Mr. Michael Peters reports

CAREBOOK ANNOUNCES SECOND QUARTER 2023 FINANCIAL RESULTS

Carebook Technologies Inc. has released its results for the quarter ended June 30, 2023.

• Record revenue for the quarter up 16 per cent to $2.7-million for Q2 2023 compared with $2.3-million for Q2 2022;
• As a result of significant revenue growth and cost optimization initiatives, loss from operations was $(600,000), an improvement of $1.6-million or 71 per cent, when compared with Q2 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss for Q2 2023 was $(200,000), an improvement of $1.7-million or 88 per cent relative to Q2 2022, positioning Carebook to achieve its goal of generating positive adjusted EBITDA in the near future;
• Adjusted EBITDA margin of (9 per cent) in Q2 2023 compared with (81 per cent) in Q2 2022;
• Net Loss for Q2 2023 was $(700,000) and also improved by 72 per cent year-over-year;
• Raised $2.5-million in additional gross proceeds from equity financings during the six months ended June 30, 2023;
• $4.4-million in additional contract value signed during the first two quarters of 2023;
• ARR (annual recurring revenue) of $10.6-million as of June 30, 2023, an increase of 19 per cent over the same date in 2022.

"We continue to execute on our business plan, completed several large implementations during the quarter and signed over $4-million in additional contract value during the first two quarters," commented Michael Peters, Carebook chief executive officer. "We reached another new high this quarter in terms of our revenue and continued our drive towards profitability. Our focus on cost management coupled with significant contract expansions confirms Carebook's positive trajectory and reinforces our belief in our ability to achieve profitable growth in the near future."

Q2 2023 highlights

Revenue

Revenue for the quarter ended June 30, 2023, was $2.7-million compared with $2.3-million for the quarter ended June 30, 2022, an increase of 16 per cent which was primarily driven by organic growth in the pharmacy vertical and an increase in licence revenue from CoreHealth offset by a decrease in implementation revenue at CoreHealth and a decrease in licence revenue at Infotech. Revenue generated in the quarter ended June 30, 2023, was 61 per cent from the employer vertical, down from 75 per cent during the same quarter in 2022 due to significant contract expansions from the company's major pharmacy client. Recurring revenue from the employer vertical business is expected to increase during 2023, following the implementation of several large customers during the fourth quarter of 2022 and the first half of 2023.

Loss from operations and net loss

Loss from operations for the quarter ended June 30, 2023, was $(600,000) compared with $(2.3-million) in the same period of 2022, an improvement of $1.6-million or 71 per cent. The decrease in operating expenses was due to lower general and administrative costs and lower sales and marketing costs.

Net loss was $(700,000) for the quarter ended June 30, 2023, compared with a loss of $(2.4-million) for the quarter ended June 30, 2022, an improvement of 72 per cent. The variance is driven mostly by higher revenue and a lower loss from operations.

Adjusted EBITDA

Adjusted EBITDA loss for the quarter ended June 30, 2023, was $(200,000) compared with $(1.9-million) for the quarter ended June 30, 2022, an improvement of $1.7-million or 88 per cent over the same period in 2022. The corresponding adjusted EBITDA margin for the quarter ended June 30, 2023, was (9 per cent compared with (81 per cent) in Q2 2022, and represented a meaningful improvement, positioning Carebook to achieve its goal of generating positive adjusted EBITDA in the near future.

Additional financing during the first half of the year

On March 8, 2023, the company announced the closing of a non-brokered private placement of units at 10 cents per unit with UIL Ltd., its largest shareholder, for $1.25-million in gross proceeds. The private placement resulted in the issuance of 12.5 million common shares and 187,500 common share purchase warrants, with each whole warrant entitling the holder to acquire one common share for 15 cents on or before March 8, 2025.

On May 23, 2023, the company announced the closing of a non-brokered private placement of units at 10 cents per unit with Permanent Mutual Ltd., an affiliate of UIL, for $1.25-million in gross proceeds. The private placement resulted in the issuance of 12.5 million common shares and 187,500 common share purchase warrants, with each whole warrant entitling the holder to acquire one common share for 15 cents on or before May 23, 2025.

Large contract increase with existing European client and expansion of statement of work with major pharmacy client

On June 30, 2023, CoreHealth, a wholly owned subsidiary of the company, signed a significant extension to an existing contract with a large European client, representing an increase in contract value of $2.8-million over the extended 3.5-year term. On July 19, 2023, CoreHealth announced further details regarding the contract extension, confirming its partnership with AG Health Partner (AGPH) and that the CoreHealth platform was made available to an additional 550,000 eligible members, most of whom are employees working for clients of AG Insurance, AGPH's parent company and a market leader in Belgium.

In 2022, Carebook announced a significant new order under its pharmacy solution agreement with its major pharmacy client. On April 21, 2023, Carebook further expanded the scope of work under its pharmacy solution with its major pharmacy client, adding another $1.6-million in contract value over a one-year term.

Cost reduction measures and sublease of Montreal headquarters

During the last quarter of 2022, the company implemented additional cost reduction measures that resulted in additional annual savings. On Nov. 10, 2022, the company entered into an agreement to sublease the entire premises of its Montreal office commencing on May 1, 2023, until the end of the lease on July 31, 2028. These initiatives, when combined with the strong revenue growth that the company is experiencing, reinforce the trajectory of the company toward profitability.

Financial outlook

Carebook's financial outlook continues to be positive for 2023. The company is poised to achieve significant revenue growth while effectively managing its costs and delivering sustained growth in cash flows. Carebook's strong organic growth and efficient cost management initiatives will allow the company to continue to successfully execute on its strategy. Carebook is expecting to maintain strong performance in 2023 for the entire company as a whole. To complement its organic growth strategy, Carebook will continue to seek out accretive acquisitions and partnerships that improve the accessibility, quality and functionality of its comprehensive solutions, surrounding ecosystem and supporting services. Carebook has adopted a disciplined approach toward exploring strategic merger and acquisition opportunities in order to grow its reach in other markets and offer new services to its customer base, while maintaining a focus on its organic growth. This financial outlook is fully qualified and based on a number of assumptions and subject to a number of risks.

Conference call details

A conference call will be held at 8:30 a.m. Eastern Time on Aug. 22, 2023, to discuss Carebook's year-end financial results. Participants may join the company's conference call by using the following information:

Date: Tuesday, Aug. 22, 2023

Time: 8:30 a.m. Eastern Time

Local: 416-764-8659

North American toll-free: 1-888-664-6392

Conference replay

Local: 416-764-8677

North American toll-free: 1-888-390-0541

Entry code: 730905 followed by pound key

Expiration date: Aug. 29, 2023

Carebook's interim condensed consolidated financial statements and accompanying notes, and management's discussion and analysis for the quarter ended June 30, 2023, are available on the company's website and on SEDAR+.

About Carebook Technologies Inc.

Carebook's digital health platform empowers its clients and more than 3.5 million members to take control of their health journey. During 2021, the company completed the acquisitions of InfoTech, a global leader in health and productivity risk management, and CoreHealth Technologies, owner of an industry-leading wellness platform. In combination, these companies create a comprehensive digital health platform that includes both assessment tools and the technology to deliver complementary solutions.

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