Medicure Inc.

Welcome to Medicare's Earnings Conference Call for the year ended December 31st, 2023. 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 US 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, as described in the company's most recent annual information form and Form 20F. Later, we will be conducting a question and answer session. Please note that this conference call is being recorded and today's date is April 9th, 2024. 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, moderator, and good morning to all on the call. We appreciate your interest and participation in today's call. Joining me today for the 2023 financial statements are Dr. Neil Owens, President and Chief Operating Officer, and Hara Sudin, Medicare's Chief Financial Officer. We were pleased to report that in 2023, Medicare was cash flow positive for the year, adding $1.5 million in cash. The net revenue for the year 2023 decreased a bit from the previous year, that being $21.7 million, compared to $23.1 million for the previous year. It was mainly due to reduced revenue from Agristat, the reduced reduction due to some generic competition. which was anticipated in the budget. Revenue from other sources were all up for the year. Net loss for the year was $922,009 per share compared to a net gain of $1.4 million and 13 cents per share in the previous year. The net loss was due primarily to non-cash items like depreciation and stock option expenses. Adjusted earnings before interest, taxes, depreciation, and amortization for the year was $1.9 million positive compared to adjusted EBITDA of 3.3 in the previous year. The four focuses of the business continue, sales and profits of Agristat, growing Zypidemay revenue and profit, growing the Marley Drug online pharmacy business, and the development of MC1 for PNPO deficiency. 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 for Zipidimac and its growing contributor to Medicare's business. We continue to explore the acquisition of additional pharmacies with a promising outlook. We believe the investments and experience over the last 25 years positions Medicare on a steady path for continued success. I now would like to turn the call over to our CFO, Harasudan, to review and provide colour on the 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 can obtain a complete copy of our financial statements for the year ended December 31st, 2023, along with previous financial statements on the investors page of our website. Alternatively, a copy of all financial statements and management discussion analysis can also be obtained from CDAR.com. I will now provide some key highlights of our financial performance for the year ended December 31st, 2023. Total revenues for the year ended were $21.7 million compared to $23.1 million for the prior year. Net revenues earned from Eggerstadt during the current year totaled $9.7 million, a decrease from the prior year where net revenue from Eggerstadt was $11.7 million. The decrease in Eggerstadt revenue during the current year is a result of lower volume of units sold. Net revenue earned from Zipidimeg through the traditional insurance channel during the current year totaled $2.4 million, which is a decrease in the $3.6 million net revenue earned during the prior year. The decrease in Zipidimeg sales can be attributed to increased wholesaler fees and increased rebate payments to pharmacy benefit managers. Moving on to Marley Drug. Net revenues from Marley Drug during the current year totaled $9.6 million during the year on December 31st. and this is an increase from the $7.8 million earned from Marley Drug during 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 Zepidemeg sales through Marley Drug which is included within this figure. The increase in Marley Drug sales offset by decreases in pharmacy benefit manager reimbursements on insured product sales. The company continues to focus on growing Marley Drug and growing the sales of Zepidimeg through Marley Drug into 2024 and beyond. Moving on to cost of goods sold, Agristat cost of goods sold for the year ended December 31st totaled $3 million. A decrease in the prior year where cost of goods sold totaled $3.4 million. The decrease in cost of goods sold is a result of a lower volume of Eggerstat sold, offset by an increase in cost of goods sold caused by inventory batches which were damaged in transport. The PDMEC cost of goods sold for the year end of summer 31st totaled $974,000, a decrease from the prior year, whereas the PDMEC cost of goods sold was $1.2 million. Included within cost of goods sold for the current year is $597,000 relating to products sold to customers, $611,000 for amortization of the Zepidemeg Intangible Asset and these expenses are offset by a recovery of $234,000 relating to royalties on the sale of Zepidemeg resulting from the acquisition of the product in September 2019. The decrease in cost to go through an order during the current year is due to the conclusion of the company's royalty obligation on the sale of Zepidemeg in addition to the company recognizing a recovery of royalties during the current period offset by a higher volume of epidemic units sold during the current year. Marley drug cost of goods sold totaled $3.8 million during the year ended December 31, 2023, an increase from the prior year for a cost of goods sold totaled $2.4 million. The increase in cost of goods sold during the current year is a result of a higher volume and nature of products sold through the mail order and e-commerce platform during the current year. Selling expenses totaled $8.3 million for the year ended December 31, 2023 in comparison to $8 million for the year ended December 31, 2022. Selling expenses slightly increased in the current year due to inflationary increases from the company's third-party logistic provider in addition to higher selling expenses through Marley Drug consistent with the higher revenue earned through Marley Drug as indicated earlier. General and administrative expenses totaled $4.1 million for the year end of December 31, 2023 in comparison to $4.2 million during the year end of December 31, 2022. The slight decrease in general and administrative expenses to the company was a result of less non-capitalized expenditures in the current year in comparison to the prior year with regards to improvements made to the Marley Drug e-commerce platform. This is offset by higher share-based compensation during the current year as a result of stock auctions which were granted during 2023. Research and development expenses for the year end of December 31, 2023 totaled $2.4 million compared to $2.8 million 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. During the year end, December 31st, 2023, the company did not record any gains or losses through other income related to the revaluation of the contingent consideration pertaining to the Marley drug acquisition compared to a $346,000 gain recorded in the prior year. As of December 31st, 2023, there are no liabilities recorded on the consolidated financial statement of financial position with respect to contingent consideration stemming from the Marley drug acquisition. The company recorded finance income of $65,000 during the year ended December 31, 2023, compared to finance expense of $206,000 in the prior year. The finance income recorded during the current year consisted primarily of interest income earned on cash held by the company, in addition to a recovery of accretion expense pertaining to the Egerstadt royalty obligation, which ended in May of this year. Offsetting finance income was bank charges and finance expenses on the company's lease obligations. The Council recorded a foreign exchange loss during the year ended December 31st, 2023 of 108,000 compared to a foreign exchange gain of 52,000 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 year. Adjusted EBITDA for the year ended December 31st, 2023 was 1.9 million compared to an adjusted EBITDA of 3.3 million during the year ended December 31st, 2022. The decrease in adjusted EBITDA during the current year is due to a decrease in operating income which primarily stemmed from decreased revenues from sale of agro-static acid bags offset by higher revenue through Marley Drugs. In addition, the decreased pharmacy benefit manager or PBM rebates on insurance products sold through Marley Drugs resulted in the company losing revenue yet still incurring cost of goods sold expenditures. Offsetting these factors, which resulted in the company's debt loss, was a slight decrease in research and development expenses during the current year. As of December 31, 2023, the company had cash totaling approximately $6.4 million Canadian, 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.