Medicure Inc.

Welcome to Medicare's Earnings Conference Call for the quarter ended June 30th, 2023. My name is Holly, and I will 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 is being recorded and today's date is July 31st, 2023. I would now like to turn the conference over to Dr. Albert Friesen, Chief Executive Officer of Medicare. Please go ahead, Dr. Friesen.

Thank you, Holly. And good morning to all on the call. We appreciate your interest and participation in today's call. Joining me today for the Q2 23 financial statements are Dr. Neil Owens, President and Chief Operating Officer, and Horace Uden, Medicare's Chief Financial Officer. We are pleased to report that net revenue of $6.0 million for Q2, which continues the steady growth from previous quarters. Net income was $253,000, or two cents per share, and EBITDA was $948,000, all showing consistent good financial returns. Agristat sales, Zypidemag sales, and Marley drug income all provided net earnings. The four focuses of business continue as, number one, the sales and profits of Agristat, growing Zypidemag revenue and profit, Three, growing the Marley Drug online pharmacy business. And the fourth, the development of MC1 for the PNPO deficiency indication and pediatric voucher. The acquisition of Marley Drug, the online pharmacy delivering homes to all 50 states and other territories through mail was to expand our sales reach for Zypemag and growing our business. That has worked out for us. We believe the investments and experience over the last 25 years positions Medicare on a steady path to continued success. Now we'll turn it over to our CFO, our student, to review and provide a color on financial results of the Q2 financial statements.

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 quarter ended June 30th, 2023 by the end of day today, along with 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 quarter ended June 30th, 2023. Total revenues for the three-month period ended June 30, 2023 was $6 million, compared to $5.7 million for the period ended June 30, 2022. Net revenues earned from Egrostat during the current quarter totaled $2.6 million, a slight decrease from the prior year, where net revenue from Egrostat was $2.9 million. The decrease in exit debt revenue during the current quarter is a result of a fluctuation of foreign exchange rates and higher wholesale fees on units of products sold. Net revenues earned from CEPIDMAG during the current quarter totaled $722,000, which is a decrease from the $1.1 million of net revenue earned during the prior year. The decrease can be attributed to coverage gap rebates paid during the current period in addition to higher wholesale fees. The company continues to focus on Zipidimeg and see the growth of sales through both the traditional insurer channels and through Marley Drugs. Moving on to Marley Drugs, net revenues from Marley Drugs during the current quarter totaled $2.7 million. This is an increase from the $1.8 million earned from Marley Drugs during the same period in the prior year. The increase in Marley drug sales during the current year is due to an increased volume of sales, including an increase in the sales through the Marley drug platform, which is also included within this figure. With respect to cost of goods sold, Agrisac cost of goods sold during the quarter end of June 30, 2023 totaled $659,000, a decrease in the prior year, where cost of goods sold totaled $1.1 million. The decrease in cost of goods sold for Agristat is the result of better inventory management during the current year, in addition to a lower volume of Agristat sold. The PDMAG cost of goods sold for the quarter ended June 30, 2023, totaled $298,000, a decrease from the prior year, where cost of goods sold for the PDMAG was $325,000. Included within Cost of Goods Sold versus the PDMAG is $147,000 relating to products sold to customers and $153,000 from amortization of the PDMAG intangible assets. The decrease in Cost of Goods Sold during the current quarter is due to a lower volume of products sold during the current period. Marriott drug cost of goods sold totaled $848,000 during the quarter ended June 30, 2023. This is an increase from the prior year, where cost of goods sold totaled $456,000. The increase in cost of goods sold during the current year is the result of a higher volume of products sold through the Marriott drug platform. Selling expenses totaled $2.1 million for the quarter ended June 30, 2023, in comparison to $1.7 million during the prior year. Selling expenses increased in the current year due to the company reporting a higher volume of products sold, in addition to inflationary increases the company has been subject to during the current year. General and administrative expenses were $1.1 million during the current period in comparison to $1.6 million during the same period in the prior year. The decrease in general and administrative expenses is primarily related to a decrease in professional fees paid by the company during the current period. The company incurred additional professional fees in the prior year as a result of the e-commerce platform launching during Q1 of 2022. Research and development expenses for the current period totaled $668,000 compared to $1.3 million during the prior year. The decrease 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 income of $22,000 during the current period ended June 30, 2023, compared to finance expense of $38,000 during the period mid-June 30, 2022. The finance income recorded during the current period consisted primarily of a recovery on the accretion of the Agristat royalty obligation, in addition to interest income offset by the company's lease obligations and bank charges. The company recorded a foreign exchange loss during the period ended June 30, 2023 of $30,000 compared to a foreign exchange loss of $98,000 during the prior year. The change relates to changes in the US dollar exchange rate during the respective years, which led to an unfavorable foreign exchange loss during the current period. Adjusted EBITDA for the quarter end of June 30th, 2023 was $948,000 compared to an adjusted EBITDA of negative $210,000 during the quarter end of June 30th, 2022. The increase in adjusted EBITDA during the current year is due to an increase in operating income, which primarily stems from an increase in overall net revenue, in addition to reduced research and development expenses and reduced general administrative expenses, offset by higher selling expenses during the current quarter. As at June 30, 2023, the company had cash totaling approximately $5.4 million, an increase from the $4.9 million of cash held as of December 31, 2022. 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.