Novo Integrated Sciences Reports Record Revenue of $13.8 million in Fiscal 2022 Third Quarter

Rhea-AI Summary

Novo Integrated Sciences, Inc. (NASDAQ: NVOS) reported a remarkable 481% year-over-year revenue increase for the fiscal third quarter, totaling $13.85 million, driven largely by outsourced product sales. However, they experienced a net loss of $3.81 million, up 827% from the prior year. Significant operating costs rose due to increased overhead linked to Acenzia, PRO-DIP, and Terragenx. The company anticipates improved integration of operations to mitigate these costs in future quarters. Cash and cash equivalents stand at $12.6 million.

Positive

• Revenue surged 481% year-over-year to $13,851,883.
• Record revenue driven by increases in outsourced product sales and IoNovo Iodine.
• Projected market penetration growth and service expansion.
• Cash and cash equivalents at $12.6 million.

Negative

• Net loss increased 827% to $3,810,054 due to higher overhead and expenses.
• 7.6% revenue decline in healthcare services attributed to COVID-19 impacts.

Revenue Increased 382% Sequentially and 481% Year-to-Year for the Fiscal 2022 Third Quarter

BELLEVUE, Wash.--(BUSINESS WIRE)-- Novo Integrated Sciences, Inc. (NASDAQ: NVOS) (the “Company” or “Novo”), pioneering a holistic approach to patient-first health and wellness through a multidisciplinary healthcare ecosystem of multiple patient and consumer touchpoints for services and product innovation, today reported its financial results for the fiscal third quarter ended May 31, 2022.

Robert Mattacchione, Novo’s CEO and Board Chairman, stated, “Novo achieved record revenue in the fiscal 2022 third quarter primarily driven by an increase in both proprietary and outsourced product sales. We believe that subsequent quarters will illustrate a further acceleration of market penetration for our product solutions, particularly when combined with the synergistic positive effect of both our existing and projected expansion of the Company’s service-oriented business units. The three pillars of the Company’s operating model are gaining traction particularly as we expand our line of product solutions and complete our acquisitional objectives.”

Financial Highlights for the Period Ended May 31, 2022:

• Cash and cash equivalents were $12.6 million, total assets were $71.7 million, total liabilities were $27.3 million, and stockholders’ equity was $44.4 million.
• Revenues were $13,851,883, representing an increase of $11,470,909, or 481.8%, from $2,380,974 for the same period in 2021 principally due to an increase in outsourced product sales and IoNovo Iodine which resulted in an increase in revenue of $9,730,236. Acenzia’s and Terragenx’s revenue for the three months ended May 31, 2022 was $645,588 and $1,275,690, respectively. Revenue from our healthcare services decreased by 7.6% when comparing the revenue for the three months ended May 31, 2022 to the same period in 2021 primarily due to a COVID-19 surge in Ontario province Canada and COVID-19 staffing related shortages limiting clinic and eldercare patient-practitioner direct personal interaction.
• Operating costs for the three months ended May 31, 2022 were $3,611,628, representing an increase of $1,929,198, or 114.7%, from $1,682,430 for the same period in 2021. The increase in operating costs is principally due to the increase in overhead expenses associated with the operations of Acenzia, PRO-DIP, and Terragenx which was approximately $952,000 for the three months ended May 31, 2022. In subsequent quarters, this increase in overhead expenses associated with Acenzia, PRO-DIP, and Terragenx is projected to decrease as the Company integrates and consolidates operations. In addition, common stock issued for services increased by $276,828 for the three months ended May 31, 2022 compared to the same period in 2021. Also, an increase in legal and professional fees contributed to the increase in operating expenses.
• Net loss attributed to Novo Integrated Sciences, Inc. for the three months ended May 31, 2022 was $3,810,054, representing an increase of $3,398,867, or 827%, from $411,187 for the same period in 2021. The increase in net loss is principally due to (i) an increase in overhead expenses associated with the operations of Acenzia, PRO-DIP, and Terragenx which was approximately $952,000 for the three months ended May 31, 2022, (ii) common stock issued for services of $314,000; (iii) an increase in interest expense and (iv) an increase in amortization of debt discounts.

Operational Milestones for the Fiscal 2022 Second Quarter:

• Chief Medical Officer, Dr. Joseph M. Chalil, Selected as Top Physician of the Year by IAOTP for outstanding leadership, dedication, and innovation medical contributions.
• Completed Acquisition of Clinical Consultants International LLC (CCI).
• PRO-DIP® issued U.S. Patent for oral pouch delivery system technology.
• Completed acquisition of 2 multi-disciplinary clinics in Ontario Canada.

About Novo Integrated Sciences, Inc.

Novo Integrated Sciences, Inc. is pioneering a holistic approach to patient-first health and wellness through a multidisciplinary healthcare ecosystem of multiple patient and consumer touchpoints for services and product innovation. Novo offers an essential and differentiated solution to deliver, or intend to deliver, these services and products through the integration of medical technology, diagnostic and therapeutic solutions, and rehabilitative science.

We believe that “decentralizing” healthcare, through the integration of medical technology and interconnectivity, is an essential solution to the rapidly evolving fundamental transformation of how non-catastrophic healthcare is delivered both now and in the future. Specific to non-critical care, ongoing advancements in both medical technology and inter-connectivity are allowing for a shift of the patient/practitioner relationship to the patient’s home and away from on-site visits to primary medical centers with mass-services. This acceleration of “ease-of-access” in the patient/practitioner interaction for non-critical care diagnosis and subsequent treatment minimizes the degradation of non-critical health conditions to critical conditions as well as allowing for more cost-effective healthcare distribution.

The Company’s decentralized healthcare business model is centered on three primary pillars to best support the transformation of non-catastrophic healthcare delivery to patients and consumers:

• First Pillar: Service Networks. Deliver multidisciplinary primary care services through (i) an affiliate network of clinic facilities, (ii) small and micro footprint sized clinic facilities primarily located within the footprint of box-store commercial enterprises, (iii) clinic facilities operated through a franchise relationship with the Company, and (iv) corporate operated clinic facilities.
• Second Pillar: Technology. Develop, deploy, and integrate sophisticated interconnected technology, interfacing the patient to the healthcare practitioner thus expanding the reach and availability of the Company’s services, beyond the traditional clinic location, to geographic areas not readily providing advanced, peripheral based healthcare services, including the patient’s home.
• Third Pillar: Products. Develop and distribute effective, personalized health and wellness product solutions allowing for the customization of patient preventative care remedies and ultimately a healthier population. The Company’s science-first approach to product innovation further emphasizes our mandate to create and provide over-the-counter preventative and maintenance care solutions.

Innovation through science combined with the integration of sophisticated, secure technology assures Novo Integrated Sciences of continued cutting-edge advancement in patient first platforms.

For more information concerning Novo Integrated Sciences, please visit www.novointegrated.com. For more information on Novo Healthnet Limited, Novo’s wholly owned subsidiary, please visit www.novohealthnet.com

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Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical facts included in this press release are forward-looking statements. In some cases, forward-looking statements can be identified by words such as "believe," “intend,” "expect," "anticipate," "plan," "potential," "continue" or similar expressions. Such forward-looking statements include risks and uncertainties, and there are important factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors, risks, and uncertainties are discussed in Novo’s filings with the Securities and Exchange Commission. Investors should not place any undue reliance on forward-looking statements since they involve known and unknown, uncertainties and other factors which are, in some cases, beyond Novo’s control which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects Novo’s current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to operations, results of operations, growth strategy and liquidity. Novo assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future. The contents of any website referenced in this press release are not incorporated by reference herein.

NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS As of May 31, 2022 (unaudited) and August 31, 2021
		May 31,				August 31,
		2022				2021
			(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents		$	12,677,446			$	8,293,162
Accounts receivable, net			5,166,239				1,468,429
Inventory, net			645,063				339,385
Other receivables, current portion			1,209,137				814,157
Prepaid expenses and other current assets			380,800				218,376
Total current assets			20,078,685				11,133,509
Property and equipment, net			5,931,683				6,070,291
Intangible assets, net			32,192,858				32,029,499
Right-of-use assets, net			2,222,970				2,543,396
Other receivables, net of current portion			-				692,738
Goodwill			11,366,618				9,488,848
TOTAL ASSETS		$	71,792,814			$	61,958,281
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable		$	1,621,719			$	1,449,784
Accrued expenses			1,243,792				1,129,309
Accrued interest (including amounts to related parties)			961,823				366,280
Government loans and notes payable, current portion			5,260,056				4,485,649
Convertible notes payable, net of discount of $0			1,875,000				-
Contingent liability			750,860				-
Due to related parties			456,528				478,920
Finance lease liability, current portion			15,982				23,184
Operating lease liability, current portion			544,690				530,797
Total current liabilities			12,730,450				8,463,923
Debentures, related parties			981,337				982,205
Notes payable, net of current portion			158,645				5,133,604
Convertible notes payable, net of discount of $5,170,205			10,252,017				-
Finance lease liability, net of current portion			8,563				16,217
Operating lease liability, net of current portion			1,734,790				2,057,805
Deferred tax liability			1,499,045				1,500,372
TOTAL LIABILITIES			27,364,847				18,154,126
Commitments and contingencies			-				-
STOCKHOLDERS’ EQUITY
Novo Integrated Sciences, Inc.
Convertible preferred stock; $0.001 par value; 1,000,000 shares authorized; 0 and 0 shares issued and outstanding at May 31, 2022 and August 31, 2021, respectively
Common stock; $0.001 par value; 499,000,000 shares authorized; 30,659,073 and 26,610,144 shares issued and outstanding at May 31, 2022 and August 31, 2021, respectively			30,659				26,610
Additional paid-in capital			64,620,878				54,579,396
Common stock to be issued (4,308,591 and 3,622,199 shares at May 31, 2022 and August 31, 2021)			10,096,332				9,236,607
Other comprehensive income			1,015,993				991,077
Accumulated deficit			(31,391,082	)			(20,969,274	)
Total Novo Integrated Sciences, Inc. stockholders’ equity			44,372,780				43,864,416
Noncontrolling interest			55,187				(60,261	)
Total stockholders’ equity			44,427,967				43,804,155
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	71,792,814			$	61,958,281

NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS For the Three and Nine Months Ended May 31, 2022 and 2021 (unaudited)
		Three Months Ended								Nine Months Ended
		May 31,				May 31,				May 31,				May 31,
		2022				2021				2022				2021
		(unaudited)				(unaudited)				(unaudited)				(unaudited)
Revenues		$	13,851,883			$	2,380,974			$	19,883,033			$	6,612,374
Cost of revenues			11,443,001				1,100,516				14,991,331				3,769,020
Gross profit			2,408,882				1,280,458				4,891,702				2,843,354
Operating expenses:
Selling expenses			9,802				2,381				36,340				4,226
General and administrative expenses			3,601,826				1,680,049				9,542,443				5,324,768
Total operating expenses			3,611,628				1,682,430				9,578,783				5,328,994
Loss from operations			(1,202,746	)			(401,972	)			(4,687,081	)			(2,485,640	)
Non operating income (expense)
Interest income			8,355				8,402				25,233				25,265
Interest expense			(513,398	)			(21,701	)			(1,808,310	)			(68,590	)
Amortization of debt discount			(2,133,890	)			-				(3,654,752	)			-
Foreign currency transaction gains (losses)			97,654				-				(303,714	)			-
Total other income (expense)			(2,541,279	)			(13,299	)			(5,741,543	)			(43,325	)
Loss before income taxes			(3,744,025	)			(415,271	)			(10,428,624	)			(2,528,965	)
Income tax expense			-				-				-				-
Net loss		$	(3,744,025	)		$	(415,271	)		$	(10,428,624	)		$	(2,528,965	)
Net income (loss) attributed to noncontrolling interest			66,029				(4,084	)			(6,816	)			(6,438	)
Net loss attributed to Novo Integrated Sciences, Inc.		$	(3,810,054	)		$	(411,187	)		$	(10,421,808	)		$	(2,522,527	)
Comprehensive loss:
Net loss			(3,744,025	)			(415,271	)			(10,428,624	)			(2,528,965	)
Foreign currency translation gain			13,711				123,521				24,916				176,349
Comprehensive loss:		$	(3,730,314	)		$	(291,750	)		$	(10,403,708	)		$	(2,352,616	)
Weighted average common shares outstanding - basic and diluted			29,817,999				25,298,866				28,498,414				24,192,998
Net loss per common share - basic and diluted		$	(0.13	)		$	(0.02	)		$	(0.37	)		$	(0.10	)

NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY For the Three and Nine Months Ended May 31, 2022 and 2021 (unaudited)
																										Total
										Additional				Common				Other								Novo
		Common Stock								Paid-in				Stock To				Comprehensive				Accumulated				Stockholders’				Noncontrolling				Total
		Shares				Amount				Capital				Be Issued				Income				Deficit				Equity				Interest				Equity
Balance, August 31, 2021			26,610,144			$	26,610			$	54,579,396			$	9,236,607			$	991,077			$	(20,969,274	)		$	43,864,416			$	(60,261	)		$	43,804,155
Common stock for services			35,000				35				64,715				-				-				-				64,750				-				64,750
Common stock issued as collateral and held in escrow			2,000,000				2,000				(2,000	)			-				-				-				-				-				-
Common stock to be issued for purchase of Terragenx			-				-				-				983,925				-				-				983,925				97,311				1,081,236
Common stock to be issued for purchase of Mullin assets			-				-				-				188,925				-				-				188,925				-				188,925
Value of warrants issued with convertible notes			-				-				295,824				-				-				-				295,824				-				295,824
Fair value of stock options			-				-				154,135				-				-				-				154,135				-				154,135
Foreign currency translation loss			-				-				-				-				(103,533	)			-				(103,533	)			(855	)			(104,388	)
Net loss			-				-				-				-				-				(1,806,587	)			(1,806,587	)			(9,808	)			(1,816,395	)
Balance, November 30, 2021			28,645,144				28,645				55,092,070				10,409,457				887,544				(22,775,861	)			43,641,855				26,387				43,668,242
Common stock for services			240,000				240				297,760				-				-				-				298,000				-				298,000
Value of warrants issued with convertible notes			-				-				5,257,466				-				-				-				5,257,466				-				5,257,466
Fair value of stock options			-				-				44,427				-				-				-				44,427				-				44,427
Foreign currency translation gain			-				-				-				-				114,738				-				114,738				355				115,093
Net loss			-				-				-				-				-				(4,805,167	)			(4,805,167	)			(63,037	)			(4,868,204	)
Balance, February 28, 2022			28,885,144				28,885				60,691,723				10,409,457				1,002,282				(27,581,028	)			44,551,319				(36,295	)			44,515,024
Common stock for services			125,000				125				313,875				-				-				-				314,000				-				314,000
Common stock for conversion of convertible notes			623,929				624				1,247,225				-				-				-				1,247,849				-				1,247,849
Common stock for acquisition			800,000				800				1,703,200				-				-				-				1,704,000				-				1,704,000
Common stock to be issued for acquisitions			-				-				-				260,625				-				-				260,625				25,402				286,027
Issuance of common stock to be issued			225,000				225				573,525				(573,750	)			-				-				-				-				-
Fair value of stock options			-				-				91,330				-				-				-				91,330				-				91,330
Foreign currency translation gain			-				-				-				-				13,711				-				13,711				51				13,762
Net loss			-				-				-				-				-				(3,810,054	)			(3,810,054	)			66,029				(3,744,025	)
Balance, May 31, 2022			30,659,073			$	30,659			$	64,620,878			$	10,096,332			$	1,015,993			$	(31,391,082	)		$	44,372,780			$	55,187			$	44,427,967
Balance, August 31, 2020			23,466,236			$	23,466			$	44,905,454			$	-			$	1,199,696			$	(16,507,127	)		$	29,621,489			$	(49,859	)		$	29,571,630
Common stock issued for cash			21,905				22				91,978				-				-				-				92,000				-				92,000
Common stock issued for services			65,000				65				247,935				-				-				-				248,000				-				248,000
Foreign currency translation gain			-				-				-				-				10,596				-				10,596				(225	)			10,371
Net loss			-				-				-				-				-				(771,470	)			(771,470	)			(1,633	)			(773,103	)
Balance, November 30, 2020			23,553,141				23,553				45,245,367				-				1,210,292				(17,278,597	)			29,200,615				(51,717	)			29,148,898
Exercise of stock options			7,500				8				11,992				-				-				-				12,000				-				12,000
Common stock issued for intellectual property			240,000				240				875,760				-				-				-				876,000				-				876,000
Common stock to be issued for services rendered			-				-				-				375,000				-				-				375,000				-				375,000
Rounding due to stock split			957				1				(1	)			-				-				-				-				-				-
Fair value of vested stock options			-				-				22,215				-				-				-				22,215				-				22,215
Foreign currency translation gain			-				-				-				-				42,232				-				42,232				(965	)			41,267
Net loss			-				-				-				-				-				(1,339,870	)			(1,339,870	)			(721	)			(1,340,591	)
Balance, February 28, 2021			23,801,598				23,802				46,155,333				375,000				1,252,524				(18,618,467	)			29,188,192				(53,403	)			29,134,789
Common stock for services			100,000				100				374,900				(375,000	)			-				-				-				-				-
Common stock issued for acquisition			189,796				190				430,647				-				-				-				430,837				-				430,837
Common stock issued for services rendered			9,913				9				37,163				-				-				-				37,172				-				37,172
Common stock issued for cash, net of offering costs			2,388,050				2,388				7,233,192				-				-				-				7,235,580				-				7,235,580
Fair value of vested stock options			-				-				66,640				-				-				-				66,640				-				66,640
Foreign currency translation gain			-				-				-				-				123,521				-				123,521				(3,143	)			120,378
Net loss			-				-				-				-				-				(411,187	)			(411,187	)			(4,084	)			(415,271	)
Balance, May 31, 2021			26,489,357			$	26,489			$	54,297,875			$	-			$	1,376,045			$	(19,029,654	)		$	36,670,755			$	(60,630	)		$	36,610,125

NOVO INTEGRATED SCIENCES, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended May 31, 2022 and 2021 (unaudited)
		Nine Months Ended
		May 31,				May 31,
		2022				2021
		(unaudited)				(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(10,428,624	)		$	(2,528,965	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			2,349,434				1,118,925
Fair value of vested stock options			289,892				88,855
Common stock issued for services			676,750				660,172
Operating lease expense			418,188				467,864
Amortization of debt discount			3,654,752				-
Foreign currency transaction losses			303,714				-
Changes in operating assets and liabilities:
Accounts receivable			(3,650,069	)			543,213
Inventory			(263,539	)			-
Prepaid expenses and other current assets			(150,632	)			(143,590	)
Accounts payable			117,056				(97,659	)
Accrued expenses			(68,871	)			64,513
Accrued interest			598,904				7,455
Operating lease liability			(406,862	)			(460,063	)
Net cash used in operating activities			(6,559,907	)			(279,280	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(190,973	)			(201,369	)
Cash acquired from (paid for) acquisition			57,489				(10,000	)
Payment on other receivable			296,138				-
Amounts loaned for other receivables			-				(470,040	)
Net cash provided by (used in) investing activities			162,654				(681,409	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments to related parties			(21,932	)			(177,534	)
Repayments of finance leases			(14,797	)			-
Repayments of notes payable			(4,430,794	)			-
Proceeds from the sale of common stock, net of offering costs			-				7,327,580
Proceeds from exercise of stock options			-				12,000
Proceeds from issuance of convertible notes, net			15,270,000				-
Net cash provided by financing activities			10,802,477				7,162,046
Effect of exchange rate changes on cash and cash equivalents			(20,940	)			97,970
NET INCREASE IN CASH AND CASH EQUIVALENTS			4,384,284				6,299,327
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			8,293,162				2,067,718
CASH AND CASH EQUIVALENTS, END OF PERIOD		$	12,677,446			$	8,367,045
CASH PAID FOR:
Interest		$	1,294,912			$	33,183
Income taxes		$	-			$	-
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock to be issued for intangible assets		$	188,925			$	876,000
Common stock to be issued for acquisitions		$	1,244,550			$	-
Common stock issued for acquisition		$	1,704,000			$	430,837
Conversion of convertible notes payable and accrued interest to common stock		$	1,247,849			$	-

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20220714005789/en/

Chris David, COO & President

Novo Integrated Sciences, Inc.

chris.david@novointegrated.com

(888) 512-1195

Source: Novo Integrated Sciences, Inc.

FAQ

What were Novo Integrated Sciences' revenues for Q3 2022?

Novo Integrated Sciences reported revenues of $13,851,883 for Q3 2022, a 481% increase year-over-year.

What was the net loss for Novo Integrated Sciences in Q3 2022?

The net loss for Q3 2022 was $3,810,054, an increase of 827% from the previous year.

How did COVID-19 affect Novo Integrated Sciences' healthcare services revenue?

Healthcare services revenue decreased by 7.6% due to a COVID-19 surge and staffing shortages.

What does the future outlook look like for Novo Integrated Sciences?

Novo expects to enhance market penetration and reduce operating costs as they integrate and consolidate operations.