Mr. Jason Tong reports

ARCPOINT TO HOST CONFERENCE CALL TO DISCUSS 2023 Q4 AND FULL YEAR FINANCIAL RESULTS

Arcpoint Inc. will host a conference call at 4 p.m. Eastern Time, Wednesday, May 1, 2024, to review the company's results for the 2023 full year and fourth quarter ended Dec. 31, 2023.

The dial-in numbers for the conference call are as follows:

• Canada/United States toll-free at 1-844-763-8274;
• International toll at 1-647-484-8814.

Callers should dial in five to 10 minutes prior to the scheduled start time and ask to join the Arcpoint call.

Arcpoint president and chief executive officer John Constantine commented: "We have worked hard to make progress in bringing our costs in line with revenues over the past 14 months, including recent new staffing and operational reductions. Together, all of these reductions have resulted in an approximately 45-per-cent reduction in our head count and 30-per-cent reduction in our overall operating expenses since early 2023."

Throughout April, 2024, the company enacted reductions in head count, as well as to operational and administrative costs that are expected to result in annualized savings of approximately $530,000 in staffing costs and $440,000 in operational and administrative costs. These recently completed reductions are in addition to the staffing and operational cuts totalling $2-million (U.S.) as previously reported by the company in its news releases dated March 8, 2023, and Oct. 17, 2023.

Mr. Constantine concluded: "While the effects of these cuts have been difficult, we believe they are necessary to bring longer-term value to our shareholders as we seek to leverage our MyArcpointLabs technology platform to create a health care ecosystem that will drive more business to our franchisees and expand our distribution network through new partnerships."

On July 10, 2023, the company reported that it had launched its new consumer e-commerce platform, MyArcpointLabs (MAPL). MAPL was developed to make it easier for the company's franchisees to attract and better serve individual health care consumers and for a greater number of consumers to purchase the company's products and services more easily. By year-end of 2023, every Arcpoint franchised location had MAPL integrated into its location and interfaced with its local website. MAPL also provides interface support with various other health care organizations and acts as the operations tool within the franchise system. The technology virtualizes the company's consumer business model, allowing for the expansion of the company's footprint to other entities beyond traditional Arcpoint facilities and enabling franchisees to generate revenue prior to having a bricks and mortar facility. MAPL also allows for the linking of diagnostic testing services with virtual physicians and other health care system constituents, such as independent pharmacies.

On Nov. 21, 2023, the company further announced that it had implemented a new application programming interface (API) with MD Care Group LLC, a telehealth company that provides consumers with cost-effective, virtual access to health care through a national network of thousands of board-certified physicians and health care providers. This allows Arcpoint customers to connect with MD Care Group's doctors, through MAPL, to discuss results from Arcpoint diagnostic tests or other medical concerns they may have. This opens the door for future opportunities for the creation of virtual primary care and urgent care centres anywhere Arcpoint services can be accessed.

As at Dec. 31, 2023, the company had total cash on hand of approximately $1.0-million (U.S.), comprising $900,000 (U.S.) in unrestricted cash and cash equivalents, and $100,000 (U.S.) in brand fund restricted cash. Use of brand fund restricted cash is at the company's discretion and is used to increase sales and the brand presence of the company's entities and franchisees.

All results below are reported under international financial reporting standards (IFRS) and in U.S. dollars.

Summary of 2023 Q4 financial results:

• Total revenues for the three months ended Dec. 31, 2023, were $1.8-million, compared with $1.3-million for the three months ended Dec. 31, 2022. The increase in revenue for Q4 2023 versus Q4 2022 was primarily due to higher royalty and franchising revenues and also an increase in support service revenues provided to franchisees and lab services.
• Net loss for the three months ended Dec. 31, 2023, was $3.0-million, compared with a net loss of $6.1-million for the three months ended Dec. 31, 2022. The decrease in loss for Q4 2023 versus Q4 2022 was primarily due to a decrease in stock-based compensation of $1.0-million and a decrease in professional fees of $400,000. Net loss for Q4 2022 was higher also due to non-recurring items in the period including loss on conversion of convertible debt of $1.3-million and public listing expense and transaction costs of $2.2-million.
• Operating cash flow for the three months ended Dec. 31, 2023, was negative $200,000, compared with negative $300,000 for the three months ended Dec. 31, 2022.
• EBITDA (earnings before interest, taxes, depreciation and amortization) for the three months ended Dec. 31, 2023, was negative $2.7-million, compared with negative $5.8-million for the three months ended Dec. 31, 2022.
• Adjusted EBITDA for the three months ended Dec. 31, 2023, was negative $700,000, compared with negative $1.3-million for the three months ended Dec. 31, 2022. The decrease in negative adjusted EBITDA for Q4 2023 versus Q4 2022 was primarily due to increase in revenues of $400,000 and overall reduction in operating expenses.

Summary of 2023 year-end audited financial results:

• Total revenues were $6.7-million for the 12 months ended Dec. 31, 2023, compared with $10.9-million for the 12 months ended Dec. 31, 2022. The difference in revenue for 2023 versus 2022 was due to overall reduction in royalties and franchise fees and also reduction in support and lab services revenues.
• Net loss was $8.9-million for 12 months ended Dec. 31, 2023, compared with a net loss of $8.3-million for the 12 months ended Dec. 31, 2022. The difference in net loss for 2023 versus 2022 was due to decline in revenues of $4.2-million, partially offset by a reduction in operating expenses of $800,000 and listing expenses and transaction costs of $2.2-million.
• Operating cash flow for the 12 months ended Dec. 31, 2023, was negative $4.2-million, compared with negative $100,000 for the 12 months ended Dec. 31, 2022.
• EBITDA for the 12 months ended Dec. 31, 2023, was negative $7.7-million, compared with negative $7.3-million for the 12 months ended Dec. 31, 2022.
• Adjusted EBITDA for the 12 months ended Dec. 31, 2023, was negative $4.3-million, compared with negative $1.0-million for the 12 months ended Dec. 31, 2022. The increase in negative adjusted EBITDA was primarily due to a decline in revenues of $4.2-million, partially offset by a reduction in operating expenses of $800,000.

Definition and reconciliation of non-IFRS financial measures

The company reports certain non-IFRS measures that are used to evaluate the performance of its businesses and the performance of their respective segments. Securities regulators require such measures to be clearly defined and reconciled with their most comparable IFRS measures.

As non-IFRS measures generally do not have a standardized meaning, they may not be comparable with similar measures presented by other issuers. Rather, these are provided as additional information to complement those IFRS measures by providing further understanding of the results of the operations of the company from management's perspective. Accordingly, these measures should not be considered in isolation, nor as a substitute for analysis of the company's financial information reported under IFRS. Non-IFRS measures used to analyze the performance of the company's businesses include EBITDA and adjusted EBITDA.

A reconciliation of how the company calculates EBITDA and adjusted EBITDA is provide in the attached table. For more information, please see the audited annual financial statements and the annual management's discussion and analysis of the company under the company's profile on SEDAR+.

About Arcpoint Inc.

Arcpoint is a leading United States-based franchise system that leverages technology along with bricks and mortar locations to give businesses and individual consumers access to convenient, cost-effective health care information and solutions with transparent, upfront pricing, so that they can be pro-active and preventative with their health and well-being. Arcpoint is based in Greenville, S.C. Arcpoint Franchise Group LLC, formed under the laws of the state of South Carolina in February, 2005, is the franchisor of Arcpoint labs and supports over 130 independently owned locations. Arcpoint sells franchises to individuals throughout the U.S. and provides support in the form of marketing, technology and training to new franchisees. Arcpoint Corporate Labs LLC develops corporate-owned labs committed to providing accurate, cost-effective solutions for customers, businesses and physicians. AFG Services LLC serves as the innovation centre of the Arcpoint group of companies as it builds a proprietary technology platform and a physician network to equip all Arcpoint labs with best-in-class tools and solutions to better serve their customers. The platform also digitalizes and streamlines administrative functions, such as materials purchasing, compliance, billing and physician services for Arcpoint franchise labs and other clients.

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