Mr. Nolan Reeds reports

MCI ONEHEALTH REPORTS FIRST QUARTER 2023 FINANCIAL RESULTS

MCI Onehealth Technologies Inc. has released its financial results for the three months ended March 31, 2023.

A summary of MCI Onehealth's financial and operational results is set out herein, and more detailed information is contained in the condensed interim consolidated financial statements and related management's discussion and analysis, which are available on MCI Onehealth's SEDAR page. Financial measures described as adjusted in this news release are non-international financial reporting standard measures and may not be comparable with other similar measures disclosed by other companies.

Cash and liquidity update

For the three months ended March 31, 2023, the company experienced operating losses of $7.4-million and negative cash flows from operations of $1.11-million, and as at the end of that period, had a cash balance of approximately $1.4-million and accounts payable and other current liabilities of approximately $20.7-million. The company will need to obtain additional financing by the end of May to finance continuing operations in the ordinary course and may be required to obtain additional financing in future periods.

To address its immediate liquidity constraints, the company announced on April 27, 2023, that it is seeking approval for an additional $1.5-million debt financing facility from a related party to finance its continuing operations and for general and administrative expenses. That facility remains subject to the approval of the Toronto Stock Exchange and has not yet closed. Even if the facility is implemented, it is likely that the company will need to obtain additional sources of liquidity by the end of May to continue to finance its continuing operations.

The company's special committee, composed of two of its independent directors, remains engaged in a process to evaluate and consider the company's current financial and liquidity position, operational challenges and possible financing, reorganization, or restructuring alternatives that may be available to the company. The company is also continually evaluating other alternatives for generating cash in the short term, including the potential sale of certain assets identified by the company, and is continuing to responsibly reduce costs while it evaluates the potential options. The company provided an update on these efforts, which are continuing, in a press release on April 20, 2023.

Other than as described in this news release, the company has not made any decisions related to strategic alternatives at this time. The company cautions that there are no assurances that the evaluation of strategic alternatives will result in the approval or completion of any specific transaction or outcome, and there is no certainty that the company will be able to secure additional financing or sell assets to generate liquidity, or on what terms it will be able to do so, or that its revenue growth and expense reduction strategies will be successful.

First quarter 2023 financial and operational highlights

Significant financial and operational highlights for MCI Onehealth during the three months ended March 31, 2023, included:

• Operational challenges: As described above, the company faced, and is continuing to face, liquidity and operational challenges, and has taken, and is continuing to take, steps to reduce costs while considering all available options.
• Revenue: Revenue for first quarter 2023 declined 11 per cent in the reporting period as compared with the prior period due in large part to lower patient volumes in the company's clinics, telehealth services and virtual health care services. Lower patient volumes in the company's clinics relate in part to the consolidation of five of the company's clinics in Ontario into its remaining 14 clinics in that province. Total revenue for first quarter 2023 was $11.5-million, compared with $13.0-million in first quarter 2022.
• Financing: On Jan. 4, 2023, MCI Onehealth announced an amendment of its existing credit facility with The First Canadian Wellness Co. Inc., a related party to the company, increasing the amount of debt financing available to the company from $5-million to $7-million. The details of the loan amendment are set out in the company's press release on Jan. 4, 2023.
• Information and data analytics: The company continues to make progress in standing up its data lake, composed of an ever increasing volume of health records currently numbering in excess of 3.3 million. The company anticipates that it will begin servicing customers looking for data insights from these records later in 2023.
• Smart referral system: The company continues to make progress in rolling out its smart referral system, the first application to leverage the data backbone which the company is developing with a leading data analytic partner. The smart referral system streamlines the flow of patient referrals from general practitioners to specialists within the company's network, optimizing patient care pathways and increasing revenue from existing customers.
• Corporate health services: The company began offering corporate health services from its five Calgary clinics and continued to roll out services to national customers. Overall revenue from corporate health services declined during the quarter due to decreased demand for COVID-19 testing but is expected to recover as more customers are on boarded and new service offerings are made available.
• Personnel: The company hired eight new physicians during the three months ended March 31, 2023, who will begin delivering health services to patients in 2023.
• Net losses: Net losses for first quarter 2023 were $7.4-million, as compared with losses of $4.2-million in first quarter 2022. The company's revenue declined over the same period last year, driven by lower patient volumes. The company's general and administrative expenses declined in first quarter 2023 due to cost reduction measures and focus on operational efficiency, but research and development spending increased to support projects relating to the company's data-insight-as-a-service initiatives.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): Adjusted EBITDA for first quarter 2023 remained steady at negative $2.4-million, as compared with an adjusted EBITDA of negative $2.4-million in first quarter 2022.

About MCI Onehealth Technologies Inc.

MCI Onehealth is a health care technology company focused on empowering patients and doctors with advanced technologies to increase access, improve quality and reduce health care costs. As part of the health care community for over 30 years, MCI Onehealth operates one of Canada's leading primary care networks with approximately 280 physicians and specialists, serves more than one million patients annually, and had nearly 300,000 telehealth visits last year, including on-line visits. MCI Onehealth additionally offers an expanding suite of occupational health service offerings that support a growing list of more than 650 corporate customers. Led by a proven management team of doctors and experienced executives, MCI Onehealth remains focused on executing a strategy centred around acquiring technology and health services that complement the company's current road map.

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