Transaction expected to be immediately accretive and will further strengthen market position in Ontario
TORONTO, Jan. 26, 2021 /CNW/ - CareRx Corporation ("CareRx" or the "Company") (TSX: CRRX), Canada's leading provider of specialty pharmacy services to seniors, announced today that it has entered into a definitive agreement to acquire SmartMeds Pharmacy Inc., ("SmartMeds"), a specialty pharmacy serving over 2,400 residents in long-term care, assisted living and other institutional settings in Ontario (the "Transaction"). SmartMeds also operates a retail pharmacy located in Burlington, Ontario that will be acquired as part of the Transaction.
The Transaction is expected to be immediately accretive to CareRx's earnings and is expected to contribute run-rate revenue and EBITDA of approximately $13 million and $1.5 million respectively to CareRx on an annualized basis, prior to any benefits from the integration of the operations of the two businesses.
"SmartMeds has established an excellent reputation in the industry as a leader in innovation, quality, and customer service," said David Murphy, President and Chief Executive Officer of CareRx. "It is a well-run organization with significant customer loyalty and a broad range of customers in both long-term care and other institutional settings. This is an exciting tuck-in acquisition for CareRx, and we look forward to working with the SmartMeds team and customers towards a seamless integration."
SmartMeds is recognized as an innovator in seniors care pharmacy, with a reputation for value-added technology and an outstanding service culture. SmartMeds exclusively licenses proprietary technology called SmartLinkTM, a web-based operating software that provides real-time information for resident care and creates efficiencies in filling prescriptions. SmartLinkTM helps ease the workload for home operator staff and has helped SmartMeds achieve medication error rates that are well below industry averages. CareRx has a right of first refusal to purchase SmartLinkTM and related proprietary technology for a period of 24 months following closing.
The closing consideration is comprised of $4 million of cash and $475,000 of CareRx common shares ("Common Shares") that will be determined with reference to the volume weighted average price of the Common Shares prior to closing of the Transaction. The purchase price also consists of an earn-out component of up to an additional $2.925 million of cash consideration, payable following the second anniversary of closing, based on certain targets being achieved.
Closing of the Transaction is expected to occur by March 31, 2021. The Company expects to satisfy the closing cash consideration with cash on hand.
About CareRx Corporation
CareRx is Canada's leading provider of specialty pharmacy services to seniors. We serve approximately 50,000 residents in over 900 seniors and other 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.
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. 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.
SOURCE CareRx Corporation
For further information: visit www.carerx.ca or contact: David Murphy, President & Chief Executive Officer, CareRx Corporation, 416-927-8400; Lawrence Chamberlain, Investor Relations, LodeRock Advisors, 416-519-4196, firstname.lastname@example.org