Careteq Posts Positive Cash Flow, Completes EHS Sale, Refocuses on HMR Referrals

Positive Cash Flow and Balance Sheet Strengthening

Careteq Limited (ASX:CTQ) has reported a modest but meaningful turnaround in operating cash flow, posting a positive $14,000 for the March quarter, a marked improvement from the $95,000 cash outflow in the prior quarter. Customer receipts held steady at $2.2 million, supporting this shift. The company’s cash balance rose to $837,000 from $669,000 at the end of December, reflecting disciplined cost control and working capital management during a significant transition phase.

This financial progress coincides with Careteq’s completion of a two-tranche capital raising announced in March, securing approximately $2.2 million before costs through the issue of 440 million shares at $0.005 each. The placement was structured with an initial $193,000 tranche issued under existing capacity and a second $2.07 million tranche subject to shareholder approval at the April general meeting, which was subsequently obtained. This capital injection is designed to bolster the balance sheet and fund the company’s strategic initiatives.

Completion of Embedded Health Solutions Sale

Post quarter-end, Careteq finalised the sale of its Embedded Health Solutions (EHS) business to Nationwide Investments Holdings Pty Ltd for $5 million less customary adjustments totaling about $990,000. From the proceeds, Careteq repaid the $2.47 million vendor loan along with accrued interest, effectively removing this significant liability from its balance sheet. This divestment marks a clear pivot away from the EHS segment, allowing Careteq to concentrate resources on its core HMR Referrals platform.

The sale concludes a process that was first announced in early 2026, with the company previously signalling the need to recalibrate its focus amid rising losses and an ongoing dispute with the Australian Taxation Office (ATO) over R&D tax claims. The divestment and capital raise together provide a cleaner financial footing as Careteq charts its next phase of growth. This follows the company’s earlier $5M sale of Embedded Health Solutions announcement, which set the stage for this balance sheet reset.

Refocusing on HMR Referrals with AI Ambitions

With EHS now behind it, Careteq is doubling down on HMR Referrals, its marketplace platform for Home Medicines Reviews. The company is re-crafting its business plan to accelerate referral growth through established channels such as GP networks, pharmacists, and home care providers. A key feature of the reset is the staged exploration of AI-enabled functionality aimed at delivering measurable value to stakeholders across the referral process.

Careteq intends to streamline the operating cost base to align with this focused strategy and pursue partnerships that expand referral pathways. The company is also reassessing capital allocation priorities post-EHS sale and capital raise to ensure flexibility and efficiency. This strategic pivot builds on the company’s previous HMR Referrals platform growth plans and reflects a sharper technology-driven approach to scaling its operations.

Governance and Regulatory Developments

In a move to align costs with the company’s streamlined focus, Careteq’s Board has agreed to reduce director remuneration effective 1 May 2026. Executive Chair and CEO Mark Simari’s pay is halved to $120,000 per annum inclusive of superannuation, while Non-Executive Directors Stephen Munday and Brett Cheong will each receive $30,000, down from $36,000.

On the regulatory front, Careteq has formally commenced an objection process with the ATO regarding amended assessments on R&D tax incentive claims for FY21–FY23. The company has submitted additional evidence, including key staff witness statements, now under review by the ATO’s Objection Officer. The outcome of this dispute remains uncertain and could influence future financial performance.