers basis these were just three departments. Uh the bloodstream infections went from 13 to two. So 13 bloodstream infections in the kind of year before two in the year after. And so that that means 11 babies little little kids uh newborns to couple years old but 11 babies didn't get a bloodstream infection. So you do the math on that right? 11 families didn't have to stare down a really challenging pathway. The math would say of those 11, one or two would have died. So, uh that that's when things start to get real. It's a big part of why I joined Kovalon as well was the mission we're on. Um and you start multiplying that across lots of different hospitals. It's a huge huge huge impact in society and it helps our our providers uh our customers. Uh it's a win-win when we we implement our products. >> That's great. Um I want to talk about the US uh exposure, if you will. You know, you have a high percentage of your revenues in the US. Uh we all know there's a lot of uncertainty with tariffs, with the scal policy, all that stuff. So um how are you navigating these uh circumstances? Yeah, you know, uh, in my adult life, I don't know if I've ever seen a period of greater uncertainty and and I think to the earlier point on the destroyer versus the aircraft carrier, being a smaller company allows us a little more nimleness as things change. Um, you know, the tariff thing was was really concerning. Uh, less than a year ago, we were staring down a 30% tariff on product manufactured in Canada and shipped to the US. uh that came to pass and and you know we're tariffree and uh uh a a good chunk of our revenue more than half our revenue uh is product that's made in Canada and sold in the US. So that was going to be a you know we had some mitigation steps we could take but wasn't going to be pleasant. So you know knock on on wood here. Hopefully that stays the way it is and and we're tearfree. Um and uh you know we actually see it as a competitive advantage now because on that collagen product on the right there uh we we believe we're the largest North American manufacturer and about uh I think it's about 70 or 80% of the competition make in either China, the UK or Germany. So take your pick. 10% 20% China like I I even tried googling it last night. I think it's 30% right now, but there's like threats of 50 100 could go back, could go up. So, there's a lot of uncertainty and and we we see big opportunities. Uh we've seen some pickup and we think it'll be even more in the future on that. >> All right. I think uh we only have a few minutes left, so we're going to open it up to questions. Any questions? Can you please go through the thought process on the special dividend that you just announced? >> Yeah, for sure. So, uh, for those of you that, uh, that that aren't aware, we, uh, uh, yesterday announced a special dividend of 15 cents a share. So, that's, uh, uh, uh, what we what we've released. And just a little context, right, it's a, as we thought about how to best use our cash, uh, we're in a great position. We've gone from six quarters ago having $7 million just over $7 million in the bank to as of pretty recently uh just under $19 million. Portion of that was from about four and a half 5 million of warrant proceeds. Uh so insiders from 5 years ago uh exercising their warrants and uh and uh we had a like a 99 point something% redemption rate. And then, you know, about twothirds of that increase, uh, just a little under two-thirds was from business results. So, we put ourselves in a great position. We're investing some of that back into our company in the form of manufacturing and automation to drive cost out. Um, but we've we've also had a lot of conversations with shareholders uh and advisors and and uh there was definitely uh a great push uh on our board to how do we how do we, you know, use our cash in some different ways. Um a share buyback is something that's often often considered and and we did ultimately uh you know as we talked to our you know some advisers and and different people in our in our orbit uh we settled on the special dividend. We thought it was a good way to return cash. We've had a lot of shareholders that uh are long-term uh that have uh have been key parts of getting us to our company where we are today and wanted to return that uh via the dividend. Um, you know, we're we may or may not do another one in the future. Uh, all all options are still open. We're still uh even with that represents about $4 million. So, uh, you know, uh, still a lot of cash left for different purposes and we're looking at how we might use that. Okay. >> Yeah. So, we've talked about uh, as part of kind of our strategic alternatives in in the future, that's something that uh, we see down the road. no update today. Um but uh certainly when we look at kind of the the different markets and and the US is is definitely a a larger market. It's also you know the medtech focus is a lot greater and so you know we're we're certainly looking for opportunities where we could get to there but not nothing uh in in the imminent future. was easiest. >> Given what you just said about the special dividend, are any bolt-on acquisitions and fert buybacks discarded? >> Yeah. No. Uh nothing's off the table. I mean, that's that's a it's a portion of our cash uh for sure, but uh we are actively looking at different acquisitions, tuckins, bolt-ons, uh and uh there's there's a lot out there. It's kind of a interesting time in the markets for sure with valuations and and uh um where you know where companies are looking to go to. Uh but uh we're we're we're definitely you know we're going to continue driving our business forward uh generating more and more cash and uh always looking at where we can best use that uh investing back in the company, investing in other companies uh to acquire them. uh looking at all sorts of options, future share buyback, dividends, etc. Everything's on the table and uh we'll just consider that on a go forward basis. I >> think we're getting the Yep, time's up. Uh happy to answer any other questions outside or in one-on ones. But listen, thanks so much, Matthew. Thank you for for leading the fireside chat here. There is no fire, but we got a little bit of air conditioning coming up. And I just I just close with uh really appreciate uh everyone coming here listening. Hopefully uh you left a little more informed about our company, where we're at, where we're going. Uh really bright future making a massive difference in uh in the the markets we serve. And uh hope that uh we can have some further conversations and talk to those of you that are investors to invest more and those of you that aren't joining the bandwagon because we've just barely scratched the surface and there's a ton of upside here. So thank you. Exile
Covalon (TSX-V: COV / OTCQX: CVALF) Fireside Chat with Mathieu Martin, Rivemont MicroCap Fund
Summary
Transcript
love to introduce our next presentation here at the Planet Micro Cap Showcase Toronto in partnership with Micro Cap Club. We're doing a fireside chat hosted by Matthew Martin, portfolio manager at Remon Micro Cap Fund and it is with Kovalon Technologies. >> Okay. Uh thank you Bobby. Uh okay, let's start with the elevator pitch. Brent, uh you know, tell us more about what Kablan does. >> Sure. Hey, thanks a lot Matthew and uh good afternoon to everyone here. So Brent Ashton, I'm the CEO for Kovalon Technologies and really we're all about helping patients heal faster with less pain and uh we'll talk in a bit about preventing complications and how important that is. Uh so we're a about a 20-year-old company. Uh we we're headquartered here just outside of Toronto in Missaga. uh and uh trade on the uh the Toronto Stock Exchange, the Ventures, as well as the OTCQX in the US. Uh in the last 12 months, we've uh done about $33 million Canadian of revenue and about $4 million of adjusted EBA. And uh yeah, uh you know, on the preventing complications front, it's it's really a big part of our focus and and all of us want you know, a lot of these companies have different plays in different spaces. One of the things that's unique about medical is everyone here in this room watching online. Uh you you will probably be a customer of ours at some point or you have or will be. Um and uh that's our goal for sure. Uh but uh these complications can be really challenging. These are things like infections and skin tears caused by adhesives. And we really help our customers uh clinicians, different medical providers uh prevent those from happening uh saving lives uh and uh and making the overall patient experience a lot better. >> That's awesome. Great uh great mission. Um Brent, tell us more about your background. You know, I like to get started with an overview of the the management team. So, you know, how did you get involved with Colon and and what did you do before? >> Yeah. So uh you know I've I've spent most of the last 20 years almost 20 years in medtech. Uh the majority of that time uh prior to Kovalon with two really large multinational healthcare companies 3M healthcare which is now known as Sventum. Uh they spun off from 3M a couple years ago and Beckton Dickinson BD. And so at those at those companies I was running hundred couple hundred million to half billion dollar individual businesses and then the last call it five years before joining Kovalon kind of portfolios uh in the range of a billion and a half to two billion and a half. Uh so big large multinationals very global businesses. Um but when I was trying to think about okay well like what what did I want to do next? I really felt there was an opportunity to make a bigger impact uh with a smaller company and I'd known Kovalon for about 10 years dating back to when I was running 3M's vascular access business and uh I always saw them as a company that had some amazing technology. It's a really cool technology. Uh some very loyal customers uh making a big impact, but they just hadn't quite unlocked their full potential and I really felt like I could help guide our team uh to to achieving that. And so I joined Kovalon uh almost two years ago and uh it's been an amazing journey. Uh it's obviously uh going from you know bill billion dollar2 billion dollar slices of 2030 billion companies to a company the size of Kovalon. It's a it's a big difference. I've learned a ton. Uh I think I've made a big difference and uh it's just been great working with the team, working with our customers. It's one of the the benefits of of the medtech world. I've also worked in electronics and in the medtech world, nurses give you hugs and high fives and just are so grateful for the products we bring to them to help them, you know, save lives and make the patient experience better. The electronics side, you know, I didn't get a lot of hugs. Uh I got uh, you know, maybe a firm handshake was the best I got. So, it's been a great journey. What what were some of the key lessons that you learned at at uh you know 3ML care and BD that could apply to Kovan and and that you've applied coal on so far? >> Yeah, it's it's absolutely a case of uh have been applying them and I'd say there's a few uh one that that really jumps out. It was around prioritization and focus and uh you know at at 3M at BD this was this was critical. It's even more critical at Kovalon. I'll share that in a bit. But, you know, it was kind of an adage of just because you can do something doesn't mean you should. And I'd say where in my past where I've seen things get off the rails, it was when you were trying to do too much, spread too thin, and just really not knocking a smaller number of things out of the park. And when I came into Kovalon and and talked to our our management team, existing team, that that was a theme. There was a lot of like so many things we could do. we were candidly spread too thin doing too much and so pretty early on we really focused down we put a really big focus on our US product side of things uh so that's on the wound care side and on the uh vascular access side and uh it's paid off we've had some really strong success there so that prioritization and focus is one key I'd say and and this is kind of a yin-yang thing um optionality is another thing I learned and I'd say, you know, I was I was running a surgical business at 3 ammos, about a billion half dollar portfolio of uh different surgical uh surgical products and consumables, hardware, whatnot. And that was that was in like 2020. What what happened in 2020? COVID. So uh I I prior to getting into the surgical space I wouldn't have guessed but elective surgical procedures in the US uh and and maybe to a lesser extent around the world uh 60% of the mix. So overnight 60% of my business just went away. Uh but fortunately we had some other things. We had a hand sanitizer business and uh and that obviously picked up and we were able to quadruple our manufacturing output within I think it was 4 months. Uh so having those options is key. And so fast forward to Kovalon, I'd say it's been really helpful even though we're we're we're really dialing in the priorities uh and and focusing having options for the future and we've built up I think we've doubled or tripled the size of our kind of idea pipeline and there's so many things we could do in the future and you know things change circumstances change. I certainly hope we don't go through another co but uh as things change I think we have some good options for the future. So those are a couple of the big ones. >> Totally makes sense. Um okay, let's let's give people uh a bit more details on you know your two businesses uh you know wound care vascular access. What's the difference? Uh tell us more about about those. >> Absolutely. Thank you Matthew. uh very different businesses and I've I've been fortunate at my time at 3M and then BD was a little bit on the vascular access side as well but I ran both those businesses at at 3M healthcare so know the industry well you know the wound care business for us is uh it's a it's a bigger part of our revenue uh than uh it's more than half our revenue uh the vascular access side a little less than half and uh it's it's one where in the US which is you very a very very high percentage of our our geographic mix for that business small you know mid singledigit number of of customers. So we make products uh you can see them on the screen there the far right. So we make a collagen dressing uh that really helps wounds heal uh wounds chronic wounds that aren't going to heal on their own. It'll jumpst start their healing and uh uh small number of customers OEM type model uh which was smart. It was predated my time in the business, but it was a great decision by the company because that business is really fragmented, especially in the US where care gets given. It's it's uh wound clinics, hospitals, uh podiatry offices, general, you know, long-term care, etc. And so having someone else with a broader portfolio that can help cover has been has been really helpful. Uh so that's a a low SGNA model which fuels a lot of EBID for our company. Um it's a massive space overall. You know, it's like a $10 billion space. Uh and the the the market we play in directly is probably around 150 $200 million. So there's there still a lot of growth, a lot of headway there. Um we've had a lot of success in that space. On the vascular access and and surgical side, very different business, different model. Uh and for us, it's more of a traditional medtech model where, you know, we we own the sales and marketing, we drive that. So, it's a little more within our direct control and uh and uh it's it's one that has really grown super strong. I think our our keer over the last uh three or four years is uh like in the high 40s. Uh so some really strong growth there making a huge difference. Uh but that's more of a hospital business for us as well. Um uh a very high I think it's 90% plus of our customers are today are hospitals and that's been our area focus. uh we do see a lot of growth opportunities outside the hospital that we're looking to crack as we go on. So, two very different businesses. We've had a lot of success with both of them. Uh but uh it's it's kind of that optionality as well. It's good to have uh kind of different different business plays to uh to consider for the future as well. >> And to to follow up on that, uh can you talk about the competitive landscape in both of these businesses and and you know what makes Kolon unique in the space? Yeah, for sure. Uh, it's an interesting mix on the competitive front. Uh, it's a mix of large companies and small companies. Some overlap between the two spaces even though they're different. So, you know, my my old friends at 3M uh, Sventum uh, are big players in both of those spaces. Uh, Medline, Smith and Nephew, uh, J&J Ethicon, uh, BD all play. And then we also see some smaller players, a number of them kind of coming out of China. And uh that's been a an interesting evolution for for them uh that uh that have emerged. Uh so uh it's it's a mix uh large and small geographically. You know a lot kind of headquartered in North America, some in Europe, some in in Asia. Um you know what what when I think about what really makes us unique, I'd say three big things. One is on a product level. Uh our products have some really unique differentiation. Uh, our wound care product as an example has four main ingredients that combine just make a a really big difference, a different way of jumpstarting that healing, excuse me, than the competition uh that in some cases are just a single collagen. So, we have four different uh ingredients there that uh really drive strong outcomes for for our our providers. Um then we have some products like our Valgard where there really isn't that's on the vascular access side. There really isn't any direct competition. Uh there's some alternative uses of different products but really a big green field opportunity and and that's a product that's done really well for us. Uh over the past uh couple years I think we've had seven of our last eight quarters have had quarterly sequential growth. not just annual growth, quarterly, sequential quarteron-quarter growth. Uh, and it's it's averaged 11%. So, that one is really scaling and and we're really excited about the future for that. And then the third I'd say is more of a company level and that is, you know, as we compete with these larger players, uh, they're the aircraft carriers, we're the destroyers. We we can pack a pretty good punch, uh, but we're not as big and and, uh, bulky as they are. We don't displace as much uh as much water in the in the ocean. But uh we are also a lot more agile and and so we can respond to customers a lot quicker than they can. Uh and so that's been key. And then I'd say another one that's emerging is we're really going hard on the AI front and and so are these larger competitors. Uh I see them using uh artificial intelligence more on a cost not cost out. uh we've got a this is they've got a you know 100 person customer service team and they want to use AI to get that down to 60 or 50 people. We're using it and we're in the early stages but we're using it as a a massive force multiplier on the revenue line and how can we show up you know we have a small team. how can we show up uh as a as a much larger uh presence for our customers and uh again it's early but uh we're seeing some really cool things and uh I think there's a bright future there so little bit around how we're different and unique >> super interesting I I didn't expect to hear about AI in a couple of presentation um I want to talk a bit more about your Valgar product you know you've published some recent clinical evidence on this product and I think might be something that that people have overlooked a little bit uh this announcement. So tell us why it's important. >> Yeah, this this is huge and this is uh another area I learned from my past that I've brought to Kova and that's the area of market development. So that includes generating clinical evidence. It includes working with key opinion leaders and uh on this specific Valgard example um I guess it starts with the problem we're trying to solve and the problem that our customers face are bloodstream infections caused by catheterss catheter associated bloodstream infections. And these these are just these are not you do not want to get one of these. These are all too common. Um, if you get it, best case, you're going to end up with another 2 weeks in the ICU in a hospital getting fed uh antibiotics introvenously and you've got probably a 15 20% chance of dying. Just flat out dying. That's that's obviously your worst case scenario. So, best case, worst case, it really sucks. Um, these these infections cost hospitals 40 to $50,000 and they don't get reimbursed. uh in the US they don't get reimbursed by Medicare for it. So, it's a big cost driver as well. And we were fortunate to partner with the children's hospital at Monte Fiory, a big uh big hospital system uh in the east in uh New York City. And uh they collected data pre using our product and after. and uh you know to to get down it it represented a um 50s something% decrease overall uh in their uh in their two acute care units and 100% decrease in infections in their pediatric critical care unit. So those are just numbers right um I like to put things in terms of kind of the human element. So on a numbers basis these were just three departments. Uh the bloodstream infections went from 13 to two. So 13 bloodstream infections in the kind of year before two in the year after. And so that that means 11 babies little little kids uh newborns to couple years old but 11 babies didn't get a bloodstream infection. So you do the math on that right? 11 families didn't have to stare down a really challenging pathway. The math would say of those 11, one or two would have died. So, uh that that's when things start to get real. It's a big part of why I joined Kovalon as well was the mission we're on. Um and you start multiplying that across lots of different hospitals. It's a huge huge huge impact in society and it helps our our providers uh our customers. Uh it's a win-win when we we implement our products. >> That's great. Um I want to talk about the US uh exposure, if you will. You know, you have a high percentage of your revenues in the US. Uh we all know there's a lot of uncertainty with tariffs, with the scal policy, all that stuff. So um how are you navigating these uh circumstances? Yeah, you know, uh, in my adult life, I don't know if I've ever seen a period of greater uncertainty and and I think to the earlier point on the destroyer versus the aircraft carrier, being a smaller company allows us a little more nimleness as things change. Um, you know, the tariff thing was was really concerning. Uh, less than a year ago, we were staring down a 30% tariff on product manufactured in Canada and shipped to the US. uh that came to pass and and you know we're tariffree and uh uh a a good chunk of our revenue more than half our revenue uh is product that's made in Canada and sold in the US. So that was going to be a you know we had some mitigation steps we could take but wasn't going to be pleasant. So you know knock on on wood here. Hopefully that stays the way it is and and we're tearfree. Um and uh you know we actually see it as a competitive advantage now because on that collagen product on the right there uh we we believe we're the largest North American manufacturer and about uh I think it's about 70 or 80% of the competition make in either China, the UK or Germany. So take your pick. 10% 20% China like I I even tried googling it last night. I think it's 30% right now, but there's like threats of 50 100 could go back, could go up. So, there's a lot of uncertainty and and we we see big opportunities. Uh we've seen some pickup and we think it'll be even more in the future on that. >> All right. I think uh we only have a few minutes left, so we're going to open it up to questions. Any questions? Can you please go through the thought process on the special dividend that you just announced? >> Yeah, for sure. So, uh, for those of you that, uh, that that aren't aware, we, uh, uh, yesterday announced a special dividend of 15 cents a share. So, that's, uh, uh, uh, what we what we've released. And just a little context, right, it's a, as we thought about how to best use our cash, uh, we're in a great position. We've gone from six quarters ago having $7 million just over $7 million in the bank to as of pretty recently uh just under $19 million. Portion of that was from about four and a half 5 million of warrant proceeds. Uh so insiders from 5 years ago uh exercising their warrants and uh and uh we had a like a 99 point something% redemption rate. And then, you know, about twothirds of that increase, uh, just a little under two-thirds was from business results. So, we put ourselves in a great position. We're investing some of that back into our company in the form of manufacturing and automation to drive cost out. Um, but we've we've also had a lot of conversations with shareholders uh and advisors and and uh there was definitely uh a great push uh on our board to how do we how do we, you know, use our cash in some different ways. Um a share buyback is something that's often often considered and and we did ultimately uh you know as we talked to our you know some advisers and and different people in our in our orbit uh we settled on the special dividend. We thought it was a good way to return cash. We've had a lot of shareholders that uh are long-term uh that have uh have been key parts of getting us to our company where we are today and wanted to return that uh via the dividend. Um, you know, we're we may or may not do another one in the future. Uh, all all options are still open. We're still uh even with that represents about $4 million. So, uh, you know, uh, still a lot of cash left for different purposes and we're looking at how we might use that. Okay. >> Yeah. So, we've talked about uh, as part of kind of our strategic alternatives in in the future, that's something that uh, we see down the road. no update today. Um but uh certainly when we look at kind of the the different markets and and the US is is definitely a a larger market. It's also you know the medtech focus is a lot greater and so you know we're we're certainly looking for opportunities where we could get to there but not nothing uh in in the imminent future. was easiest. >> Given what you just said about the special dividend, are any bolt-on acquisitions and fert buybacks discarded? >> Yeah. No. Uh nothing's off the table. I mean, that's that's a it's a portion of our cash uh for sure, but uh we are actively looking at different acquisitions, tuckins, bolt-ons, uh and uh there's there's a lot out there. It's kind of a interesting time in the markets for sure with valuations and and uh um where you know where companies are looking to go to. Uh but uh we're we're we're definitely you know we're going to continue driving our business forward uh generating more and more cash and uh always looking at where we can best use that uh investing back in the company, investing in other companies uh to acquire them. uh looking at all sorts of options, future share buyback, dividends, etc. Everything's on the table and uh we'll just consider that on a go forward basis. I >> think we're getting the Yep, time's up. Uh happy to answer any other questions outside or in one-on ones. But listen, thanks so much, Matthew. Thank you for for leading the fireside chat here. There is no fire, but we got a little bit of air conditioning coming up. And I just I just close with uh really appreciate uh everyone coming here listening. Hopefully uh you left a little more informed about our company, where we're at, where we're going. Uh really bright future making a massive difference in uh in the the markets we serve. And uh hope that uh we can have some further conversations and talk to those of you that are investors to invest more and those of you that aren't joining the bandwagon because we've just barely scratched the surface and there's a ton of upside here. So thank you. Exile