Company: Nova Leap Health Corp.
President and CEO: Chris Dobbin
Markets: TSX Venture Exchange (TSX.V:NLH)
Market Cap: 24,114,229
Share Price: $ 0.395
52-week high/low: 0.41/ 0.24
|Nova Leap Health Corp. has grown at an impressive pace over the last two years. It has acquired tenhome care companies since September 2017, posted nine consecutive quarters of revenue growth, and grown from a team of 10 to a team of approximately 800.
“Nova Leap has continuously delivered record quarterly results– record revenue, record gross margin, record EBITDA, record EBITDA margin and record operating cash flow,” says Chris Dobbin, the company’s President and CEO. “That’s the way it’s been trending quarter after quarter over the last ninequarters. We’ve come a long way over the last couple of years.”
“With nine consecutive quarters of revenue growth and positive operating cash flows for three straight quarters, Nova Leap is clearly undervalued. But I don’t believe it will be for much longer.”
Greg Beckett,Senior Analyst and Chartered Investment Manager for the Richmond Club
Nova Leap’s third quarter financial results for 2019, released on November 7, are the best in its history. EBITDA, which has been on an upward trend since the fourth quarter of 2018, reached a new record high of US$324,676 in the third quarter, an increase of 685% over the same period last year. Revenue for the quarter also broke records at US$4,424,350, 54.1% higher than last year.
Nova Leap Health: a growing company in a growing industry
Nova Leap is a homecare business that takes care of seniors living with some form of dementia. Dobbin launched the company in 2016 after a personal experience with a relative helped him identify a gap in the homecare services industry.
Nova Leap operates on a unique business model. It acquires existing small and privately held homecare businesses in secondary markets, and then makes substantial improvements over time. In recent months, the company closed on an acquisition in Nova Scotia, a second one in Oklahoma and a third in Massachusetts. “I founded Nova Leap with the view of being an industry consolidator. We’ve been quite active in acquiring homecare companies primarily in the New England and Nova Scotia area. Our ability to improve the existing operations has led to outstanding financial results.”
Dobbin says, “it really comes down to people. We’ve been fortunate to identify good people who operate the agencies prior to Nova Leap acquiring them. Their expertise in homecare combined with our business acumen is what makes our formula work.”
With an aging North American population, the services offered by Nova Leap are timely and essential. The homecare industry is one of the fastest growing markets in Canada and the U.S., driven by an aging population. “The industry is going to continue to grow year after year and I don’t think I will run out of opportunities to grow Nova Leap during my lifetime, just given the size of the demographic market.”
“The homecare industry in both Canada and the US is expected to grow significantly in the coming years,” says Greg Beckett, Richmond Club Senior Analyst and Chartered Investment Manager, who picks stocks for the Richmond Club Index. Over the last decade and a half his picks have averaged a return of approximately 19.76% since inception over 15 years ago. “With nine consecutive quarters of revenue growth and positive operating cash flows for three straight quarters, Nova Leap is clearly undervalued. But, if performance is any indication, I don’t believe it will be for much longer.”
Beckett sums up the reasons for investing in Nova Leap as follows:
- Nova Leap is a growing company in a growing industry. The company has a proven track record of enhancing the performance of the agencies it acquires. It also operates within the non-medical homecare industry, which represents 6.1 per cent of US$5.4 billion in revenues of the US$89.2 billion home healthcare market.
- The company’s projected growth is closely tied to demographics. Nova Leap operates from ten geographical locations in the U.S. and Canada, where the population is aging and the need for home care services is expected to grow substantially in the coming years.
- Undervalued relative to peers. Nova Leap has lots of room for scale and growth when compared to larger competitors within the homecare space.