Medicure Inc.

Welcome to Medicare's Earnings Conference call for the quarter ended September 30th, 2021. My name is Anis and I'll be your operator for today's call. At this time, all participants are in listen-only mode. Before we proceed, I would like to remind everyone that this presentation contains forward-looking statements relating to future results, events, and expectations, which are made pursuant to the Safe Harbor provisions of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties which could cause the company's actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, among others, those described in the company's most recent annual information form and Form 20F. Later, we will conduct a question and answer session. Please note that this conference call is being recorded and today's date is November 23rd, 2021. I would now like to turn the conference over to Dr. Albert Friesen, Chief Executive Officer of Medicare Inc. Please go ahead, Dr. Friesen.

Thank you, Anis, and good morning to you all on the call. We appreciate your interest and your participation in today's call. Joining me today is Chief Financial Officer David Gervais and Dr. Neil's own President and Chief Operating Officer. This morning, we'll be discussing the third quarter of 2021. We are pleased with the positive trend of revenue and modest but increasing EBITDA quarter over quarter. The sales of Agersted have stabilized and we are pleased with the positioning of our December 2020 acquisition, Marley Drug, as it gets set to launch our e-commerce platform, as we just recently announced. One of the reasons we acquired Marley Drug a pharmacy uniquely positioned to dispense medications to Americans in all 50 states and territories through mail, was to expand our sales reach for Zypinime. The acquisition also gives us the opportunity to provide all FDA-approved medications at affordable prices. We believe the best way to do this is through a direct-to-consumer approach through the e-commerce platform coupled with our existing infrastructure. Marley Drugs' new e-commerce website will be a platform where FDA-approved medications, including zypidamide, can be purchased at a discount price by all Americans with home delivery to all 50 states with a valid prescription. A goal of the platform is to bypass the traditional framework run by health insurers and pharmacy benefit managers that has made access to affordable medications too expensive for many Americans, including both generic and branded drug products, just as Zypidemate. More than 120 million Americans uninsured and underinsured struggle to access affordable medications and are looking for a trusted and convenient source to fill their medications. Marley Drug, will offer industry-leading pricing on more than 100 of the most commonly prescribed generic chronic care medications with free nationwide delivery. Additional medication will also be on the platform. The platform will focus on ease of use and customer service and is differentiated by being able to ship to every state. That being said, the sales and marketing of Agristat franchise continues, as does our dedication to growing Zypitimate business with our direct marketing to patients. The new e-commerce Marley drug platform will help accelerate this, and we are optimistic about the months ahead. The revenue of the third quarter of 2021 was 4.9 million. Agristat revenue is 2.9 million, similar to the previous quarter. Marley was 1.74 million and Zypinemag was 638,000. As mentioned, the main focus at present is on the sales and marketing of Agristat, Zypinemag, and further leveraging the Marley drug pharmacy with the launch of a new e-commerce platform, which we believe can provide great margins and potential. We believe the investments in the past few quarters in our programs and onboarding new products will provide the growth in the revenue and profits for coming quarters and years. It takes time and persistence to make this reality. Medicare is a good cardiovascular product portfolio, a track record of growing sales and a great team with energy, talent, and experience to build a strong, growing company. I now turn over the call to Chief Financial Officer David Kirby.

Thank you, Dr. Friesen, and good morning, everyone. A couple of quick items to note before I start. All dollar figures are in Canadian dollars unless otherwise noted by each presenter. And as a reminder, you can obtain a complete copy of our financial statements for the year ended December 31st, 2020. And the quarter ended September 30th, 2021, along with previous financial statements on the investors page of our website. A copy of all financial statements and management discussion analysis will be obtained from cdar.com. Looking at the quarter ended September 30th, 2021, total revenues for Q3 2021 were $4.9 million compared to $3.5 million for Q3 2020. Net revenues from AgriStat for the quarter ended September 30th, 2021, total $2.9 million, which is lower than the net revenues from AgriStat for the same quarter of 2020 at $3.4 million due to higher cost of goods, pricing pressure, The company earned net revenues from Zepidemag for Q3 2021 of $388,000, over three times the net revenues from Q3 2020 of $105,000. The company continues to focus on Zepidemag and expects revenues to grow through the remainder of 2021 and beyond. And to the cost of goods sold, Agristat cost of goods sold for Q3 2021 increased. totaled $849,000 compared with $733,000 for Q3 2020. This resulted in gross margins for the quarter of approximately 70%, a slight expected decrease due to competitive pressures from the approximately 78% for the same quarter the prior year. The FIDMAG cost of goods sold for Q3 2021 totaled $638,000 and includes $56,000 related to products sold to customers, $570,000 from amortization of the Zepidemag intangible asset and $12,000 relating to royalties on sale of Zepidemag resulting from the acquisition of the product in September 2019. Removing the amortization would result in a very strong gross margin from the product of approximately 82%. As a result of the acquisition of Marley Drugs, The company recorded cost of goods sold of $550,000 during Q3 2021 pertaining to the cost of products sold by Marley Drug in-store and mail-order pharmaceutical business. Selling expenses totaled $2.6 million for Q3 2021, up from $923,000 for Q3 2020. This increase in selling expenses when compared to the same quarter in the prior year is primarily due to the acquisition of Marley Drug and increase in marketing strength. General and administrative expenses total $538,000 for Q3 2021, down from $1.3 million from the same quarter in the prior year. The decrease in general and administrative expenses is primarily related to lower legal costs associated with the company's patent challenge, which was settled in the fourth quarter of 2020, and cost reductions implemented by the company during 2021. Research and development expenses for Q3 2021 totaled $488,000 compared to $737,000 for Q3 2020. The decrease is primarily a result of different levels of activity in regard to Medicare's research program quarter to quarter. The company recorded finance expense of $40,000 for Q3 2021. This relates to accretion on the company's Agristat royalty obligation, accretion on the CEPIDMAG acquisition table, accretion on the company's contingent consideration associated with the Marley drug acquisition, finance expenses related to the company's lease obligations, and bank charges. This compares to finance income for Q3 2020 of $99,000, which again primarily relates to the accretion on the company's royalty obligation and acquisition payable, finance expenses related to the company's lease obligations and bank charges, partially offset by interest on cash held by the company. The company recorded a foreign exchange loss during Q3 2021 of $226,000 compared to a loss of $210,000 in Q3 2020. The change relates to changes in the U.S. dollar exchange rate during respective periods, which led to the foreign exchange losses. This results in a net loss for the quarter of $946,000, or $0.09 per share, compared to the $1.05 million, or $0.10 a share, for the Q3 2020 period. The change in the net loss is due to increased revenue, reduced general and administrative expenses, and research and development expenses, and is primarily driven by the amortization of the Zipidemag intangible assets. Adjusted EBITDA for Q3 2021 was a positive $282,000 compared to an adjusted EBITDA of just $4,000 in Q3 2020. change is primarily due to the increase in revenues and decrease in general and admin expenses and research and development expenses partially offset by increase in selling expenses. As of September 30th, 2021, the company had cash totaling approximately $3.3 million, up from $2.7 million as of December 31st, 2020. As of September 30th, 2021, the company had networking capital of $3.1 million compared to networking capital of at December 31, 2020 of $3.4 million. The company does not have any debt on its books. However, we are in the process of finalizing the revolving credit facility with a commercial bank to provide flexibility and to take advantages of opportunities should they arise. I want to remind you that there will be an opportunity at the end of today's call for you to ask questions regarding the financial result and the company as a whole. And with that, I would like to turn the call over to our President and Chief Operating Officer, Dr. Neil Owens for some additional commentary regarding our operations.