Novo Integrated Sciences Reports Fiscal Year 2024 Second Quarter Financial Results

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 second fiscal quarter ended February 29, 2024.

Robert Mattacchione, Novo’s CEO and Board Chairman, stated, “The Company’s fiscal year 2024 second quarter period emphasized maximizing operational efficiencies pointed towards future cost savings and margin improvement. The Company continues to work with certain prospective financial partners to close previously announced non-traditional financing opportunities to raise foundational capital with repayment terms necessary to support and accelerate the further growth of Novo’s three-pillar business model. The Company remains committed to the commercialization of its proprietary product offerings and the expansion and delivery of its essential services and solutions for how non-catastrophic healthcare is delivered both now and in the future.”

Financial Highlights for the three-month period ended February 29, 2024:

     

      • Cash and cash equivalents were $651,747, total assets were $34,949,271, total liabilities were $13,058,987, and stockholders’ equity was $21,890,284.

      • Revenues were $3,170,592, representing an increase of $614,083, or 24%, from $2,556,509 for the three months ended February 28, 2023. The increase in revenue is principally due to an increase in product sales. Acenzia’s and Terragenx’s revenue for the three months ended February 29, 2024 were $884,396 and $103,399, respectively. Revenue from our healthcare services increased by 3.4% when comparing the revenue for the three months ended February 29, 2024 to the three months ended February 28, 2023.

      • Operating costs were $2,863,854, representing an increase of $106,141, or 4%, from $2,757,713 for the three months ended February 28, 2023. The increase in operating costs was principally due to higher fair value of stock options issued during the three months.

      • Net loss attributed to the Company for the three months ended February 29, 2024 was $2,746,128, representing a decrease of $1,875,227, or 41%, from $4,621,355 for the three months ended February 28, 2023. The decrease in net loss was principally due to the increase in gross profit and lower amount of other expenses.

      • On December 21, 2023, the total principal and interest of $449,535 owed on the $445,000 Mast Hill Fund, LP promissory note, dated June 20, 2023, was converted to 457,128 shares of the Company’s common stock and paid in full.

    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 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, advanced therapeutics, 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.

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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 SHEETSAs of February 29, 2024 (unaudited) and August 31, 2023
                   
          February 29,     August 31,  
          2024     2023  
      ASSETS                
      Current Assets:                
      Cash and cash equivalents   $ 651,747     $ 416,323  
      Accounts receivable, net     2,153,914       1,467,028  
      Inventory, net     947,351       1,106,983  
      Other receivables     1,048,596       1,051,584  
      Prepaid expenses and other current assets     217,619       346,171  
      Total current assets     5,019,227       4,388,089  
                       
      Property and equipment, net     5,246,241       5,390,038  
      Intangible assets, net     15,205,967       16,218,539  
      Right-of-use assets, net     1,916,900       1,983,898  
      Goodwill     7,560,936       7,582,483  
      TOTAL ASSETS   $ 34,949,271     $ 35,563,047  
                       
      LIABILITIES AND STOCKHOLDERS’ EQUITY                
                       
      Current Liabilities:                
      Accounts payable   $ 2,173,667     $ 3,513,842  
      Accrued expenses     1,328,828       1,233,549  
      Accrued interest (including amounts to related parties)     477,480       382,666  
      Government loans and notes payable, current portion     93,488       277,405  
      Convertible notes payable, net of discount of $2,004,245     1,773,533       558,668  
      Derivative liability     2,312,921        
      Contingent liability     27,756       61,767  
      Debentures, related parties     914,219       916,824  
      Due to related parties     434,039       533,001  
      Finance lease liability     5,788       11,744  
      Operating lease liability, current portion     417,342       415,392  
      Total current liabilities     9,959,061       7,904,858  
                       
      Government loans and notes payable, net of current portion     64,016       65,038  
      Operating lease liability, net of current portion     1,639,391       1,693,577  
      Deferred tax liability     1,396,519       1,400,499  
      TOTAL LIABILITIES     13,058,987       11,063,972  
                       
      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 February 29, 2024 and August 31, 2023, respectively            
      Common stock; $0.001 par value; 499,000,000 shares authorized; 17,748,320 and 15,759,325 shares issued and outstanding at February 29, 2024 and August 31, 2023, respectively     17,749       15,760  
      Additional paid-in capital     96,082,626       90,973,316  
      Common stock to be issued (17,375 and 91,138 shares at February 29, 2024 and August 31, 2023)     44,443       1,217,293  
      Other comprehensive gain (loss)     503,381       (357,383 )
      Accumulated deficit     (74,459,512 )     (67,033,041 )
      Total Novo Integrated Sciences, Inc. stockholders’ equity     22,188,687       24,815,945  
      Noncontrolling interest     (298,403 )     (316,870 )
      Total stockholders’ equity     21,890,284       24,499,075  
      TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 34,949,271     $ 35,563,047  

      * The condensed consolidated balance sheets’ common stock amounts have been retroactively adjusted to account for the Company’s 1:10 reverse stock split, effective November 7, 2023.

       
      NOVO INTEGRATED SCIENCES, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSSFor the Three and Six Months Ended February 29, 2024 and February 28, 2023 (unaudited)
                               
                               
          Three Months Ended     Six Months Ended  
          February 29,     February 28,     February 29,     February 28,  
          2024     2023     2024     2023  
                               
      Revenues   $ 3,170,592     $ 2,556,509     $ 7,061,810     $ 5,975,789  
                                       
      Cost of revenues     1,846,506       1,585,606       3,793,706       3,265,353  
                                       
      Gross profit     1,324,086       970,903       3,268,104       2,710,436  
                                       
      Operating expenses:                                
      Selling expenses     2,590       707       12,176       8,039  
      General and administrative expenses     2,861,264       2,757,006       8,113,333       6,731,167  
      Total operating expenses     2,863,854       2,757,713       8,125,509       6,739,206  
                                       
      Loss from operations     (1,539,768 )     (1,786,810 )     (4,857,405 )     (4,028,770 )
                                       
      Non-operating income (expense)                                
      Interest income     2,477       2,243       4,696       4,524  
      Interest expense     (138,684 )     (123,866 )     (282,058 )     (291,109 )
      Other expense     (308,763 )           (960,937 )      
      Change in fair value of derivative liability     373,339             958,868        
      Amortization of debt discount     (1,114,573 )     (2,740,349 )     (2,190,501 )     (4,230,862 )
      Foreign currency transaction (loss) gain     (19,588 )     3,620       (78,946 )     (35,681 )
      Total other expense     (1,205,792 )     (2,858,352 )     (2,548,878 )     (4,553,128 )
                                       
      Loss before income taxes     (2,745,560 )     (4,645,162 )     (7,406,283 )     (8,581,898 )
                                       
      Income tax expense                        
                                       
      Net loss   $ (2,745,560 )   $ (4,645,162 )   $ (7,406,283 )   $ (8,581,898 )
                                       
      Net income (loss) attributed to noncontrolling interest     568       (23,807 )     20,188       (25,130 )
                                       
      Net loss attributed to Novo Integrated Sciences, Inc.   $ (2,746,128 )   $ (4,621,355 )   $ (7,426,471 )   $ (8,556,768 )
                                       
      Comprehensive loss:                                
      Net loss     (2,745,560 )     (4,645,162 )     (7,406,283 )     (8,581,898 )
      Foreign currency translation gain (loss)     750,067       (196,683 )     860,764       (617,665 )
      Comprehensive loss:   $ (1,995,493 )   $ (4,841,845 )   $ (6,545,519 )   $ (9,199,563 )
                                       
      Weighted average common shares outstanding – basic and diluted     17,642,829       7,933,492       17,184,569       5,646,937  
                                       
      Net loss per common share – basic and diluted   $ (0.16 )   $ (0.59 )   $ (0.43 )   $ (1.52 )

      * The condensed consolidated statements of operations and comprehensive loss’s share and per share amounts have been retroactively adjusted to account for the Company’s 1:10 reverse stock split, effective November 7, 2023.

       
      NOVO INTEGRATED SCIENCES, INC.CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITYFor the Three and Six Months Ended February 29, 2024 and February 28, 2023 (unaudited)
                                                             
                Additional     Common     Other           Novo              
          Common Stock     Paid-in     Stock To     Comprehensive     Accumulated     Stockholders’     Noncontrolling     Total  
          Shares     Amount     Capital     Be Issued     Income (Loss)     Deficit     Equity     Interest     Equity  
      Balance, August 31, 2023     15,759,325     $ 15,760     $ 90,973,316     $ 1,217,293     $ (357,383 )   $ (67,033,041 )   $ 24,815,945     $ (316,870 )   $ 24,499,075  
      Cashless exercise of warrants     245,802       246       1,323,152                         1,323,398             1,323,398  
      Exercise of warrants for cash     240,400       240       240,160                         240,400             240,400  
      Share issuance for convertible debt settlement     519,845       520       577,002                         577,522             577,522  
      Issuance of common stock to be issued     73,767       74       1,172,776       (1,172,850 )                              
      Common stock issued for services     424,080       424       1,194,976                         1,195,400             1,195,400  
      Reverse stock split share rounding     27,973       28       (28 )                                    
      Foreign currency translation loss                             110,895             110,895       (1,919 )     108,976  
      Net loss                                   (4,680,343 )     (4,680,343 )     19,620       (4,660,723 )
      Balance, November 30, 2023     17,291,192     $ 17,292     $ 95,481,354     $ 44,443     $ (246,488 )   $ (71,713,384 )   $ 23,583,217     $ (299,169 )   $ 23,284,048  
                                                                               
      Share issuance for convertible debt settlement     457,128       457       453,616                         454,073             454,073  
      Foreign currency translation gain                             749,869             749,869       198       750,067  
      Fair value of stock options                 147,656                         147,656             147,656  
      Net loss                                   (2,746,128 )     (2,746,128 )     568       (2,745,560 )
      Balance, February 29, 2024     17,748,320     $ 17,749     $ 96,082,626     $ 44,443     $ 503,381     $ (74,459,512 )   $ 22,188,687     $ (298,403 )   $ 21,890,284  

                      Additional     Common     Other           Novo              
          Common Stock     Paid-in     Stock To     Comprehensive     Accumulated     Stockholders’     Noncontrolling     Total  
          Shares     Amount     Capital     Be Issued     Income (Loss)     Deficit     Equity     Interest     Equity  
      Balance, August 31, 2022     3,118,063     $ 3,118     $ 66,084,887     $ 9,474,807     $ 560,836     $ (53,818,489 )   $ 22,305,159     $ (257,588 )   $ 22,047,571  
      Common stock issued for cash, net of offering costs     400,000       400       1,794,600                         1,795,000             1,795,000  
      Issuance of common stock to be issued     3,623       4       92,362       (92,366 )                              
      Cashless exercise of warrants     467,399       467       1,138,583                         1,139,050             1,139,050  
      Fair value of stock options                 60,887                         60,887             60,887  
      Foreign currency translation loss                             (417,008 )           (417,008 )     (3,974 )     (420,982 )
      Net loss                                   (3,935,413 )     (3,935,413 )     (1,323 )     (3,936,736 )
      Balance, November 30, 2022     3,989,085     $ 3,989     $ 69,171,319     $ 9,382,441     $ 143,828     $ (57,753,902 )   $ 20,947,675     $ (262,885 )   $ 20,684,790  
                                                                               
      Share issuance for convertible debt settlement     9,310,940       9,311       9,076,740                         9,086,051             9,086,051  
      Cashless exercise of warrants     115,935       116       282,417                         282,533             282,533  
      Exercise of warrants for cash     131,000       131       130,869                         131,000             131,000  
      Issuance of common stock to be issued     320,202       320       8,164,828       (8,165,148 )                              
      Shares issued with convertible notes     95,500       96       82,868                         82,963             82,963  
      Value of warrants issued with convertible notes                 86,327                         86,327             86,327  
      Fair value of stock options                 60,887                         60,887             60,887  
      Extinguishment of derivative liability due to conversion                 1,390,380                         1,390,380             1,390,380  
      Foreign currency translation loss                             (195,821 )           (195,821 )     (862 )     (196,683 )
      Net loss                                   (4,621,355 )     (4,621,355 )     (23,807 )     (4,645,162 )
      Balance, February 28, 2023     13,962,662     $ 13,963     $ 88,446,635     $ 1,217,293     $ (51,993 )   $ (62,375,257 )   $ 27,250,640     $ (287,554 )   $ 26,963,086  

      * The condensed consolidated statements of stockholders’ equity share amounts have been retroactively adjusted to account for the Company’s 1:10 reverse stock split, effective November 7, 2023.

       
      NOVO INTEGRATED SCIENCES, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFor the Six Months Ended February 29, 2024 and February 28, 2023 (unaudited)
                   
                   
          Six Months Ended  
          February 29,     February 28,  
          2024     2023  
                   
      CASH FLOWS FROM OPERATING ACTIVITIES:                
      Net loss   $ (7,406,283 )   $ (8,581,898 )
      Adjustments for non-cash items:                
      Depreciation and amortization     1,140,613       1,138,797  
      Fair value of vested stock options     147,656       121,774  
      Change in fair value of derivative liability     (958,868 )      
      Cashless exercise of warrants     1,323,398       1,421,583  
      Common stock issued for services     1,195,400        
      Operating lease expense     308,867       419,256  
      Amortization of debt discount     2,190,501       4,230,862  
      Foreign currency transaction losses     78,946       35,681  
      Changes in operating assets and liabilities:                
      Accounts receivable     (691,424 )     57,936  
      Inventory     157,116       (78,898 )
      Prepaid expenses and other current assets     127,885       6,143  
      Accounts payable     (1,333,031 )     299,881  
      Accrued expenses     98,987       148,918  
      Accrued interest     63,151       28,226  
      Operating lease liability     (308,867 )     (405,082 )
      Net cash used in operating activities     (3,865,953 )     (1,156,821 )
                       
      CASH FLOWS FROM FINANCING ACTIVITIES:                
      (Repayments to) proceeds from related parties     (64,837 )     6,138  
      Proceeds from notes payable     145        
      Repayments of notes payable     (184,475 )      
      Repayments of finance leases     (5,931 )     (4,299 )
      Proceeds from issuance of convertible notes, net     3,314,153       445,235  
      Repayment of convertible notes           (2,977,778 )
      Proceeds from the sale of common stock, net of offering costs           1,795,000  
      Proceeds from exercise of warrants     240,400       131,000  
      Net cash provided by (used in) financing activities     3,299,455       (604,704 )
                       
      Effect of exchange rate changes on cash and cash equivalents     801,922       192,576  
                       
      NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     235,424       (1,568,949 )
                       
      CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     416,323       2,178,687  
                       
      CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 651,747     $ 609,738  
                       
      CASH PAID FOR:                
      Interest   $ 158,367     $ 275,990  
      Income taxes   $     $  
                       
      SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:                
      Common stock issued for convertible debt settlement   $ 1,031,595     $ 9,086,051  
      Debt discount recognized on derivative liability   $     $ 1,390,380  
      Debt discount recognized on convertible note   $     $ 297,055  
      Extinguishment of derivative liability due to conversion   $     $ 1,390,380  
      Common stock issued with convertible notes   $     $ 82,963  
      Warrants issued with convertible notes   $     $ 86,327  

      Contacts

      Chris David, COO-President
      Novo Integrated Sciences, Inc.
      chris.david@novointegrated.com
      (888) 512-1195

      Link to original press release can be found here.