Medicure Inc.

Welcome to Medicare's earnings conference call for the quarter ended September 30th, 2023. My name is Holly 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, 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 November 22nd, 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, Holly, and good morning to everybody on the call. We appreciate your interest and participation in today's call. Joining me today on this Q3 2023 financial statement call is Dr. Neil Owens, President and Chief Operating Officer, and Horace Uden, Medicare's Chief Financial Officer. We're pleased to report that net revenue of $5.0 million for Q3 remains steady from the previous quarters, with a net income of $77,000 or more. one cent per share, an EBITDA of $628,000, all showing consistent good financial returns, particularly when you consider we're also investing $508,000 in R&D in this past quarter for the future growth potential. Agristat sales, Zipidimac sales, and Marley Road income are providing net earnings. The four focuses of the business continues, that is sales and profits of Agristat, growing Zypidemag revenue and profit, growing the Marley Drug online business, and development of MC1 for the PNPO deficiency application. The acquisition of Marley Drug, the online pharmacy, delivering to homes in all 50 states and other territories through mail was to expand our sales reach of Zypidemag, and it is contributing to the Medicare business. We believe the investments and experience over the past 25 years plus positions Medicare on a steady path for continued growth and success. I'd now like to turn the call over to Haris Uddin, CFO, to review and provide some color on the financial results of the Q3 2023 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 September 30th, 2023, by the end of the day today, along with previous financial statements on the investors page of our website. Alternatively, a copy of all financial statements and management discussion and analysis can be obtained immediately from CDAR.com. I will now provide some key highlights of our financial performance for the quarter ended September 30th, 2023. Total revenues for the three-month period ended September 30th, 2023 were $5 million compared to $5.3 million for the period ended September 30th, 2022. Net revenues earned from Agristat during the current quarter totaled $2.4 million, a slight decrease from the prior year where net revenue from Agristat was $3.1 million. The decrease in Agri-Start revenue during the current quarter is the result of higher wholesaler fees on units of products sold, in addition to increased competition from generic tariff items in the current quarter. Net revenues earned from Zipidimeg during the current quarter totaled $398,000, which is a decrease from the $434,000 of net revenue recorded during the prior year. The decrease in net revenue can be attributed to coverage gap rebates paid during the current period, in addition to higher wholesaler fees, offset by a higher volume of Zepidemeg sold during the current period. The company continues to focus on Zepidemeg and see the growth of sales through both the traditional insured channels and through Murley Drug. Net revenues from Murley Drug during the current quarter totaled $2.2 million. which is an increase from the $1.8 million earned from Marley Drug during the same period in the prior year. The increase in Marley Drug sales during the current quarter is due to an increased volume of sales, including an increase in Zepidemag sales through Marley Drug, which are also included within this figure. Moving on to cost of goods sold, Agristat cost of goods sold for the quarter ended September 30th, 2023, totaled $648,000, an increase from the prior year. where cost of goods sold totaled $477,000. The increase noted in cost of goods sold for Agristat is a result of a one-time discount provided on a specific batch of Agristat in the prior year by the product's manufacturer, offset by a lower volume of products sold in the current quarter. Epidemec cost of goods sold for the quarter ended September 30, 2023, totaled $34,000, a decrease from the prior year, where cost of goods sold for Epidemec was $363,000. Included within cost of goods sold for Zepidimeg is $163,000 relating to products sold to customers, $152,000 from amortization of the Zepidimeg intangible asset, offset by a $281,000 recovery of previously expensed royalties, which the company deemed in the current period were recoverable. Marley drug cost of goods sold totaled $680,000 during the quarter ended September 30, 2023, which is an increase from the prior year, where cost of goods sold totaled $551,000. The increase in cost of goods sold during the current quarter is the result of a higher volume of products sold through Marley Drugs, which corresponds with the higher revenue during the current period. Selling expenses totaled $2.1 million for the quarter ended September 30, 2023, in comparison to $1.7 million during the same period in the prior year. Selling expenses increased in the current year due to the company recording a higher volume of products sold during the current period in addition to inflationary increases the company had been subject to during the current year. General and administrative expenses totaled $1 million during the current period, which is a slight decrease from 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 had incurred additional professional fees in the prior year as a result of its e-commerce platform launching during the prior year. The decrease in professional fees during the current quarter is offset by higher stock-based compensation expense during the current quarter. Research and development expenses for the current period totaled $508,000 compared to $314,000 during the prior year. The decrease during the current year is primarily due to the timing of research and development expenditures relating to each development project the company is currently undertaking. The company recorded finance income of $3,000 during the current period compared to finance expense of $33,000 during the period ended September 30, 2022. The finance income recorded during the current period consisted primarily of interest income offset by finance expense related to the company's lease obligations and bank charges. The company recorded a foreign exchange loss during the period ended September 30, 2023 of $17,000 compared to a foreign exchange gain of $10,000 during the same period in the prior year. The change from the prior year 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 ended September 30, 2023 was $429,000 compared to an adjusted EBITDA of $1.3 million during the quarter ended September 30, 2022. The decrease in adjusted EBITDA during the current year is due to a decrease in operating income which primarily stemmed from a decrease in overall revenue, higher selling expenses and higher R&D expenses. offset by lower general and administrative expenses and lower cost of goods sold. As of September 30, 2023, the company had cash totaling approximately $5.6 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.