Mr. Nolan Reeds reports

MCI ONEHEALTH REPORTS SECOND QUARTER 2023 FINANCIAL RESULTS

MCI Onehealth Technologies Inc. has released its financial results for the three months ended June 30, 2023.

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

Cash and liquidity update

The company has been and is continuing to face financial and operational challenges. For the three months ended June 30, 2023, the company experienced losses from continued and discontinued operations of $9.8-million, and had negative cash flows of $3.5-million. As at the end of that same period, the company had a cash balance of approximately $662,000, and accounts payable and other current liabilities of approximately $6.8-million.

On July 19, 2023, after the end of the reporting period, the company entered into definitive agreements with Well Health Technologies Corp. to complete a strategic transaction which, if successfully completed, will result in the company selling a significant portion of its clinical assets to a subsidiary of Well, obtaining new financing and positioning itself to emerge as a key national platform with a strong focus on AI (artificial intelligence)-powered healthcare technology and clinical research. Please refer to the company's news release dated July 20, 2023, for additional details on the proposed transaction.

In connection with signing the definitive agreements for the transaction, Well advanced $3-million to the company under a secured promissory note to provide the company with working capital to stabilize its business, continue to operate in the ordinary course, and to accelerate the pursuit of its strategic plan during the interim period between signing and closing the transaction. This advance is anticipated to provide the company with sufficient liquidity, absent any material unanticipated developments, to complete the transaction, which is anticipated to close on Oct. 1, 2023. At that time, the company will complete a convertible debenture financing to raise additional capital to address its longer-term liquidity and capital requirements. In the event that the transaction cannot be successfully completed, or the closing date for the transaction is delayed, the company anticipates that it will need to obtain additional financing by the end of September to finance continuing operations in the ordinary course.

Second quarter 2023 financial and operational highlights

Significant financial and operational highlights for MCI during the three months ended June 30, 2023, include:

• Operational challenges: As described above, the company has faced, and is continuing to face, liquidity and operational challenges. The company continued to take steps during the reporting period to reduce its expenses, settle outstanding liabilities, sell non-core assets and otherwise address its short-term liquidity requirements, while working toward the negotiation of definitive agreements for the transaction.
• Financing: On May 18, 2023, MCI announced that it completed a transaction with The First Canadian Wellness Co. Inc., a related-party to the company, to provide a new $1.5-million credit facility to the company, in addition to its existing $7-million loan arrangement with the lender. Additional details pertaining to the new facility are set out in the company's press release dated May 18, 2023.
• Sale of assets: On May 31, 2023, the company sold its subsidiary, MCI Medical Clinics (Alberta) Inc., which housed its five medical clinics in Alberta, to a subsidiary of Well for total consideration of $2-million, less customary closing adjustments and hold backs. The proceeds of the sale were applied to address some of the company's recent financial challenges and liquidity constraints. Additional details on the sale of assets are set out in the company's news releases dated May 19, 2023, and June 1, 2023.
• Information and data analytics: The company continued to provide data insights as a service to customers in six categories: rare disease; complex major medical/chronic; patient cohort building; clinical trial recruitment; synthetic health data; and bespoke insights. Such services are targeted primarily at pharmaceutical companies, life science companies, precision medicine companies and top-tier universities.
• Corporate health services: The company continued to offer corporate health services from its 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 at a slower rate than the previous quarter.
• Revenue: Revenue for Q2 2023 declined 40 per cent in the reporting period as compared with the Q2 2022. The decline in revenue was driven primarily by the consolidation of five of the company's medical clinics in Ontario, which was completed in late 2022 and early 2023, as well as the divestiture of five of the company's medical clinics in Alberta during the reporting period. Total revenue for Q2 2023 from continuing operations was $3.2-million, compared with $5.3-million in Q2 2022.
• Net losses: Net losses for Q2 2023 from continuing and discontinued operations were $9.8-million, as compared with net losses of $4.2-million in Q2 2022. Higher net losses in the reporting period were driven by the consolidation of five clinics in Ontario in late 2022 and early 2023, the sale of the company's clinics in Alberta, lower revenue in health technology and health research services, impairment of investments and goodwill, and an increase in non-cash share-based compensation.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): Adjusted EBITDA from continuing operations for Q2 2023 was a loss of $2.4-million, as compared with an adjusted EBITDA from continuing operation of negative $2.6-million in Q2 2022.

Selected financial information

About MCI Onehealth Technologies Inc.

MCI is a health care technology company focused on empowering patients and doctors with advanced technologies and data-driven clinical insights to increase access, improve quality and reduce health care costs. Led by a proven management team of doctors and experienced executives, MCI remains focused on executing a strategy centred around acquiring technology and health services that complement the company's current road map.

We seek Safe Harbor.