Novus Acquisition and Development, Corp. (OTC Markets: NDEV), through its wholly-owned subsidiary WCIG Insurance Services, Inc., is a hybrid health insurance entity and, the nations first health carrier offering cannabis in health plans to recreational and medicinal users, today reported its third-quarter financial results for the three months ended September 30, 2021, and update on the progression of its business model.
Employer-Sponsored Health Plans
As Novus comes out from under the COVID crisis were experiencing a breakthrough development in our effort to penetrate Insurance Group Sales in the small to midsize businesses (SMB) market. As SMBs desire to compete and expand, it is essential to attract and retain their talent pool with competitive health benefits, but affordability remains an issue as healthcare costs rise faster than inflation.
According to the Bureau Of Labor Statistics, more than half (57%), of SMB workers did not have employer-sponsored health benefits. The top perks employees seek are employer-sponsored, dental, vision, and Health Savings Account (HSA).
Novus cannabis benefits packages fit into this niche, with the desirability of cannabis and the affordability of premiums with additional benefits. SMBs continue to contact us, and their views on employee legal cannabis use have become more relaxed. And rightly so, when precedence was set in the New Jersey Supreme Court ruling, where employees who legally use cannabis as permitted by the states Compassionate Use of Cannabis of Medical Marijuana Act[i] cannot be fired.
The authenticity of cannabis benefits in employee health plans gives Novus the ability to capture more value from selling individual policies to the economics of selling to the multitudes.
Expansion Of Partnerships
Partnerships continue to increase with agreements with Health Carriers, Third-party Administrators, Pharmacy Benefits Managers, Professional Employment Organizations, and Brokers in Group Sales. These partnerships encompass adding cannabis benefits as a rider and/or as a supplement bundle to consumer health plans. They see how Novus benefit packages are an enticement to acquire new clients and up-sell existing ones.
The unique characteristics of our business model is based on the acceptance of cannabis being a benefits package to health plans. According to Forbesby 2025, 5.4 million Americans, or 2.4% of U.S. adults, will be registered patients in medical cannabis states.
However, that 2.4% will considerably increase as the price of cannabis proliferates with added state/federal taxation to recreational products, alluring rec users to seek health plans that include cannabis. The success of our business model is making cannabis affordable to our patient /members by reducing the cost of the plant by 30%-35% combined with a 15%-17% abatement in taxes at the point of sale.
Illicit Cannabis Market
Recently California authorities eradicated 509,453 plants from 135 sites in the past 13-weeks with an undisclosed report of how much the operation cost the state government. We continue to advise cannabis verticals and state officials on using Novus insurance plans to cost-effectively combat illicit cannabis which will top $4 billion by 2025 as reported by New Frontier Data.
These entities will quickly understand that by utilizing Novus insurance plans how compliantly we will corral med and rec users towards legal brands, we are confident that it is clearly discernable that this methodology is far superior to expensive law enforcement measures.
Our Provider network covers over 20,000 zip codes. The expansion of our Provider network is a continuous effort to develop underserved markets despite the slow down due to COVID. The procurement of reliable cannabis verticals as a Provider is the most arduous and nonlinear undertaking in our business model and it will be the same for any new competition. Having a head start as far back as 2016, we believe, we will leave very little resources to potential rivals in this department.
Financial milestones within the third quarter of 2021:
- No Dilution: No common stock was issued
- Three Month Revenue Increase: $6,656 or 9.8% to $67,955 for the three months ended September 30, 2021, as compared to $61,299 for the three months ended September 30, 2020.
- Six Month Revenue Increase $11,477 or 8.8% to $132,686 for the six months ended September 30, 2021, as compared to $121,209 the six months ended September 30, 2020.
- Profit Margin: Demonstrated a 36% profit margin pricing structure in its business model for the three months ended September 30, 2021
- Net Income Increase: $4,202 or 17% to $24,888 for the three months ended September 30, 2021, as compared to $20,686 three months ended September 30, 2020
- Shareholder Equity Increase: $1,481,889 on September 30, 2021, from $1,465,967on September 30, 2020
- Cash and Cash Equivalents Increase: Moderately from $157,888 on September 30, 2020, to $158,195 three months ended September 30, 2021. Due to the cost of integrating Novus and PRAM back-office data to support their newly acquired clientele.
- Cash Flow: Increased 16% to $48,968 for the six months ended September 30, 2021, as compared to $41,270 the six months ended September 30, 2020.
Frank Labrozzi, CEO states, We are fervent as we make cannabis health insurance mainstream. The acceptance of cannabis in employer-sponsored health plans combined with the inclusion of our benefits into health carriers plans makes the first-mover advantage of our infrastructure a successful perspective towards the value of our insurance model.