Why Is Careteq Selling Embedded Health Solutions Amid Rising Losses?
Careteq Limited reported a widening half-year loss with revenues down 18%, announcing plans to sell its Embedded Health Solutions business to strengthen its balance sheet and focus on its HMR Referral platform.
- Half-year revenue declined 18% to $51,003
- Loss after tax from continuing operations increased 22.8% to $922,188
- Plans to divest Embedded Health Solutions for $5 million, pending shareholder approval
- Ongoing dispute with Australian Tax Office over $3.6 million in R&D tax claims
- Company maintains going concern status based on sale proceeds and cash flow forecasts
Financial Performance Highlights
Careteq Limited has released its half-year results for the period ending 31 December 2025, revealing a challenging financial landscape. Revenues from its continuing operations fell by 18% to just over $51,000, while losses after tax surged by nearly 23% to $922,188. The company’s comprehensive loss attributable to shareholders widened significantly to $277,931, up 85% from the prior corresponding period.
These figures underscore the pressures facing Careteq as it navigates a competitive healthcare services sector, particularly in the provision of Residential Medication Management Review and Home Medicines Review services.
Strategic Divestment to Recalibrate
In response to these financial headwinds, Careteq’s board has announced a binding agreement to sell its fully owned subsidiary, Embedded Health Solutions (EHS), for $5 million (subject to customary adjustments). This sale, pending shareholder approval at an Extraordinary General Meeting scheduled for 13 March 2026, aims to recalibrate the company’s balance sheet and sharpen its strategic focus on growing the HMR Referral marketplace platform.
The divestment of EHS is a pivotal move, allowing Careteq to streamline operations and concentrate resources on its core digital platform, which facilitates home medication reviews in the home care sector. The sale proceeds are expected to bolster liquidity and provide a buffer as the company addresses other financial challenges.
Ongoing ATO Dispute Casts Shadow
Adding complexity to Careteq’s outlook is an ongoing dispute with the Australian Taxation Office (ATO) concerning R&D tax incentive claims for the fiscal years ending 2021, 2022, and 2023. The ATO has issued amended assessments seeking repayment of approximately $2.6 million in claimed refunds, alongside penalties and interest totaling nearly $1 million.
Careteq maintains its position that its R&D activities and associated claims are legitimate and well-documented, and has lodged formal objections supported by legal advisors. The resolution timeline remains uncertain, but the company is actively engaging with the ATO’s objections team and is prepared to pursue further review if necessary.
Going Concern and Future Prospects
Despite the losses and regulatory challenges, Careteq’s directors affirm the company’s ability to continue as a going concern. This confidence is grounded in the forecasted cash flows, the expected proceeds from the EHS sale, and the potential to raise additional capital if required. The company’s cash position stood at $681,802 at the half-year end, with net cash outflows from operating activities reduced compared to the prior period.
Looking ahead, the company’s strategic pivot towards its HMR Referral platform represents a bet on digital innovation within the healthcare services sector. However, the outcome of the shareholder vote on the EHS sale and the resolution of the ATO dispute will be critical determinants of Careteq’s financial stability and growth trajectory.
Bottom Line?
Careteq’s upcoming shareholder vote and ATO dispute resolution will be decisive for its financial turnaround and strategic focus.
Questions in the middle?
- Will shareholders approve the $5 million sale of Embedded Health Solutions?
- How will the ATO dispute over R&D claims ultimately impact Careteq’s finances?
- What growth prospects exist for Careteq’s HMR Referral platform post-divestment?
