CareRx Reports Results for the Second Quarter of 2023

Returns to Growth in Revenue and Adjusted EBITDA 

TORONTO, Aug. 10, 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 second quarter ended June 30, 2023.

"We are pleased to have returned to generating organic quarter-over-quarter revenue and Adjusted EBITDA growth in the second quarter, which was in-line with our expectations. While CareRx has been navigating the various challenges in the healthcare labour market over the last year, our focus on organic growth opportunities and margin accretive efficiencies is starting to take hold and these results are reflective of that focus," said Puneet Khanna, President & Chief Executive Officer of CareRx. "With the growth in beds serviced in the second quarter, we have now substantially offset the fiscal 2022 customer offboarding. CareRx will continue to focus on the execution of a comprehensive technology and operational process optimization program which is expected to result in cost savings and improved productivity. Over the next 12 months, these efforts are expected to drive improved financial and operating performance, strengthen our competitive advantage, and better position CareRx in this high growth industry."

Highlights for the Second Quarter of 2023

• Revenue for the quarter was $94.5 million as compared to $91.4 million for the first quarter of 2023 and $96.9 million for the second quarter of 2022:
• Increase compared to the prior quarter was primarily due to an increase in the average number of beds serviced; and
• Decline compared to the same period in the prior year was primarily driven by a change in the mix of branded and generic pharmaceuticals dispensed, which did not negatively impact the Company's profitability in the quarter.
• Adjusted EBITDA¹ for the quarter was $7.0 million as compared to $6.8 million for the first quarter of 2023 and $8.8 million for the second quarter of 2022:
• Increase compared to the prior quarter was due to an increase in the average number of beds serviced; and
• Decline compared to the same period in the prior year was primarily the result of incremental costs associated with continued challenges in the healthcare labour market.
• Net income for the quarter was $1.9 million as compared to a net loss of $2.1 million for the first quarter of 2023 and a net loss of $25.1 million for the second quarter of 2022:
• Elimination of net loss as compared to the prior quarter was primarily due to an increase in income tax recovery; and
• Elimination of net loss as compared to the same period in the prior year was driven primarily by non-cash adjustments including impairment losses related to goodwill and intangible assets and investments recorded during the second quarter of 2022, which did not recur in 2023.
• Effective May 31, 2023, Puneet Khanna assumed the role of President and Chief Executive Officer and joined the Company's Board of Directors on June 6, 2023, after previously serving as the Company's Chief Operating Officer.
• On June 6, 2023, Jeff Watson joined the Company's Board of Directors. Mr. Watson most recently served as the President and Chief Executive Officer of Apotex Inc. from December 2018 to April 2023.

¹ See "Non-IFRS Measures" below

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)	2023	2022	2021	2023	2022	2021
	$	$	$	$	$	$
Revenue	94,485	96,879	49,656	185,889	190,055	94,513
EBITDA^1	6,415	(17,868)	(991)	12,189	(12,347)	(1,092)
Adjusted EBITDA^1	7,040	8,797	4,338	13,859	17,413	8,424
Per share - Basic	$0.12	$0.19	$0.14	$0.25	$0.37	$0.29
Per share - Diluted	$0.11	$0.19	$0.14	$0.25	$0.37	$0.29
Adjusted EBITDA Margin^1	7.5 %	9.1 %	8.7 %	7.5 %	9.2 %	8.9 %
Net income (loss)	1,881	(25,129)	(8,489)	(268)	(27,891)	(14,355)
Per share - Basic and Diluted	$0.03	($0.53)	($0.28)	$0.00	($0.60)	($0.49)
Cash provided by (used in) operations	5,329	(3,979)	(5,721)	10,395	(5,155)	(7,426)
Total Assets	268,782	258,433	165,222	268,782	258,433	165,222
Total Liabilities	188,886	198,606	144,655	188,886	198,606	144,655

¹ See "Non-IFRS Measures" below.

Conference Call

The Company will host a conference call, including a slide presentation, to discuss its second quarter of 2023 financial results on Thursday August 10, 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/3O990RB 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 95,000 residents in over 1,500 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.

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, start-up, restructuring and other 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 share-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,
	2023	2022	2023	2022
(Thousands of Canadian Dollars except per share amounts)	$	$	$	$
Net income (loss)	1,881	(25,129)	(268)	(27,891)
Depreciation and amortization	5,317	5,127	10,092	9,826
Finance costs, net	3,234	3,575	6,382	7,249
Income tax recovery	(4,017)	(1,441)	(4,017)	(1,531)
EBITDA	6,415	(17,868)	12,189	(12,347)
Transaction, start-up, restructuring and other costs	554	1,033	812	3,721
Change in fair value of contingent consideration liability	16	658	197	754
Goodwill and intangible assets impairment	—	24,330	—	24,330
Share-based compensation expense	36	823	737	2,153
Change in fair value of derivative financial instruments	(91)	(2,980)	(268)	(4,106)
Change in fair value of investment	—	2,713	—	2,713
Loss on disposal of assets	110	88	192	195
Adjusted EBITDA	7,040	8,797	13,859	17,413
Weighted average number of shares - basic (in thousands)	57,661	47,076	56,502	46,792
Adjusted EBITDA per share - basic	$0.12	$0.19	$0.25	$0.37
Weighted average number of shares - diluted (in thousands)	63,169	47,076	56,502	46,792
Adjusted EBITDA per share - diluted	$0.11	$0.19	$0.25	$0.37

SOURCE CareRX Corporation

Puneet Khanna, President & 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]