Medicure Inc.

Welcome to Medicare's Q2 Financial Statement Earnings Conference Call for the quarter ending June 30, 2022. My name is Deborah, 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 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 August 25, 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, Deborah. Good morning to all on the call. We appreciate your interest and participation in today's call. Joining me today on this Q2 financial statements call is Dr. Neil Owens, President and Chief Operating Officer, and Horace Uden, Medicare's Chief Financial Officer. We're pleased to share that the net revenue for the quarter was about the same as the previous quarter with continued increase in Zipidemag sales. Agristat sales remained steady with a small decline in Marley drug sales other than the Zipidemag. Earnings dipped from the previous quarter mainly due to a substantial increase in research and development spending which totaled over a million. which was much more than the previous quarter and anticipated in the next quarter. Absent the unusual high R&D spend, we would have seen a further increase in earnings this quarter. The acquisition of Marley Drug Inc., an innovative online pharmacy channel, helped drive the sales of Zypidemag, as did the general sales and marketing efforts on the Medicare team. With the acquisition of Marley, we now have four main focuses, continued sales and profits of Agristat, number two, Zypidemag revenue and profit, developing Marley drug online presence, and the fourth is MC1 development of PNPO deficiency. One of the reasons we acquired Marley, a pharmacy uniquely positioned to dispense medications to Americans in all 50 states and other territories through mail was to expand our sales reach of Zypinime. This 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 via our e-commerce platform, coupled with our existing sales and marketing infrastructure. A goal of the platform is to bypass the traditional framework run by health insurers and pharmacy benefit managers, PBMs, that has made access to affordable medications too expensive for many Americans, including generic and branded products such as Zypidemate. The platform will focus on ease of use and customer service and is differentiated by being able to ship medications to every state in the U.S., We believe the investments in the past several quarters in our programs and onboarding of new products has and will continue to provide growth in revenue, profits for the coming quarters and years. It takes time and persistence. Medicare 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. So now I'd like to turn over to our CFO, Horace Ouden, to review and provide some of the colour on the financial results of Q2 2022.

Thank you, Dr. Fraser. 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 will be able to obtain a complete copy of our financial statements for the quarter ended June 30th, 2022, by the end of day today, along with the previous financial statements on the investor 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 June 30th, 2022. Total revenues for the three-month period ended June 30, 2022 were $5.8 million compared to $5.1 million for the quarter ended June 30, 2021. Net revenues from Agristat for the period ended June 30, 2022 totaled $2.9 million, a slight increase from the prior year where net revenue from Agristat was $2.8 million during the same period. The increase in Agristat revenue during the current year is the result of a higher volume of units sold. The company earned net revenues from Zipidimeg in Q2 of 2022 of $1.1 million, which is a significant increase in the net revenues earned during the same period in the prior year of $403,000. The company continues to focus on Zipidimeg and expects revenues to continue to grow through the remainder of 2022 and beyond. The company earned net revenues from Marley Drug in Q2 of 2022 of $1.8 million which is a slight decrease in the net revenues earned from Marley Drug in Q2 2021 of $1.9 million. The decrease in net revenue earned through Marley Drug is a result of increased competition for filling generic medications. Turning to cost of goods sold. Agristat cost of goods sold for the three-month period ended June 30, 2022, totaled $1.2 million. Cost of goods sold for Agristat consisted of finished products sold that was delivered to customers. The PDMAG cost of goods sold for the three-month period ended June 30, 2022, totaled $325,000 and includes $181,000 relating to products sold to customers. $143,000 from amortization of this Epidemag intangible asset, and $43,000 relating to royalties on the sale of Epidemag, resulting from the acquisition of the product in September of 2019. Marley drug cost of goods sold was $456,000 during the three-month period ended June 30, 2022, and pertained 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 June 30, 2022, in comparison to $2.5 million for the three-month period ended June 30, 2021. Selling expenses decreased in the current period as a result of the company implementing cost-saving measures on Marley Drug, in addition to the company reclassifying certain expenses as general and administrative expenses based on their nature. General and administrative expenses totaled $1.6 million for the quarter ended June 30, 2022 in comparison to $571,000 during the period ended June 30, 2021. The increase in general and administration 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 the current year. This is partially offset by lower legal costs and a reclassification of certain expenses from selling to general and administrative expenses based on a review of their nature. Research and development expenses for the three-month period ended June 30, 2022 totaled $1.3 million compared to $705,000 during the three-month period ended June 30, 2021. The increase during the current period is primarily due to the timing of research and development expenditures relating to each development project. The company recorded finance expense of $38,000 during the three-month period ended June 30, 2022. The finance expense recorded during the current period consisted primarily of accretion on these epitome acquisition table, bank charges incurred, and finance expense on the company's lease obligation. partially offset by interest income earned during the current period. The company recorded a foreign exchange gain during the three-month end of June 30, 2022 of $98,000 compared to a foreign exchange loss of $172,000 during the three-month period ended June 30, 2021. The change relates to changes in the U.S. dollar exchange rates during the respective periods which led to a favorable foreign exchange gain during the current period. Adjusted EBITDA for the three-month period ended June 30th, 2022 was negative $210,000 compared to adjusted EBITDA of $158,000 during the three-month period ended June 30th, 2021. The decrease in adjusted EBITDA for the three months ended June 30th, 2022 is the result of higher research and development costs and general administrative costs related to the improvements in the Marley Drug e-commerce platform. partially offset by decreased selling expenses and higher revenues when compared to the same period in 2021. As of June 30, 2022, the company had cash totaling $4.8 million and increased from the $3.7 million of cash held as of 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.