Returns to Growth in Revenue and Adjusted
EBITDA
TORONTO, Aug. 10,
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 second quarter ended June 30,
2023.
"We are pleased to have returned to generating organic
quarter-over-quarter revenue and Adjusted EBITDA growth in the
second quarter, which was in-line with our expectations. While
CareRx has been navigating the various challenges in the healthcare
labour market over the last year, our focus on organic growth
opportunities and margin accretive efficiencies is starting to take
hold and these results are reflective of that focus," said
Puneet Khanna, President & Chief
Executive Officer of CareRx. "With the growth in beds serviced in
the second quarter, we have now substantially offset the fiscal
2022 customer offboarding. CareRx will continue to focus on the
execution of a comprehensive technology and operational process
optimization program which is expected to result in cost savings
and improved productivity. Over the next 12 months, these efforts
are expected to drive improved financial and operating performance,
strengthen our competitive advantage, and better position CareRx in
this high growth industry."
Highlights for the Second Quarter of 2023
- Revenue for the quarter was $94.5
million as compared to $91.4
million for the first quarter of 2023 and $96.9 million for the second quarter of
2022:
-
- Increase compared to the prior quarter was primarily due to an
increase in the average number of beds serviced; and
- Decline 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 $7.0 million as compared to $6.8 million for the first quarter of 2023
and $8.8 million for the second
quarter of 2022:
-
- Increase compared to the prior quarter was due to an increase
in the average number of beds serviced; and
- Decline 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 income for the quarter was $1.9
million as compared to a net loss of $2.1 million for the first quarter of 2023 and a
net loss of $25.1 million for the
second quarter of 2022:
-
- Elimination of net loss as compared to the prior quarter was
primarily due to an increase in income tax recovery; and
- Elimination of net loss as compared to the same period in the
prior year was driven primarily by non-cash adjustments including
impairment losses related to goodwill and intangible assets and
investments recorded during the second quarter of 2022, which did
not recur in 2023.
- Effective May 31,
2023, Puneet Khanna assumed the role of President and Chief
Executive Officer and joined the Company's Board of Directors on
June 6, 2023, after previously
serving as the Company's Chief Operating Officer.
- On June 6, 2023, Jeff Watson joined the Company's Board of
Directors. Mr. Watson most recently served as the President and
Chief Executive Officer of Apotex Inc. from December 2018 to April
2023.
1 See "Non-IFRS Measures"
below
|
FINANCIAL RESULTS
Selected Financial Information
|
For the three month
periods
ended June 30,
|
For the six month
periods
ended June 30,
|
(Thousands of
Canadian dollars except per
share amounts and percentages)
|
2023
|
2022
|
2021
|
2023
|
2022
|
2021
|
$
|
$
|
$
|
$
|
$
|
$
|
Revenue
|
94,485
|
96,879
|
49,656
|
185,889
|
190,055
|
94,513
|
|
|
|
|
|
|
|
EBITDA1
|
6,415
|
(17,868)
|
(991)
|
12,189
|
(12,347)
|
(1,092)
|
Adjusted
EBITDA1
|
7,040
|
8,797
|
4,338
|
13,859
|
17,413
|
8,424
|
Per share -
Basic
|
$0.12
|
$0.19
|
$0.14
|
$0.25
|
$0.37
|
$0.29
|
Per share -
Diluted
|
$0.11
|
$0.19
|
$0.14
|
$0.25
|
$0.37
|
$0.29
|
Adjusted EBITDA
Margin1
|
7.5 %
|
9.1 %
|
8.7 %
|
7.5 %
|
9.2 %
|
8.9 %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
1,881
|
(25,129)
|
(8,489)
|
(268)
|
(27,891)
|
(14,355)
|
Per share - Basic and
Diluted
|
$0.03
|
($0.53)
|
($0.28)
|
$0.00
|
($0.60)
|
($0.49)
|
|
|
|
|
|
|
|
Cash provided by
(used in) operations
|
5,329
|
(3,979)
|
(5,721)
|
10,395
|
(5,155)
|
(7,426)
|
|
|
|
|
|
|
|
Total
Assets
|
268,782
|
258,433
|
165,222
|
268,782
|
258,433
|
165,222
|
Total
Liabilities
|
188,886
|
198,606
|
144,655
|
188,886
|
198,606
|
144,655
|
1 See
"Non-IFRS Measures" below.
|
Conference Call
The Company will host a conference call, including a slide
presentation, to discuss its second quarter of 2023 financial
results on Thursday August 10, 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/3O990RB 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 over 95,000 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 June 30,
|
For the six
month
periods ended June 30,
|
|
2023
|
2022
|
2023
|
2022
|
(Thousands of
Canadian Dollars except per
share amounts)
|
$
|
$
|
$
|
$
|
|
|
|
|
|
Net income
(loss)
|
1,881
|
(25,129)
|
(268)
|
(27,891)
|
Depreciation and
amortization
|
5,317
|
5,127
|
10,092
|
9,826
|
Finance costs,
net
|
3,234
|
3,575
|
6,382
|
7,249
|
Income tax
recovery
|
(4,017)
|
(1,441)
|
(4,017)
|
(1,531)
|
EBITDA
|
6,415
|
(17,868)
|
12,189
|
(12,347)
|
Transaction, start-up,
restructuring and other costs
|
554
|
1,033
|
812
|
3,721
|
Change in fair value of
contingent consideration liability
|
16
|
658
|
197
|
754
|
Goodwill and intangible
assets impairment
|
—
|
24,330
|
—
|
24,330
|
Share-based
compensation expense
|
36
|
823
|
737
|
2,153
|
Change in fair value of
derivative financial instruments
|
(91)
|
(2,980)
|
(268)
|
(4,106)
|
Change in fair value of
investment
|
—
|
2,713
|
—
|
2,713
|
Loss on disposal of
assets
|
110
|
88
|
192
|
195
|
Adjusted
EBITDA
|
7,040
|
8,797
|
13,859
|
17,413
|
|
|
|
|
|
Weighted average number
of shares - basic (in
thousands)
|
57,661
|
47,076
|
56,502
|
46,792
|
Adjusted EBITDA per
share - basic
|
$0.12
|
$0.19
|
$0.25
|
$0.37
|
Weighted average number
of shares - diluted (in
thousands)
|
63,169
|
47,076
|
56,502
|
46,792
|
Adjusted EBITDA per
share - diluted
|
$0.11
|
$0.19
|
$0.25
|
$0.37
|
SOURCE CareRX Corporation