NOVA LEAP HEALTH CORP. (TSXV: NLH) (“Nova Leap” or “the Company”),
a growing home health care organization, is pleased to announce the
release of financial results for the quarter ended June 30, 2022.
All amounts are in United States dollars unless otherwise
specified.
Nova Leap Q2 2022 Financial
Results
Financial results for the three and six months
ended June 30, 2022 include the following:
- Q2 2022 revenues were the 2nd highest in the Company’s
history;
- Q2 2022 revenues of $6,986,758 increased by 37.4% relative to
Q2 2021 revenues of $5,085,445 due to five business acquisitions
completed during the later part of 2021. Q2 2022 revenues decreased
by 4.2% from Q1 2022 revenues of $7,296,609 due in part to the
ongoing impact of COVID-19. However, a significant portion of the
decrease in Q2 2022 revenues from Q1 2022 revenues, and the
corresponding impact on Adjusted EBITDA, relates to the loss of
significant client service hours in one of our New England agencies
for which we have filed a lawsuit on July 5, 2022 seeking $1.2
million in past and projected future profits against the previous
owner and a related corporate entity for breach of certain
covenants that formed part of the acquisition agreement;
https://www.globenewswire.com/NewsRoom/AttachmentNg/a52b6ee2-3979-4b4e-a6c8-18348a310a43
- Adjusted EBITDA was $33,950 in Q2 2022, a decrease from $42,974
in Q2 2021 and $227,562 in Q1 2022;
https://www.globenewswire.com/NewsRoom/AttachmentNg/82a903a7-8e87-43ab-8287-17eabe4e5683
- Gross profit margin as a percentage of revenues remained strong
at 35.4% in Q2 2022, an increase from gross profit margin of 34.8%
in Q1 2022;
- The loss from operating activities in Q2 2022 increased to
$430,883 from $237,575 in Q2 2021 and $198,829 in Q1 2022 due to an
increase in amortization and depreciation expense in 2022 as a
result of the business acquisitions in 2021;
- The Company recorded a net loss of $24,746 in Q2 2022 as
compared to net income of $345,470 in Q2 2021. Net income was
positively impacted in Q2 2021 by COVID-19 relief programs income
which increased net income by $1,255,362 (net of estimated related
income taxes of $442,921);
- The Company had cash and cash equivalents of $448,937 (net of
the revolving credit facility of $345,186) as of June 30, 2022, as
well as access to a revolving credit facility of $818,868
(CAD$1,055,193).
President & CEO’s
Comments
“Q2 was one very much spent focused on
investment in our agencies to drive organic growth”, said Chris
Dobbin, President & CEO of Nova Leap. “During the quarter,
management implemented additional organic growth initiatives
through an expansion of service lines at select locations to
include both private duty nursing and geriatric care management
services. Over time, we believe these initiatives will allow us to
become one of the largest providers of integrated care management
and home care services in North America.
The improving gross margins is indicative of the
Company’s pricing power while operating in an inflationary
environment.
Over the past couple of years, as we continued
to scale, we created new positions across the Company that we
believed would be necessary to support the continued growth
trajectory of the business. While we have seen
improvements in financial performance in a few of the agencies
owned throughout the pandemic, these improvements have been offset
by some agencies that have yet to recover to pre-pandemic levels
and, most notably, by the one agency for which we have initiated
legal action against the former owner, as indicated above. Access
to the appropriate number of quality care professionals remains our
largest impediment to growing the business organically in the
manner we would like and is an area of continued attention.
During the quarter, as part of our focus on
operational improvement and efficiencies, we eliminated certain
support positions in the areas of digital marketing, accounting,
corporate development and operations which allows us to be more
appropriately staffed for the current operating environment. The
full impact of these reductions, which allows for a leaner more
efficient organization, will be realized in Q3.
We believe the organic growth initiatives, in
combination with the appropriate reduction of certain staff
complement, will lead to improving financial results for the
remainder of the year and better position us long term. We continue
to evaluate acquisition and expansion opportunities as we have in
the past.”
This news release should be read in conjunction
with the Unaudited Condensed Interim Consolidated Financial
Statements for the three and six months ended June 30, 2022 and
2021 including the notes to the financial statements and
Management's Discussion and Analysis dated August 11, 2022, which
have been filed on SEDAR.
About Nova Leap
Nova Leap is an acquisitive home health care
services company operating in one of the fastest-growing industries
in the U.S. & Canada. The Company performs a vital role within
the continuum of care with an individual and family centered focus,
particularly those requiring dementia care. Nova Leap achieved the
#42 ranking on the 2021 Report on Business ranking of Canada’s Top
Growing Companies, the #2 ranking on the 2020 Report on Business
ranking of Canada’s Top Growing Companies and the #10 Ranking in
the 2019 TSX Venture 50™ in the Clean Technology & Life
Sciences sector. The Company is geographically diversified with
operations in 11 different U.S. states within the New England,
Southeastern, South Central and Midwest regions as well as in Nova
Scotia, Canada.
NON-IFRS AND OTHER
MEASURES:
This release contains references to certain
measures that do not have a standardized meaning under IFRS as
prescribed by the International Accounting Standards Board (“IASB”)
and are therefore unlikely to be comparable to similar measures
presented by other companies. Rather, these measures are provided
as additional information to complement IFRS measures by providing
a further understanding of operations from management’s
perspective. Accordingly, non-IFRS financial measures should not be
considered in isolation or as a substitute for analysis of
financial information reported under IFRS. The Company presents
non-IFRS financial measures, specifically Adjusted EBITDA (as such
term is hereinafter defined), as well as supplementary financial
measures such as annualized revenue. The Company believes these
non-IFRS financial measures are frequently used by lenders,
securities analysts, investors and other interested parties as a
measure of financial performance, and it is therefore helpful to
provide supplemental measures of operating performance and thus
highlight trends that may not otherwise be apparent when relying
solely on IFRS financial measures.
Adjusted Earnings before interest, taxes,
amortization and depreciation (“Adjusted EBITDA”), is calculated as
loss from operating activities plus amortization and depreciation
and stock-based compensation expense. The most directly comparable
IFRS measure is loss from operating activities.
Annualized revenue is calculated as actual
revenue extrapolated from the beginning of the year or date of
acquisition over 365 days.
The reconciliation of Adjusted EBITDA to the
loss from operating activities is as follows:
|
Three months ended June 30 |
|
Q1 |
|
Six months ended June 30 |
|
|
|
2022 |
|
2021 |
|
2022 |
|
|
2022 |
|
2021 |
|
|
|
$ |
|
$ |
|
$ |
|
|
$ |
|
$ |
|
Loss from operating activities |
|
(430,883 |
) |
(237,575 |
) |
(198,829 |
) |
(629,712 |
) |
(545,106 |
) |
Add back: |
|
|
|
|
|
|
|
|
|
|
|
|
Amortization and
depreciation |
|
373,676 |
|
222,618 |
|
330,888 |
|
704,564 |
|
437,635 |
|
Stock-based compensation |
|
91,157 |
|
57,931 |
|
95,503 |
|
186,660 |
|
111,753 |
|
Adjusted EBITDA |
|
33,950 |
|
42,974 |
|
227,562 |
|
261,512 |
|
4,282 |
|
FORWARD LOOKING
INFORMATION:
Certain information in this press release may
contain forward-looking statements, such as statements regarding
future expansions and cost savings, timing of receipt of ERC, and
plans regarding future acquisitions and business growth, including
anticipated annualized revenue or annualized recurring revenue run
rate growth and anticipated consolidated Adjusted EBITDA margins.
This information is based on current expectations and assumptions,
including assumptions described elsewhere in this release and those
concerning general economic and market conditions, availability of
working capital necessary for conducting Nova Leap’s operations,
availability of desirable acquisition targets and financing to fund
such acquisitions, and Nova Leap’s ability to integrate its
acquired businesses and maintain previously achieved service hour
and revenue levels, that are subject to significant risks and
uncertainties that are difficult to predict. Actual results might
differ materially from results suggested in any forward-looking
statements. Risks that could cause results to differ from those
stated in the forward-looking statements in this release include
the impact of the COVID-19 pandemic or any recurrence, including
government regulations or voluntary measures limiting the Company’s
ability to provide care to clients (such as shelter-in-place
orders, isolation or quarantine orders, distancing requirements, or
closures or restricted access procedures at facilities where
clients reside), increased costs associated with personal
protective equipment and sanitization supplies, staff and supply
shortages, regulatory changes affecting the home care industry or
government programs utilized by the Company (such as ERC), other
unexpected increases in operating costs and competition from other
service providers. All forward-looking statements, including any
financial outlook or future-oriented financial information,
contained in this press release are made as of the date of this
release and included for the purpose of providing information about
management's current expectations and plans relating to the future,
and these statements may not be appropriate for other purposes. The
Company assumes no obligation to update the forward-looking
statements, or to update the reasons why actual results could
differ from those reflected in the forward-looking statements
unless and until required by securities laws applicable to the
Company. Additional information identifying risks and uncertainties
is contained in the Company's filings with the Canadian securities
regulators, which filings are available at www.sedar.com.
CAUTIONARY 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 further information:
Chris Dobbin, CPA, CA, ICD.D
Director, President and CEO
T: 902 401 9480
E:cdobbin@novaleaphealth.com
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