LifeWorks : 2021 2nd Quarter - MD&A

Management's discussion and analysis

Three and six months ended June 30, 2021 and 2020

Preface

This Management's discussion and analysis ("MD&A") covers the three and six months ended June 30, 2021 and should be read in conjunction with the accompanying unaudited condensed consolidated interim financial statements ("interim financial statements") of LifeWorks1 (the "Company," "we," "us," and "our") and notes thereto for the three and six months ended June 30, 2021 and 2020, and the MD&A and audited consolidated financial statements and notes thereto for the year ended December 31, 2020 and 2019 ("annual financial statements").

Unless otherwise noted, all financial information presented has been rounded to the nearest thousand, and all financial information is presented in Canadian dollars, in accordance with International Financial Reporting Standards ("IFRS"), unless otherwise noted. Certain totals, subtotals and percentages may not reconcile due to rounding.

Unless otherwise noted, all comparative results for Q2 2021 (three and six months ended June 30, 2021) are compared against Q2 2020 (three and six months ended June 30, 2020).

To assist investors in assessing the Company's financial performance, this MD&A makes reference to certain key performance indicators ("KPIs") and non-IFRS metrics which Management believes are useful in assessing the performance of the Company. Readers are cautioned that these measures do not have any standard meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. KPIs and non-IFRS metrics are described and reconciled to IFRS metrics in the "Key performance indicators and non-IFRS financial metrics" section of this MD&A.

Forward-looking information

This MD&A contains "forward-looking information" within the meaning of applicable securities laws, such as statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Specific statements used in this MD&A that may contain "forward-looking information" include but are not limited to statements with respect to: the discussion of our business and operating segments, focuses and strategies; our expectations of future performance for our various operating segments and our consolidated financial results; the conversion of long-term incentive plan units into common shares; considerations in determining when to declare dividends and the amount of such dividends; the Company's management and monitoring of commitments and contractual obligations to ensure that they can be met with funding provided by operations and capital resources available; the ability to fund commitments and contractual obligations with funding provided by operations and capital resources available; future lease and credit facility commitments; and future consideration related to acquisitions. They are based on certain factors and assumptions, including expected growth, results of operations, business prospects and opportunities. The use of words such as "may," "will," "expect," "believe," "could," "would," "intend," or other words of similar effect may indicate "forward-looking information." Forward-looking information is not a guarantee of future performance and is subject to numerous risks and uncertainties, including those described in our publicly filed documents (available on SEDAR at sedar.com) and in this MD&A under the heading "Risks and Uncertainties".

Those risks and uncertainties include, among other things, the ability to maintain profitability and manage growth, competition, reliance on information systems and technology, reputational risk, satisfactory performance of client obligations, general economic conditions, and pandemics, natural disasters or other unanticipated events (including the novel coronavirus and variants thereof ("COVID-19") pandemic), dependence on key clients and key channel partners, risk of future legal proceedings, protection of intellection property, foreign exchange risk, insurance, indebtedness and interest rates, credit risk, dividends, market price and dilution of common shares. Many of these risks and uncertainties can affect the Company's actual results and could cause the Company's actual results to differ materially from those expressed or implied in any forward-looking information or statement made by the Company or on the Company's behalf. Given these risks and uncertainties, investors should not place undue reliance on forward-looking information as a prediction of actual results.

All forward-looking information in this MD&A is qualified by these cautionary statements. These statements are made as of the date of this MD&A and, except as required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise. Additionally, the Company undertakes no obligation to comment on analyses, expectations or statements made by third parties in respect of the Company, its financial or operating results or its securities.

1 LifeWorks Inc. ("LifeWorks") was incorporated pursuant to the laws of the Province of Ontario on October 19, 2010 under the name Morneau Shepell Inc. and completed a name change to LifeWorks Inc. on May 17, 2021.

LifeWorks Inc. | Q2, 2021

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Management's discussion and analysis

Business overview

LifeWorks is a world leader in providing digital and in-person solutions that support the total wellbeing of individuals - mental, financial, social and physical. We deliver a personalized continuum of care that helps our clients improve the lives of their people and by doing so, improve their business. It's the idea that by improving a person's life, we improve how they perform at work.

Client organizations that use our services in Canada, the United States and around the globe

25 thousand

Number of lives LifeWorks services cover

37 million

The Company's Purpose, Vision and Values are the pillars by which the Company operates.

Our purpose

Improving lives.

Improving business.

By helping our clients improve the wellbeing of their people, we help them improve workforce engagement and productivity, thereby improving the performance of our clients' organizations.

Our vision

To optimize the health and productivity of people - the heart of every successful organization.

Our values

We value long-term relationships

We treat others the way we want to be treated

We are innovative and entrepreneurial

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Management's discussion and analysis

About LifeWorks

Our approach spans services in employee and family assistance, health and wellness, recognition, pension and benefits administration, retirement consulting, and actuarial and investment services.

People with access to mobile integrated platform (millions)

Total number of lives	Number of lives
covered by EAP -	covered by enhanced
Direct	modules
14.8 million	1.2 million

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1

0

Dec 31	Mar 31	Jun 30	Sep 30	Dec 31	Mar 31	Jun 30	Sep 30	Dec 31	Mar 31	Jun 30
2018	2019	2019	2019	2019	2020	2020	2020	2020	2021	2021

• Total number of lives with access to the platform
  5.9 million

LifeWorks Inc. | Q2, 2021

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Management's discussion and analysis

LifeWorks delivers a unified continuum of care that supports the whole person. We provide personalized solutions that feature diverse levels of support across the four pillars of total wellbeing:

• Mental - Helping individuals realize their full potential, cope with daily stressors and be productive.
• Financial - Knowledge, behaviour, strategies and insights that support financial security.
• Social - Healthy social relationships that give people a sense of connection and belonging.
• Physical - Lifestyle choices that support current and long-term health and physical ability.

We combine technology and deep expertise to deliver results. Our solutions combine our global depth of in- person expertise and technologies that make complex solutions simple, accessible and intuitive for people and HR leaders. When people need support, we can intervene proactively; when someone is at risk, we can provide help with recovery and avert problems in the first place.

Every individual has different wellbeing needs and expectations. We always start where people are and work toward their goals by understanding their needs, then providing options for the support they need. We provide a guided journey for positive total wellbeing, all toward maximizing organizational productivity.

We empower people by supporting their wellbeing. We're there for people at the most critical moments in their lives: when a child arrives, when buying a house, on starting a pension plan, when a partner gets ill, during a crisis, and at retirement. We are there when it matters.

LifeWorks helps deliver results in the workplace in areas such as engagement, talent retention and productivity. We help to manage health care, absence and disability costs. We help organizations adapt to a changing and challenging world.

As a global enterprise, we have the reach to support organizations around the world. We take equal pride in having the agility of a start-up, with game-changing solutions for today's digitally connected organizations.

Our teams have capabilities for delivering quality and innovation in employee and family assistance, health and wellness, recognition, pension and benefits administration, retirement consulting, actuarial and investment services.

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Management's discussion and analysis

2021 second quarter summary

Key performance indicators do not have standardized meanings under IFRS and, therefore, may not be comparable to similar terms used by other companies. Constant currency organic growth, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted EBITDA per share (basic) are all considered non-IFRS measures that are not standardized measures under the financial reporting framework used to prepare LifeWorks' financial statements and may not be comparable to similar financial measures reported by other companies. Refer to "Key performance indicators and non-IFRS financial metrics" for further details.

(In thousands of Canadian dollars,
except where noted)	Q2, 2021	Q2, 2020	Variance	YTD, 2021	YTD, 2020	Variance
Revenue	$ 257,734	$ 246,175	4.7%	$ 514,873	$ 489,223	5.2%
Tech enabled recurring revenue(1)	92,446	86,183	7.3%	185,678	166,886	11.3%
Organic growth(1)	3.2%	1.5%		5.2%	1.6%
Constant currency organic growth(1)	7.8%	(0.1%)		8.7%	0.5%
(Loss) profit for the period	(40,807)	8,258	(594.2%)	(30,634)	47,163	(165.0%)
(Loss) earnings per share (basic)	(0.58)	0.12	(0.70)	(0.44)	0.68	(1.12)
Adjusted EBITDA(1)	49,520	52,075	(4.9%)	102,285	99,399	2.9%
Adjusted EBITDA margin(1)	19.2%	21.2%	(2.0%)	19.9%	20.3%	(0.4%)
Adjusted EBITDA per share (basic)(1)	0.71	0.75	(0.04)	1.46	1.43	0.03

1. These items are non-IFRS metrics. They are key performance indicators and should not be considered substitutes or alternatives for IFRS metrics. Refer to "Key performance indicators and non-IFRS financial metrics" for further details.

Second quarter and year-to-date highlights:

Revenue	Constant currency	Tech enabled recurring	Adjusted EBITDA
growth	organic growth1	revenue growth1	margin1

4.7%	7.8%	7.3%	19.2%
Q2, 2021		Q2, 2021		Q2, 2021		Q2, 2021
5.2% YTD		8.7% YTD		11.3% YTD		19.9% YTD

• Constant currency organic growth was 7.8% for the quarter and 8.7% year-to-date. Overall, revenue growth of 4.7% for the quarter and 5.2% year-to-date compared to the same periods in the prior year was primarily due to strong organic growth, partially offset by unfavourable foreign exchange movement. A decrease in revenue due to the divestiture of our benefits consulting business in the first quarter of 2020 negatively impacted the year-to-date revenue growth.
• Year-to-datetech enabled recurring revenue growth of 11.3% as compared to the same period in the prior year was driven by Integrated Health Solutions retainer and platform revenue, internet-based cognitive behavioural therapy ("iCBT") mandates and Health and Welfare offerings.

1 These items are non-IFRS metrics. They are key performance indicators and should not be considered substitutes or alternatives for IFRS metrics. Refer to "Key performance indicators and non-IFRS financial metrics" for further details.

LifeWorks Inc. | Q2, 2021

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