Careteq Reports $398K Loss, $4M EHS Sale, and $3.19M Cash at FY26 Close

Strategic Reset Marks FY26 for Careteq

Careteq Limited (ASX:CTQ) closed FY26 with a net loss of $398,121, a significant increase from a $72,204 loss in the prior year, reflecting a year of transition and strategic realignment. The company completed the divestment of its Embedded Health Solutions (EHS) business, which was sold for $5 million less purchase price adjustments of nearly $1 million, resulting in net cash proceeds of approximately $4 million and a gain on disposal of $2.02 million.

This sale marked a pivotal reset for Careteq, allowing it to repay all outstanding vendor loans related to the prior acquisition of EHS, including $2.47 million in principal and interest. The repayment cleared the company’s debt, leaving Careteq debt free with $3.19 million in cash at bank, up from $1.05 million at the end of FY25.

Revenue Decline and R&D Claim Reversals

Revenue from continuing operations fell 21.3% to $6.08 million, impacted by the sale of EHS which meant only nine months of revenue from this business was recognised in FY26. Additionally, the company reversed $1.21 million of previously accrued R&D tax incentive claim income for FY24, FY25, and the first half of FY26, due to ongoing delays in resolving a dispute with the Australian Taxation Office (ATO) over claims for FY21 through FY23.

Despite these headwinds, EBITDA from continuing operations remained positive, albeit reduced to $20,000 from $270,000 the prior year. The net loss after tax from continuing operations was $398,121 compared with a $72,204 loss in FY25.

Balance Sheet Strengthened and Cost Base Reduced

Following the EHS sale and capital raising of $2.2 million, Careteq has materially simplified its capital structure. All outstanding convertible notes were converted into fully paid ordinary shares, eliminating convertible debt. The company’s net assets grew to $3.23 million from $1.52 million at the prior year-end.

With the divestment of EHS, the management team associated with that business also exited, enabling Careteq to reduce its annualised corporate cost base to approximately $1 million per annum. This leaner structure is designed to provide flexibility to invest in growth initiatives while maintaining balance sheet strength.

Focused Growth on HMR Referrals Marketplace

Careteq’s strategic focus is now squarely on its HMR Referrals platform, a marketplace that streamlines Home Medicines Reviews by connecting general practitioners, pharmacists, and referral sources. The company has outlined a clear execution plan for FY27, including activating GP clinics, recruiting pharmacists, building AI-enabled workflow improvements, pursuing strategic collaborations, and scaling the platform to meet unmet needs in home and aged care sectors.

Executive Chairman Mark Simari emphasised the company’s improved strategic position post-reset, noting that despite the accounting impacts of the EHS sale and R&D claim reversals, Careteq is well-positioned to grow HMR Referrals and manage ongoing regulatory challenges.

ATO R&D Dispute Remains a Key Risk

The company continues to contest amended ATO assessments related to its R&D Tax Incentive claims for FY21 to FY23, which include potential repayments of $2.6 million plus penalties and interest. Careteq has lodged formal objections and is supported by legal advisors Minter Ellison. While the company maintains confidence in its claims, the dispute introduces material uncertainty and is disclosed as a contingent liability.

Careteq’s financial statements include a going concern note highlighting this uncertainty, although the directors believe the company has sufficient cash resources and access to capital to meet obligations over the next 12 months.

Board and Leadership Changes

The board saw the retirement of Non-Executive Director Brett Cheong and the appointment of Leonard Math in June 2026. The company secretary role continues to be held by David Lilja, who also provided financial services support during the year.

Non-executive director fees and executive remuneration remain structured to align with performance and shareholder interests, with total key management personnel remuneration increasing modestly to $357,000 in FY26.