CareRx Corporation

Good morning, everyone, and welcome to the CareRx first quarter 2025 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 the company's website at www.CareRx.com. Today's call is accompanied by a slide presentation. Those listening on the phones can access the slide presentation from the company's website in the investor relations 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 can constitute forward-looking statements that are subject to risk and uncertainties related to QRX'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 QRX's continuous disclosure record, which you can access in the CEDARplus database under www.cedarplus.ca. KRRX is under no obligation to update any forward-looking statements discussed today, and investors are cautioned not to place undue reliance on these statements. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference, you can signal an operator by pressing the star key followed by zero. I would now like to turn the conference over to Mr. Punit Khanna, President and CEO of KRRX Corporation. Please go ahead, Mr. Connor.

Thank you, and good morning, everyone. Welcome to our first quarter 2025 earnings call. With me this morning is our Chief Financial Officer, Suzanne Brand. In the first quarter of 2025, we delivered revenue of $89.6 million and adjusted EBITDA of $7.8 million. As expected, average bed count in the quarter was slightly above the fourth quarter of 2024. As we previously announced, in early December, we opened a new state-of-the-art high-volume fulfillment center in North Burnaby, British Columbia. With this expansion, we commenced the consolidation of our existing Burnaby and Vancouver pharmacy operations into the new KRRX Lower Mainland locations. The transition of all beds to this new facility was completed in the first quarter of 2025. At the end of the quarter, we were proud to host the BC Ministry of Health and the BC Care Providers Association for a tour of this new pharmacy. With a shared commitment to improving health outcomes for seniors, we are excited about the ongoing opportunities to contribute to the future of senior care in British Columbia. In April, the Ontario Ministry of Health announced the postponement of the previously scheduled changes to the long-term care pharmacy funding for another year. These changes would have reduced the fixed professional fee under the fee per bed capitation model from an annual amount of $1,500 per bed to $1,400 per bed. We have a collaborative relationship with the Ontario government and are optimistic that together, permanent and mutual beneficial platform for funding will be developed. We look forward to building on this partnership as we continue to demonstrate the value of long-term care pharmacy. Finally, we strengthen our management team with the addition of Erwin van Hout as Senior Vice President, Information Technology. Erwin joins us with a wealth of experience in the healthcare sector and a proven track record of balancing innovation and operational excellence. He has held senior roles at Deloitte, at several hospital health systems, including SickKids Hospital in Toronto, where he led the implementation of critical IT infrastructure and implemented cutting-edge technologies for the new 22-storey tower. I'm excited to have Erwin's healthcare IT-focused experience leading the next phase of our growth journey. I will now turn over the call to Suzanne, who will discuss our first quarter financial results in more detail. Suzanne?

Thank you, Puneet, and good morning, everyone. Revenue for the first quarter of 2025 was essentially in line with the first quarter of 2024 at $89.6 million. and decreased slightly from $92.2 million in the fourth quarter of 2024. Revenue remained stable year-over-year, primarily due to a change in the mix of branded and generic pharmaceuticals dispensed. The quarter-over-quarter revenue decrease was due to two fewer operational days in the quarter. Adjusted EBITDA for the first quarter increased by 4.5% to $7.8 million from $7.4 million in the first quarter of last year and increased by 3% from the fourth quarter of 2024. Adjusted EBITDA margin increased by 40 basis points year-over-year to 8.7% and increased 50 basis points quarter-over-quarter. The year-over-year improvement in adjusted EBITDA was primarily the result of efficiencies and cost savings initiatives. We generated net income of $227,000 in the first quarter compared with a net loss of $517,000 in the first quarter of 2024 and a net loss of $2.2 million in the fourth quarter. The elimination of the net loss was driven primarily by decrease in finance costs and depreciation and amortization expenses, partially offset by increase in transaction, restructuring, and other costs, and a reduced favorable adjustment in the fair value of contingent consideration liability. Cash as of March 31st was $11.2 million compared with $9.1 million at the end of the fourth quarter. Net debt decreased by $2.8 million to $33.4 million compared to $36.2 million last quarter. The quarter-over-quarter increase in our cash balance and decrease in net debt was due to a net increase in cash generated from operations and payments to the term loan. Net debt to annualized run rate adjusted EBITDA at the end of the first quarter was 1.1 times, down from 1.2 times in the fourth quarter of 2024. We continue to remain committed to returning capital to 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 reiterate 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 turn the call back over to Puneet.