Neighbourly Announces Strong Fourth Quarter and Full Year Results

Company announces the addition of 10 new locations to network of pharmacies

TORONTO, June 8, 2023 /CNW/ - Neighbourly Pharmacy Inc. ("Neighbourly" or the "Company") (TSX: NBLY), Canada's largest and fastest growing network of independent pharmacies, today announced its financial results for the twelve-week period and fiscal year ended March 25, 2023 (the "fourth quarter 2023" and "fiscal 2023", respectively).

"I'd like to congratulate the team on a successful year, and I look forward to continuing to realize Neighbourly's tremendous growth potential in the future," stated Skip Bourdo, the Company's Chief Executive Officer. "I am excited about Neighbourly's long runway, driven by both our robust acquisition pipeline and through the opportunities to drive incremental organic growth and profitability across our existing network. We have a full agenda of initiatives and a talented and capable team to accelerate Neighbourly's growth trajectory forward," concluded Mr. Bourdo.

Fourth Quarter 2023 Highlights

• Revenue for the fourth quarter increased to $190.6 million, up $78.3 million or 69.7%. 99% of the growth was driven by pharmacies acquired in the past 12 months.
• Same store sales¹ in the fourth quarter increased 1.6%.
• Adjusted EBITDA² for the fourth quarter increased to $19.6 million, up 73.4% due to the incremental contributions from pharmacies added to the Company's network.
• Announced two acquisitions subsequent to the quarter-end, adding 10 pharmacies and $6 million of Adjusted EBITDA on a proforma basis, with the purchase price consistent with the Company's historical multiples for transactions of this size.  Both transactions are expected to close by the end of June 2023.
• Initial network optimization initiative has resulted in the closure or consolidation of 4 existing locations.
• Announced a greenfield location in Kingston, Ontario, specializing in compounding and pain management.
• Pharmacy network to continue growing from a strong base of 291 locations across Canada.
• Adjusted Earnings per Share³ for the fourth quarter of $0.06, up compared to $0.05 for the fourth quarter of 2022.

____________________________________

¹ Same-store sales is a supplementary measure, which represents sales from comparable pharmacy locations that were owned and operated by the Company with more than 52 consecutive weeks of operations.

² Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure at the conclusion of this news release.

³ Adjusted Earnings (Loss) per share, Proforma Revenue and Proforma EBITDA are non-IFRS measures. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure at the conclusion of this news release.

Full Year 2023 Highlights

• Revenue for fiscal 2023 increased to $749.1 million, up $321.6 million or 75.2%, due to contributions from new acquisitions and organic growth in the existing store base.
• Same store sales¹ for fiscal 2023 increased 2.9%.
• Adjusted EBITDA² for fiscal 2023 was $79.2 million, an increase of $33.3 million or 72.6%.
• Adjusted Earnings per Share³ for fiscal 2023 of $0.45, up from $0.38 for fiscal 2022.
• Pro-Forma Revenue3 of $876.1 million and Pro-Forma Adjusted EBITDA3 of $99.3 million.
• Acquired 112 pharmacies and added one greenfield location in fiscal 2023.

 Selected Fourth Quarter and Fiscal 2023 Results

			Fourth quarter			Fiscal year
in 000's			2023	2022		2023	2022
Store count			291	171		291	171
Total Prescriptions			3,249	1,875		12,590	7,227
Same-store prescription growth (%)			(0.6 %)	1.8 %		(1.2 %)	1.5 %
Revenue			$  190,612	$ 112,317		$ 749,149	$ 427,509
Same-store sales growth (%)^1			1.6 %	2.3 %		2.9 %	3.1 %
Pharmacy revenue as a % of revenue			79.4 %	80.0 %		78.6 %	78.4 %
Corporate, general & administrative ("CG&A") costs^2			$      7,265	$    4,742		$  28,534	$  16,584
CG&A as a % of revenue			3.8 %	4.2 %		3.8 %	3.9 %
Adjusted EBITDA^3			$    19,614	$  11,314		$   79,189	$   45,890
Adjusted EBITDA margin (%)			10.3 %	10.1 %		10.6 %	10.7 %
Pro-Forma Adjusted EBITDA for the 52 weeks ended^4			$    99,265
Pro-Forma Revenue for the 52 weeks ended^5			$  876,104

___________
^1 Same-store sales is a supplementary measure, which represents sales from comparable pharmacy locations that were owned and operated by the Company with more than 52 consecutive weeks of operations.
^2 Corporate, general & administrative costs represents costs incurred at the corporate level (as opposed to costs incurred at the store level) and is a component of Operating, general and administrative expenses. See reconciliation in the "Results of Operations".
^3 Adjusted EBITDA is a non-IFRS financial measure and does not have any standard meaning under IFRS. Refer to "Reconciliation of Non-IFRS Measures" of this MD&A for additional information including a reconciliation to the most comparable IFRS measure.
^4 Pro-Forma Adjusted EBITDA is a non-IFRS financial measure and does not have any standard meaning under IFRS. Refer to "Reconciliation of Non-IFRS Measures" of this MD&A for additional information including a reconciliation to the most comparable IFRS measure.
^5 Pro-Forma Revenue is a non-IFRS financial measure and does not have any standard meaning under IFRS. Refer to "Reconciliation of Non-IFRS Measures" of this MD&A for additional information including a reconciliation to the most comparable IFRS measure.

Declaration of Dividend

Neighbourly announced today that a quarterly dividend will be paid on August 3, 2023, to the Company's common shareholders of record as of July 6, 2023. The amount of the dividend will be $0.045 for each common share. This dividend is an "eligible dividend" for Canadian income tax purposes.

Conference Call and Webcast Information

A conference call will be held at 8:30AM Eastern on June 8, 2023, to discuss Neighbourly's financial results for the fourth quarter 2022. Participants may join the Company's conference call by dialing 416-764-8650 or 1-888-664-6383 (ID: 22502525). For those unable to participate, playback will be made available an hour after the event at 416-764-8677 or 1-888-390-0541, utilizing passcode 502525#. The webcast of the call will also be archived and available on the Company's website.

The conference call will also be available via webcast on the Investor section of Neighbourly's website at https://investors.neighbourlypharmacy.ca/events-and-presentations.

Neighbourly's unaudited consolidated financial statements and accompanying notes, and Management's Discussion and Analysis for the fourth quarter 2022 are available on the Company's website at www.neighbourlypharmacy.ca and on SEDAR at www.sedar.com.

About Neighbourly Pharmacy Inc.

Neighbourly is Canada's largest and fastest growing network of community pharmacies. United by their patient first focus and their role as essential and trusted healthcare hubs within their communities, Neighbourly's pharmacies strive to provide accessible healthcare with a personal touch. Since 2015, Neighbourly has expanded its diversified national footprint to include 291 locations, reinforcing the Company's reputation as the industry's acquirer of choice.

Non-IFRS Measures

This press release makes reference to certain non-IFRS measures, such as "Adjusted EBITDA", "Adjusted EBITDA Margin", "Pro-Forma Adjusted EBITDA", "Pro-Forma Revenue", "Adjusted Net Income (Loss)" and "Adjusted Earnings (Loss) Per Share." Refer to the Company's Management's Discussion and Analysis dated June 7, 2023 for the fiscal year and twelve weeks ended March 25, 2023, which is available under the Company's profile on SEDAR at www.sedar.com, for an explanation of the composition of those non-IFRS measures, an explanation of how these non-IFRS measures provide useful information to investors and the additional purposes for which management uses these non-IFRS financial measures. These measures are not recognized under International Financial Reporting Standards ("IFRS") and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures are used to provide readers with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that market participants frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. See the financial table at the conclusion of this press release for a reconciliation of Adjusted EBITDA, Adjusted EBITDA Margin, Pro-Forma Adjusted EBITDA, Pro-Forma Revenue and Adjusted Net Income (Loss) to the most directly comparable IFRS measures.

Key-Performance Indicators

This press release makes reference to certain key performance indicators, such as Same-store sales and corporate, general & administrative costs. We monitor key performance indicators to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. These key performance indicators are also used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use industry metrics in the evaluation of issuers. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies.

Forward-Looking Statements

This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking information may relate to our future financial results and may include information regarding our financial position, business strategy, growth strategies, financial results, taxes, dividend policy, plans and objectives. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "expects", "estimates", "outlook", "forecasts", "projection", "prospects", "intends", "anticipates", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. Forward-looking information in this news release includes, among other things, statements relating to the expected completion of acquisitions and timing thereof, the expected impact of acquisitions on the Company's financial results and expected accretion, the payment of dividends, and same store sales improvements.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that the Company considered appropriate and reasonable as of the date such statements are made in light of its experience and perception of historical trends, current conditions and expected future developments. Such estimates and assumptions include the satisfaction of all conditions of closing and the successful completion of probable acquisitions within the anticipated timeframe, including receipt of regulatory approvals. Further, forward-looking information is subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to risks and uncertainties related to probable acquisitions, including the failure to receive or delay in receiving regulatory approvals or otherwise satisfy the conditions to the completion such acquisitions, in a timely manner, or at all, and the reliance on information provided by the relevant sellers, as well as other factors discussed or referred to in the Company's Management's Discussion and Analysis for the fiscal year and twelve weeks ended March 25, 2023 (the "MD&A") and under the heading "Risk Factors" in the Company's annual information form (the "AIF") filed on June 8, 2023. If any of these risks or uncertainties materialize, or if the opinions, estimates, or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. The opinions, estimates or assumptions referred to above and described in greater detail elsewhere in the MD&A as well as in the "Risk Factors" section of the AIF should be considered carefully by prospective investors. The pro forma information set forth in this press release should not be considered to be what the actual financial position or other results of operations would have necessarily been had the probable acquisitions discussed herein been completed as, at, or for the periods stated.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents the Company's expectations as of the date of this press release (or as the date they are otherwise stated to be made) and are subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events, or otherwise, except as required under applicable securities laws in Canada. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

			12 weeks ended			52 weeks ended
000's			March 25, 2023	March 26, 2022		March 25, 2023	March 26, 2022
Revenue			$                                 190,612	112,317		749,149	427,509
Cost of sales			114,161	70,396		456,420	269,037
Gross Profit			76,451	41,921		292,729	158,472
Operating, general and administrative expenses			57,762	31,727		218,385	117,364
Acquisition, transaction and integration costs			3,341	2,886		18,888	26,637
Depreciation and amortization			16,236	7,200		59,837	25,354
Impairment loss			723	-		723	324
Operating (loss) income			(1,611)	108		(5,104)	(11,207)
Finance costs, net			8,356	2,456		14,706	4
Change in fair value of financial assets and liabilities			2,157	-		(448)	67,228
(Loss) income before income taxes			(12,124)	(2,348)		(19,362)	(78,439)
Recovery of income taxes			(6,547)	(10,934)		(4,563)	(6,044)
Net loss and comprehensive loss for the period			(5,577)	8,586		(14,799)	(72,395)
Attributable to:
Shareholders of the Company			$                                     (5,310)	8,311		(15,499)	(73,356)
Non-controlling interest			(267)	275		700	961
			(5,577)	8,586		(14,799)	(72,395)
Net loss per share attributable to shareholders of the Company
basic and diluted			$                                       (0.12)	0.24		(0.37)	(2.57)

Condensed Consolidated Statements of Financial Position   

000's			March 25, 2023	March 26, 2022
Assets
Current
Cash			$                                   22,889	40,410
Trade and other receivables			38,236	24,616
Inventory			94,277	55,721
Prepaid expenses and other assets			3,898	2,009
Assets held for sale			2,099	-
Total Current Assets			161,399	122,756
Property and equipment, net			27,986	12,366
Right-of-use assets			80,207	47,163
Intangible assets, net			353,219	134,798
Goodwill			456,311	238,267
Deferred tax assets			19,750	13,288
Other assets			3,129	627
Total Non-current Assets			940,602	446,509
Total Assets			$                            1,102,001	569,265
Liabilities and Shareholders' Equity
Current
Accounts payable and other liabilities			$                                 105,697	61,226
Other liabilities			62	62
Current portion of long-term borrowings			3,750	2,500
Current portion of lease liabilities			22,808	14,705
Total Current Liabilities			132,317	78,493
Long-term borrowings			225,237	83,656
Lease liabilities			64,637	37,177
Deferred tax liabilities			64,322	21,317
Total non-current liabilities			354,196	142,150
Total liabilities			486,513	220,643
Shareholders' Equity
Share capital			867,052	585,764
Contributed surplus			10,876	5,131
Deficit			(267,513)	(249,956)
Total shareholders' equity			610,415	340,939
Non-controlling interest			5,073	7,683
Total shareholders' equity			615,488	348,622
Total liabilities and shareholders' equity			$                            1,102,001	569,265

Condensed Consolidated Statements of Cash Flows

				12 weeks ended			52 weeks ended
000's				March 25, 2023	March 26, 2022		March 25, 2023	March 26, 2022
Operating Activities:
	Net loss for the period			(5,577)	8,586		(14,799)	(72,395)
	Adjustments for non-cash items:
	Depreciation and amortization			16,236	7,200		59,837	25,354
	Impairment loss			723	(19)		723	324
	Share-based compensation			925	1,120		4,845	4,783
	Gain (loss) on disposal of property and equipment			(103)	124		(76)	113
	Finance costs (income), net			8,355	2,456		14,706	4
	Change in fair value of financial assets and liabilities			2,157	-		(448)	67,228
	Recovery of income taxes			(6,547)	(10,934)		(4,563)	(6,044)
	Lease renewals and modifications			(351)	(141)		(488)	(205)
	Expected credit loss expense			-	-		-	11
	Loss on remeasurement of held for sale assets			-	-		534	-
	Change in non-cash operating working capital			(1,460)	1,002		(9,868)	(4,392)
	Income taxes recovered (paid)			(911)	(637)		(655)	(3,731)
	Payment of contingent consideration			12	-		-	-
				13,459	8,757		49,748	11,050
Financing Activities:
	Proceeds from issuance of common shares, net of issuance costs			1,326	1,894		284,110	217,985
	Proceeds from exercise of stock options			1,658	192		3,108	317
	Proceeds from exercise of warrants			-	-		-	9
	Repayment of promissory notes payable			-	-		-	(740)
	Proceeds from long-term borrowings			-	-		157,626	-
	Repayment of long-term borrowing			(9,000)	-		(9,000)	(100,168)
	Transaction costs related to long-term borrowings			(6)	(1,029)		(2,042)	(2,944)
	Repayment of mortgages payable			-	-		-	(1,304)
	Interest Paid			(4,813)	(790)		(14,892)	(4,716)
	Dividends and distributions paid			(326)	(1,656)		(9,475)	(5,673)
	Payment of lease liabilities			(5,220)	(3,888)		(21,450)	(12,869)
	Proceeds from cancellation of shares			-	-		900	-
				(16,381)	(5,277)		388,885	89,897
Investing Activities:
	Acquisition of property and equipment			(1,481)	(1,104)		(8,544)	(2,973)
	Acquisition of intangible assets			(33)	(125)		(496)	(610)
	Acquisition of other assets			(15)	-		(18)	(15)
	Business combinations, net of cash acquired			(4,551)	(1,971)		(461,542)	(103,116)
	Proceeds from sale of assets held for sale			12,042	-		14,270	-
	Interest received			61	37		176	263
				6,023	(3,163)		(456,154)	(106,451)
Net change in cash for the period				3,101	317		(17,521)	(5,504)
Cash, beginning of the period				19,788	40,093		40,410	45,914
Cash, end of period				22,889	40,410		22,889	40,410

Reconciliation from IFRS to Non-IFRS Measures

The following tables provide a reconciliation of loss and comprehensive loss to Adjusted EBITDA, Adjusted Net Income (Loss) and Pro-Forma Adjusted EBITDA, and of Revenue to Pro-Forma Revenue, for the periods indicated:

			Fourth quarter			Fiscal
	in 000's (unless otherwise stated)		2023	2022		2023	2022
	Loss and Comprehensive loss for the period		(5,577)	8,586		(14,799)	(72,395)
	Income tax expense (recovery)		(6,547)	(10,934)		(4,563)	(6,044)
	Finance Costs, net		8,356	2,456		14,706	4
	Fair value changes of financial liabilities		2,157	-		(448)	67,228
	Depreciation and amortization		16,236	7,200		59,837	25,354
	Impairment loss		723	-		723	324
	Acquisition, transaction and integration costs		3,341	2,886		18,888	26,637
	Share-based compensation^1		925	1,120		4,845	4,782
	Adjusted EBITDA		19,614	11,314		79,189	45,890
	Revenue		190,612	112,317		749,149	427,509
	Adjusted EBITDA margin		10.3 %	10.1 %		10.6 %	10.7 %

Pro-forma Adjusted EBITDA
Adjusted EBITDA for the 52 weeks ended March 25, 2023						79,189
Incremental Adjusted EBITDA for new stores acquired after March 26, 2022 as if owned on March 26, 2022²						14,101
Incremental Adjusted EBITDA for stores acquired, or to be acquired on or after March 25, 2023 as if owned on March 26, 2022³						5,975
Pro-forma Adjusted EBITDA for the 52 weeks ended March 25, 2023						99,265

Pro-forma Revenue
Revenue for the 52 weeks ended March 25, 2023						749,149
Incremental Revenue for the new stores acquired after March 26, 2022 as if owned on March 26, 2022^4						93,421
Incremental Revenue for the stores acquired, or to be acquired on or after  March 25, 2023 as if owned on March 26, 2022^5						33,533
Pro-forma Revenue for the 52 weeks ended March 25, 2023						876,104

________________________________________

Notes

¹ Represents non-cash expenses recognized in connection with share-based compensation in respect of our legacy stock option plan and omnibus long-term equity incentive compensation plans.

² The Company regularly acquires pharmacies and estimates that if it had acquired each of the pharmacies that it acquired during the 52 weeks prior to March 25, 2023 on March 26, 2022, it would have recorded additional Adjusted EBITDA of $14,101 for the 52 weeks ended March 25, 2023. This estimate is based on the amount of EBITDA budgeted by the Company for each of the acquired pharmacies to be earned at the time of their acquisition. There can be no assurance that if the Company had acquired these pharmacies on  March 26, 2022, they would have actually generated such budgeted EBITDA, nor is this estimate indicative of future results.

³ The Company regularly acquires pharmacies and estimates that if it had acquired each of the pharmacies that it acquired or has announced to be acquired after March 25, 2023 on March 26, 2022, it would have recorded additional Adjusted EBITDA of $5,975 for the 52 weeks ending March 25, 2023. This estimate is based on the amount of EBITDA budgeted by the Company for each of the acquired pharmacies to be earned at the time of their acquisition. There can be no assurance that if the Company had acquired these pharmacies on March 26, 2022, they would have actually generated such budgeted EBITDA, nor is this estimate indicative of future results.

⁴ The Company regularly acquires pharmacies and estimates that if it had acquired each of the pharmacies that it acquired during the 52 weeks prior to March 25, 2023 on March 26, 2022, it would have recorded additional Revenue of $93,421 for the 52 weeks ended March 25, 2023. This estimate is based on the amount of Revenue budgeted by the Company for each of the acquired pharmacies to be generated at the time of their acquisition. There can be no assurance that if the Company had acquired these pharmacies on March 26, 2022, they would have actually generated such budgeted Revenue, nor is this estimate indicative of future results.

⁵ The Company regularly acquires pharmacies and estimates that if it had acquired each of the pharmacies that it acquired or has announced to be acquired after March 25, 2023 on March 26, 2022, it would have recorded additional Revenue of $33,533 for the 52 weeks ended March 25, 2023. This estimate is based on the amount of Revenue budgeted by the Company for each of the acquired pharmacies to be generated at the time of their acquisition. There can be no assurance that if the Company had acquired these pharmacies on March 26, 2022, they would have actually generated such Revenue, nor is this estimate indicative of future results.

SOURCE Neighbourly Pharmacy Inc.

please contact Marina Davies, VP, Investor Relations at [email protected] or visit www.neighbourlypharmacy.ca.