Quarter Highlighted by Completion of Remedy's Integration Ahead of Schedule, Contributing to 65% Year-over-Year Increase in Adjusted EBITDA
TORONTO, March 10, 2021 /CNW/ - CareRx Corporation ("CareRx" or the "Company") (TSX: CRRX), Canada's leading provider of pharmacy services to seniors communities, today reported its financial results for the fourth quarter and year ended December 31, 2020.
Highlights for the Fourth Quarter of 2020
(All percentage increases are as compared to the fourth quarter of 2019)
- Revenue from continuing operations increased 44% to $46.4 million from $32.2 million;
- Adjusted EBITDA1 from continuing operations increased 65% to $4.1 million from $2.5 million;
- Completed integration of Remedy's business ahead of schedule, which is expected to result in over $3.0 million of annualized cost saving synergies, of which $0.5 million were realized in the fourth quarter of 2020;
- Signed a multi-year contract with an Ontario-based seniors home operator, adding approximately 1,100 new retirement and long-term care residents across 13 seniors housing communities;
- Strengthened its 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.
Highlights Subsequent to Quarter End
- Signed a definitive agreement to acquire SmartMeds Pharmacy Inc., which serves more than 2,400 residents in Ontario, with the transaction expected to close by March 31, 2021;
- The Ontario Ministry of Health announced a pause in the previously scheduled reduction in the funding model for long-term care pharmacies;
- Completed a bought deal financing and concurrent private placement for total gross proceeds of $21.2 million; and
- Partnered with Think Research Corporation ("Think") to deliver virtual healthcare to seniors through Think's VirtualCare telemedicine software and CareRx's pharmacy services.
"The fourth quarter of 2020 was a very strong finish to a transformational year for CareRx," said David Murphy, President and Chief Executive Officer of CareRx. "In 2020, we became the largest and fastest growing seniors pharmacy provider in Canada, enhanced our team and capabilities, and further strengthened our value proposition to our home operator partners and their residents. We are committed to continuing our strong momentum in 2021, delivering continued growth from both acquisitions and new customer contracts, and further strengthening our leadership position in the sector."
Selected Financial Information
(Thousands of Canadian dollars except per
share amounts and percentages)
For the three month periods
ended December 31,
For the years ended
Revenue from continuing operations
Operating loss from continuing operations
Loss from continuing operations before
interest expense and income taxes
EBITDA1 from continuing operations
Adjusted EBITDA1 from continuing operations
Per share - Basic and Diluted2
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 three month period and year ended December 31, 2020 increased by 44.0% to $46.4 million from $32.2 million and by 30.1% to $162.2 million from $124.6 million, respectively, for the same periods in the prior year. Revenue increased primarily as a result of the Remedy's business contributing $15.1 million of revenue in the fourth quarter of 2020 and $40.3 million for the year ended December 31, 2020. This increase was slightly offset by certain amendments to O. Reg. 201/96 under the Ontario Drug Benefit Act (the "ODBA Amendments") that came into effect on January 1, 2020 and a slight temporary reduction in the average number of beds serviced in the second half of 2020 due to COVID-19.
Adjusted EBITDA for the three month period and year ended December 31, 2020, increased by 64.6% to $4.1 million from $2.5 million and by 36.2% to $12.8 million from $9.4 million as a result of the acquisition of Remedy's, which contributed $1.6 million and $3.4 million, respectively, in Adjusted EBITDA since its acquisition part way through the second quarter, including $0.5 million in cost saving synergies. The net impacts of the ODBA Amendments that came into effect on January 1, 2020 were $0.3 million and $1.5 million, respectively, for the three month period and year ended December 31, 2020. The full year impact of the ODBA Amendments was fully offset by cost saving initiatives implemented during the first half of 2020 and other operating cost savings.
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.
CareRx will host a conference call, including a slide presentation, to discuss its fourth quarter and full year financial results on Thursday, March 11, 2021 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 is Canada's leading provider of pharmacy services to seniors communities. 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, 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, change in fair value of investment, 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 calculation. 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