VANCOUVER, BCJuly 8, 2024 /CNW/ – CareSpan Health, Inc. (TSXV:CSPN) (“CareSpan” or the “Company“) a digital healthcare company focusing on primary care and mental health through its provider networks American-APN and American-Med Psych, and its “Clinic-in-the-Cloud” integrated digital care platform, announces its audited consolidated financial results for the fiscal year ended December 31, 2023 and unaudited results for the three-month period ended March 31, 2024. The Company also provides an update on the CTO (as defined herein).

All amounts are expressed in this press release are in United States dollars.

Update on Cease Trade Order

On June 12, 2024, the Company filed, together with the applicable fees, its audited financial statements for the year ended December 31, 2022, related management’s discussion and analysis, and the certification of annual filings for the period ended December 31, 2023. On June 24, 2024, the Company filed, together with the applicable fees, its interim financial statements for the three-month period ended March 31, 2024, related management’s discussion and analysis, and the certification of interim filings for the period ended March 31, 2024.

The Company has submitted an application to the TSX Venture Exchange (the “Exchange“) to reinstate trading of the common shares of the Company on the Exchange. The Exchange has confirmed that trading of the Common Shares will resume on July 10, 2024.

2023 Financial Highlights

Revenue: CareSpan reported total revenue of $2.52 million for the year ended December 31, 2023, a decrease from $4.54 million for 2022. The decline was primarily due to a strategic shift from low-margin to higher-margin business contracts.

Operating Expenses: Operating expenses decreased to $4.6 million for the year ended December 31, 2023 from $8.17 million for 2022; a significant portion of the cost reduction was due to a decrease in payments to practices as that portion of the Company’s business decreased and its focus shifted to higher margin contracts.  There was also a significant decrease in labor costs, information technology costs, and general administrative expenses for the 2023 year.

“In 2023, we made strategic decisions to pivot our business model towards higher-margin SaaS offerings and contracts serving U.S. military veterans,” stated Darrell Messersmith, Chief Executive Officer of CareSpan. “This transition necessitated a deliberate, strategic shift from low-margin to higher-margin engagements that we anticipate will improve revenue quality in the long-term. With this focus implemented during the year 2023, we are confident in our ability to drive long-term value.”

Detailed Look

Revenue: CareSpan reported a decrease in annual revenue to $2.52 million for the period ended December 31, 2023, down from $4.54 million for 2022. The decline in revenue was primarily attributed to a programmed decrease in the Company’s provider network business that was not yielding the expected margins.  During the past year, the Company’s shift was a strategic realignment to focus to support third party contracts with the VA, involving medical examinations for returning veterans and reservists. This business segment has growth potential and improved margins for CareSpan. The Company dedicated its resources to the recruitment of providers for these contracts in 2023 and Q1 2024. These providers are subject to typical stringent credentialing requirements and processes that takes multiple months to complete.  The Company has started to generate network growth through contracting new providers in 2023, as providers became credentialed and are expecting the realization of revenue to continue during 2024 and beyond.

Operating Expenses: As the Company pivoted and transitioned its business, revenue from the prior provider network business declined as new business from U.S. military contracts started to increase. During this transition phase, as overall revenue declined, the Company effectively managed operating expenses, which decreased to $4.6 million in 2023 from $8.17 million in 2022. This reduction reflects ongoing efforts to enhance cost efficiency across the organization.

Q1 2024 Financial Highlights

Revenue: CareSpan reported total revenue of $969,675 for the three-month period ended March 31, 2024, compared to $904,191 in revenue for the three month period ended March 31, 2023.

Net Income: The Company achieved a net income of $439,971 for Q1 2024 compared to a net loss of $520,002 in Q1 2023. This turnaround is largely due to the sale of our remaining interest in CareSpan Asia Inc. (“CareSpan Asia“), effective cost management, and the continued strategic pivot towards higher-margin engagements.  CareSpan sold its remaining 15% interest in CareSpan Asia (the “CareSpan Asia Transaction“), resulting in gross proceeds of $988,475. The CareSpan Asia Transaction, included the sale of the shares of CareSpan Asia and technology to CareSpan Asia for use in the Philippines and certain other Southeast Asian countries, in consideration for a cash payment and CareSpan to receive by the end of 2024, a modernized version of the CareSpan platform currently under development by CareSpan Asia. The CareSpan Asia Transaction contributed significantly to the net income of the Company during Q1 2024. The sale generated revenue of $729,116 from the technology transfer and $36,364 from the sale of shares. Additionally, $133,390 was repaid from advances previously written off in 2022, and $38,475 was received for services provided to CareSpan Asia.

Operating Expenses: Operating expenses were significantly reduced to $528,704 in Q1 2024, down from $1,424,193 in Q1 2023, demonstrating our commitment to enhancing operational efficiency through cost containment, focus on revenue-enhancing projects, and a reduction in payments to practices and provider network business.

Strategic Initiatives and Partnerships

U.S. Military Contracts: As a critical part of the company’s shift to higher margin business, we continue to expand our network of providers performing medical examinations for U.S. military veterans and reservists. With over 30 contracted providers to date and more expected to sign in the coming weeks, revenue from this line of business is expected to experience significant growth as more providers complete credentialing and begin accepting appointments. While the Company has encountered delays in realizing higher-margin revenue from VA medical exams and new SaaS business ventures to date, the expansion of the PACT Act1 is expected to significantly increase the volume of contracted VA medical exams, creating substantial opportunities for providers like CareSpan. Beyond the VA medical exams, the Company is optimistic about its SaaS opportunities in the chronic care and managed care markets, leveraging developments recently completed with its relationship with Golden Care Solutions (“Golden Care“).

The Company has expanded licensing and completed the development of additional features through the relationship with Golden Care, a national medical practice that collaborates with other practices and providers nationwide to provide comprehensive preventive services built on annual wellness visits, remote patient monitoring, and chronic care management. By leveraging technologies and collaborative care models, the Company is empowering practices nationwide to deliver more proactive, personalized, and value-based care, ensuring better health outcomes and new revenue opportunities. Additionally, ongoing regulatory support for digital health solutions continues to reinforce CareSpan’s market position. This collaboration with Golden Care for preventive services including Annual Wellness Visits, Remote Patient Monitoring, and Chronic Care Management is expected to be a key growth factor for the Company in 2024.

CareSpan is in strategic talks with a potential artificial intelligence partner to integrate advanced artificial intelligence capabilities into its digital healthcare platform. This collaboration aims to enhance synergies, bring higher operational efficiencies, and advanced clinical decision to support CareSpan’s customers.

Update on ChopraX Transaction

Further to its press release on November 7, 2023, the Company and the Chopra team are still intent on collaborating around the Chopra Whole Person Care brand to deliver integrative medicine using the CareSpan platform; but as of the date hereof, there are no material updates with respect to the anticipated closing of the proposed transaction between the parties nor updates on the contemplated concurrent financing.

About CareSpan Health, Inc.

CareSpan is a healthcare technology and services company. CareSpan, with its office in British Columbia, is the parent company of the CareSpan group, which holds a 100% interest in its operating subsidiary, CareSpan Holdings, Inc., a Delaware incorporated company.

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 behavioral health care.

Forward-Looking Statements

This news contains “forward-looking statements” within the meaning of applicable Canadian securities laws (collectively, “forward-looking statements”) which reflect the current expectations of management of the company’s future growth, results of operations, performance, and business prospects and opportunities, including the statements made above with respect to: (i) the resumption of trading of the Common Shares; (ii) the expected generation of higher margin business; (iii) contracting of new providers on the Company’s platform; (iv) expected benefits of the PACT Act; (v) anticipated trends as in technology and SaaS business ventures that could have a positive act on the Company and its partnerships; (vi) discussions with an artificial intelligence partner and the potential benefits to the Company; and (vii) the intention of CareSpan and Chopra to work together. Forward-looking statements are frequently, but not always, identified by words such as “may”, “would”, “could”, “will”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential for”, “intend” and similar expressions or the negative of these terms or other comparable terminology, although these words may not be present in all forward-looking statements. 

Forward-looking statements are based on management’s assumptions as at the date of the forward-looking statements are provided, including but not limited to the following: the ability of the Company to execute its growth plans; the Company’s ability to sign-up new providers; the ability of Company’s management to deploy capital in an efficient and profitable manner; the market being receptive to such product offering from the Company; no adverse changes in the applicable regulatory environment of the Company; and Company’s ability to sufficiently capture opportunities to grow profitably. Though management believes that its assumptions are reasonable in the circumstances, forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to differ materially from all or any of the future results, performance or achievements expressed or implied by forward-looking statements.

Risk factors that could cause the Company’s actual results, performance, or achievements to differ from the forward-looking statements in this news release include, but may not be limited to: general market and economic risk; the ability of the Company’s management to execute its strategy; the Company’s ability to allocate capital in an efficient manner; the Company may never reach profitability and has a history of losses; risk of dilution and further share issuances to raise capital; Golden Care’s and  Chopra’s respective brands maintain a positive association with wellness; the profitability of military health contracts; consumer demand for remote patient monitoring in the United States; reliance on key personnel and management; unexpected or adverse regulatory changes in the healthcare space. These factors should be considered carefully, and prospective investors should not place undue reliance on the forward-looking statements. Although the forward-looking statements contained in the news release are based upon what management currently believes to be reasonable assumptions, the Company cannot assure prospective investors that actual results, performance or achievements will be consistent with these forward-looking statements. Except as required by law, the Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. 

SOURCE CareSpan Health, Inc.