TORONTO, Nov. 5, 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 third quarter of 2020.
Highlights for the Third Quarter of 2020
(All percentage increases are as compared to the third quarter of 2019)
- Accelerated the integration of the Remedy's business, including commencement of the consolidation of certain fulfillment centres, with the site integration now expected to be completed by the end of the fourth quarter of 2020, ahead of schedule;
- Average number of beds serviced increased 58% to 49,344;
- Generated 45% growth in revenue from continuing operations to $45.6 million;
- Generated 37% growth in Adjusted EBITDA1 from continuing operations to $3.8 million;
- Achieved a 14.5% reduction in corporate costs; and
- Launched "Pharmacy at Your Door" to leverage the Company's market-leading institutional pharmacy and technology capabilities for potential new markets.
Highlights Subsequent to Quarter
- Strengthened the senior leadership team through the addition of industry veteran Puneet Khanna in the role of Senior Vice President, Corporate Development; and
- Divested of a wholly-owned, non-operating shell subsidiary (a pre-1954 charter company) for gross proceeds of $1.5 million.
"The third quarter of 2020 – our first with a full period of contribution from the Remedy's acquisition – was another strong quarter for our Company from both an operational and financial perspective," said David Murphy, President and Chief Executive Officer of CareRx. "The integration of the Remedy's business is ahead of schedule – now expected to be completed by year end – and we expect to begin to realize meaningful synergies in the first quarter of next year."
"CareRx has established a formidable position as the industry leader in Canada. We remain laser-focused on the execution of our strategy, leveraging our capabilities and customer-focused culture to win new contracts, while continuing to pursue acquisition opportunities to strengthen our value proposition, expand our national platform, and generate further operational efficiencies. 2021 promises to be a productive year in this regard."
Selected Financial Information
(Thousands of Canadian dollars except per share
amounts and percentages)
For the three month
For the nine month
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
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 third quarter of 2020 increased 45.3% to $45.6 million from $31.4 million for the third quarter of 2019. The increase was driven by the acquisition of Remedy's in May 2020 which contributed $15.8 million of revenue in the third quarter of 2020. This increase was slightly offset by the impact of certain amendments to the Ontario Drug Benefit Act ("ODBA") that came into effect on January 1, 2020 (the "ODBA Amendments") and a slight temporary COVID-19-related reduction in the average number of beds serviced during the third quarter of 2020.
Adjusted EBITDA from continuing operations for the third quarter of 2020 increased by 36.8% to $3.8 million compared to $2.8 million for the third quarter of 2019. The increase was attributable to the addition of the Remedy's business and a reduction in corporate costs. The Remedy's business contributed $1.2 million of Adjusted EBITDA in the third quarter of 2020. The net impact of the ODBA Amendments was a reduction to Adjusted EBITDA of $0.3 million, which was fully offset by a reduction in corporate costs of 14.5% to $1.1 million from $1.2 million, compared to the same period in the prior year, and other operating cost savings of $0.2 million.
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 nine month periods ended September 30, 2020 were both nil as compared to $8.9 million and a loss of $0.1 million, and $31.0 million and $2.5 million, respectively, for the same periods in the prior year.
Reduction in the Size of the Board of Directors
To accommodate the Company's objective of reducing the size of its Board of Directors, John Ewing has agreed to step down as a director of the Company, effective November 5, 2020.
"John has played a critical role in helping usher CareRx through an important period in its history and achieving a number of objectives that have significantly strengthened the organization going forward," said Kevin Dalton, Chairman of CareRx. "Not only has he been immensely supportive in helping CareRx solidify its financial position to enable its future success, John has been instrumental in recruiting new directors and improving the overall quality of the Board. On behalf of the Board of Directors, I want to thank John for his significant contribution to the Company and wish him the best of luck in his future pursuits."
"I am proud to have had the opportunity to be part of the CareRx story and to have contributed to the impressive transformation of the Company during the past two years," said Mr. Ewing. "With a strengthened Board and an exceptional management team, I am confident in the Company's prospects for future growth and success in the months and years to come."
CareRx will host a conference call, including a slide presentation, to discuss its third quarter financial results tomorrow, Friday, November 6, 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; Lawrence Chamberlain, Investor Relations, LodeRock Advisors, 416-519-4196, firstname.lastname@example.org