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

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

BELLEVUE, Wash., July 14, 2022--(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

-

-