Careteq Cuts Cash Burn, Grows Revenue, but Platform Launch Delayed
Careteq Limited reports a significant reduction in operating cash outflow and modest revenue growth for FY25, while facing delays in its key platform integration and a dispute with the ATO over R&D claims.
- Operating cash outflow reduced by 85% to $0.07m in Q4
- FY25 revenue up 2% to $8.3m despite divestment
- 1-System platform integration delayed due to developer transition
- Raised $0.625m via convertible note and director loans
- Disputing amended ATO R&D tax assessment with formal objection
Operational Progress and Financial Health
Careteq Limited (ASX – CTQ), an Australian clinical healthtech company focused on medication management solutions, has reported a marked improvement in its financial and operational metrics for the quarter ending June 30, 2025. The company achieved an 85% reduction in operating cash outflow, down to just $70,000, marking the fourth consecutive quarter of improvement. This progress comes alongside a modest 2% year-on-year revenue increase to $8.3 million for FY25, despite the earlier divestment of its Sofihub business unit.
Platform Integration Delays and Strategic Outlook
Careteq’s ambitious rollout of its 1-System platform, designed to unify its Embedded Health Solutions and Home Medicines Review Referrals, has encountered delays. The transition to a new outsourced development team was necessitated by capacity reductions from the incumbent provider, pushing back the anticipated late Q4 deployment. While the timing remains under review pending a comprehensive gap analysis, the company remains confident that the platform will deliver significant cost efficiencies and enable the retirement of legacy systems, underpinning improved profitability in FY26.
Capital Management and Funding Position
To support its operational transition, Careteq secured $0.5 million through a convertible note from technology investor Antanas Guoga, alongside $0.125 million in director loans. These measures have strengthened the company’s cash position to just over $1 million, extending its funding runway and providing flexibility as it aims for sustained positive cash flow. The convertible notes carry a conversion price of $0.01 per share and mature in June 2026.
ATO R&D Tax Incentive Dispute
On the regulatory front, Careteq is contesting an amended assessment from the Australian Taxation Office concerning its R&D Tax Incentive claims for FY21 through FY23. The company has lodged a formal objection, supported by legal advisors MinterEllison, maintaining that its claims are valid and well-documented. The outcome of this dispute remains uncertain, with potential implications for Careteq’s financials depending on the ATO’s final determination.
Looking Ahead
Careteq’s priorities for FY26 include delivering consistent positive operating cash flow, realising cost synergies from the 1-System platform, expanding strategic partnerships in aged and home care sectors, and resolving the ATO dispute. The company’s disciplined financial management and operational improvements position it to create sustainable shareholder value, though the timing of key milestones and regulatory outcomes will be critical to watch.
Bottom Line?
Careteq’s financial discipline and strategic initiatives set the stage for growth, but platform delays and the ATO dispute pose near-term uncertainties.
Questions in the middle?
- When will the new development team complete the 1-System platform integration?
- What financial impact could the ATO R&D dispute have if the objection is unsuccessful?
- How will Careteq expand its strategic partnerships in the evolving aged care market?
