Medicure Inc.

Welcome to Medicare's earnings conference call for the quarter-ended March 31st, 2022. My name is Kelsey, and I will be your operator for today's call. At this time, all participants are in listen-only mode, and 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 present to the safe harbor provisions of the U.S. Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risk and uncertainties, which could cause the company's actual results to differ materially from those in the forward-looking statements. Such as risk and uncertainties include, amongst others, those described in the company's most recent annual information form and Form 20-F. Later, we will conduct a question and answer session. Please note that this conference call is being recorded and today's date is May 31st, 2022. I would now like to turn the conference call over to Dr. Albert Friesen, Chief Executive Officer of Medicare, Inc. Please go ahead, Dr. Friesen.

Thank you, Kelsey, and good morning to all on the call. We appreciate your interest and the participation in today's call. Joining me in the call today is Dr. Neil Owens, President and Chief Operating Officer, Medicare and Harris-Uden, providing consultation for the preparation of Q1 financial statements for 2022, which are the statements we'll be discussing this morning. We're pleased to share that both the net income and EBITDA continue to increase. The acquisition of Marley Drug An innovative online pharmacy sales channel helped to drive sales of Zypidemag as did the general Medicare sales and marketing efforts. With the acquisition of Morley Drug, Medicare's business focus now is the following on growth and development. Number one, continued sales and profits of Agristat. Two, growing Zypidemag revenue and profit. developing the Marley online presence and for continuing the MC1 development for PMPO deficiency. The sales of Agristat have remained steady with a small growth over the previous year. We're hopeful that the launch of our e-commerce platform will further enhance both sales of Zypidemag and the other pharmaceuticals provided through home delivery. 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 of Zypidemag. 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 an e-commerce platform coupled with our existing infrastructure. The goal of the platform is to bypass the traditional framework run by health insurers and pharmacy benefit managers that has been made access to affordable medications too expensive for many Americans, including both generic and branded products such as Zypidimed. 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 this Zypinim Ag business through more direct marketing to patients. Agristat continues to hold the majority of patient share with sales for Q1 of 5.7 million and compared to 4.9 for the previous year. Sales as an epitome continued to increase as $1 million for Q1 compared to $161,000 for Q1 the previous year. And together with Marley Drug, revenue of $1.9 million results in a Q1 net revenue compared to 2.1 the previous year's quarter one. We believe the investments in the past Several quarters in our programs and onboarding of new products has and will continue to provide the growth in revenue and profits for the coming quarters and years. It takes time and persistence. MediGear has 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. Now I'll turn over the call to our financial consultant, Haris Uddin, to review and provide some color on the financials for Q122.

Thank you, Dr. Friesen. A couple of quick items to note before I start. All dollar figures are in Canadian dollars unless otherwise noted by each presenter. And a reminder, you will be able to obtain a complete copy of our financial statements for the quarter ended March 31, 2022, by the end of day today, along with previous financial statements on the investor's page of our website. Alternatively, a copy of all financial statements and management discussion analysis can be obtained immediately from CDAR.com. I will now provide some key highlights of our financial performance for the quarter ended March 31st, 2022. Total revenues for the three-month period ended March 31st, 2022 were $5.7 million compared to $4.9 million for the three-month period ended March 31st, 2021. Net revenues from Agristat for the period ended March 31st, 2022 totaled 2.8 million, which is an increase in net revenues in comparison to the period ended March 31st, 2021, where the net revenue for Agristat was 2.6 million. The increase in revenues when compared to the same period in the prior year is primarily a result of an increased volume of Agristat sold in Q1 of 2022. The company earned net revenues from Zipidimeg in Q1 of 2022 of $1.1 million, which is a significant increase from the net revenues earned during the same period in the prior year of $161,000. The company continues to focus on Zipidimeg and expects revenues to continue to grow throughout the remainder of 2022 and beyond. The company earned net revenues from Marley Drug in Q1 of 2022 of $1.9 million, which is a decrease in the net revenues earned from Marley Drug during Q1 2021 of $2.1 million. The decrease in net revenue earned from Marley Drug is a result of the timing of promotional offers to customers, in addition to increased competition within the industry. The company did launch its e-commerce platform during Q1 of 2022 and as a result is expecting to see a growth in revenue for Marley Drug in subsequent quarters. Turning to cost of goods sold, Agristat cost of goods sold for the three-month period ended March 31, 2022, totaled $911,000. Cost of goods sold for Agristat consisted of finished products sold and delivered to customers. Zipidimeg cost of goods sold for the three-month period ended March 31, 2022, totaled $224,000 and included $41,000 relating to products for its customer, $143,000 from amortization of the Zipidimeg intangible assets, and $40,000 relating to royalties on the sale of Zipidimeg, which is resulting from the acquisition of the product in September of 2019. Marley Drugs cost of goods sold for the three-month period ended March 31st, 2022 was $556,000 and pertaining to the cost of products sold by Marley Drugs in-store and mail-order pharmaceutical business. Selling expenses totaled $1.7 million for the three-month period ended March 31st, 2022. Selling expenses decreased in the current period as a result of the company implementing cost-saving measures at Marley Drugs. in addition to the company reclassifying certain expenses as general and administrative based on their nature. General and administrative expenses totaled $1.3 million for the quarter ended March 31, 2022. The increase in general and administrative expenses is primarily related to professional fees incurred during the current period as the company continues to improve its e-commerce platform, which was launched during 2022, This is partially offset by lower legal costs and a reclassification of certain expenses from selling to general and administrative expenses based on the review of their nature. Research and development expenses for the three-month period ended March 31, 2022 totaled $345,000 compared to $581,000 during the three-month period ended March 31, 2021. The decrease during the current period is primarily due to the timing of research and development expenditures relating to each development project and a declining research and development budget. The company recorded finance expense of $19,000 during the three-month period ended March 31st, 2022. The finance expense recorded during the current period consisted primarily of accretion on this epitome acquisition payable, bank charges incurred, and finance expense on the company's lease obligations. These expenses were offset by interest income earned during the current period. The company recorded a foreign exchange loss during the three-month period ended March 31, 2022 of $133,000 compared to a gain of $2,000 during the three-month period ended March 31, 2021. The change relates to changes in the U.S. dollar exchange rate during respective periods which led to unfavorable exchange loss during the current period. Adjusted EBITDA for the three-month period ended March 31st, 2022 was $1.2 million compared to adjusted EBITDA of $31,000 during the three-month period ended March 31st, 2021. The change is primarily due to increased revenues as a result of increased epitomeg revenue and a decrease in selling and research and development expenses which is partially offset by higher cost of goods sold and general and administrative expenses during the current period. As at March 31, 2022, the company had cash totaling approximately $2.8 million, a decrease from the $3.7 million held at December 31, 2021. The decrease in cash is a result of the timing of sales, which is further corroborated by the 4.9 net working capital the company had at March 31, 2022, compared to the net working capital of $4 million the company had at December 31, 2021. The company does not have any debt on its books. 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 results of 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. Thank you, Horace, and good morning, everyone.