Mr. Joe Walewicz reports

NEUPATH HEALTH REPORTS THIRD QUARTER 2023 RESULTS

Neupath Health Inc. has released its financial and operating results for the three and nine months ended Sept. 30, 2023. All figures are in Canadian dollars, unless otherwise noted.

Financial and operational highlights:

• Neupath delivered a net profitable quarter and year to date with positive contributions to cash flow from operations.
• Quarterly revenue was $16.1-million for the three months ended Sept. 30, 2023, up 6 per cent year-over-year, and for the nine months ended Sept. 30, 2023, revenue of $49.3-million was up 6 per cent year-over-year.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $700,000 and $2.4-million for the three and nine months ended Sept. 30, 2023, a 62-per-cent increase over the comparative quarter and a 61-per-cent increase over the comparative nine-month period.
• On Aug. 31, 2023, the company successfully completed the sale of its corporate-owned medical facility in London, Ont., for $2.1-million, generating an $800,000 net gain.
• On Nov. 10, 2023, the company successfully completed the closing of its updated credit facility providing immediate access to new capital and improving future cash flows from refinancing of existing HealthPointe term debt.
• In the current three- and nine-month periods, capacity utilization improved to 65 per cent and 64 per cent, up 4 per cent and 2 per cent compared with the comparative three- and nine-month periods.
• The company continues to focus on improved operations to support its accelerated growth strategy, including entering into new leases for two facilities that will improve cash flows in Q1 2024 and beyond.

"We are pleased to deliver strong operating metrics, with continued year-over-year growth and improvements in capacity utilization, margins and cash flows," said Joe Walewicz, Neupath's chief executive officer. "Our team continues to upgrade our facilities by successfully adding new treatment rooms at busier clinics while simultaneously right-sizing our footprint at clinics with unused space. Ongoing improvements in our operations and our improved balance sheet will allow us to continue investing in improvements to our clinics and growth opportunities."

Q3 2023 financial results

Total revenue

Total revenue comprises clinic revenue and non-clinic revenue. Total revenue was $16.1-million and $49.3-million for the three and nine months ended Sept. 30, 2023, compared with $15.2-million and $46.6-million for the three and nine months ended Sept. 30, 2022.

Clinic revenue

Clinic revenue is generated through the provision of medical services to patients. Clinic revenue was $14.9-million and $45.7-million for the three and nine months ended Sept. 30, 2023, compared with $14.3-million and $43.7-million for the three and nine months ended Sept. 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 64 per cent in the three and nine months ended Sept. 30, 2023, compared with 61 per cent and 62 per cent for the three and nine months ended Sept. 30, 2022. The improvement in capacity utilization was primarily driven by stronger revenues with one less clinic.

Non-clinic revenue

Non-clinic revenue was $1.2-million and $3.6-million for the three and nine months ended Sept. 30, 2023, compared with $1-million and $2.9-million for the three and nine months ended Sept. 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 percentage was 18.3 per cent and 18.4 per cent for the three and nine months ended Sept. 30, 2023, compared with 16.4 per cent and 17.2 per cent for the three and nine months ended Sept. 30, 2022. Gross margin for the comparative three- and nine-month periods was impacted by remuneration payment accruals due to the HealthPointe acquisition resulting in increased COMS of $200,000 and $600,000, respectively. Excluding these transaction-related accruals, gross margin percentage would have been 17.6 per cent and 18.4 per cent for the three and nine months ended Sept. 30, 2022.

Adjusted EBITDA was $700,000 and $2.4-million for the three and nine months ended Sept. 30, 2023, compared with $400,000 and $1.4-million for the three and nine months ended Sept. 30, 2022.

For further details on the results, please refer to Neupath's management, discussion and analysis and condensed consolidated interim financial statements for the three and nine months ended Sept. 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. The company 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.

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