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Novo Integrated Sciences, Inc. (NVOS)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 FY2024 revenue was $3.17M, up 24% year over year, driven principally by higher product sales; net loss narrowed 41% YoY to $2.75M as gross profit improved and other expenses declined .
  • Sequentially, revenue declined to $3.17M from $3.89M in Q1 and gross margin compressed versus Q1, while operating expenses fell materially versus Q1; management emphasized maximizing operational efficiencies for future cost savings and margin improvement .
  • No formal quantitative guidance or earnings call transcript was provided; management reiterated pursuit of non-traditional financing (including previously announced instruments) to support the three-pillar strategy (services, technology, products) .
  • Key potential catalysts: closing financing agreements (e.g., Streeterville note executed post-Q2, Ophir collection monetization plans, non-dilutive long-term debt), and continued commercialization of proprietary products and services .

What Went Well and What Went Wrong

What Went Well

  • Revenue increased 24% YoY to $3.17M on stronger product sales; healthcare services revenue rose 3.4% YoY in Q2 .
  • Net loss narrowed by $1.88M YoY (−41%) to $2.75M due to improved gross profit and lower other expenses .
  • Management highlighted operational efficiency efforts aimed at future margin improvement, underscoring focus on cost discipline: “maximizing operational efficiencies pointed towards future cost savings and margin improvement” .

What Went Wrong

  • Sequential revenue fell from $3.89M (Q1) to $3.17M (Q2); gross margin compressed versus Q1, reflecting mix and cost dynamics .
  • Ongoing reliance on external financing and derivative liabilities continued to weigh on results, with amortization of debt discount and non-operating items a recurring headwind across quarters (evident in Q1 and subsequent Q3 disclosures) .
  • No quantitative guidance and no earnings call transcript limited visibility and estimate benchmarking for investors .

Financial Results

MetricQ1 2024 (Nov 30, 2023)Q2 2024 (Feb 29, 2024)Q3 2024 (May 31, 2024)
Revenue ($USD)$3,891,218 $3,170,592 $3,151,851
Gross Profit ($USD)$1,944,018 $1,324,086 $896,893
Gross Profit Margin %50.0% (calc: 1.944/3.891) 41.8% (calc: 1.324/3.171) 28.5% (calc: 0.897/3.152)
Operating Expenses ($USD)$5,261,655 $2,863,854 $3,417,096
Operating Income (Loss) ($USD)$(3,317,637) $(1,539,768) $(2,520,203)
Net Loss Attributed to NVOS ($USD)$(4,680,343) $(2,746,128) $(13,741,903)
Diluted EPS ($USD)$(0.28) $(0.16) $(0.74)
Cash and Equivalents ($USD)$1,640,007 $651,747 $1,539,771
Total Assets ($USD)$37,244,384 $34,949,271 $35,327,000
Total Liabilities ($USD)$13,960,336 $13,058,987 $25,663,779
Stockholders’ Equity ($USD)$23,284,048 $21,890,284 $9,663,221

Segment/Product KPIs

KPIQ1 2024Q2 2024Q3 2024
Acenzia Revenue ($USD)$1,683,850 $884,396 $884,396
Terragenx Revenue ($USD)$16,971 $103,399 $103,399
Healthcare Services Revenue YoY Growth %+1.2% +3.4% +8.1%

Notes:

  • Q2 revenue up 24% YoY; net loss down 41% YoY as per company highlights .
  • Q3 showed elevated non-operating losses (derivative fair value change, amortization, FX), materially impacting net loss .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY2024/Q2Not provided Not provided Maintained (no guidance)
Gross MarginFY2024/Q2Not provided Not provided Maintained (no guidance)
OpExFY2024/Q2Not provided Not provided Maintained (no guidance)
EPSFY2024/Q2Not provided Not provided Maintained (no guidance)
Tax RateFY2024/Q2Not provided Not provided Maintained (no guidance)
Segment GuidanceFY2024/Q2Not provided Not provided Maintained (no guidance)

Management did not issue formal quantitative guidance in Q2 materials .

Earnings Call Themes & Trends

No earnings call transcript was available in our document set for Q2; themes below reflect management communications across Q1–Q3 press releases.

TopicPrevious Mentions (Q1 2024, Q3 2024)Current Period (Q2 2024)Trend
Operational efficiencies and margin focusEmphasized cost discipline and addressing non-operating headwinds ; Q3 referenced inflationary impact on costs “Maximizing operational efficiencies pointed towards future cost savings and margin improvement” Continuing focus; cost pressure acknowledged in Q3
Non-traditional financing initiativesDetailed pipeline: $70M non-dilutive debt; Ophir gemstone collection acquisition/monetization; $1B gold-backed bond collateral transfer Continued work with prospective financial partners to close financing opportunities Ongoing; Streeterville $6.21M note executed post-Q2 (Q3 PR)
Decentralized healthcare (three-pillar model)Reaffirmed services, technology, products strategy Reiterated three pillars and product commercialization Consistent strategic messaging
Product sales momentumQ1: Acenzia $1.68M, Terragenx $17K Q2: Acenzia $0.88M, Terragenx $0.10M Mixed; sequential decline from Q1; services modest YoY growth
Macro/cost inflationQ3 noted inflationary impact on operating costs Not explicitly cited in Q2 PRCost pressure highlighted later in Q3
FX and derivative liability impactsQ3: large derivative liability fair value loss and FX loss Not highlighted in Q2 PRNon-operating volatility intensified in Q3

Management Commentary

  • “The Company’s fiscal year 2024 second quarter period emphasized maximizing operational efficiencies pointed towards future cost savings and margin improvement.” — Robert Mattacchione, CEO .
  • “The Company continues to work with certain prospective financial partners to close previously announced non-traditional financing opportunities to raise foundational capital…necessary to support and accelerate the further growth of Novo’s three-pillar business model.” — Robert Mattacchione .
  • Q1 reiterated financing pipeline: unsecured, non-dilutive 15-year $70M debt; Ophir Collection acquisition and monetization; $1B gold-backed bond collateral transfer .
  • Strategy consistently anchored on decentralized healthcare via services networks, interconnected technology, and science-first products .

Q&A Highlights

  • No earnings call transcript or Q&A disclosure was provided in Q2 materials; management communications were via press release .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 FY2024 EPS and revenue was unavailable due to missing SPGI/CIQ mapping for NVOS. As a result, we cannot benchmark reported results versus consensus at this time. Values typically retrieved from S&P Global; unavailable in this case.

Key Takeaways for Investors

  • Q2 showed solid YoY revenue growth (+24%) with meaningful YoY improvement in net loss (−41%), driven by higher product sales and improved gross profit; sequentially, revenue and margins softened versus Q1 .
  • Operating expenses fell materially versus Q1, aligning with the company’s stated efficiency focus; continued reductions could support margin stabilization .
  • Non-operating items (derivative liabilities, amortization, FX) represent significant earnings volatility, as evidenced in Q3; monitoring financing structure and derivative exposures is critical .
  • Product contribution is variable (Acenzia/Terragenx), and services revenue shows modest, steady YoY growth; mix will influence margins and cash generation .
  • Near-term catalysts include closing and deployment of non-traditional financing (e.g., Streeterville note, Ophir monetization), which could strengthen liquidity and fund expansion of the three pillars .
  • Absence of guidance and call limits visibility; any update with quantitative targets or financing closure milestones could be stock-moving .
  • Focus for the next quarter: progress on financing, stabilization of gross margin, and containment of non-operating losses to reduce EPS volatility .