SYDNEY: Careteq Limited (ASX: CTQ) announced the divestment of its Sofihub business for $0.58 million, in cash plus transferring staff entitlements to Directed Technologies Group, with settlement expected to be in the early part of August 2024.

The Board has strategically decided to divest the Sofihub business to accelerate its core strategic plan to achieve the company’s target of 15,000 subscribers for its assistive living technology suite.

This strategic divestment is projected to improve annualised net operating cash flow by $0.8 million and accelerate the Company’s pathway to profitability in the core medication management and clinical governance services.

Current Director and Chief Operating Officer, Alex Boyd, will be transferring with the Sofihub business as part of the sale. The board would like to thank Alex and the Sofihub team for their loyalty, devotion and contribution during their time with the company, and we wish them all the very best on their new and exciting journey with Directed. Directed is privately owned connected technology leader in smart home, consumer and mobile electronics, and connected vehicle solutions; and the Sofihub business and team will find a great future ahead in Directed’s connected services channels.

Careteq will now streamline its focus on medication management and clinical governance in the health, aged, and home care sectors.

The acquisition of HMR Referrals in December 2023 enables Careteq to drive growth in Home Medication Reviews (HMR) and Residential Medication Management Reviews (RMMR), where EHS is a market leader in medication management.

The immediate cash inflow of $0.58 million from the sale will bolster Careteq’s cash reserves as well as the reduction of future outflows by $0.8 million.

Additionally, the company has recently undertaken a cost optimisation initiative, reducing its annualised cost base by a further $0.83 million heading into FY25.

Mark Simari, Executive Chairman of Careteq, commented, “Whilst the Sofihub business has seen encouraging subscriber and ARR growth over the last 18 months, this divestment is strategically important. It accelerates our path towards profitability and provides the team with a laser focus on medication management and clinical governance where we are a market leader in residential medication management.”