7 Consecutive Quarters of Revenue Growth Net Income Up 145% for the Quarter
MIAMI, FL / ACCESSWIRE / May 16, 2018 / Novus Acquisition and Development, Corp. (OTC PINK: NDEV), through its wholly owned subsidiary WCIG Insurance Services, Inc., is a diversified insurance entity in health, liability, annuity and accident, and, the nation's first carrier/aggregator offering a cannabis health plan, today reported financial and operational results for its first quarter ended March 31, 2018.
First Quarter 2018 Highlights:
- Revenue increased 51% to $41,061 for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017
- 7 consecutive quarters of revenue growth
- Demonstrated 59% profit margin pricing structure in business model
- Net income increased 145% to $24,097 for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017
- Shareholder equity remained strong at $1,422,777 at March 31, 2018, increasing from $1,360,207 at December 31, 2017
- Cash and Cash Equivalents increased to $106,271 at March 31, 2018, from $102,888 at December 31, 2017
7th Consecutive Quarters of Sequential Increase in Revenue:
Novus' Chief Executive Officer, Frank Labrozzi, commented, "We are very pleased with our continued progress, market penetration and traction of Novus Cannabis MedPlan. Our platform of services has demonstrated reliability and scalability and is poised for continued growth throughout 2018 and beyond. Our focus for the remainder of 2018 is to increase the visibility and awareness and ramp the covered lives of Novus Cannabis MedPlan. We are optimistic that many of the open discussions with potential strategic partners, medical cannabis businesses and dispensaries will result in signed agreements and roll-out over the next few months. Medical cannabis regulation continues to gain populous support due to its medical health benefits and is now approved and regulated in 30 U.S. states. We look to continue to be at the forefront of adding value to both medical cannabis consumers and businesses in an underserved and inefficient market."
Overall market sentiment towards legalized cannabis turned challenging at the end of 2017 and into the beginning of 2018, but these adverse market drivers turned out to be manageable. And, through this struggle, Novus still showed growth. The areas of discord were:
a) Facebook Advertising: With its Federal Government inquiry into privacy breach of over 80 million users, the social network giant began rejecting ads that contain the word "cannabis". This move was to cover any improprieties by the social media giant to any other federal legal repercussion. Novus marketing engagements declined, however our marketing mix to support the business model, was not solely dependent on Facebook and we quickly deployed an increase digital display marketing efforts in other avenues such as programmatic marketing that have been responsive.
b) Market Instability: Such factors included, market instability and uncertainty, reports of over-capacity and price declines in certain states at the wholesale level. However Novus' business model still holds up to these market/pricing pressures simply due two factors, (i) that taxation on recreation (blended state tax rate of 25%) is not as attractive as medical cannabis (with tax abatements) coupled with our provider discounts starting at 30% making Novus Cannabis MedPlan an attractive value model to consumers regardless, and (ii) certain state markets still have regulatory legislative issues pertaining to compliance that has not yet to been finalized in states such as Florida. And,
c) Attorney General Sessions: U.S. Attorney General Jeff Sessions messaging, the Administration's stance and announcements on marijuana enforcement, particularly the rescinding of the Cole Memorandum and giving the Federal US Attorneys "free-reign" as to enforcement priorities set a very negative tone and caused hesitation from buyers in the cannabis industry. Industry-wide build-outs slowed and were pushed-out. However the silver lining, many state lawmakers when crafting the their regulation, took in account the Cole Memo and with an abrupt move Attorney General Session, leaving it up to federal prosecutors to use their discretion on attacking legal cannabis, the result, changed a thing. See Forbes Article "Investors Aren't Scared By Sessions Change in Pot Policy." Read article here: https://bit.ly/2KmJ9Di.
In Summary: despite the adverse affects in marketing and advertising and the instability in the cannabis market in the past two quarters, Novus has still generated an uptick in revenue generation for seven straight quarters.
Novus' health insurance business model is divided into three components:
- Medical Cannabis (THC-based meds) can render risk and non-risk insurance models in Washington, Oregon, Hawaii, Michigan, Arizona, Colorado, California, Washington, New York, Massachusetts, Florida and Vermont.
- CBD MedPlans are available nationwide.
- Traditional Benefit Packages: Novus also sells benefit packages nationwide in medical marijuana CBD concentrate, dental, vision, diabetic supplies, prescriptions and hearing.
Novus continues to execute its plan as an early mover as an insurance entity in the legal medical cannabis industry with its unique business model and strategic partnerships with a focus on growing its number of patient members. Its in-house multi-prong marketing strategy utilizing direct digital marketing and strategic partners has been key to increase visibility and awareness and expand the business. Novus targets three groups of people:
(1) A wide audience of cannabis interested people via digital marketing, programmatic advertising, social media and influencer's targets millions of people at likely minimal conversion rates at .05% to .08%.
(2) A more specific audience seeking medical cannabis information via medical cannabis focused websites or apps targets hundreds of thousands of people with better than average conversion rates at 1% to 3%.
(3) A very specific audience seeking medical cannabis product via dispensaries, doctors and legal cannabis cardholder's targets tens of thousands of people have higher than normal conversion rates at 3% to 5%.
The Value Proposition That Novus Gives:
To Patient/Members: If a cannabis consumer purchases $150 or more per month in cannabis meds, the consumer will benefits from being in the Novus Cannabis MedPlan. Novus patient members are spending on average $300 per month and with minimum 30% discount, giving patients a gross saving would a min $90.00 per month or $1,080 per year.
Dispensaries/ Cultivators/ Manufactures: Novus helps dispensaries (at no cost) increase retail foot traffic with a marketing strategy that features the latest technology that allow unique insights about targeting consumers while they are in behavioral buy pattern. By delineating the differences between dispensary customers and the general population, or the dispensaries top competitors in their geo region. Novus taps into a 5-meter geo fence versus Google's quarter mile geo fence, giving Novus the ability to comprehend customer's path to purchase while patronizing competitive dispensaries, at the point of interest and visitation patterns. Then we can expand the reach of location-based audiences with a retargeting strategy, and the most powerful strategy is location-based audiences across devices and formats for greater reach using real world, contextually relevant data.
Member Access: to a loyal and exclusive patient market, averaging $300 per month in purchase. Novus helps the dispensary gain the competitive edge over their competition as a Novus MedPlan Provider. Novus now can implement the sales of their health benefits in the State of Florida, projected to be the second largest cannabis market in the United States. However the Florida legislature has delayed a definitive regulatory plan but is expected by June 2018. Many analysts project that Florida's cannabis market will grow to $1.6 billion by 2020 at a compound annual growth rate of 140%; making it at least half the size of California's projected $2.6 billion and projecting Florida to be 7.5% of the total legal U.S. cannabis market by 2020.
Other states that have medical cannabis regulations that contain THC (greater than 1%), these states are still pending final legislation and have sizeable populations for Novus to target:
- New Jersey
Novus continues to successfully add to its Provider Network with more legal medical cannabis dispensaries nationwide. This expansion covers an area that encompasses approximately 30 million in the United States and 15 million in Canada.
During the fourth quarter of 2017, Novus attained a Canadian federal charter allowing it to conduct its business model across the entire country, versus having to incorporate in each province. Novus is currently rolling out its branding and sales initiatives in the provinces of Ontario, British Columbia, Quebec, Alberta and Saskatchewan. Since the Canadian regulation is federal, inter-province is legal, as opposed to the U.S. whereby it's intrastate only. On July 1, 2018 Canadians will be able to purchase marijuana medically and recreationally, and, as always Novus had the foresight to be first to market in the medical cannabis sector.
Novus continues to identify and engage in talks with a wide variety of potential strategic partners to increase its visibility and awareness with the ultimate goal of increasing its lives covered and revenue. The continued discussions range from widely known nationwide cannabis brands to niche local state businesses.
Cannabis sales in the U.S. will continue to rise in 2018, as cannabis is now more mainstream. The industry along with Novus Cannabis MedPlan has maintained a strong growth trend over the past 3 years. Venture Capitalist to Day Traders participation in cannabis ventures is showing sustainable emerging growth despite the industry impediments. Novus Cannabis MedPlan business model is clearly the most unique niche in the cannabis industry that will only continue to grow. We invite you to review the following:
- For more information, please visit: http://www.getnovusnow.com
- For NDEV Q1 2018 and 2017 Annual Financial Filings: https://www.otcmarkets.com/stock/NDEV/filings
- Learn How Insurance Companies Are Evaluated: http://bit.ly/2ddIYva
Financial Results for the Three Months Ended March 31, 2018:
Revenue increased by 51% to $41,061 for the three months ended March 31, 2018, as compared to the three months ended March 31, 2017. This increase was primarily due to increased awareness and visibility of the Novus MedPlan offering and the improvement in key performance indicators (KPI) in the Company's in-house marketing efforts, which resulted in a greater number of patient members.
Operating and Net income improved to a quarterly record of $24,097 for the three months ended March 31, 2018. This represents a 59% operating profit margin for the three months ended March 31, 2018 and demonstrates the scalability and efficiency of the business model.
The Company's Balance Sheet strengthened by 4.6% in Net Asset Value to $1,422,777 and an increase in cash balance to $106,271.
Capital Structure, Shares Outstanding and Trading as of March 31, 2018:
- No Convertible Notes
- 97,533,624 common shares issued and outstanding
- No sales of insider shares since the third quarter of 2015
We invite you to review the entire filing here: https://www.otcmarkets.com/stock/NDEV/filings
Novus Acquisition & Development Corp. (NDEV), through its subsidiary WCIG Insurance, provides health insurance and related insurance solutions within the wellness and medical marijuana industries in states where legal programs exist. Novus has developed its infrastructure within many lines of the insurance business such as, health, property & casualty, life, accident and fixed annuities.
Novus medical cannabis benefits package will work as outside developers and will not cultivate, handle, transport grow, extract, dispense, put up for sale, put on the market, vend, deliver, supply, circulate, or trade cannabis or any substances that violate the United States law or the Controlled Substances Act, nor does it intend to do so in the future and will continue to follow state and federal laws. The statements made about specific products have not been evaluated by the United States Food and Drug Administration (FDA) and are not intended to diagnose, treat, cure or prevent disease. All information provided on these press releases or any information contained on or in any product label or packaging is for informational purposes only and is not intended as a substitute for advice from your physician or other health care professional. Once a push notification is competed the transaction is solely between the state-licensed dispensary and the registered patient.
The state laws are in conflict with the federal Controlled Substances Act. The current administration has effectively stated that it is not an efficient use of resources to direct federal law enforcement agencies to prosecute those lawfully abiding by state designated laws, allowing the use and distribution of medical marijuana. However, there is no guarantee that the current administration, nor any future administration, will not change this policy and decide to enforce the federal laws strongly. Any such change in the federal government's enforcement of current federal laws could cause significant financial changes to Novus Medical Group. While we do not intend to harvest, distribute or sell cannabis or cannabis related products, we may be harmed by a change in enforcement by federal or state governments.
This release includes forward-looking statements, which are based on certain assumptions and reflects management's current expectations. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. Some of these factors include: general global economic conditions; general industry and market conditions and growth rates; uncertainty as to whether our strategies and business plans will yield the expected benefits; increasing competition; availability and cost of capital; the ability to identify and develop and achieve commercial success; the level of expenditures necessary to maintain and improve the quality of services; changes in the economy; changes in laws and regulations, includes codes and standards, intellectual property rights, and tax matters; or other matters not anticipated; our ability to secure and maintain strategic relationships and distribution agreements. Novus Medical Group disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Chairman and CEO
SOURCE: Novus Acquisition & Development Corp.