Cannabis MedPlan Business Model Withstands Economic Adversity Brought on by COVID-19 Pandemic
MIAMI, FL / ACCESSWIRE / August 17, 2020 / Novus Acquisition and Development, Corp. (OTC PINK:NDEV), through its wholly owned subsidiary WCIG Insurance Services, LLC., is an insurance entity in health and, the nation's first carrier offering cannabis health plans to recreation and medicinal users, today reported, its financial and operational results for the three months ended June 30, 2020.
Novus COVID 19 Crisis Management
During this reporting period of April 1 to June 30, due to the quickly spreading coronavirus, the United States economy experienced a tremendous set back with states telling residents to shelter in place and many small businesses shutting down.
Fortuitously for Novus, the majority of state governments around the nation deemed medical marijuana companies "essential" during the coronavirus pandemic. Thus, the vast majority of medical marijuana businesses remained open and active during COVID-19 with the delivery of cannabis meds to patient / members in their homes.
With unemployment hitting over 20% there were some cancellations of policies, but we quickly offered to patient / members a temporary 60-day abatement on paying the full amount of the monthly premium by allowing the member to pay $1.00 for 60 days. Fortunately, many patient/members opted-in, conversely, after the Federal Government economic stimulus program, we experienced an uptick in new polices being issued which helped us maintain slight growth of 1.2% through the reporting period.
Second Quarter 2020 Financial Highlights:
- Revenue increased $6,221 or 12% to $59,910 for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019.
- Revenue increased $13,624 or 13% to $118,987 for the six months ended June 30, 2020, as compared to the six months ended June 30, 2019.
- Demonstrated a 34% profit margin pricing structure in its business model for the three months ended June 30, 2020.
- Net income decreased $500 or 2% to $20,584 for the three months ended June 30, 2020, as compared to the three months ended June 30, 2019.
- Shareholder equity remained strong at $1,441,031 at June 30, 2020, from $1,426,431 at December 31, 2019.
- Cash and Cash Equivalents increased to $154,345 at June 30, 2020, from $149,822 at December 31, 2019.
- Successfully implements Covid-19 Crisis Management Strategy to retain current patient /members that have been laid off or loss of employment.
- Federal Stimulus Packaged sparked procurement of policies.
Growth Metrics
Growth Initiatives
Increased Agent/Affiliate Base
Our Agent/Affiliate base grew 7.5% with 856 active reps. Our growth potential is tied to these participants book of business throughout the year as opposed to the two months during Open Enrollment.
Hired Insurance Industry Powerhouse Executive
Mark Kuban comes to Novus as a 30-year insurance executive, having previously worked with Colonial, Sun Life, and Washington National. His strengths are the creation of InsurTech innovation and streamlining the sale of carrier benefits to the consumer through the agent/broker network. Mr. Kuban is passionate about the cannabis sector when he became familiar through his advisory work with the United States Cannabis Chamber of Commerce. His initial focus at Novus has been to accelerate sales growth by increasing broker/agent recruitment, greater alignment with InsureTech companies that retain millions of consumers and employ executives to administer group sales.
Mr. Kuban's significant experience has the right skill set to help support our expansion goals as well as the commitment to excellent service that is a hallmark of our Company. Mr. Kuban is a consummate professional with the ability to manage multiple stages of our growth environment and the development of Novus' ecosystem as we continue to gain market share as the nation's primary carrier of cannabis health plans.
Financial Results for the Three Months Ended June 30, 2020
Revenue increased by $6,221 or 11.6% to $59,910 for the three months ended June 30, 2020, as compared $53,689 for the three months ended June 30, 2019. The growth was primarily due to expansion into new territories, market awareness / visibility of the Novus Cannabis MedPlan offering and an increased number of strategic partners, dispensary providers and lives covered. The Healthcare Reimbursement Act and the acceptance of credit cards for policy payments has facilitated the growth.
Income from operations decreased by $500 or 2.4% to $20,584 for the three months ended June 30, 2020, as compared $21,084 for the three months ended June 30, 2019.
The Company's Balance Sheet remained strong with an increase in the cash balance to $154,345 and Shareholder Equity to $1,441,031.
Financial Results for the Six Months Ended June 30, 2020
Revenue increased by $13,624 or 12.9% to $118,987 for the six months ended June 30, 2020, as compared $105,363 for the six months ended June 30, 2019. Income from operations increased by $2,328 or 6.0% to $40,892 for the six months ended June 30, 2020, as compared $38,564 for the six months ended June 30, 2019.
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Resources:
- Source: "Total expenditures in millions by source of payment and insurance coverage, United States, 2017," Center for Financing, Access and Cost Trends, Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey, 2017, https://meps.ahrq.gov/mepstrends/hc_use/.
About Novus
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.
Forward-Looking Statements
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 disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Investor Contact Information
855-228-7355
Email: [email protected]
SOURCE: Novus Acquisition and Development, Corp.