HALIFAX, Nova Scotia, June 27, 2023 (GLOBE NEWSWIRE) --

Dear Nova Leap Shareholders:

As Nova Leap Health Corp. (“Nova Leap” or the “Company”) is midway through its 8^th 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:

1. Cash payments to Nova Leap in the amount of $95,000 received in Q2;
2. Forgiveness of the remaining promissory notes related to this agency, plus accrued interest, in the amount to $258,000; and
3. 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.D
President & 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.