Dear Nova Leap Shareholders:
As Nova Leap Health Corp. (“Nova Leap” or the
“Company”) is midway through its 8th year of operations, and in
advance of tomorrow’s annual general meeting, this is an
appropriate time for me to provide some commentary as well as a
corporate update.
Leadership, Process Improvement and Expected
Impact
From Q2 2022 through to the end of Q1 2023, we
made several leadership and structural changes to the Company. I
have commented on these changes in the past. These changes were
strategic and reflect the resources and leadership qualities
necessary to move the Company through to its next phase of growth.
The ensuing benefits of these changes often take time to show up in
the financial results as new leaders evaluate specific
opportunities and challenges at the agency level. I fully expect
that these changes will lead to our intended long-term results and
will begin to be reflected in future quarterly financial
reporting.
During this quarter, I had the pleasure of
traveling to meet with several of our leaders across the U.S. These
travels took me to visit our home care agency teams in Texas,
Oklahoma, Arkansas, Ohio, Kentucky and western Massachusetts. These
travels built upon previous visits to our offices throughout
Massachusetts, Vermont, New Hampshire and Rhode Island several
weeks earlier. I came away extremely impressed with the quality of
leadership and talent that we have in place. Our leaders and teams
instill a confidence in the exceptional service we provide to our
clients, leading with safety in mind, and continuing to move the
business forward in a positive manner. These meetings also
facilitated an increase in inter-agency cooperation and sharing of
best practices, the implementation of new agency revenue sources
and the removal of certain barriers, all of which I anticipate will
lead to improved financial results over
time.
Prudent Fiscal Management
In an environment of rapidly increasing interest
rates and economic uncertainty, companies that learn to operate in
a fiscally prudent manner with a view to continuous improvement
generally are well positioned for growth. I believe Nova Leap is
such a company.
I have referenced our favorable debt position in
past commentary many times and believe it provides us with a great
deal of financial flexibility as we continue to navigate the
current economic and capital markets environment. With the full
collection of the ERC receivable, referenced separately below, our
bank debt at the end of 2023 is projected to be less than $300,000.
This is a major accomplishment, particularly for a company that has
borrowed several million dollars to support funding of its
acquisition program.
Further, with the litigation settlement in
place, also referenced separately below, our cash flow profile has
improved because of the settlement cash received, the reduction in
ongoing legal fees, and the entire elimination of both promissory
notes and potential earnout payments.
The strength of our balance sheet positions Nova
Leap well for future growth opportunities.
Government Tax Credit Receivable
The Government Tax Credit (“ERC”) receivable on
our balance sheet at the end of Q1 in the amount of $452,306 has
now been fully collected. The funds were used to repay the
remaining balance of $430,000 in demand loans. As a result, the Q1
demand loans in the amount of $995,366 has been reduced by 43% (not
including regular monthly principal and interest payments). Both
the ERC receivable collection and the demand loan repayment will be
reflected in the Q2 financial statements.
Litigation Settlement
The litigation initiated by Nova Leap and
previously referenced as part of Q2 2022 results has been settled.
The settlement consists of the following:
- Cash payments to Nova Leap in the
amount of $95,000 received in Q2;
- Forgiveness of the remaining
promissory notes related to this agency, plus accrued interest, in
the amount to $258,000; and
- No future earnout payments, if
earnout thresholds have been reached.
As a result, the Q1 promissory notes in the
amount of $897,706 has been reduced by 28.7% (not including
regularly scheduled payments) and significant future legal costs to
pursue this litigation will be eliminated both improving future
cash flow. The results of the settlement will be reflected in the
Q2 financial statements.
Insider ownership
During the past six weeks, insiders have
purchased just over three quarters of a million shares in the open
market as part of their long -term investment strategy showing
confidence in the Company’s future prospects. As a result, insider
ownership has increased to 39.97%.
Thank you for your ongoing support.
Yours truly,
Chris Dobbin, CPA, ICD.DPresident & CEO
FORWARD LOOKING
INFORMATION:
Certain information in this press release may
contain forward-looking statements, such as statements regarding
future expansions and cost savings, 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
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, ICD.D
Director, President and CEO
T: 902 401 9480
E:cdobbin@novaleaphealth.com
Nova Leap Health (TSXV:NLH)
Gráfica de Acción Histórica
De Nov 2024 a Dic 2024
Nova Leap Health (TSXV:NLH)
Gráfica de Acción Histórica
De Dic 2023 a Dic 2024
