TORONTO, Nov. 9, 2022
/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, 2022.
Highlights for the Third Quarter
of 2022
(All percentage increases are as compared to the third quarter
of 2021)
- Revenue increased 37% to $97.4
million from $71.3
million:
-
- Growth driven primarily by the full quarter contribution of the
prior year acquisition of the Long-Term Care Pharmacy Business of
Medical Pharmacies Group Limited ("MPGL LTC Pharmacy Business"),
which was acquired during the third quarter of 2021, and the
contribution of the Long-Term Care Pharmacy Business of Hogan
Pharmacy Partners Ltd. (the "Hogan LTC Pharmacy Business") that was
acquired on May 30, 2022 as well as
organic growth from contracts that were onboarded over the second
half of 2021 and first half of 2022.
- Adjusted EBITDA1 increased 12% to $7.7 million from $6.9
million:
-
- Growth driven primarily by contributions of the MPGL LTC
Pharmacy Business and Hogan LTC Pharmacy Business, as well as from
new contracts that were onboarded over the second half of 2021 and
first half of 2022.
- Adjusted EBITDA was impacted by the commencement of the
offboarding of a large customer contract, which reduced Adjusted
EBITDA by $0.5 million in the
quarter, consistent with previous expectations. Adjusted EBITDA was
also impacted by certain incremental costs associated with a higher
than average number of open pharmacy staff positions as a result of
the current labour market, including overtime, contract labour and
recruitment costs, totaling $0.9
million. These incremental costs are expected to persist for
the remainder of 2022 and into 2023.
- Net loss decreased by 55% to $1.8
million from $3.9
million:
-
- Decrease in net loss was driven primarily by the full quarter
contribution of the MPGL LTC Pharmacy Business, and decreases in
transaction and restructuring costs and finance costs, partially
offset by the commencement of the offboarding of a large customer
contract, incremental costs incurred as a result of the current
labour market and a lower positive impact from the change in the
fair value of derivative financial instruments.
- Signed new long-term agreement with large national
customer
-
- Includes a 5-year extension for over 4,500 beds currently
serviced by the Company, including approximately 3,400 beds
expected to be acquired by the customer from another existing
customer.
- Over 1,200 new beds are expected to be onboarded as a result of
the contract renewal.
- Transfer of the 3,400 acquired beds and onboarding of the 1,200
beds not currently serviced will result in this customer being one
of the Company's largest going forward.
- Signed multi-year contract to provide pharmacy services to
residents in multiple seniors living facilities in Atlantic Canada, initially serving up to 600
residents. CareRx is currently in the process of establishing
pharmacy operations in Atlantic
Canada and expects to commence servicing homes in the third
quarter of 2023.
1 See
"Non-IFRS Measures" below.
|
"Our third quarter results continue to reflect the execution of our
organic and acquisitive growth strategy," said David Murphy, President and Chief Executive
Officer of CareRx. "Similar to what was experienced in the last
quarter, as expected, Adjusted EBITDA continues to be impacted by
incremental costs associated with the challenging labour market. We
expect these challenges to persist into 2023 and mitigating this
impact remains a top priority. We continue to execute in areas that
will support our growth in the near- and long-term and during the
quarter we signed a new long-term agreement and contract extension
with a large national customer which includes the onboarding of
over 1,200 new beds. We also announced a significant step in our
growth journey with our planned expansion into Atlantic Canada. New growth opportunities such
as this, combined with our continued pursuit of acquisition
opportunities in what remains a fragmented market, support our
confidence in our growth potential in the near- and long-term."
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)
|
2022
|
2021
|
2020
|
2022
|
2021
|
2020
|
$
|
$
|
$
|
$
|
$
|
$
|
Revenue
|
97,353
|
71,267
|
45,633
|
287,408
|
165,780
|
115,808
|
|
|
|
|
|
|
|
EBITDA1
|
6,943
|
5,450
|
(313)
|
(5,404)
|
4,358
|
(7,815)
|
Adjusted
EBITDA1
|
7,710
|
6,862
|
3,840
|
25,123
|
15,286
|
8,710
|
Per share -
Basic
|
$0.16
|
$0.19
|
$0.17
|
$0.53
|
$0.48
|
$0.46
|
Adjusted EBITDA
Margin1
|
7.9 %
|
9.6 %
|
8.4 %
|
8.7 %
|
9.2 %
|
7.5 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
(1,782)
|
(3,928)
|
(6,407)
|
(29,673)
|
(18,283)
|
(15,241)
|
Per share - Basic and
Diluted
|
($0.04)
|
($0.11)
|
($0.28)
|
($0.63)
|
($0.58)
|
($0.81)
|
|
|
|
|
|
|
|
Cash provided by
(used in) operations
|
13,298
|
11,997
|
1,525
|
8,143
|
4,571
|
(2,590)
|
|
|
|
|
|
|
|
Total
Assets
|
255,580
|
284,131
|
153,104
|
255,580
|
284,131
|
153,104
|
Total
Liabilities
|
196,721
|
205,006
|
140,033
|
196,721
|
205,006
|
140,033
|
1 See
"Non-IFRS Measures" below.
|
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 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. 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,
|
|
2022
|
2021
|
2022
|
2021
|
(Thousands of
Canadian Dollars except per
share amounts)
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Net
loss
|
(1,782)
|
(3,928)
|
(29,673)
|
(18,283)
|
Depreciation and
amortization
|
5,018
|
3,786
|
14,844
|
10,112
|
Finance costs,
net
|
4,186
|
5,525
|
11,435
|
13,494
|
Income tax expense
(recovery)
|
(479)
|
67
|
(2,010)
|
(965)
|
EBITDA
|
6,943
|
5,450
|
(5,404)
|
4,358
|
Transaction and
restructuring costs
|
580
|
3,889
|
4,301
|
6,478
|
Change in fair value of
contingent consideration
liability
|
577
|
632
|
1,331
|
883
|
Goodwill and intangible
assets impairment
|
—
|
—
|
24,330
|
—
|
Share-based
compensation expense
|
814
|
565
|
2,967
|
2,057
|
Change in fair value of
derivative financial
instruments
|
(1,249)
|
(3,412)
|
(5,355)
|
1,428
|
Change in fair value of
investment
|
—
|
—
|
2,713
|
—
|
Loss (gain) on disposal
of assets
|
45
|
(262)
|
240
|
82
|
Adjusted
EBITDA
|
7,710
|
6,862
|
25,123
|
15,286
|
|
|
|
|
|
Weighted average number
of shares - basic
and diluted (in thousands)
|
47,466
|
36,051
|
47,019
|
31,518
|
Adjusted EBITDA per
share - basic
|
$0.16
|
$0.19
|
$0.53
|
$0.48
|
Conference Call
The Company will host a conference call, including a slide
presentation, to discuss its third quarter 2022 financial results
on Wednesday, November 9, 2022 at
8:30 a.m. Eastern Time (ET).
Telephone Dial-In Access Information
To access the conference call by telephone, 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 1,600 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.
SOURCE CareRx Corporation