20-F: Avricore Health Reports Strong Revenue Growth Amid Strategic Shift from Shoppers Drug Mart to UK and Rexall Expansion

Avricore Health Inc. reported a 37% increase in annual revenue for fiscal year 2024, reaching $4.78 million, while navigating a significant strategic pivot away from its major Canadian pharmacy partner, Shoppers Drug Mart, towards new growth opportunities in the UK and with Rexall.

Summary

• Avricore Health Inc. generated $4,785,711 in revenue for the year ended December 31, 2024, a 37% increase year-over-year from $3,485,147 in 2023.
• Gross profit increased by 56% to $1,880,287 in 2024, up from $1,203,396 in 2023.
• The company concluded its operations with Shoppers Drug Mart and affiliated Loblaws locations on March 31, 2025, where 693 HealthTab systems were previously operating.
• Avricore is redeploying assets to support expansion in the U.K. market and with Rexall in Canada.
• 14 HealthTab systems were operating in Rexall stores as of May 31, 2025, with plans to deploy to a minimum of 20 additional locations in Alberta and Ontario.
• The company launched its first UK deployment of the HealthTab platform in North East London in November 2024.
• An impairment loss of $772,174 was recognized on equipment due to the non-renewal of the major customer agreement (Shoppers Drug Mart).
• The company reported a net loss of $668,977 for the year ended December 31, 2024, compared to a loss of $701,215 in 2023.
• Working capital improved significantly to $1,252,139 at December 31, 2024, from $244,343 at December 31, 2023.
• Management believes current cash on hand, expected future cash inflows, and cash savings from device redeployment will be sufficient to finance working capital for the next 12 to 18 months.
• Hector Bremner ceased to be CEO and Director on June 4, 2025, and Rodger Seccombe was appointed CEO on the same date.
• The company repaid a $40,000 Canada Emergency Business Account loan in January 2024, receiving $10,000 in loan forgiveness.

Sentiment

Score: 4

Explanation: The sentiment is mixed to slightly negative. While there's strong revenue growth and a clear strategic pivot to new markets (UK, Rexall), the loss of a major customer (97% of revenue) and the associated significant impairment loss ($772,174) are substantial negative events. The company remains unprofitable, and future success hinges heavily on the successful execution of new market entries, which carry inherent risks. The positive growth is overshadowed by the immediate impact of losing the primary revenue source and the financial write-down.

Positives

• Revenue increased by 37% year-over-year to $4,785,711 in 2024, demonstrating strong top-line growth.
• Gross profit increased by 56% to $1,880,287 in 2024, indicating improved profitability on sales.
• Working capital significantly improved to $1,252,139 at December 31, 2024, from $244,343 in 2023, enhancing short-term liquidity.
• The company has secured new partnerships with Rexall in Canada, with 14 systems deployed and plans for at least 20 more locations.
• Strategic expansion into the UK market has commenced with the first HealthTab platform launched in North East London in November 2024, aligning with the NHS's Pharmacy First strategy and significant government funding commitments.
• Redeployment of existing devices from former Shoppers Drug Mart locations is expected to reduce upfront capital requirements for new deployments for the next 12 to 18 months.
• The company repaid its $40,000 Canada Emergency Business Account loan, receiving $10,000 in loan forgiveness, improving its debt position.
• HealthTab is part of a collaborative study with Barts Heart Centre, UCL Partners, and HEART UK to evaluate pharmacist-led cholesterol testing, positioning it for future NHS funding rounds.

Negatives

• The company concluded its operations with Shoppers Drug Mart and affiliated Loblaws locations on March 31, 2025, losing a major customer that accounted for approximately 97% of trade receivables in 2024.
• An impairment loss of $772,174 was recognized on equipment due to the non-renewal of the major customer agreement, reflecting a significant asset write-down.
• The company continues to incur operating losses, with a net loss of $668,977 in 2024, and has an accumulated deficit of $32,404,537, indicating a lack of sustained profitability.
• The company's limited operating history and reliance on new market penetration make future sales difficult to predict.
• The company has no present intention of paying cash dividends in the foreseeable future.

Risks

• The company's limited operating history makes it difficult to evaluate its current business and forecast future results.
• Failure to generate sufficient revenues and cash flow in the future could cause the company to go out of business.
• The company may incur operating losses in future periods due to ongoing expenses associated with the HealthTab network rollout, legal and accounting fees, and public listing maintenance.
• If the company raises further funds through equity issuances, the price of its securities could decrease due to dilution.
• Having an unlimited number of authorized but unissued common shares could lead to significant dilution of current shareholders without shareholder approval.
• The company could enter into debt obligations and not have the funds to repay them, potentially restricting operations or leading to legal action.
• The company's information technology systems are susceptible to risks, including cybersecurity breaches, which could adversely impact operations and financial condition.
• It may be difficult for U.S. shareholders to effect service on the Canadian company or to realize on judgments obtained in the United States.
• The company's future performance is dependent on key personnel, and the loss of executives or Board members could have a material adverse effect.
• There is no assurance that key personnel can be replaced with similar qualifications within a reasonable period of time.
• There is no assurance that the company will be able to secure the funds needed for future development, which could lead to a lack of growth opportunities and impair the ability to roll out the HealthTab network.
• Conflicts of interest may exist for Directors and Officers who also serve other companies, potentially inhibiting their ability to act in the best interests of Avricore Health Inc.
• Management's collective ownership of approximately 10% of common shares could significantly influence matters requiring shareholder approval, potentially leading to entrenchment.
• The value and transferability of the company's shares may be adversely impacted by the limited trading market on the TSX Venture Exchange and OTCQB.
• The company's common shares may be subject to 'penny stock rules' in the U.S., which could adversely affect market liquidity.
• There is a risk of competition from alternative Point-of-Care Testing (POCT) platforms, including from better-funded or entrenched competitors.
• There is a risk that the company's intellectual property infringes upon the rights of other companies, potentially leading to reduced revenues, sanctions, product withdrawal, or significant legal costs.

Future Outlook

Avricore Health is strategically shifting its focus to expand its HealthTab footprint in the UK and with Rexall in Canada, following the conclusion of its Shoppers Drug Mart operations. Management anticipates that redeploying existing devices will reduce the need for new device investment for the next 12 to 18 months, and current cash, along with expected future cash inflows, will be sufficient to finance working capital for the same period. The company expects momentum to grow throughout 2025, particularly as NHS plans for expanding point-of-care testing in community pharmacy become clearer, aligning with the scheduled 2026 mandate for pharmacists to prescribe for chronic conditions.

Management Comments

• "Managements 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."
• "Because the Company expects devices to be redeployed to new locations in Canada and the UK, management estimates that the Company will not require investment in new devices for the next 12 to 18 months."
• "It also expects cash-on-hand, expected future cash inflows from revenues, and cash savings from redeployment of devices estimated to be sufficient to finance working capital for the next 12 to 18 months."
• "The Company remains confident in its growth trajectory and encouraged by recent NHS pharmacy budget commitments, which reaffirm the sectors strategic role in primary care and chronic disease management."

Industry Context

The document highlights a significant industry trend towards consumer point-of-care testing and the increasing role of community pharmacies in healthcare delivery. Pharmacies are seeking new revenue streams and value-added services due to sector disruptions and regulatory changes. The connected medical device market is rapidly growing, with projections of reaching $133 billion USD by 2029, driven by the increasing importance of Electronic Health Records (EHRs) and consumer demand for direct, lower-cost access to health data. The company positions itself to capitalize on the demand for Real Time Real World Data (RTRWD) for clinical research, distinguishing itself from traditional Real World Data (RWD) sources. Policy changes, such as the NHS's Pharmacy First program in the UK and initiatives in Ontario, are expanding the scope of pharmacy services, including chronic disease prevention and management, creating a favorable environment for HealthTab's expansion.

Comparison to Industry Standards

• The document states that the Point of Care Testing Market is expected to reach $93.21 Billion USD in 2030, indicating a large and growing market for HealthTab's services.
• It cites that nearly 13.6 Million Canadians are expected to be diabetic or prediabetic by 2030, and over 1 in 3 Americans (approximately 88 million people) have pre-diabetes, highlighting a significant target population for HealthTab's screening capabilities.
• The report notes that close to 160,000 Canadians 20 years and older are diagnosed with heart disease each year, often only after a heart attack, underscoring the need for preventative screening offered by HealthTab.
• The UK government's commitment of £645 million (approx. CAD $1.2 billion) to its Pharmacy First program in 2024, followed by £617 million (approx. CAD $1.144 billion) in 2025, demonstrates substantial investment in pharmacy-led services, which HealthTab aims to integrate with.
• A recent NHS Confederation report found community-based cardiovascular screening delivers a return of up to £7.52 for every £1 invested and a 9 to 1 ROI for diabetes, suggesting strong economic benefits for the services HealthTab provides.
• The document mentions that more than half of the UK's 12,000 pharmacies are already conducting 250,000 blood pressure screenings monthly, indicating an established infrastructure and demand for point-of-care services that HealthTab can leverage.
• The Deloitte Center for Health Solutions survey found that 94% of pharmaceutical companies believe using Real World Evidence (RWE) in R&D will become important or very important by 2022, and all surveyed companies have entered strategic partnerships to access new sources of RWD, positioning Avricore's RTRWD offering favorably.

Management Changes

Corporate Governance

Related Party Transactions

• The company paid $15,100 in office rent to a company controlled by the Chief Technology Officer (Rodger Seccombe) in 2024.
• The company paid $12,000 in office rent to a company controlled by the Chief Financial Officer (Kiki Smith) in 2024.
• The company paid $317,978 for analyzer quality control services to a company controlled by the Chief Technology Officer (Rodger Seccombe) in 2024.
• Related party transactions for remuneration of directors and key management (President, CEO, CFO) included $216,000 in consulting fees, $216,000 in management fees, $128,400 in professional fees, and $433,848 in share-based compensation for 2024.

Stakeholder Impact

• **Shareholders:** Face continued operating losses and dilution risk from potential future equity issuances. The significant impairment loss and loss of a major customer could negatively impact share price. However, strategic expansion into the UK and new Canadian partnerships offer potential for future growth and value creation.
• **Employees:** The company employs 1 employee directly and engages key management through consulting contracts. The strategic shift may impact operational roles and resource allocation.
• **Customers (Pharmacies):** HealthTab offers a new revenue stream and value-added service, supporting business growth beyond traditional dispensing. The transition from Shoppers Drug Mart means a change in service provider for those locations, while Rexall and UK pharmacies gain access to the HealthTab platform.
• **Patients:** Benefit from quicker access to lab-accurate health data (up to 27 biomarkers in 12 minutes) at community pharmacies, enabling better health understanding, tracking, and screening for risks.
• **Creditors:** The company repaid its CEBA loan, improving its debt profile. Management believes current liquidity is sufficient for 12-18 months, reducing immediate creditor risk, but future financing needs remain.
• **Regulatory Authorities:** The company adheres to SEC and TSX Venture Exchange filing requirements and is navigating regulatory environments in Canada and the UK for its services.

Next Steps

• Deploy a minimum of 20 additional HealthTab systems in Rexall stores across Alberta and Ontario.
• Collaborate with Rexall teams to assess deployment workflow, refine processes, and identify further deployment opportunities.
• Expand HealthTab into other major population centers with diverse demographics in the UK (Phase I).
• Work with NHS stakeholders to support broader adoption of HealthTab, including potential integration of cholesterol testing within the Pharmacy First protocol nationwide (Phase II).
• Continue pursuing new partnerships and grant opportunities in the UK during the pre-commissioning stage.
• Ensure HealthTab is well-positioned to capitalize on the significant opportunity that commissioning will represent in the UK.
• Continue technical discussions on the integration of HealthTab into electronic medical records and pharmacy management systems with a Canadian market leader.

Key Dates

Recommendation

Keywords

Point-of-Care Testing, HealthTab, Pharmacy Services, Healthcare Technology, SEC Filing, Annual Report, Financial Performance, Strategic Expansion, UK Healthcare Market, Canadian Pharmacies, Real-World Data, Digital Health, Medical Devices, Corporate Governance, Risk Management, TSX Venture Exchange, OTCQB