CareRx Reports 47% Year-Over-Year Growth in Revenue and 100% Year-Over-Year Growth in Adjusted EBITDA for First Quarter of 2021

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TORONTO, May 12, 2021 /CNW/ - CareRx Corporation ("CareRx" or the "Company") (TSX: CRRX), Canada's leading provider of pharmacy services to seniors communities, today reported its financial results for the first quarter ended March 31, 2021.

Highlights for the First Quarter of 2021

(All percentage increases are as compared to the first quarter of 2020)

  • Revenue from continuing operations increased 47% to $44.9 million from $30.4 million, driven primarily by the acquisition of the Remedy's business in the second quarter of 2020. This contribution was partially offset by a temporary COVID-19-related reduction in the average number of beds serviced during the first quarter of 2021, with the COVID-19-related impact on beds serviced having reached its peak in January 2021;

  • Adjusted EBITDA1 from continuing operations increased 100% to $4.1 million from $2.0 million, driven by the contribution of the Remedy's business, including over $3.0 million in annualized cost saving synergies achieved from the consolidation of certain fulfillment centres and other operating cost savings that were fully realized in the quarter, which were partially offset by the temporary COVID-19-related reduction in the average number of beds serviced;

  • Substantially completed onboarding of 1,100 beds from multi-year contract with Ontario-based seniors home operator with onboarding activities occurring late in the quarter after having been delayed due to COVID-19; and

  • Completed a bought deal financing and concurrent private placement for total gross proceeds of $21.2 million.

Highlights Subsequent to Quarter End

  • Entered a definitive agreement to acquire the Long-Term Care Pharmacy Division of Medical Pharmacies Group Limited ("MPGL LTC Pharmacy Business"), which includes 18 facilities and 36,000 residents serviced and is expected to contribute run-rate annualized revenue and Adjusted EBITDA of approximately $150.0 million and $10.0-12.0 million, respectively, and minimum additional cost savings synergies of $5.0 million;

  • Entered a definitive agreement to acquire a portion of the Long-Term Care Pharmacy Services business of Rexall Health Solutions ("Rexall LTC Pharmacy Business") that services approximately 4,200 residents and is expected to contribute run-rate annualized revenue of approximately $14.0 million and nominal Adjusted EBITDA, prior to integration synergies. Rexall has made the strategic decision to exit the business of providing pharmacy services to seniors homes and other congregate care settings and the Company will have a further opportunity to work with Rexall to transition additional beds that are outside of the scope of the acquisition as Rexall winds down the remainder of its business;

  • Completed the acquisition of SmartMeds Pharmacy Inc. (announced during the first quarter of 2021), which added 2,400 residents serviced in Ontario and is expected to contribute run-rate annualized revenue and Adjusted EBITDA of approximately $13.0 million and $1.5 million, respectively, prior to integration synergies;

  • Completed the acquisition of a fulfillment centre in Thunder Bay, Ontario from MPGL in advance of closing the MPGL LTC Pharmacy Business acquisition in order to service a portion of the beds associated with the 1,100-bed contract win that was previously announced in the fourth quarter of 2020;

  • Entered into a bought deal private placement and concurrent private placement of subscription receipts of the Company for total gross proceeds of approximately $55.0 million, which are expected to close on or about May 19, 2021;

  • Entered into binding commitment letters with the Company's lenders to refinance its existing credit facilities under which a syndicate of lenders will advance $60.0 million in new credit facilities contemporaneously with the closing of the MPGL LTC Pharmacy Business acquisition, to repay the existing senior credit facility and to pay a portion of the cash closing price for the MPGL LTC Pharmacy Business and related transaction costs; and

  • Expanded the Company's Pharmacy At Your Door business to the greater Vancouver area.

"CareRx has undertaken a number of exciting initiatives to start 2021," said David Murphy, President and Chief Executive Officer of CareRx. "To date, we have executed on three acquisitions, including the acquisition of the MPGL LTC Pharmacy Business - the most significant pharmacy acquisition in the Company's history. These acquisitions are expected to grow our bed count by approximately 85%, further transform our revenue and profitability profile, and enable us to realize meaningful increases in cost efficiencies and scale."

"Our financial results for the first quarter of 2021, with strong year-over-year growth in revenue and Adjusted EBITDA, reflect the execution of our growth strategy in 2020, and in particular the scale and synergies generated by the Remedy's acquisition that was completed last May. Our results, however, were impacted by a temporary lower bed count with existing homes serviced, as well as a slower than expected onboarding of an 1,100-bed contract, especially in the early part of the quarter as the impact of COVID-19 on our business reached its peak in January. We have now completed that onboarding and are seeing bed counts begin to normalize."

"Looking forward, even with the completion of our acquisitions, the Canadian seniors care pharmacy sector remains highly fragmented. With our strengthened leadership position and expanded national scale, CareRx is better positioned than ever before to continue to execute on our growth strategy through additional acquisitions and organic growth."

FINANCIAL RESULTS

Selected Financial Information

(Thousands of Canadian dollars except per share amounts and percentages)

For the three month periods ended March 31,


2021

2020

2019


$

$

$

Revenue from continuing operations

44,857

30,426

29,533





Operating loss from continuing operations

(419)

(2,281)

(1,498)





Loss from continuing operations before interest expense and income taxes

(3,193)

(2,575)

(2,223)





EBITDA1 from continuing operations

(101)

(261)

(15)

Adjusted EBITDA1 from continuing operations

4,086

2,045

1,859

Per share - Basic2

$0.15

$0.14

$0.18

Per share - Diluted2

$0.15

$0.08

$0.18

Adjusted EBITDA Margin from continuing operations

9.1%

6.7%

6.3%





Adjusted EBITDA1

4,086

2,045

3,140

Per share - Basic2

$0.15

$0.14

$0.31

Per share - Diluted2

$0.15

$0.08

$0.31

Adjusted EBITDA Margin

9.1%

6.7%

7.8%





Net income (loss)

(5,866)

5,314

(5,271)

Per share - Basic2

($0.21)

$0.37

($0.52)

Per share - Diluted2

($0.21)

$0.21

($0.52)





Cash provided by (used in) operations

(1,705)

(1,450)

2,547





Total Assets

170,624

92,566

138,967

Total Liabilities

143,934

105,163

153,751


1 See "Non-IFRS Measures" below.

2 Basic and diluted earnings per share is based on the profit or loss attributable to shareholders of CareRx Corporation.

Revenue from continuing operations for the three month period ended March 31, 2021 increased by 47.4% to $44.9 million from $30.4 million. Growth was driven primarily by the contribution of the Remedy's business that was acquired in the second quarter of 2020. This contribution was partially offset by a temporary COVID-19-related reduction in the average number of beds serviced during the first quarter of 2021, with the COVID-19 impact on beds serviced having reached its peak in January 2021.

Adjusted EBITDA for the three month period ended March 31, 2021, increased by 99.8% to $4.1 million from $2.5 million. Growth was driven primarily by the contribution from the Remedy's business acquisition that was completed in the second quarter of 2020, including over $3.0 million in annualized cost saving synergies achieved from the consolidation of certain fulfillment centres and other operating cost savings that were fully realized in the quarter. This contribution was partially offset by the impact of the temporary COVID-19-related reduction in the average number of beds serviced during the first quarter of 2021 and COVID-19 outbreaks that occurred in the first half of the quarter at homes being serviced.

Conference Call

CareRx will host a conference call, including a slide presentation, to discuss its first quarter financial results on Thursday, May 13, 2021 at 8:30 a.m. (ET).

Telephone Dial-In Access Information

To access the conference call by telephone, dial 647-427-7450 or 1-888-231-8191. 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 web site (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 web site (https://carerx.ca/presentations/).
For further information, please visit https://www.carerx.ca.

About CareRx Corporation

CareRx is Canada's leading provider of pharmacy services to seniors communities. We serve over 52,000 residents in over 925 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 exposure to and reliance on government regulation and funding, the Company's liquidity and capital requirements, exposure to epidemic or pandemic outbreak, the highly competitive nature of the Company's industry, 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 (income), 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 on both a basic and diluted basis. 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 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.

SOURCE CareRx Corporation

Cision
Cision

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