Medicure Inc.

Welcome to Medicare's Earnings Conference Call for the year ended December 31, 2022. My name is Paul, and I will be your operator for today's call. At this time, all participants are in a 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, this conference is being recorded and today's date is April 10th, 2023. 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, Paul, and good morning to everyone on the call. We appreciate your interest and participation in today's call. Joining me today for this 2022 financial statements call is Dr. Neil Owens, President and Chief Operating Officer, and Haris Uddin, Medicare's Chief Financial Officer. We are pleased to report that net revenue for the year 2022 increased from the previous year with a significant increase in net income, a very good year of growth and profitability. Net revenue is 23.1 million compared to 21.7 for the previous year and net income for the year was 1.4 million or 13 cents per share compared to a net loss of $727,000 or 7 cents a share for the previous year. Adjusted earnings before interest, taxes, depreciation, amortization for the year was $3.3 million compared to adjusted EBITDA of 2.1 for the previous year. Agristat sales, Zypidemate sales, Marley Drug income all increased from the previous year with significant increase in net income. Just a reminder that the four focuses of our business are the sales and profits of Agristat, sales and growth at Zypidemag, growing the Marley Drug online pharmacy, and the development of MC1 for a PNPO deficiency. The acquisition of Marley Drug, the online pharmacy, delivering to homes in all 50 states in the U.S. and their territories through mail, was to expand our sales reach for Zypidemag as a growing contributor to the Medicare business. A goal of the platform is to bypass traditional framework run by health insurers and pharmacy benefit managers that has made access to affordable medications too expensive for many Americans including generic and branded products such as Zypidemag. This past year, Medicare celebrated its 25th anniversary. For 25 years, our mission has been to serve patients by delivering safe and efficacious life-changing medicines. Capitalizing on our strength in cardiovascular therapies, knowledge of the ever-changing U.S. market, we are excited to continue towards our mission over the next 25 years. We believe the investments and experience over the 25 years positions Medicare on a steady path to continued success. It takes time and persistence and we've demonstrated both. I would now like to turn the call over to our CFO, Haro Sutan, to review and provide some color on the financial statements for 2022. Haro Sutan 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 as a reminder, you will be able to obtain a complete copy of our financial statements for the year ended December 31st, 2022 by the end of day today, in addition to any previous financial statements on the investors 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 year ended December 31, 2022. Total revenues for the year ended December 31, 2022 were $23.1 million compared to $21.7 million for the prior year. Net revenues earned from Agristat during the current year totaled $11.7 million, a slight increase from the prior year where net revenue from Agristat was $11.6 million. The increase in Agri-Start revenue during the current year is the result of a higher volume of units sold. Net revenue earned from Zepidimeg during the current year totaled $3.6 million, which is an increase from the $3.2 million earned during the prior year. The company continues to focus on Zepidimeg and hopes to see the growth and sales of Zepidimeg continue into 2023 and beyond. Moving on to Marley Drug. Net revenues from Marley Drug during the current year totaled $7.8 million. which is an increase from the $6.9 million earned during the prior year. The increase in Marley Drug sales during the current year is due to an increased volume of sales, which is partially attributable to the launch of the Marley Drug e-commerce platform, which was launched during the beginning of 2022. With respect to cost of goods sold, Agristat cost of goods sold for the year ended December 31st, 2022, total $3.4 million, a decrease from the prior year. where cost of goods sold totaled $4.2 million. The decrease in cost of goods sold during the current year is a result of better inventory management, leading to less written-off inventory. This is offset by a higher volume of agri-stats sold during the current year. Zepidemeg cost of goods sold for the year-end of December 31, 2022, totaled $1.2 million, a decrease from the prior year, where cost of goods sold for Zepidemeg was $2.4 million. Included within cost of goods sold for Cepidemec during the current year is $441,000 relating to products sold to customers, $589,000 from amortization of the Cepidemec intangible asset, and $151,000 relating to royalties on the sale of Cepidemec resulting from the acquisition of the product in September of 2019. The decrease in cost of goods sold during the current year is due to a prospective change in the amortization of this epidemic intangible asset, which was initially applied in Q4 of 2021. This is offset by a higher volume of product sold during the current year. Marley Drug cost of goods sold totaled $2.38 million during the year ended December 31st, 2022. This is a slight decrease in the prior year where cost of goods sold totaled $2.4 million. The decrease in cost of goods sold during the current year is the result of the company negotiating better shipping and delivery of its products to customers offset by a higher volume of products sold during the current year. Selling expenses totaled $8 million for the year ended December 31, 2022, in comparison to $10.3 million for the year ended December 31, 2021. Selling expenses decreased in the current year due to the company decreasing travel expenditures and a restructuring of the company's sales team within the United States. This has led to better staff utilization of its sales force and additional cost savings. General and administrative expenses total $4.2 million for the year end of December 31, 2022, in comparison to $2.7 million during the year end of December 31, 2021. The increase in general and administrative expenses is primarily related to the company increasing its employee headcount during the current year to improve the control processes within various departments. In addition, It also includes non-capitalized expenditures incurred during the current year related to improvements made to the Marley Drug e-commerce platform. Research and development expenses for the year on December 31, 2022 total $2.8 million compared to $1.8 million during the prior year. The increase during the current year is primarily due to the timing of research and development expenditures related to each development project the company is currently undertaking. The company recorded finance expense of $206,000 during the year ended December 31st, 2022. The finance expense recorded during the current period consisted primarily of accretion on the ZPTMAG acquisition table, bank charges incurred, and finance expense on the company's lease obligations. This is partially offset by interest income earned during the current year. The company recorded a foreign exchange gain during the current year of $52,000, compared to a foreign exchange gain of $31,000 during the prior year. The increase incurred relates to changes in the U.S. dollar exchange rate during the respective years, which led to a favorable foreign exchange during the current year. Adjusted EBITDA for the year ended December 31, 2022 was $3.3 million compared to an adjusted EBITDA of $2.1 million during the year ended December 31, 2021. increase in adjusted EBITDA during the current year is due to an increase in operating income, which primarily stemmed from increased revenues from the sale of agrocytes epitomeg and through Marley drugs. In addition, as indicated earlier, the prospective change to the amortization of the epitomeg intangible asset during the fourth quarter of 2021, which resulted in lower cost of goods sold during the current year. Offsetting these increases was an increase in R&D expenses during the current year. as at December 31st, 2022, the company had cash totaling approximately $4.9 million, an increase from the $3.7 million of cash held as of December 31st, 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 it over to our President and Chief Operating Officer, Dr. Neil Owens, for some additional commentary regarding our operation.