Mr. Chris Dobbin reports

PRESIDENT & CEO LETTER TO SHAREHOLDERS

Dear Nova Leap Health Corp. shareholders:

(All amounts are in U.S. dollars unless otherwise specified.)

Nova Leap is a story of entrepreneurship born from the experience of one of my close family members with dementia requiring home care. The positive impact my family saw from home care led to the creation of the company in 2016. At that time, I believed that we could provide families impacted by dementia with a level of service that would have a meaningful impact on their lives and that the demand for our services would grow over time due to an aging demographic. I am reminded every day of why this industry is so important to families and the challenge in meeting the generational demand that will exist for decades to come.

Today, Nova Leap is a very different company than it was in 2016, when we started with a mere $500,000 (Canadian), but one very much with a continued focus on providing exceptional in-home care to families. As we move through the early stages of 2024, I would like to recognize the significant contribution from our team for the results achieved during 2023. Nova Leap is in excellent financial condition, and is actively seeking merger-and-acquisition opportunities.

From my perspective, the highlights from 2023 are as follows:

1. We established Nova Leap as a cash-flow-positive company.
2. We paid off all long-term bank debt during the year, ahead of schedule, positioning the company to re-engage its acquisition program.
3. We achieved record annual consolidated adjusted earnings before interest, taxes, depreciation and amortization of $1,477,000 ($2.0-million (Canadian)), which were more than the three previous years combined and a 124-per-cent increase over 2022 results.
4. In my year-end 2022 comments, I specifically addressed the changes we had made in the U.S. operating segment. We delivered on these changes with a 73-per-cent year-over-year increase in U.S. segment adjusted EBITDA.
5. We ended the year with record adjusted EBITDA of $571,000 ($778,000 (Canadian)) in fourth quarter, the company's third straight quarter of record adjusted EBITDA.
6. Nova Leap's accounts receivable collection rate of 99.7 per cent remained exceptional and consistent with the prior years range of 99.7 per cent to 99.9 per cent between 2020 and 2022.
7. Insider ownership grew. During the fourth quarter, insiders continued to acquire shares in the open market bringing insider ownership to 40.61 per cent. Insider ownership was 38.9 per cent at the end of 2022 and 36.2 per cent at the end of 2021.

In summary, 2023 was a year in which the leadership team at Nova Leap demonstrated its ability to execute on operations and to put the company in excellent financial position for the next phase of growth.

Allocation of capital plans for 2024

Management has three primary objectives pertaining to allocating capital for 2024 as follows:

1. Investing in current home care operations: Our objective is to increase revenues and hours of service at existing home care locations by hiring experienced sales personnel that can bring in new business to complement existing operational teams. More on this below.
2. Acquisitions: Nova Leap has created borrowing capacity with the repayment of all long-term bank debt. Management plans to leverage some of this capacity for M&A opportunities in addition to cash generated from operations, where appropriate.
3. Promissory note repayment: Management intends to repay the approximately $117,000 of promissory notes remaining from previous acquisitions on schedule.

Financial objectives

For the past year, Management has been working toward an internal objective of sustaining quarterly consolidated adjusted EBITDA for existing operations of $450,000. The average of the past three quarters is just above that mark.

Management has a new objective of achieving quarterly consolidated adjusted EBITDA of $750,000 as a next level, which would represent annualized adjusted EBITDA of $3-million ($4-million (Canadian)). We are working to achieve this through our allocation of capital strategy of investing further in current operations to build on the success of last year and by making acquisitions. We do not expect an immediate jump as it will take some time for our capital allocation decisions to take shape, but I think it is important for shareholders to understand where our focus lies and what management is trying to achieve.

Where we have been challenged

Simply put, our largest challenge in 2023 was revenue growth. We saw significant achievements in major financial categories such as gross margin percentage, adjusted EBITDA, cash flows, operating income and debt reduction, but revenues fell below expectations. It is a focus in 2024.

On an individual basis, our home care agencies would all be considered small businesses. At the local level, hours of service are driven by a recurring revenue model where caregivers are generally scheduled to assist clients on the same schedule each week for as long as they require care. These small businesses are greatly impacted by either obtaining or losing clients requiring high hours of service. As an example, if a business was doing $2-million in revenue in a year and lost a 24-hour client, revenue would drop by approximately 15 per cent (assuming remaining hours held constant). We experienced that in 2023 along with other agencies, where revenue grew for the same reason, including one of our agencies, whose revenue grew by 54 per cent.

A lot of new business is generated by local reputation, word of mouth, families of past clients and recurring referral sources. As we examined our collection of agencies, we found that the natural attrition of clients was being offset by agencies that had successful sales personnel that were able to market our services to a broader base of referral sources than those agencies without a sales role. As a result, we have allocated capital to the hiring of sales personnel in some of our larger markets. We anticipate that these new hires will have a positive impact on our results over time.

What we offer other home care business owners

Home care agency owners regularly engage with us for two reasons:

1. Succession planning/retirement;
2. Seeking a strategic partner for growth.

The acquisitions that we have made in the past have been driven by owner succession, meaning that the founder of the home care agency we acquired was seeking an exit for retirement purposes and wanted a suitable home for their staff. I believe owners have chosen Nova Leap so many times to purchase their businesses because: (1) we value people and want to welcome the team at the acquired agency to its new home with Nova Leap; (2) we acquire these agencies with a view to holding them and supporting them in perpetuity further respecting the exiting owner's legacy; and (3) we have a fair and reasonable approach, which allows us to agree on deal terms and structures in an efficient manner.

We are also willing to partner with home care agency owners that are not quite ready to exit the business entirely but would rather have a strategic partner to assist with expanding the business for some period of time prior to a full exit. These types of situations are always of interest to us because partnering with great people usually leads to a lot of success.

Shareholders and shareholder communications

I have generally sought out, and we have attracted, shareholders who share my view that significant value creation transpires over a long period of time. Our two largest shareholders, of which I am one, own 30 per cent of the stock. Another 10 per cent is collectively owned by members of the board and our chief financial officer. Meaningful blocks are held by entrepreneurs who have built companies from the ground up with sustained success, founders, directors or past directors of publicly traded companies that are or have been successful with value-creating roll-up strategies, similar to the strategy pursued by Nova Leap, senior capital market executives with practical counsel and a couple of microcapitalization funds with a long-term horizon. I find these types of shareholders valuable because they have experience they can share that is directly applicable to our situation. All have been supportive. I hope that we will attract more of these types of quality investors over time.

Throughout our history, we have been intentional in avoiding hot money and have done our best to recognize contributions from existing shareholders by issuing equity at a premium to market in certain cases, demonstrating our commitment with insider-led offerings, along with reducing the risk of warrant stripping by mostly not issuing them since our early days.

We do not spend a lot of money on shareholder communications. We do not provide earnings guidance or hold quarterly conference calls. I do provide quarterly commentary with the release of results, present at select capital market events and hold chief executive officer interviews with some third parties that are uploaded to YouTube. We believe capital is best spent in growing the company and that we will continue to attract quality shareholders based on company performance.

We do not have any institutional ownership that I am aware of, and I do not think we will for some time. I recall two conversations that I had which may be instructive. The first was in 2019 before the pandemic, when we were setting record results each quarter. I met with an investment fund manager in New York, one who generally takes concentrated positions over time. His view was that, while we were making a lot of progress, we would be an interesting opportunity at $5-million of EBITDA, particularly given the potential for significant compounding at those levels.

The other meeting was in Toronto near the beginning of 2023, postpandemic. It was relayed to me that the institutional investors who had been previously seeking alpha down to the sub-$100-million (Canadian) market capitalization companies had moved back up to the $250-million (Canadian) market cap area. The message being that it would take longer to get institutional capital and lots of hard work.

I think those are important views as it relates to Nova Leap as I think about achieving future milestones in terms of levels. We made meaningful progress in 2023 with record adjusted EBITDA of $1,477,000. Internally, we are working toward $3-million of adjusted EBITDA as our next objective (see financial objectives section above). I see that as the next level that we need to sustain and one that we can achieve through organic growth and M&A. If we can achieve that, I believe we will continue to attract investors with the profile similar to our existing shareholder base. After $3-million, I view the next level or milestone to achieve as $5-million of adjusted EBITDA. Will the profile of our investor base change at this level? Time will tell. Regardless, we are up to the challenge and the hard work it will take to get there.

Nova Leap as a public company

Although Nova Leap is a public company, management makes decisions considering the long-term implications to the company. In this regard, we make decisions more in line with a private enterprise without regard to how the impact of those decisions may impact financial results from one quarter to the next. In other words, we are willing to allocate capital that may have a shorter-term negative impact on adjusted EBITDA with an expectation that it will create adjusted EBITDA in a sustained manner longer term.

At the time of this writing, Nova Leap is a TSX Venture Exchange-listed company with a $17.6-million (Canadian) market cap ($12.9-million on the OTCQX). Hopefully, the summary of our results will encourage investors to consider Nova Leap for investment purposes as part of their own capital allocation strategy.

Thank you for your continuing support.

Yours truly,

Chris Dobbin, CPA, ICD.D,

President and chief executive officer

We seek Safe Harbor.