CareRx Corporation Reports Strong Second Quarter Driven by Addition of Remedy's Business
Acquisition contributed significant growth in revenue, Adjusted EBITDA and beds under contract
TORONTO, Aug. 13, 2020 /CNW/ - CareRx Corporation ("CareRx" or the "Company") (TSX: CRRX), Canada's leading provider of specialty pharmacy services to seniors, today reported its financial results for the second quarter of 2020.
Highlights for the Second Quarter of 2020
- Completed the acquisition of Remedy'sRx Specialty Pharmacy ("Remedy's") on May 7, 2020;
- Revenue from continuing operations increased 26.2% to $39.7 million;
- Adjusted EBITDA1 from continuing operations increased by 26.0% to $2.8 million;
- Changed name to CareRx Corporation and completed share consolidation; and
- Raised gross proceeds of $11.5 million through a bought deal private placement, which included a fully exercised over-allotment option.
"We had a strong and eventful second quarter," said David Murphy, President and CEO of CareRx. "Our acquisition of Remedy's part way through the quarter makes us the country's leading provider of specialty pharmacy services to seniors in long-term care and retirement homes – contributing significant growth in revenue, profitability, and beds under contract. In addition, we completed our rebranding from Centric Health to CareRx Corporation, and further strengthened our balance sheet in order to pursue further acquisition and growth opportunities."
Selected Financial Information
(Thousands of Canadian dollars except per share
amounts and percentages)
For the three month
periods ended June 30,
For the six month
periods ended June 30,
Revenue from Specialty Pharmacy
Adjusted EBITDA1 from Specialty Pharmacy
Adjusted EBITDA Margin from Specialty Pharmacy
Corporate office costs
Adjusted EBITDA from continuing operations
Adjusted EBITDA Margin from continuing operations
Per share - Basic and Diluted2
Adjusted EBITDA Margin
Per share - Basic and Diluted2
Cash provided by (used in) operations
See "Non-IFRS Measures" below.
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 quarter increased 26.2% to $39.7 million compared to $31.5 million in the second quarter of last year. The increase was driven by the acquisition of Remedy's part way through the quarter, which led to an increase in the average number of beds serviced during the quarter.
Adjusted EBITDA from continuing operations during the quarter increased by 26.0% to $2.8 million compared to $2.2 million in the same quarter of last year. The increase was attributable to the addition of the Remedy's business part way through the quarter, and a 30.4% reduction in corporate costs.
During the year ended December 31, 2019, the Company divested the operating assets of its retail pharmacy operations in Grande Prairie, AB and Medicine Hat, AB and the Company's Surgical and Medical Centres business. On January 1, 2020, the Company divested its Performance Orthotics business. The results of these operations have been included as part of discontinued operations on the consolidated statement of income and comprehensive income.
Revenue and Adjusted EBITDA from discontinued operations for the three and six month periods ended June 30, 2020 were both nil as compared to $11.3 million and $1.3 million, and $22.1 million and $2.6 million, respectively, for the same periods in the prior year.
Effective August 14, 2020, Darren Youngleson will retire as a director of the Company. Mr. Youngleson currently serves as a director nominee under a nomination right that was granted to Dr. Jack Shevel, one of the Company's directors and its Chairman Emeritus. As a result of the conversion of special warrants of the Company into common shares on August 13, 2020, Dr. Shevel's ownership threshold dropped below the required threshold to maintain two Board seats.
"Darren has been a director and a significant shareholder for over 11 years and has played an important part in the stewardship and direction of CareRx over that time," said Kevin Dalton, Chairman of CareRx. "On behalf of the Board of Directors, I want to thank Darren for his contributions to the Company and wish him the best of luck in his future endeavors."
The Company recently received the outcome of a confidential arbitration that had been ongoing with the vendors of one of its historical acquisitions in relation to the non-payment of a disputed earn-out. The arbitrator sided with the vendors and awarded them $4.2 million. The Company is currently evaluating its options in respect of the decision.
CareRx will host a conference call, including a slide presentation, to discuss its second quarter financial results on Friday, August 14, 2020 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 (formerly Centric Health Corporation) is Canada's leading provider of specialty pharmacy services to seniors. We serve approximately 50,000 residents in over 900 seniors and other communities, including 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.
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.
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 (income) 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, 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 calculations. EBITDA and Adjusted EBITDA are not recognized measures under IFRS.
SOURCE CareRx Corporation
For further information: David Murphy, President and Chief Executive Officer, CareRx Corporation, 416-927-8400; Andrew Mok, Chief Financial Officer, CareRx Corporation, 416-927-8400