Careteq Limited has returned to profitability in FY25, reporting a 5.4% revenue increase and a 171% jump in underlying EBITDA, driven by strategic divestments and acquisitions.
- 5.4% revenue growth to $7.6 million in FY25
- 171% increase in underlying EBITDA from continuing operations
- Return to profitability with group EBITDA profit of $0.3 million
- Acquisition of remaining 45% of Embedded Health Solutions
- Ongoing ATO dispute over R&D tax claims with $3.6 million at stake
Strategic Realignment Spurs Financial Turnaround
Careteq Limited (ASX – CTQ), a clinical healthtech company focused on medication management and clinical governance, has reported a significant turnaround in its FY25 preliminary results. The company posted a 5.4% increase in revenue to $7.6 million and a remarkable 171% rise in underlying EBITDA from continuing operations, reaching $0.5 million. This marks a return to profitability with a group EBITDA profit of $0.3 million, compared to a loss of $1.4 million in the prior year.
The transformation follows decisive strategic moves early in FY25, including divesting the loss-making Sofihub business and acquiring the remaining 45% stake in Embedded Health Solutions (EHS) for $2.4 million. This acquisition has positioned Careteq to fully integrate and scale its platforms across aged care, home care, and disability sectors.
Embedded Health Solutions Leads Growth
EHS proved to be a key driver of the company’s improved performance, delivering a 13% increase in underlying EBITDA to $1.7 million. The business unit’s operational efficiencies and synergies from integration have enhanced financial outcomes while supporting high-quality medication management in residential aged care. Careteq’s Executive Chairman, Mark Simari, highlighted that further synergies are anticipated as the company consolidates its platforms into a single system, streamlining legacy technology and expanding its market reach.
Expanding Partnerships and Market Potential
Careteq’s HMR Referrals platform has established partnerships with major national GP networks, potentially reaching over 100,000 members and 2,000 GPs. This network could generate more than 500,000 referrals, underpinning the company’s growth ambitions in medication safety for Australians with chronic conditions. Management is optimistic about leveraging these partnerships to drive revenue and EBITDA growth in FY26.
Regulatory Headwinds and Outlook
Despite the positive operational momentum, Careteq faces a significant regulatory challenge. The Australian Taxation Office (ATO) has issued amended assessments related to historical R&D Tax Incentive claims from FY21 to FY23, demanding repayment of $2.6 million plus penalties and interest totaling nearly $1 million. Careteq has formally objected and is working with legal advisors to resolve the dispute. The outcome remains uncertain and could materially impact future financials.
Looking ahead, Careteq expects continued revenue and EBITDA growth from its core operations in FY26 while managing the ongoing ATO dispute. The company’s strategic focus on integrated medication management solutions positions it well to capitalize on market opportunities in aged care and home health sectors.
Bottom Line?
Careteq’s FY25 turnaround sets the stage for growth, but the looming ATO dispute could test its resilience.
Questions in the middle?
- How will the resolution of the ATO R&D tax dispute impact Careteq’s financial outlook?
- What timeline is expected for the full integration of EHS, Mederev, and HMR Referrals platforms?
- Can Careteq sustain and accelerate growth through its GP network partnerships in FY26?