CRRX CareRX Corporation

TORONTO, May 11, 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 first quarter ended March 31, 2022.

Highlights for the First Quarter of 2022

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

• Revenue increased 108% to $93.2 million from $44.9 million:
• • Growth driven primarily by contribution from the prior year acquisitions of SmartMeds, Rexall LTC Pharmacy and Medical Pharmacies Group Limited LTC Pharmacy ("MPGL LTC Pharmacy", and collectively, the "Acquired Businesses") as well as organic growth from contracts that were onboarded throughout 2021.
• Adjusted EBITDA¹ increased 111% to $8.6 million from $4.1 million:
• • Growth driven primarily by contributions of the Acquired Businesses, as well as from new contracts that were onboarded throughout 2021.
• Net loss decreased by 53% to $2.8 million from $5.9 million:
• • Decrease in net loss was driven primarily by the contribution of the Acquired Businesses and non-cash adjustments related to the change in fair value of derivative financial instruments partially offset by an increase in transaction and restructuring costs related to the transition and integration of the MPGL LTC Pharmacy Business and an increase in share-based compensation.
• Continued integration of MPGL LTC Pharmacy Business as planned:
• • Total cumulative cost savings synergies realized by the end of the first quarter of 2022 were approximately $0.5 million, or $2.0 million annualized, with total annual cost savings synergies of approximately $5.0 million expected to be realized upon the completion of the integration;
  • One pharmacy site was consolidated during the first quarter of 2022 with three additional consolidations expected to be completed in 2022 and the last remaining site consolidation now expected in the first half of 2023; and
  • Integration projects otherwise expected to be substantially complete by the end of the third quarter of 2022.
• Secured long-term extensions with three of the Company's four largest customers, including its two largest customers, representing approximately 18,000 total beds serviced, for an average of 5.5 years from the end of 2021.
• Expected to offboard approximately 5,800 beds throughout the second half of 2022 as a result of a large customer awarding a request for proposal to another pharmacy services provider.
• Entered into a definitive agreement to acquire the Long-Term Care Pharmacy Business ("Hogan LTC Pharmacy") of Hogan Pharmacy Partners Ltd. ("Hogan"):
• • Currently serving approximately 725 residents in long-term care and retirement homes in Ontario and expected to contribute run-rate annualized revenue and Adjusted EBITDA¹ of approximately $4.0 million and $0.6 million, respectively, not including potential cost savings synergies; and
  • The Company will sign a new seven-year contract with Hogan's largest customer, a regional seniors living operator, representing approximately 85% of the beds serviced by Hogan. Hogan's customers are expected to increase their beds serviced by over 1,200 beds by the fourth anniversary of closing based on new license allocations and other anticipated growth plans, which is expected to increase the total beds serviced to approximately 2,000.
• Ontario Ministry of Health announced that it postponed previously scheduled changes to long-term care pharmacy funding for a further year.
• Expanded scope of medical supplies business under new brand, Revicare™, offering significantly increased assortment of medical supplies.

Highlights Subsequent to the End of the First Quarter of 2022

• Commenced operations in April at new innovative high-volume fulfillment centre in Oakville, Ontario
• • New fulfillment centre will allow for enhanced operating margins through higher prescription volumes without additional labour costs, while improving safety and reducing medication packaging errors and waste; and
  • Will be the first pharmacy in Canada to use BD Rowa^TM Dose medication packaging system from Becton, Dickinson and Company which will optimize the high-volume dispensing of medications at speeds that exceed conventional packaging solutions currently utilized in Canada.
• Further pricing adjustments under the agreement between the pan-Canadian Pharmaceutical Alliance (the "pCPA") and the Canadian Generic Pharmaceutical Association (the "CGPA"), with the gross impact of the announced pricing changes expected to be a reduction to Adjusted EBITDA¹ of approximately $0.5 million for 2022.
• Appointed Maria Perrella as an independent member of the Company's Board of Directors.

^{1 See "Non-IFRS Measures" below.}

"The first quarter of 2022 once again saw strong year-over-year revenue and Adjusted EBITDA growth, driven by both acquisitions and organic growth, and by continued outstanding execution by our team," said David Murphy, President and Chief Executive Officer of CareRx. "We delivered a solid start to 2022, despite average bed count for the quarter being slightly dampened by the impact of the Omicron variant. Importantly, during the quarter we continued to execute in areas that will support our growth in the near- and long-terms. The integration of MPGL continues to steadily progress and is on track to be substantially completed by the third quarter of this year. We also announced our fifth acquisition in the past two years, entering into a definitive agreement to acquire Hogan Long-Term Care Pharmacy to continue to expand our industry leading technology and service offering."

FINANCIAL RESULTS

Selected Financial Information

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 on both a basic and diluted basis. 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

Conference Call

The Company will host a conference call, including a slide presentation, to discuss its first quarter 2022 financial results on Thursday, May 12, 2022 at 8:30 a.m. Eastern Time (ET).

Telephone Dial-In Access Information

To access the conference call by telephone, dial 647-484-0475 or 1-888-220-8451. 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 95,000 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