CareRx Reports 56% Year-Over-Year Growth in Revenue and 79% Year-Over-Year Growth in Adjusted EBITDA for the Third Quarter of 2021

TORONTO, Nov. 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 third quarter ended September 30, 2021.

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

• Revenue from continuing operations increased 56% to $71.3 million from $45.6 million:
• Growth driven primarily by contribution of SmartMeds and Rexall LTC Pharmacy Business acquisitions (completed during the second quarter), and a partial quarter's contribution from the Medical Pharmacies Long-Term Care Pharmacy Business ("MPGL LTC Pharmacy Business"), acquired on August 23;
• Revenue contribution from the MPGL LTC Pharmacy Business of $16.5 million, which was consistent with expected run-rate annualized revenue of approximately $150 million;
• Revenue increase was also driven by organic growth, which included over 2,200 beds that onboarded throughout the quarter; and
• Additional organic bed wins during the third quarter to be onboarded in the fourth quarter.
• Adjusted EBITDA¹ from continuing operations increased 79% to $6.9 million from $3.8 million:
• Included quarterly contribution of over $3.0 million in annualized cost saving synergies achieved through prior year acquisition of the Remedy'sRx Specialty Pharmacy business from the consolidation of certain fulfillment centres and other operating cost savings that were fully realized in the first quarter of 2021;
• Growth was also driven by the SmartMeds acquisition that was completed at the beginning of the second quarter of 2021 and a partial quarter's contribution from acquisition of the MPGL LTC Pharmacy Business; and
• Adjusted EBITDA¹ contribution from MPGL LTC Pharmacy Business was $2.0 million, which exceeded the expected annualized run-rate primarily due to the non-recurring benefit from certain operating costs that were not incurred during the first partial month following closing of the transaction and from costs not required to be incurred until the completion of a shared services agreement with the vendor in the first quarter of 2022. Normalized for these non-recurring benefits, the performance of the MPGL LTC Pharmacy Business was consistent with the expected run-rate annualized Adjusted EBITDA of $10.0 to 12.0 million.
• Completed acquisition of the MPGL LTC Pharmacy Business:
• Included 17 fulfillment centres serving approximately 36,000 residents of long-term care, assisted living and other congregate care settings across Ontario, Alberta and British Columbia;
• 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 cost savings synergies of $5.0 million; and
• One of the locations included in the MPGL LTC Pharmacy Business acquisition was consolidated during the quarter, with four additional pharmacy site consolidations expected to be completed by the end of the year.
• Entered into an amended and restated credit agreement with the Company's senior lender to refinance existing credit facility, concurrent with closing of MPGL LTC Pharmacy Business acquisition:
• Total of $60 million in new senior credit facilities advanced to the Company ("Senior Facility");
• Approximately $37 million of the Senior Facility used to pay a portion of cash consideration for the MPGL LTC Pharmacy Business acquisition and related transaction costs; and,
• Remaining proceeds used to repay existing credit facility and associated fees.
• Received funds under the previously completed private placements of subscription receipts for total gross proceeds of $63.3 million and issued total common shares of 12,524,880:
• Proceeds used to fund a portion of the cash consideration for the MPGL LTC Pharmacy Business acquisition and related transaction costs and for general working capital purposes.
• Expanded existing contract with an Ontario-based seniors home operator by an additional 1,500 beds in 19 seniors housing communities, some of which were onboarded during the third quarter, with the remainder having been completed during the fourth quarter.

"Third quarter revenue and Adjusted EBITDA¹ were better than anticipated, driven by strong contribution from acquisitions, accelerated organic growth, and continued outstanding execution by our team," said David Murphy, President and Chief Executive Officer of CareRx. "Each of our acquisitions, including that of the Medical Pharmacies Long-Term Care Pharmacy business, are performing in line with or ahead of expectations, and integration activities are on schedule. As COVID-related impacts on our sector continue to subside, we are seeing increased opportunities to acquire new customers and add new beds. Organic growth in the third quarter alone consisted of more than 2,200 new beds, with additional wins that have been onboarded during the fourth quarter. This renewed momentum in organic growth, combined with a continued robust and active acquisition pipeline, makes us highly confident in our ability to continue our growth trajectory in the quarters and years ahead."

FINANCIAL RESULTS

Selected Financial Information

(Thousands of Canadian dollars except per share amounts and percentages)	For the three month periods ended September 30,			For the nine month periods ended September 30,
	2021	2020	2019	2021	2020	2019
	$	$	$	$	$	$
Revenue from continuing operations	71,267	45,633	31,397	165,780	115,808	92,420
Operating loss from continuing operations	(1,116)	(772)	(763)	(3,443)	(11,125)	(3,389)
Income (loss) from continuing operations before interest expense and income taxes	1,664	(2,962)	(88)	(5,754)	(15,311)	(1,640)
EBITDA^1 from continuing operations	5,450	(313)	2,299	4,358	(7,815)	5,240
Adjusted EBITDA^1 from continuing operations	6,862	3,840	2,807	15,286	8,710	6,908
Per share - Basic and Diluted^2	$0.19	$0.17	$0.26	$0.48	$0.46	$0.65
Adjusted EBITDA Margin from continuing operations	9.6%	8.4%	8.9%	9.2%	7.5%	7.5%
Adjusted EBITDA^1	6,862	3,840	2,690	15,286	8,710	9,378
Per share - Basic and Diluted^2	$0.19	$0.17	$0.25	$0.48	$0.46	$0.89
Adjusted EBITDA Margin	9.6%	8.4%	6.7%	9.2%	7.5%	7.6%
Net loss	(3,928)	(6,407)	(3,501)	(18,283)	(15,241)	(10,368)
Per share - Basic and Diluted ^2	($0.11)	($0.28)	($0.33)	($0.58)	($0.81)	($0.98)
Cash provided by (used in) operations	11,997	1,525	2,322	4,571	(2,590)	4,962
Total Assets	284,131	153,104	131,217	284,131	153,104	131,217
Total Liabilities	205,006	140,033	150,149	205,006	140,033	150,149

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.

Conference Call

The Company will host a conference call, including a slide presentation, to discuss its third quarter 2021 financial results tomorrow, Wednesday, November 10, 2021 at 8:00 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 96,000 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.

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/