Mr. Joe Walewicz reports

NEUPATH HEALTH REPORTS FOURTH QUARTER AND YEAR-END 2023 RESULTS

Neupath Health Inc. has released its financial and operating results for the three months and year ended Dec. 31, 2023.

"I am very proud of our team and our successes in 2023, which have resulted from a focus on our core clinic operations and improving our balance sheet," said Joe Walewicz, Neupath's chief executive officer. "We will continue to direct our energy towards adding more physicians, to serve more patients, in more locations, providing greater community access to medically necessary treatments."

Financial and operational highlights:

• Total revenue was $16.8-million and $66.1-million for the three months and year ended Dec. 31, 2023, up 4 per cent versus the fourth quarter of 2022 and 6 per cent for the year, delivering another record year of revenues.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $800,000 and $3.2-million for the three months and year ended Dec. 31, 2023, up 41 per cent year over year.
• For the year ended Dec. 31, 2023, capacity utilization improved to 68 per cent, up from 62 per cent in the prior year.
• The company finished the year with $3.2-million in cash and cash equivalents and long-term debt of $6.1-million, of which $2.4-million is interest bearing.
• On Jan. 12, 2024, the company closed the acquisition of the assets of SIBI Medical Inc., operating as the London Spine Centre in London, Ont. The London Spine Centre has an interdisciplinary group of health care providers that use evidence-based care to help treat back, neck and other spinal conditions.

Q4 2023 financial results

Total revenue

Total revenue comprises clinic revenue and non-clinic revenue. Total revenue was $16.8-million for the three months ended Dec. 31, 2023, compared with $16.1-million for the three months ended Dec. 31, 2022. Total revenue was $66.1-million for the year ended Dec. 31, 2023, compared with $62.7-million for the year ended Dec. 31, 2022.

Clinic revenue

Clinic revenue is generated through the provision of medical services to patients. Clinic revenue was $15.3-million for the three months ended Dec. 31, 2023, compared with $15-million for the three months ended Dec. 31, 2022. Clinic revenue was $61-million for the year ended Dec. 31, 2023, compared with $58.7-million for the year ended Dec. 31, 2022. The increase in clinic revenue for the year ended Dec. 31, 2023, was primarily due to stronger revenues from fluoroscopy and existing medical clinics.

Non-clinic revenue

Non-clinic revenue was $1.5-million for the three months ended Dec. 31, 2023, compared with $1.1-million for the three months ended Dec. 31, 2022. Non-clinic revenue was $5.1-million for the year ended Dec. 31, 2023, compared with $4-million for the year ended Dec. 31, 2022. Non-clinic revenue is earned from physician staffing allocation services, where the company provides physicians for provincial and federal correctional institutions 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 19.2 per cent for the three months ended Dec. 31, 2023, compared with 17.5 per cent for the three months ended Dec. 31, 2022. Gross margin percentage was 18.6 per cent for the year ended Dec. 31, 2023, compared with 17.3 per cent for the year ended Dec. 31, 2022. Gross margin for the comparative year was impacted by remuneration payment accruals due to the HealthPointe acquisition resulting in increased cost of medical services of $800,000. Excluding these transaction-related accruals, gross margin percentage would have been 18.7 per cent and 18.5 per cent for the three months and year ended Dec. 31, 2022.

Adjusted EBITDA was $800,000 and $3.2-million for the three months and year ended Dec. 31, 2023, compared with $800,000 and $2.3-million for the three months and year ended Dec. 31, 2022.

Liquidity and capital resources

As at Dec. 31, 2023, the company's net debt was $2.9-million, compared with $5.3-million as at Dec. 31, 2022. The company's net debt as at Dec. 31, 2023, consisted of $3.2-million of cash and cash equivalents and long-term debt of $6.1-million, compared with $1.5-million of cash and cash equivalents and long-term debt of $6.8-million as at Dec. 31, 2022.

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

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 to live his or her best life.

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