Pathway Provides Update on Proposed Arrangement and Short-Term Forbearance on Repayment of Certain Secured Indebtedness

TORONTO, July 12, 2023 /CNW/ - Pathway Health Corp. (TSXV: PHC) (Frankfurt: KL1) ("Pathway" or the "Company") wishes to announce that the Alberta Court of King's Bench has denied an originating application seeking a final order to approve the previously announced arrangement (the "Final Order") (see press releases dated December 22, 2022, March 1, 2023, March 31, 2023, April 27, 2023 and May 16, 2023) by way of plan of arrangement pursuant to the Business Corporations Act (Alberta) (the "ABCA") among Pathway, The Newly Institute Inc. ("Newly") and HEAL Global Holdings Corp. ("HEAL") (the "Transaction"). As a result, the Transaction is not expected to proceed and the Company, Newly and HEAL are in discussions regarding termination of the Transaction and repayment of the outstanding indebtedness owed to HEAL by Pathway and Newly.

Ken Yoon Chief Executive Officer of Pathway, stated: "The Transaction, whereby Pathway would acquire Newly and HEAL, in addition to having the full support of all of Pathway's secured creditors, was approved by 93.4% of disinterested Pathway shareholders at an annual and special meeting held on May 30, 2023, 100% of the HEAL shareholders,100% of the Newly shareholders who voted at the Newly meeting, and yet did not receive Alberta Court of King's Bench approval and therefore, will not proceed." Mr. Yoon continued, "While we are disappointed with the Court's decision, management will continue to work closely with stakeholders, employees and partners to assess all available options and determine the most suitable course of action in light of this recent development."

In light of the forgoing, HEAL has agreed to a short-term forbearance arrangement with respect to the previously announced a $1.25 million secured convertible promissory note (the "Note") (see press release dated February 3, 2023) pursuant to which HEAL has agreed to temporarily refrain from enforcing its default-related rights and remedies under the Note until July 27, 2023. Prior to the forbearance, the Note was to mature on the earlier of June 30, 2023 and the date on which the definitive agreement or letter of intent, as applicable, in respect of the Transaction terminated or expired.

As a direct result of the denial of the application for the Final Order by the Alberta Court of King's Bench, Pathway's management and Board of Directors intend to immediately start a process to evaluate strategic alternatives, including shutting down of some of its clinic businesses to address the termination of the Transaction and its financial condition with a view to the best interests of the Company and its stakeholders, including its creditors and other partners. In particular, the Company will explore the possibility of expanding its retail pharmacy platforms and existing retail pharmacy partnerships within Canada, potentially with the support of its senior secured lender, Avonlea-Drewry Holdings Inc. Other alternatives could include, among other things, the winding down, shut down or liquidation of all or part of the Company, sale of part or all of the assets of the Company, a sale of the Company, a merger or other business combination with another party, or other strategic transaction. The Company has not set a timetable for this process, nor has it made any decisions related to any strategic alternatives at this time. There can be no assurance that the exploration of strategic alternatives will result in a transaction or permit the Company to continue operations. The Company does not intend to provide announcements or updates unless or until it determines that further disclosure is appropriate or necessary.

Forward-Looking Statements

This news release contains forward-looking statements, which relate to future events or future performance and reflect management's current expectations and assumptions, potential outcomes of the strategic review process; the existence of future business opportunities and the level of interest in the Company's assets; timeline of the completing the review process, obtaining new capital to support the review process and maintaining current operations; projections on the ability of the company to maintain current operations, the Company's ability to realize additional value from its current assets, and the impact of the decision of the Company's management, employees and other stakeholders. Such forward-looking statements reflect management's current beliefs and are based on assumptions made by and information currently available to the Company. Investors are cautioned that these forward looking statements are neither promises nor guarantees, and are subject to risks and uncertainties that may cause future results to differ materially from those expected. These forward-looking statements are made as of the date hereof and, except as required under applicable securities legislation, the Company does not assume any obligation to update or revise them to reflect new events or circumstances except as required by applicable law. All of the forward-looking statements made in this press release are qualified by these cautionary statements and by those made in our filings with SEDAR in Canada (available at www.sedar.com).

Neither the Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this Press Release.

SOURCE Pathway Health Corp.

Pathway Health Corp., Aura Balboa, CFO, Email: [email protected], Phone: [phone]