20-F: Avricore Health Inc. Reports Increased Revenue and Gross Profit in 2023 Annual Report

Avricore Health Inc.'s 2023 annual report highlights a 97% increase in revenue and a 163% increase in gross profit, driven by the expansion of its HealthTab point-of-care testing platform.

Summary

• Avricore Health Inc.'s annual report for the year ended December 31, 2023, reveals significant financial growth.
• Revenue increased by 97% year-over-year, reaching $3,485,147.
• Gross profit saw a substantial rise of 163%, amounting to $1,203,396.
• The company's HealthTab platform is now deployed in 776 Shoppers Drug Mart and Loblaws family stores across Canada.
• Avricore is expanding its HealthTab network through partnerships with Ascensia Diabetes Care and Rexall Pharmacy Group.
• The company is also exploring opportunities in the UK, collaborating with Barts Heart Centre and HEART UK for cholesterol testing.
• The company sustained a net loss of $701,215 for the year.
• The company had a working capital of $244,343 at the end of 2023.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While there's significant revenue and gross profit growth, the company still faces net losses and relies on future financing. The strategic partnerships and expansion efforts are positive, but the financial risks need to be considered.

Positives

• Significant revenue growth of 97% indicates increasing market adoption of the HealthTab platform.
• Substantial gross profit increase of 163% demonstrates improved profitability.
• Strategic partnerships with Ascensia Diabetes Care and Rexall Pharmacy Group expand the reach and functionality of HealthTab.
• Expansion into the UK market through collaborations and reseller agreements opens new revenue streams.
• Deployment of Abbotts ID Now enhances HealthTabs capabilities for virus detection, diversifying revenue streams.
• The company has deployed Abbotts ID Now in 212 locations to offer confirmed molecular testing for virus detection in community pharmacies.

Negatives

• The company sustained a net loss of $701,215 for the year.
• The company had a working capital of $244,343 at the end of 2023.

Risks

• The company's limited operating history makes it difficult to evaluate the company's current business and forecast future results.
• The company has no history of pre-tax profit and in the previous four years has had only limited annual revenues for most of the years it has been operating.
• The continued operation of the company will be dependent upon its ability to generate operating revenues and to procure additional financing.
• The company may incur operating losses in future periods due to expenses associated with the roll out of the company's HealthTab network, legal and accounting fees, the maintenance of its public listing and other expenses associated with running an operating business.
• The company may not be successful in generating significant revenues in the future.
• The company may not be successful in generating revenues or raising capital in the future.
• Failure to generate revenues or raise capital could cause the company to cease operations.
• If the company raises further funds through equity issuances, the price of its securities could decrease due to the dilution caused by the sale of additional shares.
• The company could enter into debt obligations and not have the funds to repay these obligations.
• The company could enter into contractual obligations and not have the funds to pay for these obligations.
• The company's information technology systems are susceptible to certain risks, including cyber security breaches, which could adversely impact the company's operations and financial condition.
• As the company is a Canadian company, it may be difficult for U.S. shareholders of the company to effect service on the company or to realize on judgments obtained in the United States.
• The company's future performance is dependent on key personnel.
• There is no assurance that the company will be able to secure the funds needed for future development, and failure to secure such funds could lead to a lack of opportunities for growth.
• Conflicts of interest may exist for directors and officers which may inhibit their ability to act in the best interests of the company and its shareholders leading to possible impairment of the company's ability to achieve its business objectives.
• The value and transferability of the company shares may be adversely impacted by the limited trading market for the company's common shares.
• The value and transferability of the company shares may be adversely impacted by the penny stock rules.
• There is no guarantee that there is a market for the company's common shares in the United States.
• There is a risk of competition from alternative POCT platforms.
• There is a risk that the company's intellectual property infringes upon the rights of other companies, which could lead to reduced revenues, reduced margins due to sanctions against the company, outright withdrawal or prohibition of products or trademarks from the market and significant costs for legal defense against infringement claims.

Future Outlook

Management's focus is on expansion of the business to new markets, locations and jurisdictions; cost control and positive cash flows to ensure sustainable operations of the Company.

Management Comments

• Avricore sees the community pharmacy as underutilized and is committed to supporting their ability to deliver innovation to modern healthcare consumers.
• The Company hopes to improve health outcomes for patients and lower overall healthcare system costs in this way, bridging traditional healthcare platforms with disruptive innovations and eventually achieving the healthcare cost savings government and private payors are seeking to achieve.
• Patients also reported in post surveys that they valued receiving this information from their pharmacists, and those pharmacists indicated that HealthTab enabled an increase in the value of services they were able to provide to their patients.

Industry Context

The report highlights the increasing trend of consumer point-of-care testing and the shift in the pharmacy business model from product-focused to service-focused. The industry is undergoing significant changes due to policy changes and the demand for better data control about health.

Comparison to Industry Standards

• The Point of Care Testing Market is projected to reach $93.21 Billion USD in 2030.
• Nearly 13.6 Million Canadians are expected to be diabetic or prediabetic by 2030, with many undiagnosed.
• Over 1 in 3 Americans, approximately 88 million people, have pre-diabetes.
• Close to 160,000 Canadians 20 years and older are diagnosed with heart disease each year, often its only after a heart attack they are diagnosed.
• There are more than 10,000 pharmacies in Canada, 88,000 pharmacies in the US, nearly 12,000 in the UK.

Related Party Transactions

• The company recorded $6,000 in office rent to a company controlled by the Chief Technology Officer of the Company.
• The company recorded $12,000 in office rent to a company controlled by the Chief Financial Officer of the Company.
• The company recorded $231,393 worth of purchases to a company controlled by Chief Technology Officer of the Company.
• The remuneration of the Company's directors and other members of key management totaled $1,055,748.

Stakeholder Impact

• Shareholders may benefit from the revenue growth and strategic partnerships, but face risks related to potential dilution and the company's ability to secure future financing.
• Customers (patients) will have increased access to point-of-care testing through the HealthTab platform.
• Pharmacies will have opportunities to expand their service offerings and revenue streams through the HealthTab platform.
• Employees and consultants may benefit from the company's growth and expansion, but face risks related to the company's financial stability.

Next Steps

• Continue expanding and deploying HealthTab to meet community pharmacy sector needs.
• Negotiate new POC diagnostic device integrations to expand the HealthTab testing menu.
• Refine HealthTabs de-centralized clinical trials capabilities to monetize de-identified data associated with high-value Real-World Evaluation (RWE).
• Move forward with negotiations across several target demographics, domestically and internationally, with pharmacies, life-science companies, host-locations, and Clinical Research Organizations (CRO).

Key Dates

Keywords

HealthTab, point-of-care testing, pharmacy services, revenue growth, gross profit, Ascensia Diabetes Care, Rexall, UK expansion, diabetes management, cholesterol testing, Abbott Rapid Diagnostics, molecular testing, AVCR, Avricore Health