Mr. Joe Walewicz reports

NEUPATH HEALTH DELIVERS RECORD QUARTERLY REVENUES

Neupath Health Inc. has released its financial and operating results for the three and six months ended June 30, 2023.

Financial and operational highlights:

• Neupath delivered a net profitable quarter with positive contributions to cash flow from operations;
• Record quarterly revenue of $17.1-million for the three months ended June 30, 2023, up 8-per-cent year-over-year, and for the six months ended June 30, 2023, revenue of $33.2-million was up 6 per cent year-over-year;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $1-million and $1.7-million for the three and six months ended June 30, 2023, a 37-per-cent increase over the comparable quarter and a 63-per-cent increase over the comparable six-month period;
• On May 2, 2023, the company announced the closing of its brokered private placement offering of 10 per cent subordinated and postponed unsecured non-convertible debenture units of the company for gross proceeds of $1.5-million;
• On May 15, 2023, the company announced that it had received notices of reassessment confirming a positive resolution of the outstanding Canada Revenue Agency (CRA) matter, with cash refunds of approximately $1.9-million;
• The company continues to focus on improved operations to support its accelerated growth strategy.

"Increased physician hours, new facilities and new contracts all contributed to top-line growth in the quarter," said Joe Walewicz, Neupath's chief executive officer. "The private placement and positive resolution of the CRA matter significantly improved our balance sheet. With continued operational improvements expected in the second half of 2023, we are excited about our ability to continue to improve margins, and to execute on enhanced patient care and new growth opportunities."

Q2 2023 financial results

Total revenue is composed of clinic revenue and non-clinic revenue. Total revenue was $17.1-million and $33.2-million for the three and six months ended June 30, 2023, compared with $15.9-million and $31.3-million for the three and six months ended June 30, 2022.

Clinic revenue is generated through the provision of medical services to patients. Clinic revenue was $16-million and $30.9-million for the three and six months ended June 30, 2023, compared with $14.9-million and $29.4-million for the three and six months ended June 30, 2022. The increase was primarily driven by continued growth from new clinic openings in 2022 and stronger revenue from existing clinics. Over all, capacity utilization was 65 per cent and 63 per cent in the three and six months ended June 30, 2023, compared with 64 per cent and 63 per cent for the three and six months ended June 30, 2022, despite the addition of new capacity in the second half of 2022.

Non-clinic revenue was $1.2-million and $2.4-million for the three and six months ended June 30, 2023, compared with $1-million and $1.9-million for the three and six months ended June 30, 2022. Non-clinic revenue is earned from physician staffing, where Neupath provides physicians for provincial and federal correctional institutions, and hospital health departments across Canada, and from contract research services provided to pharmaceutical companies and clinical research organizations. This revenue fluctuates depending on the need for physicians in certain institutions, and the timing and enrolment of clinical studies that the company is working on.

Gross margin per cent was 18.8 per cent and 18.4 per cent for the three and six months ended June 30, 2023, compared with 17.9 per cent and 17.6 per cent for the three and six months ended June 30, 2022. Gross margin for the comparative three- and six-month periods were impacted by remuneration payment accruals due to the HealthPointe acquisition, resulting in increased cost of medical services (COMS) of $200,000 and $400,000, respectively. Excluding these transaction-related accruals, gross margin per cent would have been 19.1 per cent and 18.8 per cent for the three and six months ended June 30, 2022.

Adjusted EBITDA was $1-million and $1.7-million for the three and six months ended June 30, 2023, compared with $800,000 and $1.1-million for the three and six months ended June 30, 2022.

The associated table provides a reconciliation of net and comprehensive income (loss) to EBITDA and adjusted EBITDA.

The associated table provides a reconciliation of total revenue to gross margin and adjusted gross margin.

For further details on the results, please refer to Neupath's management's discussion and analysis, and condensed consolidated interim financial statements for the three and six months ended June 30, 2023, which are available on the company's website and under the company's profile on SEDAR.

About Neupath Health Inc.

Neupath operates a network of health care clinics and related businesses focused on improved access to care and outcomes for patients by leveraging best-in-class treatments and delivering patient-centred multidisciplinary care. Neupath operates a network of medical clinics in Ontario and Alberta that provide comprehensive assessments and rehabilitation services to clients with chronic pain, musculoskeletal/back injuries, sports-related injuries, and concussions. In addition, Neupath provides workplace health services and independent medical assessments to employers and disability insurers through a national network of health care providers, as well as contract research services to pharmaceutical and biotechnology companies. Neupath is focused on enabling each individual it treats to live their best life.

We seek Safe Harbor.