CareRx Reports Continued Strong Growth for the Second Quarter of 2022

TORONTO, Aug. 15, 2022 /CNW/ - CareRx Corporation ("CareRx" or the "Company") (TSX: CRRX), Canada's leading provider of pharmacy services to seniors living and other congregate care communities, today reported its financial results for the second quarter ended June 30, 2022.

Highlights for the Second Quarter of 2022

(All percentage increases are as compared to the second quarter of 2021)

• Revenue increased 95% to $96.9 million from $49.7 million:
• Growth driven primarily by contribution from the prior year acquisitions of the Long-Term Care Pharmacy Businesses of Rexall Health Solutions and Medical Pharmacies Group Limited (collectively, the "2021 Acquisitions"), the partial contribution of the Long-Term Care Pharmacy Business of Hogan Pharmacy Partners Ltd. (the "Hogan LTC Pharmacy Business") that was acquired on May 30, 2022 as well as organic growth from contracts that were onboarded over the last 12 months.
• Adjusted EBITDA¹ increased 103% to $8.8 million from $4.3 million:
• Growth driven primarily by contributions of the 2021 Acquisitions, as well as from new contracts that were onboarded over the last 12 months.
• Adjusted EBITDA was partially impacted by incremental costs, including overtime, contract labour and recruitment costs, totaling $0.6 million, incurred as a result of challenges in the current labour market, which has resulted in a higher than average number of open pharmacy staff positions.
• Net loss increased by 196% to $25.1 million from $8.5 million:
• Increase in net loss was driven primarily by non-cash adjustments including impairment losses related to goodwill and intangible assets totaling $24.3 million, an increase in share-based compensation and adjustments related to the change in fair value of contingent consideration liability and the change in fair value of investment, which were partially offset by the contribution of the 2021 Acquisitions, the change in the fair value of derivative financial instruments and a decrease in transaction and restructuring costs.
• Completed the acquisition of the Hogan LTC Pharmacy Business on May 30, 2022, adding approximately 800 residents:
• Expected to contribute run-rate annualized revenue and Adjusted EBITDA¹ of approximately $4.0 million and $0.6 million, respectively, prior to any benefits from the integration of the operations of the business and expected future bed growth of Hogan customers.
• Commenced operations at new high-volume fulfillment centre in Oakville, Ontario in April 2022.
• Pricing for certain select generic molecules were reduced effective April 29, 2022, from approximately 18% to 15% of their relevant brand reference prices under the agreement between the pan-Canadian Pharmaceutical Alliance and the Canadian Generic Pharmaceutical Association.
• Appointed Maria Perrella as an independent member of the Company's Board of Directors and Audit Committee Chair.

¹ See "Non-IFRS Measures" below.

"Our second quarter results reflect the continued execution of our growth strategy, with a 95% year-over-year increase in revenue and a 103% increase in Adjusted EBITDA as we completed the acquisition of the Hogan Long-Term Care Pharmacy Business and benefited from the contribution and synergies of our 2021 acquisitions and new contract wins," said David Murphy, President and Chief Executive Officer of CareRx. "Second quarter Adjusted EBITDA was dampened by incremental costs resulting from a challenging labour market. While we are taking measures to mitigate this impact, we expect these challenges to persist for the remainder of the year, given broader trends in the labour market for healthcare workers.  Despite these short-term headwinds, we remain optimistic about our long-term growth prospects as the market leader in a highly fragmented industry with favourable demographic and other trends."  

FINANCIAL RESULTS

Selected Financial Information

	For the three month periods ended June 30,			For the six month periods ended June 30,
(Thousands of Canadian dollars except per share amounts and percentages)	2022	2021	2020	2022	2021	2020
	$	$	$	$	$	$
Revenue	96,879	49,656	39,749	190,055	94,513	70,175
EBITDA^1	(17,868)	(991)	(7,241)	(12,347)	(1,092)	(7,502)
Adjusted EBITDA^1	8,797	4,338	2,825	17,413	8,424	4,870
Per share - Basic	$0.19	$0.14	$0.15	$0.37	$0.29	$0.29
Adjusted EBITDA Margin^1	9.1 %	8.7 %	7.1 %	9.2 %	8.9 %	6.9 %
Net loss	(25,129)	(8,489)	(14,148)	(27,891)	(14,355)	(8,834)
Per share - Basic and Diluted	($0.53)	($0.28)	($0.74)	($0.60)	($0.49)	($0.53)
Cash used in operations	(3,979)	(5,721)	(2,665)	(5,155)	(7,426)	(4,115)
Total Assets	258,433	165,222	151,759	258,433	165,222	151,759
Total Liabilities	198,606	144,655	153,356	198,606	144,655	153,356

¹ See "Non-IFRS Measures" below.

Non-IFRS Measures

This press release includes certain measures which have not been prepared in accordance with IFRS such as "EBITDA", "Adjusted EBITDA", "Adjusted EBITDA Margin" and "Adjusted EBITDA per share". These non-IFRS measures are not recognized under IFRS and, accordingly, shareholders are cautioned that these measures should not be construed as alternatives to net income determined in accordance with IFRS. The non-IFRS measures presented are unlikely to be comparable to similar measures presented by other issuers.

The Company defines "EBITDA" as earnings before depreciation and amortization, finance costs (income), net, and income tax expense (recovery). "Adjusted EBITDA" is defined as EBITDA before transaction and restructuring costs, change in fair value of contingent consideration liability, impairments, change in fair value of derivative financial instruments, change in fair value of investment, gain on disposal of property and equipment and stock-based compensation expense. "Adjusted EBITDA Margin" is defined as Adjusted EBITDA divided by revenue. "Adjusted EBITDA per share" is defined as Adjusted EBITDA divided by the weighted average outstanding shares. The Company believes that Adjusted EBITDA is a meaningful financial metric as it measures cash generated from operations which the Company can use to fund working capital requirements, service interest and principal debt repayments and fund future growth initiatives. The Company's agreements with lenders are also structured with certain financial performance covenants which includes Adjusted EBITDA as a key component of the covenant calculation. EBITDA and Adjusted EBITDA are not recognized measures under IFRS.

Reconciliation of Non-IFRS Measures

	For the three month periods ended June 30,		For the six month periods ended June 30,
	2022	2021	2022	2021
(Thousands of Canadian Dollars except per share amounts)	$	$	$	$
Net loss	(25,129)	(8,489)	(27,891)	(14,355)
Depreciation and amortization	5,127	3,234	9,826	6,326
Finance costs, net	3,575	4,548	7,249	7,969
Income tax recovery	(1,441)	(284)	(1,531)	(1,032)
EBITDA	(17,868)	(991)	(12,347)	(1,092)
Transaction and restructuring costs	1,033	1,822	3,721	2,589
Change in fair value of contingent consideration liability	658	82	754	251
Goodwill and intangible assets impairment	24,330	—	24,330	—
Share-based compensation expense	823	739	2,153	1,492
Change in fair value of derivative financial instruments	(2,980)	2,235	(4,106)	4,840
Change in fair value of investment	2,713	—	2,713	—
Loss on disposal of assets	88	451	195	344
Adjusted EBITDA	8,797	4,338	17,413	8,424
Weighted average number of shares - basic and diluted (in thousands)	47,076	30,366	46,792	29,214
Adjusted EBITDA per share - basic	$0.19	$0.14	$0.37	$0.29

Conference Call

The Company will host a conference call, including a slide presentation, to discuss its second quarter 2022 financial results on Monday, August 15, 2022 at 8:30 a.m. Eastern Time (ET).

Telephone Dial-In Access Information

To access the conference call by telephone, dial 416-764-8659 or 1-888-664-6392. Please connect approximately 15 minutes prior to the beginning of the call to ensure participation. Those participating in the conference call by telephone can view the slide presentation by accessing the online webcast (see instructions below) and choosing the Non-Streaming Audio option.

Webcast Access Information

A live webcast of the conference call, including the slide presentation, will be available on the Events and Presentations page of the Investors section of the Company's website (https://carerx.ca/presentations/). Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. To view the webcast presentation with slides, please choose either the Real Streaming Audio or Windows Streaming Audio option.

The webcast with slide presentation will be archived for 90 days on the Events and Presentations page of the Investors section of the Company's website (https://carerx.ca/presentations/).

About CareRx Corporation

CareRx is Canada's leading provider of pharmacy services to seniors living communities. We serve over 97,000 residents in over 1,600 seniors and other congregate care communities (long-term care homes, retirement homes, assisted living facilities, and group homes). We are a national organization with a large network of pharmacy fulfillment centres strategically located across the country. This allows us to deliver medications in a timely and cost-effective manner and quickly respond to routine changes in medication management. We use best-in-class technology that automates the preparation and verification of multi-dose compliance packaging of medication, providing the highest levels of safety and adherence for individuals with complex medication regimes. We take an active role in working with our home operator partners to promote resident health, staff education, and medication system quality and efficiency.

Forward-Looking Statements

This press release contains statements that may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. These forward-looking statements include, among others, statements regarding the Company's business strategy, plans and other expectations, beliefs, goals, objectives, information and statements about possible future events. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.

Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements. Factors that could cause such differences include the Company's exposure to and reliance on government regulation and funding, the Company's liquidity and capital requirements, exposure to epidemic or pandemic outbreak, the highly competitive nature of the Company's industry, reliance on contracts with key customers and other risk factors described from time to time in the reports and disclosure documents filed by the Company with Canadian securities regulatory agencies and commissions. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. As a result of the foregoing and other factors, no assurance can be given as to any such future results, levels of activity or achievements and neither the Company nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. The factors underlying current expectations are dynamic and subject to change.

SOURCE CareRx Corporation

please contact: David Murphy, President and Chief Executive Officer, CareRx Corporation, 416-927-8400; Neil Weber, Investor Relations, LodeRock Advisors, 647-222-0574, [email protected]