Mr. Rembert de Villa reports

CARESPAN HEALTH, INC. ISSUES AUDITED 2022 FINANCIAL STATEMENTS

Carespan Health Inc. has released its audited consolidated annual results for the year ended Dec. 31, 2022. All amounts are expressed in U.S. dollars.

Rembert de Villa, chairman and chief executive officer of the company, stated, "Carespan's fundamental business remained strong, with an 11.5-per-cent annual increase in patient encounters, from 40,100 in 2021 to 44,700 in 2022."

Revenues declined 21 per cent, from $5.75-million in 2021 to $4.54-million in 2022. This was due singularly to the significant drop in COVID-19-related encounters and associated reimbursements, consistent with the overall decline in COVID-19 cases throughout the United States during that period. Despite this revenue headwind, the company improved financial and operating performance. Comprehensive (loss) after one-time/non-recurring transactions improved by 51.4 per cent, from ($6.89)-million in 2021 to ($3.35)-million in 2022. Loss per share improved 88.0 per cent, from (83 cents) in 2021 to (10 cents) in 2022. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) improved 18 per cent, from ($3.38)-million in 2021 to ($2.75)-million in 2022.

Operating (loss) in 2022 improved by 32.0 per cent from 2021. This was achieved through aggressive cost containment and productivity measures taken by the company, reducing operating expenses by $2,853,963, or 26.2 per cent, from 2021 to 2022.

"We have also begun to prove our ability to scale services that drive improved margins, such as conducting medical assessments for U.S. military veterans. We continue to accelerate our path to get to cash flow positive by executing on the current backlog of higher-margin contracts, developing new contracts for our members, and right-sizing operations and administration.

"We have also been very strategic in our technology spend, enhancing our 'Clinic-in-the-Cloud' platform through higher-impact functions and features that improve clinical workflows as well as billing and collections," said Leslie Markow, chief financial officer.

Highlights of the company's financial results are as follows:"

Year-end 2022 annual financial highlights

• The number of billed patient encounters increased by 11.5 per cent, from 40,100 in 2021 to 44,700 in 2022.
  • However, as COVD-19-related cases and reimbursements declined across the country, average revenue per encounter decreased by 29.2 per cent from $143.56 in 2021 to $101.59 in 2022.
  • Availability of at-home testing and lower infection rates significantly reduced demand for in-office COVID-19-related encounters by nearly 40 per cent.
  • Reimbursements per COVID-19-related encounter declined by over 8 per cent for paid claims.
  • These two factors account for a reduction in revenue, from $5,756,681 in 2021 to $4,542,885 in 2022.
• Operating expenses in 2022 were $8,035,167 compared with $10,889,130 in 2021, an improvement of $2,853,963 or 26.2 per cent.
  • This was primary the result of a reduction in practice fees and finance costs, as well as cost reduction measures to reduce contractor costs, information technology costs, share-based payments, and general and administrative cost, while improving productivity.
  • Operating expenses for 2022 also include bad debts expense related to write-offs of loans to member providers and insurance claims receivables. Recovery actions have been initiated on these insurance claims.
• The resulting operating loss for 2022 was ($3,492,282) compared with ($5,132,449) in 2021, an improvement of 32 per cent. The reduction in operating expenses more than offset the decline in COVID-19-related revenues.
• The company reduced its equity share in Carespan Asia from 50.1 per cent through June 30, 2022, to 15 per cent from that date onwards, resulting in a net gain of $351,377.
• Total comprehensive (loss) for the company was ($3,350,182) in 2022, compared with ($6,889,086) in 2021, an improvement of $3,538,804 or 51.4 per cent.
• (Loss) per share improved from (83 cents) in 2021 to (10 cents) in 2022. In 2021, the weighted average number of common shares outstanding was 8,234,851 and 30,725,686 in 2022.
• Adjusted EBITDA, after non-recurring costs and non-cash items (mainly foreign exchange translation), improved 18.6 per cent, from ($3.38)-million in 2021 to ($2.75)-million in 2022.
• The company's cash balance was $393,746 as of Dec. 31, 2022, compared with $948,662 as of the end of 2021.
• Trade and accounts receivable declined from $1,618,588 in 2021 to $985,473 in 2022 mainly due to the reduction in revenue as explained herein, and provisions made for bad debt.
• Accounts payable and accrued liabilities declined from $2,655,108 in 2021 to $2,030,731 in 2022 due to payments and the conversion of some accounts payable into common shares. Due to related parties declined from $741,862 in 2021 to $233,513 in 2022, resulting from no longer consolidating Carespan Asia's debt.
• Shareholders' (deficiency) increased from ($699,525) in 2021 to ($885,025) in 2022, or a difference of ($185,500), mainly resulting from the capital transactions in 2022.

Events subsequent to Dec. 31, 2022

• On Jan. 9, 2023, the company announced a partnership with CoachCare to deliver medically assisted remote patient monitoring services. The combined goal of the partnership is to deliver RPM to over 2,000 patients this year. Typical reimbursement from Medicare and private insurance for RPM is over $120 per patient per month.
• On Jan. 20, 2023, the company issued 260,000 options at 13 cents to employees, consultants and directors. The options vest equally on grant date, six months, 18 months and 24 months from the date of issue and expire on Jan. 20, 2028.
• On Feb. 14, 2023, Carespan announced the reduction in exercise price of common share purchase warrants issued on Sept. 14, 2022, as per the closing of a private placement of units of the company.
• Subsequent to Dec. 31, 2022, 1,311,288 common shares were issued to employees for back pay not paid in 2022. Any remaining back pay was paid to employees by Jan. 15, 2023, except $7,814 owed to the chairman and chief executive officer, included as accounts payable and accrued liabilities on Dec. 31, 2022.
• Between March and May, 2023, the company received loans from the chairman and CEO, a shareholder, an employee, and the medical adviser to the company of $340,000. These loans are due in one year, bearing an interest rate of 12 per cent. The loan holders have the option to be converted into a future qualified equity financing in excess of $1-million (Canadian).
• The company's loan from a former director of $165,000 plus interest, previously due March 31, 2023, was extended until such time the company raises significant funds. This loan was registered in first priority of other loans under the British Columbia, Canada company legislation.
• In April, 2023, the company converted$101,765 (Canadian) of accounts payable to a vendor by the issuance of 1,017,650 common shares and issued 508,825 warrants at 15 Canadian cents for five years.

Outlook

Carespan is focused on executing its growth strategy in 2023 and beyond and achieving positive cash flow position, mainly through the following:

• Fulfilling the backlog of current, higher-margin signed contracts for United States military veterans assessments, as well as medical supervision of remote patient monitoring for patients of weight loss programs
• Continued focus on identifying and signing contracts (similar to the disability assessment contract for U.S. military veterans and RPM-related care) to match existing patient backlogs to Carespan network providers. This will drive higher margins for both Carespan and its network providers while leveraging Carespan's digital care platform to bring better health outcomes to a wider population.
• Narrowed focus on recruiting clinicians (mainly nurse practitioners) specifically in geographies matching these contracts to accelerate growth post onboarding and improve margins for both Carespan and its clinician members.
• Maintain productivity and continued reduced cost structure to improve cash flow. The company intends to continue strict control of expenses by focusing mainly on expense items that are directly tied to revenue capture.

About Carespan Health Inc.

Carespan is a health care technology and services company incorporated in British Columbia. Carespan's proprietary "clinic in the cloud" is a clinical workflow driven platform designed by doctors that integrates remote patient monitoring, diagnostic tools, the patient's electronic health record, care collaboration capabilities, patient engagement, and e-prescribing and lab ordering. Carespan's platform seamlessly supports both in-person and virtual/telehealth care. Carespan is using this platform combined with essential business services to build provider networks across the U.S. that deliver primary and chronic care, and urgent care, as well as behavioural health care.

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