CareRx Reports 25% Year-Over-Year Growth in Revenue and 54% Year-Over-Year Growth in Adjusted EBITDA for Second Quarter of 2021

TORONTO, Aug. 9, 2021 /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, 2021.

Highlights for the Second Quarter of 2021
(All percentage increases are as compared to the second quarter of 2020)

• Revenue from continuing operations increased 25% to $49.7 million from $39.7 million:
• Driven primarily by the acquisition of the Remedy'sRx Specialty Pharmacy business ("Remedy's") partway through the second quarter of 2020 and the acquisition of SmartMeds Pharmacy ("SmartMeds") on April 1, 2021;
• Partially offset by a temporary COVID-19-related reduction in the average number of beds serviced during the quarter, which has improved since the peak impact in January, but has not yet returned to pre-COVID-19 levels;
• Adjusted EBITDA¹ from continuing operations increased 54% to $4.3 million from $2.8 million:
• Driven by the acquisition of Remedy's, including the quarterly contribution of over $3.0 million in annualized cost saving synergies, as well as the acquisition of SmartMeds;
• Entered a definitive agreement to acquire the Long-Term Care Pharmacy Division of Medical Pharmacies Group Limited (the "MPGL Acquisition"), which is expected to close by mid-September 2021:
• Comprised of 18 facilities and approximately 36,000 beds;
• Expected to contribute run-rate annualized revenue and Adjusted EBITDA of approximately $150.0 million and $10.0 to 12.0 million, respectively, and minimum additional cost savings synergies of $5.0 million;
• Purchase price to be financed from $63.3 million of gross proceeds raised through brokered and non-brokered private placements of subscription receipts that were completed on May 19, 2021 and through incremental debt of $39.0 million with the Company's lenders;
• Completed the acquisition of the Long-Term Care Pharmacy Services business of Rexall Health Solutions ("Rexall LTC Pharmacy Business") on June 21, 2021:
• Adds approximately 4,000 beds across Ontario and Northern Alberta and expected to contribute run-rate annualized revenue of approximately $14.0 million and nominal Adjusted EBITDA, prior to any integration synergies; and
• Completed the acquisition of SmartMeds:
• Adds over 2,400 beds in Ontario and expected to contribute annualized run-rate revenue of $13.0 million and Adjusted EBITDA of $1.5 million, prior to any integration synergies.

"Our second quarter results reflect the continued execution of our growth strategy, with a 25% year-over-year increase in revenue and 54% increase in Adjusted EBITDA as we realized the contribution and synergies from the Remedy's and SmartMeds acquisitions," said David Murphy, President and Chief Executive Officer of CareRx. "We are on track to close the MPGL Acquisition by mid-September, and we are confident that the integration and resulting synergies will enable us to realize further efficiencies in our business, expand our Adjusted EBITDA margin, and create competitive advantages that will position us for continued growth and market share gains."

FINANCIAL RESULTS

Selected Financial Information

(Thousands of Canadian dollars except per share amounts and percentages)	For the three month periods ended June 30,			For the six month periods ended June 30,
	2021	2020	2019	2021	2020	2019
	$	$	$	$	$	$
Revenue from continuing operations	49,656	39,749	31,490	94,513	70,175	61,023
Operating loss from continuing operations	(1,908)	(8,072)	(1,128)	(2,327)	(10,353)	(2,626)
(Loss) income from continuing operations before interest expense and income taxes	(4,225)	(9,774)	671	(7,418)	(12,349)	(1,552)
EBITDA^1 from continuing operations	(991)	(7,241)	2,956	(1,092)	(7,502)	2,941
Adjusted EBITDA^1 from continuing operations	4,338	2,825	2,242	8,424	4,870	4,101
Per share - Basic and Diluted^2	$0.14	$0.15	$0.21	$0.29	$0.29	$0.39
Adjusted EBITDA Margin from continuing operations	8.7%	7.1%	7.1%	8.9%	6.9%	6.7%
Adjusted EBITDA^1	4,338	2,825	3,548	8,424	4,870	6,688
Per share - Basic and Diluted^2	$0.14	$0.15	$0.34	$0.29	$0.29	$0.63
Adjusted EBITDA Margin	8.7%	7.1%	8.3%	8.9%	6.9%	8.0%
Net loss	(8,489)	(14,148)	(1,596)	(14,355)	(8,834)	(6,867)
Per share - Basic and Diluted ^2	($0.28)	($0.74)	($0.15)	($0.49)	($0.53)	($0.65)
Cash provided by (used in) operations	(5,721)	(2,665)	93	(7,426)	(4,115)	2,640
Total Assets	165,222	151,759	132,783	165,222	151,759	132,783
Total Liabilities	144,655	153,356	148,738	144,655	153,356	148,738

^1	See "Non-IFRS Measures" below.
^2	Basic and diluted earnings per share is based on the profit or loss attributable to shareholders of CareRx Corporation.

Revenue from continuing operations for the second quarter of 2021 increased by 25% to $49.7 million from $39.7 million. Growth was driven primarily by the contribution of the Remedy's business that was acquired partway through the second quarter of 2020 and the SmartMeds business that was acquired at the beginning of the quarter. There was minimal contribution from the Rexall LTC Pharmacy Business acquisition in the quarter as it was acquired nine days prior to the end of the quarter. The contribution of these acquisitions was partially offset by a temporary COVID-19-related reduction in the average number of beds serviced during the quarter. While occupancy levels in homes serviced continue to improve, they have not yet returned to their historical levels prior to the COVID-19 pandemic.

Adjusted EBITDA for the second quarter of 2021, increased by 54% to $4.3 million from $2.8 million. Growth was driven primarily by the contribution of the Remedy's business, including over $3.0 million in annualized cost saving synergies achieved from the consolidation of certain fulfillment centres and other operating cost savings that were fully realized beginning in the first quarter of 2021, as well as the contribution of the SmartMeds acquisition that was completed at the beginning of the second quarter.

Conference Call

CareRx will host a conference call, including a slide presentation, to discuss its second quarter financial results on Tuesday, August 10, 2021 at 8:30 a.m. (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 web site (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 web site (https://carerx.ca/presentations/).

For further information, please visit https://www.carerx.ca.

About CareRx Corporation

CareRx is Canada's leading provider of pharmacy services to seniors communities. We serve over 56,000 residents in over 1,000 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.

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 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.

SOURCE CareRx Corporation

David Murphy, President and Chief Executive Officer, CareRx Corporation, 416-927-8400; Lawrence Chamberlain, Investor Relations, LodeRock Advisors, 416-519-4196, [email protected]

Related Links

https://carerx.ca/