CareRx Corporation

Good morning, everyone, and welcome to CARE-RX's fourth quarter and year-end 2024 financial results conference call. Please note that this call is being broadcast live over the internet, and the webcast will be available for replay beginning approximately one hour following the completion of the call. Details of how to access the webcast replay are available in today's news release announcing the company's financial results, as well as on the company's website at www. Today's call is accompanied by a slide presentation. Those listening on their phones can access the slide presentation from the company's website in the investor section under events and presentations by loading the webcast and choosing the non-streaming audio option. Certain matters discussed in today's call or answers that may be given to questions asked should constitute forward-looking statements that are subject to risks or uncertainties relating to CARE-RX's future financial and business performance. Actual results could differ materially from those anticipated in these forward-looking statements. The risk factors that may affect results are detailed in CARE-RX's continuous disclosure record, which you can access on the CEDARplus database under www.cedarplus.ca. CARE-RX is under no obligation to update any forward-looking statements discussed today. And investors are cautioned not to place undue reliance on these statements. I would now like to turn the call over to Puneet Khanna, President and CEO of CareRx Corporation. Please go ahead, Mr. Khanna.

Thank you, and good morning, everyone. Welcome to our fourth quarter 2024 earnings call. With me this morning is our Chief Financial Officer, Suzanne Brand. 2024 marked a year of tremendous success for the team at KRX as we continue to focus on operational excellence and strengthening the ability of our network to scale without proportionally increasing costs. In addition, we simplified our balance sheet, improved cash flow, and put the company in a position to leverage various opportunities while maintaining our disciplined approach to capital allocation. As we enter a phase of growth, we remain committed to further enhancing our service offerings to our home operating partners and residents while delivering long-term value for our shareholders. In the fourth quarter, we delivered revenue of $92.2 million and adjusted EBITDA of $7.6 million. As we anticipated, fourth quarter average bed count was slightly lower than the third quarter as a result of full quarter impact of the previous quarter debt count churn. On October 1st, Suzanne Brand joined CareX as Chief Financial Officer. Suzanne is an exceptional finance and healthcare leader with a track record of developing great teams. She brings a wealth of professional and personal experience and has already made a significant contribution in preparing us for the next stage in our growth story. As we previously announced, In early December, we opened a new state-of-the-art high-volume fulfillment center in North Burnaby, British Columbia. I will provide a more detailed update later in the call. Finally, in November, the final tranche of the company's 8.25% unsecured convertible debentures was converted into common shares at a price of $3 per share. The convertible debentures have now been extinguished in full. This marks the final step in the comprehensive debt restructuring initiative that we undertook beginning in December 2023, which further simplifies our balance sheet and decreases our annual interest expense. I will now turn the call over to Suzanne, who will discuss our fourth quarter financial results in more detail. Suzanne?

Thank you, Puneet, and good morning, everyone. Revenue for the fourth quarter of 2024 increased to $92.2 million from $91.1 million in the fourth quarter of 2023 and decreased from $92.8 million in the third quarter of 2024. The year-over-year revenue increase was driven primarily by an increase in branded pharmaceutical prices during the third quarter of 2024, despite a lower year-over-year Fed count. The quarter-over-quarter revenue decrease was the result of the slight net reduction in the average number of beds serviced. Adjusted EBITDA for the fourth quarter grew 1% to $7.6 million from $7.5 million in the fourth quarter of last year, and declined slightly from the third quarter of 2024. Adjusted EBITDA margin in the fourth quarter was flat year-over-year at 8.2% and decreased 20 basis points quarter-over-quarter. The year-over-year improvement in adjusted EBITDA occurred despite a lower bed count and was primarily the result of efficiencies, exiting unprofitable beds, and cost savings initiatives that commence during the second half of 2023, as well as improved supply terms from the amendment to the procurement agreement with our major pharmaceutical supplier. We posted a net loss of $2.2 million in the fourth quarter compared to a net loss of $3.7 million in the fourth quarter of 2023, and a net loss of $400,000 in the third quarter. This year-over-year decrease in net loss was driven primarily by decreases in finance costs and the impact of certain cost saving initiatives that commenced during the second half of 2023. Cash at December 31st was $9.1 million compared to $8.8 million at the end of the third quarter. Net debt decreased by $1.8 million to $36.2 million compared to $38 million last quarter. The increase in our cash balance and decrease in net debt was due to an increase in cash flow from operations, repayments made to our operating loan, and the repayment of the final tranche of the convertible debenture. Net debt to annualized run rate adjusted EBITDA at the end of the third quarter was 1.2 times and in line with the third quarter of 2024. It's worth highlighting the benefit of the comprehensive debt refinancing program we initiated last year. By restructuring our debt, repaying certain high-cost components, converting from fixed to floating rate, and adding the flexibility of an operating line, the total debt has been reduced by $21.8 million compared to the fourth quarter of 2023. Overall finance costs in 2024 was $9.1 million compared to $14.3 million in 2023, a year-over-year savings of $5.2 million. We continue to remain committed to returning capital to the shareholders through our active share buyback program under the normal course issuer bid, supported by our strong capital position and the belief that our share price does not adequately reflect the fundamental value in our underlying business and our near and long-term growth potential. Finally, it's important to highlight that CareRx operates exclusively within Canada, serving only Canadian customers, and we source our medications and equipment almost exclusively from Canadian suppliers. As a result, we are highly insulated from the threat of tariffs. And with that, I will turn the call back over to Puneet.