TSXV:NLH - Post Discussion
Post by
BetulaKapital on Nov 11, 2021 9:17am
Nova Leap Health - 3 keys that will drive strong growth
Strong Pricing Power, Low Reimbursement Risk, and Optimal Cash Conversion
"Approximately 70% of Nova Leap’s revenues are paid for upfront and out-of-pocket by clients, with the remaining 30% coming from reimbursements from a mix of the Veterans Affairs (VA) Office and long-term care insurance. This payment structure meaningfully differentiates Nova Leap and affords it two key benefits over its publicly traded home healthcare peers. First, with this payor mix comes strong pricing power. When the majority of the payor base is private payors, companies like Nova Leap can avoid complicated pricing negotiations with public payors and adjust billing rates elatively quickly to suit the cost environment, allowing it to maintain a consistent gross margin. Further, Nova Leap collects payment on a weekly basis from clients to minimize counterparty risk and maintain optimal liquidity to cover wages – the Company’s largest input cost. Second, minimal reliance on Medicare and Medicaid patients reduces the risk of reimbursement cuts, penalties from retroactive and often opaque audits, and other collection issues that affect the predictability and consistency of cash flows."
Source - Echelon
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