CareRx Reports Results for the Third Quarter of 2023

Achieved Second Consecutive Quarter-Over-Quarter Growth in Adjusted EBITDA 

TORONTO, Nov. 8, 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 third quarter ended September 30, 2023.

"Our third quarter results were in line with our expectations, and our quarter-over-quarter improvement in Adjusted EBITDA reflects early progress from our team's exceptional work in improving our efficiencies and managing the cost challenges that we have been facing in the healthcare labour market," said Puneet Khanna, President & Chief Executive Officer of CareRx. "Through enhancements in our technological and operational capabilities, as well as an organizational focus on margin-enhancing initiatives, we intend to further leverage our industry leadership position in order to drive profitable growth as we continue to provide value-added service to the expanding seniors living sector."

Highlights for the Third Quarter of 2023

• Revenue for the quarter was $93.8 million as compared to $94.5 million for the second quarter of 2023 and $97.4 million for the third quarter of 2022:
  • Decrease compared to the prior quarter was primarily due to a small net reduction in the average number of beds serviced; and
  • Decrease 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 $7.3 million as compared to $7.0 million for the second quarter of 2023 and $7.7 million for the third quarter of 2022:
  • Increase compared to the prior quarter was due to certain cost savings and margin-enhancing initiatives implemented during the third quarter of 2023; and
  • Decrease 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 loss for the quarter was $1.4 million as compared to net income of $1.9 million for the second quarter of 2023 and net loss of $1.8 million for the third quarter of 2022:
  • Net loss in the quarter compared to net income generated in the second quarter of 2023 was primarily due to a non-recurring income tax recovery that was recorded during the second quarter of 2023; and
  • Decline in net loss as compared to the same period in the prior year was driven primarily by decreases in share-based compensation expense, transaction and restructuring costs, finance costs and the loss on the change in fair value of contingent consideration liabilities.
• On September 7, 2023, the Company launched a normal course issuer bid to repurchase for cancellation up to 1,000,000 of the Company's common shares during the period from September 7, 2023 to September 6, 2024, subject to certain daily limitations.

¹ See "Non-IFRS Measures" below

FINANCIAL RESULTS

Selected Financial Information

	For the three month periods ended September 30,			For the nine month periods ended September 30,
(Thousands of Canadian dollars except per share amounts and percentages)	2023	2022	2021	2023	2022	2021
	$	$	$	$	$	$
Revenue	93,760	97,353	71,267	279,649	287,408	165,780
EBITDA^1	7,022	6,943	5,450	19,211	(5,404)	4,538
Adjusted EBITDA^1	7,309	7,710	6,862	21,168	25,123	15,286
Per share - Basic	$0.13	$0.16	$0.19	$0.37	$0.53	$0.48
Adjusted EBITDA Margin^1	7.8 %	7.9 %	9.6 %	7.6 %	8.7 %	9.2 %
Net loss	(1,437)	(1,782)	(3,928)	(1,705)	(29,673)	(18,283)
Per share - Basic and Diluted	($0.02)	($0.04)	($0.11)	($0.03)	($0.63)	($0.58)
Cash provided by operations	8,218	13,298	11,997	18,613	8,143	4,571
Total Assets	264,705	255,580	284,131	264,705	255,580	284,131
Total Liabilities	186,017	196,721	205,006	186,017	196,721	205,006

¹ See "Non-IFRS Measures" below.

Conference Call

The Company will host a conference call, including a slide presentation, to discuss its third quarter of 2023 financial results on Wednesday, November 8, 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/497U2on 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 94,000 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 September 30,		For the nine month periods ended September 30,
	2023	2022	2023	2022
(Thousands of Canadian Dollars except per share amounts)	$	$	$	$
Net loss	(1,437)	(1,782)	(1,705)	(29,673)
Depreciation and amortization	4,938	5,018	15,030	14,844
Finance costs, net	3,521	4,186	9,903	11,435
Income tax recovery	—	(479)	(4,017)	(2,010)
EBITDA	7,022	6,943	19,211	(5,404)
Transaction, start-up, restructuring and other costs	—	580	812	4,301
Change in fair value of contingent consideration liability	15	577	212	1,331
Goodwill and intangible assets impairment	—	—	—	24,330
Share-based compensation expense	285	814	1,022	2,967
Change in fair value of derivative financial instruments	(13)	(1,249)	(281)	(5,355)
Change in fair value of investment	—	—	—	2,713
Loss on disposal of assets	—	45	192	240
Adjusted EBITDA	7,309	7,710	21,168	25,123
Weighted average number of shares - basic and diluted (in thousands)	57,731	47,466	56,916	47,019
Adjusted EBITDA per share - basic	$0.13	$0.16	$0.37	$0.53

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]