CareRx Reports Results for the Fourth Quarter of 2022

TORONTO, March 9, 2023 /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 fourth quarter ended December 31, 2022.

Highlights for the Fourth Quarter of 2022
(All percentage increases are as compared to the fourth quarter of 2021)

• Revenue decreased 3% to $94.3 million from $96.9 million:
• Decline was driven primarily by the offboarding of a large customer contract which was substantially completed by the end of the year. This contract loss was partially offset by the contribution of new beds onboarded throughout 2022.
• Adjusted EBITDA¹ decreased 6% to $7.1 million from $7.6 million:
• Decline was partially driven by the offboarding of a large customer contract which was substantially completed by the end of the year;
• Decline was also driven by certain incremental costs associated with continued challenges in the healthcare labour market related to scarcity and increased competition for certain pharmacy positions, which has resulted in a higher number of open positions and a longer time to fill these vacancies; and
• The impact of the customer offboarding and incremental labour costs was partially offset by the contribution of new beds onboarded throughout 2022.
• Net loss increased by 5% to $4.7 million from $4.4 million:
• Increase in net loss was driven primarily by the commencement of the customer offboarding, incremental costs incurred as a result of the current labour market, higher share-based compensation expense, the loss on the change in fair value of contingent consideration liabilities and income tax expense, which were partially offset by decreases in finance costs and transaction and restructuring costs and the gain on the change in fair value of derivative financial instruments.
• Signed multi-year contract to provide pharmacy services to residents in multiple seniors living facilities in Atlantic Canada, initially serving up to 600 residents, and expect to commence servicing homes in the third quarter of 2023.
• Subsequent to the end of the fourth quarter, closed a public offering and private placement of common shares for total gross proceeds of approximately $16.1 million.

¹ See "Non-IFRS Measures" below

"Our 2022 results reflect the exceptional progress we have made in growing our national presence and expanding our leadership position over the past three years," said David Murphy, President and Chief Executive Officer of CareRx. "During that period, we have more than tripled our revenue and Adjusted EBITDA. With long-term contract extensions now in place with our largest home operator partners, and our geographic expansion plans well underway, we are very well positioned to continue this robust growth trajectory as the leading pharmacy partner to the rapidly expanding seniors living sector."

"While challenges in the healthcare labour market continue to impact the sector and put short-term strain on our operations and cost structure, we are confident in our long-term ability to leverage our scale and capabilities to provide superior service, drive efficiencies and margin expansion, and create exceptional value for all of our stakeholders."

FINANCIAL RESULTS

Selected Financial Information

	For the three month periods ended December 31,			For the years ended December 31,
(Thousands of Canadian dollars except per share amounts and percentages)	2022	2021	2020	2022	2021	2020
	$	$	$	$	$	$
Revenue	94,319	96,850	46,388	381,727	262,630	162,196
EBITDA^1	4,516	4,596	3,924	(888)	8,954	(3,891)
Adjusted EBITDA^1	7,144	7,583	4,066	32,267	22,869	12,776
Per share - Basic	$0.15	$0.17	$0.17	$0.68	$0.66	$0.63
Adjusted EBITDA Margin^1	7.6 %	7.8 %	8.8 %	8.5 %	8.7 %	7.9 %
Net loss	(4,680)	(4,447)	(3,021)	(34,353)	(22,730)	(18,262)
Per share - Basic and Diluted	($0.10)	($0.10)	($0.12)	($0.72)	($0.65)	($0.90)
Cash provided by operations	14,190	2,698	2,819	22,333	7,269	229
Total Assets	264,535	282,816	156,110	264,535	282,816	156,110
Total Liabilities	200,078	200,529	144,807	200,078	200,529	144,807

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, 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 December 31,		For the years ended December 31,
	2022	2021	2022	2021
(Thousands of Canadian Dollars except per share amounts)	$	$	$	$
Net loss	(4,680)	(4,447)	(34,353)	(22,730)
Depreciation and amortization	5,221	5,281	20,065	15,393
Finance costs, net	3,508	3,802	14,943	17,296
Income tax expense (recovery)	467	(40)	(1,543)	(1,005)
EBITDA	4,516	4,596	(888)	8,954
Transaction and restructuring costs	697	1,586	4,998	8,064
Change in fair value of contingent consideration    liability	541	6	1,872	889
Goodwill and intangible assets impairment	—	—	24,330	—
Share-based compensation expense	1,602	608	4,569	2,665
Change in fair value of derivative financial   instruments	(221)	815	(5,576)	2,243
Change in fair value of investment	—	—	2,713	—
Loss (gain) on disposal of assets	9	(28)	249	54
Adjusted EBITDA	7,144	7,583	32,267	22,869
Weighted average number of shares - basic and diluted (in thousands)	49,257	44,771	47,596	34,858
Adjusted EBITDA per share - basic	$0.15	$0.17	$0.68	$0.66

Conference Call

The Company will host a conference call, including a slide presentation, to discuss its fourth quarter 2022 financial results on Thursday, March 9, 2023 at 8:30 a.m. Eastern Time (ET).

Telephone Dial-In Access Information

To join the conference call without operator assistance, you may register and enter your phone number at https://emportal.ink/3Y6lLz2 to receive an instant automated call

To dial direct and enter the call through an operator, 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 94,000 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 general business risks, exposure to and reliance on government regulation and funding, the Company's liquidity and capital requirements, exposure to epidemic or pandemic outbreak, 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

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