Focused on the 90 billion dollar home care industry, Nova Leap Health makes 11th acquisition

As the baby boomers grow older the need for home care is accelerating. Since COVID-19 began, more and more people are considering in-home services for aged or incapacitated care, including dementia. The benefits of home care include independence, less exposure to others that might be infectious and surprisingly, often results in lower cost to everyone involved. With almost 80,000 Americans turning 65 years old each week, it is not surprising that the home care industry is one of the fastest-growing industries in the U.S. with a US$89.2 billion market size.

Nova Leap Health Corp. (TSXV: NLH) (“Nova Leap”) is a home health care services company operating in North America. Nova Leap acquires, manages, and builds home care service companies that provide support to clients and their families at home. Some of the home care services include dementia care, companionship, personal and respite care, cooking and meal preparation, light housekeeping, transportation, medication reminders, and medication administration by nursing staff. Nova Leap’s focus is to give their clients independence and quality of life in their own homes.

Currently Nova Leap has home health care services operating in 6 different U.S. states: Vermont, New Hampshire, Massachusetts, Rhode Island, Oklahoma, Ohio as well as Nova Scotia, Canada. In all, Nova Leap has acquired ten home health care businesses across the U.S. and Canada.

This month Nova Leap announced  another acquisition in New England to be made for total consideration of US$660,000. The target company had unaudited revenues of approximately US$1.697 million and EBITDA of approximately US$155,000, for the year ended September 30, 2019. Regarding the new acquisition Nova Leap’s CEO Chris Dobbin said: “Nova Leap is well positioned to capitalize on the demand for private pay in-home care and we expect further growth from the region.”

Location of Nova Leap’s current ten home health care businesses

Source: company presentation

Despite lower revenues impacted by COVID-19, Nova Leap achieved record operating cash flows

As reported in early October 2020, Nova Leap achieved a solid Q2 result despite slightly lower revenues and a small adjusted net loss of US$159,337 for Q2 2020. Investors should recall that Q2 2019 felt the worst impact from COVID-19 due to lockdowns. Nova Leap’s Q2 2020 revenue was US$3,983,402, 6.3% lower than Q2 2019 revenues of US$4,249,781 and 13.6% lower than Q1 2020 revenues of US$4,611,140. At the same time, Nova Leap achieved record operating cash flows of US$596,936 for Q2 2020 and Nova Leap’s cash balance hit a record company level of US$2,754,087 as of June 30, 2020. Gross margins improved slightly from 33.41% in Q1 2020 to 35.10% in Q2 2020 and Nova Leap paid off 21.9% of its combined schedule 1 bank debt and promissory notes relating to prior acquisitions.

Nova Leap Health has been steadily growing revenues (with a recent COVID-19 dip) with a strategy of acquisitions and organic growth

 

Source: company presentation

Approval received for Paycheck Protection Program loans from the CARES ACT in response to the COVID-19 pandemic

In August 2020, the Company was approved for Paycheck Protection Program loans at the low rate of just 1% for a total loan amount of US$1.976 million. The loans are repayable monthly over a five-year period beginning in 2021. If certain conditions are met, the loans may be partially or fully forgiven.

Nova Leap’s President and CEO’s view

“The home care industry has been an expanding industry for several years driven by an aging population,” said Chris Dobbin, President & CEO of Nova Leap. “Our company, like many in our industry, is preparing for an even greater anticipated demand for in-home care that we expect will last for several years. For investors following world events, it is evident that the pandemic has taken an unfortunate toll on many living in senior facilities. As a result, we expect many older adults and their families to opt for in-home care.”

COVID-19 has accelerated interest in at-home health care services, with many not willing to risk visiting a hospital or an assisted-living care facility. Nova Leap is well positioned to supply this increasing need with a growing network of ten home health care businesses. Currently NLH trades on the TSX Venture and has a market cap of approximately C$22m (~US$ 17.6m), which is about the same as their 2019 sales of US$17.4m.




Nova Leap Health reports strong Q1 results as COVID-19 catalyst for families opting for home health care

The home health care sector should be one of the very few winners post COVID-19. That is because many people that require health care will choose to have it at home rather than taking the risk of going into a hospital or aged care facility. This combined with the tailwind of the baby boomers retiring and ageing demographics means the home care and home health care services sector is in for a very good decade ahead.

Nova Leap Health Corp. (TSXV: NLH) is an international provider of personal home care and support services, with a focus on North America. Nova Leap acquires, manages, and builds home care service companies that provide support to clients and their families at home. Some of the home care services include dementia care, companionship, personal and respite care, cooking and meal preparation, light housekeeping, transportation, medication reminders, and medication administration by nursing staff. Nova Leap’s focus is to give their clients independence and quality of life.

Nova Leap Health Corp.’s service involve skilled home care and home health care

Source

In a recent move, Nova Leap have expanded their home care operations to the state of Ohio. By way of a subsidiary, Nova Leap has opened a new office in Centerville, Montgomery County, Ohio. This is Nova Leap’s first entry into the State of Ohio and the Midwestern United States.

Chris Dobbin, President & CEO of Nova Leap stated: “We have been planning this expansion for months and are excited to begin offering our home care services in the Buckeye State and to the people of Ohio.”

Nova Leap has now grown its home health care operations in 6 different U.S. states including: Vermont, New Hampshire, Massachusetts, Rhode Island, Oklahoma and Ohio. They also have one operation in Nova Scotia, Canada.

Nova Leap’s financials continue to improve despite a minor lull due to COVID-19

After having a tremendous last 2 years, Nova Leap has continued in 2020. Q1 2020 revenues continued to leap year on year as summarized below.

  • Q1 2020 revenues of $4,611,140 were 17.9% higher than Q1 2019 revenues of $3,911,855, but 4.3% lower than Q4 2019 revenues due to the preliminary impact of COVID-19 for the latter part of March 2020.

Nova Leap Health Corp.’s revenues continue to climb YoY with only a mild recent COVID-19 set back in Q1, 2020

Source

Other financial highlights from Q1, 2020 included:

  • Q1 2020 EBITDA of $220,051 was 20.0% higher than Q1 2019 EBITDA of $183,376 and 21.1% higher than Q4 2019 EBITDA of $181,660.
  • Adjusted net loss of $31,751 for Q1 2020 as compared to an adjusted net loss of $123,376 for Q1 2019.
  • Operating cash flows of $189,913 for Q1 2020 as compared to Q1 2019 operating cash flows of $186,022 and Q4 2019 operating cash flows of $41,554.
  • Cash balance of $2,556,873 at March 31, 2020 was the highest reported cash balance in the Company’s history.

Put simply in Q1 2020, compared to the previous quarter, Nova Leap improved EBITDA, profits (reduced losses), cash flow, and their cash position; whereas revenue was slightly lower by 4.3%. This shows management has been very prudently managing the finances and based on results to date has come through the COVID-19 pandemic very well. Q2 will also see some impact from COVID-19 particularly in the early months of April and May. Beyond that things should pick up as the US economy reopens.

Another good management sign is 38% insider ownership and the fact that acquisitions are done using non-dilutive financing.

Closing remarks

The post COVID-19 lockdown period should be very kind to Nova Leap Health Corp. as people will likely choose to have home health care services rather than risk visiting a hospital or aged care facility. This means Nova Leap is ideally positioned to be a winner at this time.

Added to this Nova Leap is very well managed. Improving revenues (a slight 4.3% Q1 2020 blip due to lockdowns), improving EBITDA, improving profits (net losses are reducing and profits will start soon), improving cash flow, and an improving cash position all point towards a great future for Nova Leap. The Company will continue to focus on strong organic growth and cash flow positive acquisitions and will benefit from North America’s ageing demographics and the trend towards home care.

The current market cap is only C$24 million so the Company is still in the early days; meaning there is still plenty of opportunity ahead for investors should Nova Leap continue to execute well.




Home health care set to boom as coronavirus affects aged care facilities

The home health care market is already doing very well helped along by the increase in our aging populations. But now with coronavirus concerns it is making more sense for those in need to have home help rather than risk crowded locations including aged care facilities. For example, in Australia the government is now considering putting aged care facilities into lockdown due to the recent surge in coronavirus case.

This plays into the strengths of a Canadian home health care acquirer Nova Leap Health Corp. (TSXV: NLH). This is because Nova Leap focuses on care in the client’s comfort of their own home.

A brief background on Nova Leap Health Corp.

Nova Leap is a home health care services company that was created to assemble a portfolio of home care and home health care companies that have the potential to be leaders in their particular geographical market. Nova Leap plans to grow through a combination of continued acquisitions and organic growth, with a focus on North America.

Nova Leap not only acquires home care services companies, they also manage and build companies that provide top-level support to their clients. By providing home health care service the Company is able to provide skilled aftercare including nursing, home physical therapy, wound care, and health care including for dementia clients. In providing a home care service alternative Nova Leap is able to provide clients with ongoing assistance with activities of daily living which may include services from simple errands to housekeeping, transportation, and meal preparation. Nova Leap’s focus is to give their clients independence and quality of life.

Nova Leap Health Corp. is growing fast in the fast growing sector of home health care in North America

 

A sound business model

Nova Leap follows a sound business model. Their process includes finding quality home health care companies (a strong reputation/brand) with a geographical focus on the US and Canada, a positive EBITDA , and ideally a 10 year history with US$1 million plus in revenues. Nova Leap is growing fast, which means that as the business scales up margins are improving and profitability is just around the corner.

US dementia patients forecast to grow significantly as the US baby boomers age

One in 10 people (10%) aged 65 and older has Alzheimer’s dementia. As North America ages the number of dementia cases is increasing. Often the best and most affordable way to care for our dementia patients is home health care in a friendly and familiar environment.

The chart below shows the number of US people aged 65 and older that are forecast to get dementia. In 2020 the figure is 5.8 million, by 2030 8.4 million, by 2040 11.6 million, and by 2050 13.8 million.

Source: Nova Leap company presentation February 2020

Nova Leap are well funded having recently been 1.5x oversubscribed

On December 5, 2019 Nova Leap announced a non-brokered private placement of convertible debentures. The offering was for C$2 million with the following terms: “The Debentures will mature five (5) years after the issue date (the “Maturity Date”) and will accrue interest at the rate of 8.0% per annum, payable semi-annually. At the holders’ option, the Debentures may be converted into common shares of Nova Leap at any time and from time to time, up to the Maturity Date, at a conversion price of CAD$0.52 per common share (the “Conversion Price”).”

President & CEO of Nova Leap, Chris Dobbin, stated: “We continue to receive quality acquisition opportunities on a regular basis……We recently announced the best financial results in our Company’s history, and we are determined to continue along that trajectory. This funding will allow us to act on acquisition opportunities should we chose, as well as pursue our plans to expand organically into new territories.”

Following the December 5 offering Nova Leap announced on December 20: “Due to oversubscribed demand, the non-brokered private placement of Debentures will now consist of maximum gross proceeds of CAD$3 million.”

The over-subscription is a very positive endorsement towards Nova Leap from investors.

2019 annual financial results to be released by mid-March

Nova Leap has had a brilliant past year with several major acquisitions resulting in a record leap in EBITDA. Nova Leap will present 2019 full year results at the 2020 Spring Investor Summit in NYC on March 25 and 26, 2020. The Spring Investor Summit will take place at the Essex House, featuring 160 companies and over 1,000 institutional and retail investors.

The Company has already publicly stated they will release “record 2019 results“. The results will be released by mid-March, 2020.

Closing remarks

Nova Leap is already well geographically diversified with operations in 5 different U.S. states: Vermont, New Hampshire, Massachusetts, Rhode Island and Oklahoma as well as Nova Scotia, Canada. Their business model of acquiring smaller but profitable home health care companies is starting to bring rewards.

The home health care sector (including dementia care) is set to grow substantially over the next decade. Added to this is the recent coronavirus concerns which may lead to more clients choosing home health care rather than taking the risk of an aged care facility.

With an oversubscribed C$3 million debenture raise now closed and 2019 results out in mid-March, Nova Leap will shortly be in the spotlight of over 1,000 institutional and retail investors.

At the current market cap of just C$24 million investors can still get in early before the institutional investors. Judging by management’s strong performance in 2019, 2020 will again be another big year for Nova Leap and should see the stock price move higher.




Chris Dobbin on Nova Leap’s record financial results for third quarter 2019

“When it comes to our (business) model. Essentially we are looking for small home care businesses primarily in the US. They are generally between a million to three million dollars in revenue. They are in secondary market where its less competitive. We have been buying in New England and most recently in South Central. These businesses have been around for 10 to 15 years. They are predominantly owned by a founder who is looking for a succession plan. We identify these businesses as part of our role up strategy. We look to make incremental improvement weather it be revenue or expense management or training or marketing. Every agency is little bit different and unique but we bring those incremental improvements and as we add these small businesses to a larger platform we start to see payoffs from a financial perspective.” States Chris Dobbin, President and CEO of Nova Leap Health Corp. (TSXV: NLH), in an interview with InvestorIntel’s Tracy Weslosky.

Chris went on to say that Nova Leap has had nine consecutive quarters of revenue growth and the management is delivering results that they said they would do. Chris further added that Nova Leap has made three aquisitions this year and it continues to pursue more acquisitions. The company recently made an acquisition in Massachusetts and expanded to South Central USA with an acquisition in Oklahoma.

To access the complete interview, click here

Disclaimer: Nova Leap Health Corp. is an advertorial member of InvestorIntel Corp.




Dobbin on Nova Leap Health’s 8th consecutive quarter of record revenue growth

“It was a great quarter for us. We have been producing quarter-over-quarter record results. We have record revenue, record gross margin, record EBITDA. We have been producing record operating cash flow. So it has been fantastic last several quarters and it is our eighth consecutive quarter of record revenue growth.”, States Chris Dobbin, President and CEO of Nova Leap Health Corp. (TSXV: NLH), in an interview with InvestorIntel’s Tracy Weslosky.

Chris went on to say that Nova Leap identified very early on that there was a very fragmented market in the home care space. The company has been acquiring very small owner-operated home care companies and now it is seeing very strong organic growth along with continued successful acquisitions. Chris also said that Nova Leap was recently ranked number 4 on the 2019 Canadian Business and Maclean’s Startup 50 ranking of Canada’s Top New Growth Companies.

To access the complete interview, click here

Disclaimer: Nova Leap Health Corp. is an advertorial member of InvestorIntel Corp.




Chris Dobbin on Nova Leap’s 877% increase in revenue in 2018

“We were pretty open with the market in terms of what our plans were. In the tail end of 2017 we said that we would do up to four acquisitions in 2018. We ended up doing five. Our operations are performing well in the US. We made one acquisition in Canada in Halifax last June. We have come back out and said we plan on doing up to four acquisitions again in 2019. So, a lot of our revenue has been driven by the acquisitions. We have made some really good acquisitions which will lead to some long-term growth for the company.” States Chris Dobbin, President and CEO of Nova Leap Health Corp. (TSXV: NLH), in an interview with InvestorIntel’s Tracy Weslosky.

Tracy Weslosky: Chris you have one of the best performing stocks. In 2017 you had a million in revenue and you have jumped to over 10 million in one year. Is that correct?

Chris Dobbin: That is right. Close to 900% improvement in revenue which we report in US dollars.

Tracy Weslosky: I think I read in your most recent fourth quarter results, a 877% lift. Can you tell us a little about the highlights from this fourth quarter?

Chris Dobbin: It really goes back to our strategy to be honest. We were pretty open with the market in terms of what our plans were. In the tail end of 2017 we said that we would do up to four acquisitions in 2018. We ended up doing five. Our operations are performing well in the US. We made one acquisition in Canada in Halifax last June. We have come back out and said we plan on doing up to four acquisitions again in 2019. So, a lot of our revenue has been driven by the acquisitions. We have made some really good acquisitions which will lead to some long-term growth for the company.

Tracy Weslosky: If you did ten times last year. What do we expect for 2019? Are you going to do it again?

Chris Dobbin: Ten times might be a bit aggressive, but we have certainly indicated to the market that we plan of growing by at least 50-100%. That’s not really from the US$ 10 million that we reported in 2018. That really has to do more with our annualized revenue run rate now which is north of US$ 15 million and with the latest acquisition that we just announced, yet to close but we are getting it close, we would be close to US$ 18 million in revenue.

Tracy Weslosky: For those of you out there in InvestorIntel may not understand or have never heard about Nova Leap Health story before. Chris can you give us kind of an overview about what the company vision is because people like me, we are fallen in love with your story.

Chris Dobbin: We are in the home care services industry. We help people, usually seniors, within their home. A lot of our client base has some form of dementia, but we are really after a demographic that is fast growing. It is sort of the biggest change in our lifetime from a demographic perspective. We have people that have some form of long term chronic condition that need assistance within their home and we provide it…to access the complete interview, click here

Disclaimer: Nova Leap Health Corp. is an advertorial member of InvestorIntel Corp.