Same store sales1 increase 4.1% in the quarter, while revenues grow to $265 million, up 90.6%

TORONTO, Feb. 14, 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 sixteen-week period ended December 31, 2022 (the "third quarter 2023").

Neighbourly Pharmacy Logo (CNW Group/Neighbourly Pharmacy Inc.)

"Neighbourly's third quarter results reflect the strength of our business and its continued resilience" stated Chris Gardner, Neighbourly's outgoing Chief Executive Officer. "I am thrilled to pass the baton over to Skip Bourdo as Neighbourly embarks on its next phase of growth. I look forward to supporting Skip and the team as they continue to execute our successful strategy," concluded Mr. Gardner.

Mr. Bourdo, the Company's newly appointed CEO said: "I feel privileged to be taking over the CEO role and along with the exceptional team, I look forward to continuing our focus on growing Neighbourly's network of independent pharmacies, while driving the health and profitability of the business and supporting the health needs of the communities we serve every day across Canada."

Third Quarter 2023 Highlights

  • Same store sales1 in the third quarter increased 4.1%.
  • Revenue for the third quarter increased to $265.3 million, up $126.1 million or 90.6%.
  • Adjusted EBITDA2 for the third quarter increased to $28.5 million, up $14.1 million or 97.2%, driven by the incremental profitability of acquired pharmacies added to the Company's network.
  • Network of pharmacies now at 284 locations, following the successful integration of 6 pharmacies acquired in Atlantic Canada and 2 in British Columbia.
  • Adjusted Earnings per Share3 of $0.17 for the third quarter 2023, increased from $0.15 in the third quarter 2022.
  • Pro-Forma Revenue3 of $842.2 million and Pro-Forma Adjusted EBITDA3 of $94.4 million.

_____________________________

1 Same store sales is a supplementary measure which represents sales from stores that were owned and operated by the Company for the entirety of both periods and is a supplementary financial measure that is commonly used in the industry.

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 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.


Selected Third Quarter 2023 Results




Third quarter



Year to Date


in 000's



2023

2022



2023

2022


Store count



284

170



284

170












Total Prescriptions 



4,379

2,311



9,341

5,352


Same-store prescription growth (%)



-2.2 %

2.7 %



-1.4 %

1.4 %












Revenue



$   265,286

$  139,180



$  558,537

$  315,192


Same-store sales growth (%)1



4.1 %

2.2 %



3.3 %

3.4 %


Pharmacy revenue as a % of revenue



77.4 %

78.4 %



78.3 %

77.9 %












Corporate, general & administrative ("CG&A") costs2



$       9,853

$      5,456



$    21,269

$     11,845


CG&A as a % of revenue



3.7 %

3.9 %



3.8 %

3.8 %












Adjusted EBITDA3



$     28,539

$    14,470



$     59,575

$     34,589


Adjusted EBITDA margin (%)



10.8 %

10.4 %



10.7 %

11.0 %












Pro-Forma Adjusted EBITDA for the 52 weeks ended4



$     94,416

















Pro-Forma Revenue for the 52 weeks ended5



$   842,242

















____________________________________












1 Same-store sales represents sales from stores that were owned and operated by the Company for the entirety of both periods and is a supplementary financial measure that is commonly used in the industry.  Neighbourly calculates same-store sales using revenue determined in accordance with IFRS.


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.













Impact of COVID-19

The COVID-19 pandemic has had a lasting impact on non-urgent trips to doctors' offices, resulting in lower than expected count of new prescriptions.

Declaration of Dividend

Neighbourly announced today that a quarterly dividend will be paid on April 11, 2023, to the Company's common shareholders of record as of March 14, 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 February 14, 2023, to discuss Neighbourly's financial results for the third quarter 2023. Participants may join the Company's conference call by dialing 416-764-8650 or 1-888-664-6383 (ID: 34289453). 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 289453#. 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 third quarter 2023 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 284 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 February 13, 2023 for sixteen weeks ended December 31, 2022, 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 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 sixteen weeks ended December 31, 2022 (the "MD&A") and under the heading "Risk Factors" in the Company's annual information form (the "AIF") filed on June 23, 2022, which are available on SEDAR at www.sedar.com under the Company's profile. 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 news release represents the Company's expectations as of the date of this news 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 Interim Statements of Income (Loss) and Comprehensive Income (Loss)




16 weeks ended


40 weeks ended

000's


Dec 31, 2022

Jan 1, 2022


Dec 31, 2022

Jan 1, 2022









Revenue


$               265,286

139,180


558,537

315,192

Cost of sales


161,742

88,475


342,259

198,641









Gross Profit


103,544

50,705


216,278

116,551









Operating, general and administrative expenses


76,786

37,702


160,623

85,625

Acquisition, transaction and integration costs


3,437

1,824


15,547

23,743

Depreciation and amortization


27,398

7,996


43,601

18,155

Impairment loss


-

320


-

343









Operating (loss) income


(4,077)

2,863


(3,493)

(11,315)









Finance costs (income), net


9,016

2,652


6,350

(2,452)

Change in fair value of financial assets and liabilities


(2,568)

-


(2,605)

67,228









(Loss) income before income taxes


(10,525)

211


(7,238)

(76,091)









Income tax expense (recovery) 


(1,911)

863


1,984

4,890









Net loss and comprehensive loss for the period


(8,614)

(652)


(9,222)

(80,981)









Attributable to:








Shareholders of the Company


$                   (8,975)

(889)


(10,189)

(81,666)


Non-controlling interest


361

237


967

685




(8,614)

(652)


(9,222)

(80,981)









Net loss per share attributable to shareholders of the Company







basic and diluted


$                     (0.20)

(0.03)


(0.25)

(3.05)


Condensed Consolidated Interim Statements of Financial Position






000's



December 31, 2022

March 26, 2022

Assets





Current





Cash



$                    19,788

40,410

Trade and other receivables



39,644

24,616

Inventory



90,149

55,721

Prepaid expenses and other assets


4,641

2,009

Assets held for sale



15,573

-

Total Current Assets



169,795

122,756






Property and equipment, net



28,937

12,366

Right-of-use assets, net



66,092

47,163

Intangible assets, net



401,396

134,798

Goodwill



427,716

238,267

Deferred tax assets



21,188

13,288

Other assets



4,365

627

Total Non-current Assets



949,694

446,509






Total Assets



$                  1,119,489

569,265






Liabilities and Shareholders' Equity









Current 





Accounts payable and other liabilities


$                     101,215

61,226

Promissory notes payable



62

62

Current portion of long-term borrowings


2,500

2,500

Current portion of lease liabilities


21,074

14,705

Total Current Liabilities



124,851

78,493






Long-term borrowings



233,991

83,656

Lease liabilities



51,101

37,177

Deferred tax liabilities



88,834

21,317

Total non-current liabilities



373,926

142,150

Total liabilities



498,777

220,643






Shareholders' Equity





Share capital



864,295

585,764

Contributed surplus



9,951

5,131

Deficit



(260,197)

(249,956)

Total shareholders' equity



614,049

340,939

Non-controlling interest



6,663

7,683

Total shareholders' equity



620,712

348,622






Total liabilities and shareholders' equity


$                  1,119,489

569,265


Condensed Consolidated Statements of Cash Flows














16 weeks ended


40 weeks ended

000's


December 31,

2022

January 1,

2022


December 31,

2022

January 1,

2022










Operating Activities:








Net loss for the period


(8,614)

(652)


(9,222)

(80,981)


Adjustments for non-cash items:








Depreciation and amortization


27,398

7,996


43,601

18,155


Impairment loss


-

320


-

343


Share-based compensation


1,781

1,467


3,920

3,663


Gain (loss) on disposal of property and equipment


16

-


27

(11)


Finance costs (income), net


9,016

2,652


6,350

(2,452)


Change in fair value of financial assets and liabilities


(2,568)

-


(2,605)

67,228


Provision for income taxes


(1,911)

863


1,984

4,890


Lease renewals and modifications


-

(32)


(137)

(64)


Expected credit loss expense


-

-


-

11


Loss on remeasurement of held for sale assets


90

-


534

-


Change in non-cash operating working capital


6,710

4,910


(8,408)

(5,394)


Income taxes recovered (paid)


12

(2,328)


256

(3,094)


Payment of contingent consideration


-

-


(12)

-





31,930

15,196


36,288

2,294










Financing Activities:








Proceeds from issuance of common shares, net of issuance costs


-

28,194


282,784

216,091


Proceeds from exercise of stock options


1,382

125


1,450

125


Proceeds from exercise of warrants


-

-


-

9


Repayment of promissory notes payable


-

-


-

(740)


Proceeds from long-term borrowings


6,452

-


157,626

-


Repayment of long-term borrowing


-

-


-

(100,168)


Transaction costs related to long-term borrowings


(60)

-


(2,036)

(1,915)


Repayment of mortgages payable


-

(1,237)


-

(1,304)


Interest Paid


(4,883)

(1,285)


(10,079)

(3,926)


Dividends and distributions paid


(4,337)

(2,514)


(9,149)

(4,017)


Payment of lease liabilities


(6,512)

(3,191)


(16,230)

(8,981)


Proceeds from cancellation of shares


-

-


900

-





(7,958)

20,092


405,266

95,174










Investing Activities:








Acquisition of property and equipment


(2,020)

(942)


(7,062)

(1,870)


Acquisition of intangible assets


(131)

(282)


(463)

(485)


Acquisition of other assets


-

(15)


(3)

(15)


Business combinations, net of cash acquired


(13,389)

(65,587)


(456,991)

(101,145)


Proceeds from sale of assets held for sale


2,228

-


2,228

-


Interest received


34

85


115

226





(13,278)

(66,741)


(462,176)

(103,289)










Net change in cash for the period


10,694

(31,453)


(20,622)

(5,821)

Cash, beginning of the period


9,094

71,546


40,410

45,914

Cash, end of period


19,788

40,093


19,788

40,093


Reconciliation from IFRS to Non-IFRS Measures

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



16 weeks ended


40 weeks ended


12 weeks

ended

in 000's (unless otherwise stated)


2023

2022


2023

2022


2022

Income (Loss) and Comprehensive Income (loss) for the period


(8,614)

(652)


(9,222)

(80,981)


8,586

Income tax expense (recovery)


(1,911)

863


1,984

4,890


(10,933)

Finance Costs, net


9,016

2,652


6,350

(2,452)


2,456

Fair value changes of financial liabilities


(2,568)

-


(2,605)

67,228


-

Depreciation and amortization


27,398

7,996


43,601

18,155


7,199

Impairment loss


-

320


-

343


(19)

Acquisition, transaction and integration costs


3,437

1,824


15,547

23,743


2,894

Share-based compensation1


1,781

1,467


3,920

3,663


1,119










Adjusted EBITDA


28,538

14,470


59,575

34,588


11,302










Revenue


265,286

139,180


558,537

315,192


112,317

Adjusted EBITDA margin


10.8 %

10.4 %


10.7 %

11.0 %


10.1 %



















Pro-forma Adjusted EBITDA


















 Adjusted EBITDA for the 40 weeks ended December 31, 2022


59,575

     Adjusted EBITDA for the 12 weeks ended March 26, 2022


11,302

Incremental Adjusted EBITDA for new stores acquired after January 1, 2022 as if owned on January 1, 20222


23,538










Pro-forma Adjusted EBITDA for the 52 weeks ended December 31, 2022








94,416



















Pro-forma Revenue









Revenue for the 40 weeks ended December 31, 2022


558,537

    Revenue for the 12 weeks ended March 26, 2022


112,317

Incremental Revenue for the new stores acquired after January 1, 2022 as if owned on January 1, 20223


171,389










Pro-forma Revenue for the 52 weeks ended December 31, 2022








842,242

____________________________________

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 December 31, 2022 on January 1, 2022, it would have recorded additional Adjusted EBITDA of $23,538 for the 52 weeks ended December 31, 2022. 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  January 1, 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 during the 52 weeks prior to December 31, 2022 on January 1, 2022, it would have recorded additional Revenue of $171,389 for the 52 weeks ended December 31, 2022. 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 January 1, 2022, they would have actually generated such budgeted Revenue, nor is this estimate indicative of future results.

 



16 weeks ended



40 weeks ended

in 000's


2023

2022



2023


2022










Income (Loss) and Comprehensive Income (loss) for the period


(8,614)

(652)



(9,222)


(80,981)

Adjustments, pre-tax:









Fair value changes of financial liabilities


(2,568)

-



(2,605)


67,228

Amortization on customer lists


18,470

3,794



24,635


8,777

Impairment loss


-

320



-


343

Acquisition, transaction and integration costs


3,437

1,824



15,547


23,743

Share-based compensation1


1,781

1,467



3,920


3,663

Gain on Debt Modification2


-

-



(8,703)


(10,356)

Income tax impact on non-GAAP adjustments


(3,221)

(1,470)



(7,595)


(5,426)

Deferred tax expense (recovery)3


(1,616)

(220)



351


2,577

Adjusted net income


7,667

5,063



16,327


9,569










Adjusted weighted average number of shares (000's)4


44,350

34,038



40,997


31,154

Adjusted Earnings per share


0.17

0.15



0.40


0.31

_____________________________________________









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 Represents the non-cash gain on debt modification related to the revaluation of the Company's credit facility that was refinanced concurrent with the IPO with an extended maturity and more favourable interest rate terms.

3 Represents the portion of the Company's tax provision that is deferred as detailed in the notes to the Interim Financial Statements.

4 Adjusted weighted average number of shares outstanding adjusted to reflect all preferred shares and related accrued dividends outstanding as though they were converted to common shares at the beginning of the respective period.



 

SOURCE Neighbourly Pharmacy Inc.

Copyright 2023 Canada NewsWire

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