CareRx Reports Results for the Second Quarter of 2024

Delivers Continued Adjusted EBITDA Growth

TORONTO, Aug. 8, 2024 /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, 2024.

"Our second quarter results illustrate steady progress in the strengthening of our operational platform," said Puneet Khanna, President & Chief Executive Officer of CareRx. "We remain focused on increasing productivity, driving efficiencies and managing cost pressures that continue to impact the broader healthcare sector. This process will ensure we are well positioned to respond immediately when growth opportunities present themselves, and we intend to capitalize on our leadership position to generate value for our shareholders, stakeholders and customers by providing exceptional pharmacy services through the long-term expansion cycle of the seniors living sector."

Highlights for the Second Quarter of 2024

• Revenue for the quarter was $92.0 million as compared to $89.7 million for the first quarter of 2024 and $94.5 million for the second quarter of 2023:
  • Despite a slight net reduction in the average number of beds serviced, the Company's revenue increase as compared to the prior quarter was primarily due to two additional days to generate revenues; and
  • Decrease as compared to the second quarter of 2023 was primarily due to a net reduction in the average number of beds serviced.
• Adjusted EBITDA¹ for the quarter was $7.5 million as compared to $7.4 million for the first quarter of 2024 and $7.0 million for the second quarter of 2023:
  • Increase as compared to the prior quarter was due to improved supply terms as a result of the amendment to the existing agreement with the Company's principal pharmaceutical wholesaler effective April 1; and
  • Increase as compared to the same period in the prior year was due to certain efficiencies and cost savings initiatives that commenced during the second half of 2023 and improved supply terms as a result of the amendment to the existing agreement with the Company's principal pharmaceutical wholesaler effective April 1, 2024.
• Net loss for the quarter was $1.4 million as compared to a net loss of $0.5 million for the first quarter of 2024 and net income of $1.9 million for the second quarter of 2023:
  • Increase in net loss compared to the prior quarter was mainly due to a non-recurring intangible asset impairment recorded during the second quarter of 2024 as a result of the Company's sale of  one of its non-core pharmacy locations; and
  • Elimination of net income as compared to the same period in the prior year was driven primarily by income tax recovery recorded during the second quarter of 2023 and non-recurring intangible asset impairment recorded during the second quarter of 2024, partially offset by decreases in finance costs, depreciation and amortization expenses, and transaction, restructuring and other costs, in addition to the impact of certain cost savings initiatives that commenced during the second half of 2023.
• On May 31, 2024, the Company closed the sale of one of its non-core pharmacy operations that primarily focused on addiction treatments servicing approximately 950 residents for a cash purchase price of $0.4 million.
• Subsequent to the quarter the Company entered into an amendment to its procurement agreement with its principal pharmaceutical wholesaler. The amended agreement, which became effective April 1, 2024, improves the Company's supply terms and provides for collaboration on new opportunities and pharmacy solutions that seek to improve the quality and efficiency of the Company's pharmacy distribution capabilities.

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)	2024	2023	2022	2024	2023	2022
	$	$	$	$	$	$
Revenue	91,968	94,485	96,879	181,697	185,889	190,055
EBITDA^1	5,784	6,415	(17,868)	12,542	12,189	(12,347)
Adjusted EBITDA^1	7,517	7,040	8,797	14,962	13,859	17,413
Per share - Basic	$0.13	$0.12	$0.19	$0.25	$0.25	$0.37
Per share - Diluted	$0.13	$0.11	$0.19	$0.25	$0.25	$0.37
Adjusted EBITDA Margin^1	8.2 %	7.5 %	9.1 %	8.2 %	7.5 %	9.2 %
Net loss	(1,379)	1,881	(25,129)	(1,896)	(268)	(27,891)
Per share - Basic and Diluted	($0.02)	$0.03	($0.53)	($0.03)	$0.00	($0.60)
Cash provided by (used in) operations	8,072	5,329	(3,979)	17,350	10,395	(5,155)
Total Assets	218,584	268,782	258,433	218,584	268,782	258,433
Total Liabilities	138,316	188,886	198,606	138,316	188,886	198,606

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 2024 financial results on Thursday, August 8, 2024 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/3Rcp2MH 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 approximately 90,000 residents in approximately 1,450 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 regimens. 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, the Company's exposure to and reliance on government regulation and funding, risks related to employee recruitment and retention, the Company's liquidity and capital requirements, exposure to epidemic or pandemic outbreak, reliance on contracts with key care operators 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, 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) loss 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,
	2024	2023	2024	2023
(Thousands of Canadian Dollars except per share amounts)	$	$	$	$
Net income (loss)	(1,379)	1,881	(1,896)	(268)
Depreciation and amortization	4,821	5,317	9,638	10,092
Finance costs, net	2,342	3,234	4,800	6,382
Income tax recovery	—	(4,017)	—	(4,017)
EBITDA	5,784	6,415	12,542	12,189
Transaction, restructuring and other costs	63	554	455	812
Change in fair value of contingent consideration     liability	17	16	(171)	197
Goodwill and intangible assets impairment	764	—	764	—
Share-based compensation expense	373	36	862	737
Change in fair value of derivative financial     instruments	—	(91)	—	(268)
Loss on disposal of assets	516	110	510	192
Adjusted EBITDA	7,517	7,040	14,962	13,859
Weighted average number of shares - basic (in thousands)	60,131	57,661	59,998	56,502
Adjusted EBITDA per share - basic	$0.13	$0.12	$0.25	$0.25
Weighted average number of shares - diluted (in thousands)	60,131	63,169	59,998	56,502
Adjusted EBITDA per share - diluted	$0.13	$0.11	$0.25	$0.25

SOURCE CareRX Corporation

For additional information, please contact: Puneet Khanna, President & Chief Executive Officer, CareRx Corporation, 416-927-8400; Davide Pernarella, Interim Chief Financial Officer, CareRx Corporation, 416-927-8400; Neil Weber, Investor Relations, LodeRock Advisors, 647-222-0574, [email protected]