BioSyent Inc.

Hello, and welcome to the BioSyent Inc. Q2 and first half 2026 results presentation. My name is René Goehrum, and I'm the president and CEO of the company. Before I dive into today's presentation, I just wanted to bring your attention to our forward-looking statements disclaimer. Undoubtedly, there will be some in this presentation. So if you're new to the BioSyent story, kind of checking in on us for the first time Just want to remind you that we are in the healthcare products business. We bring proven products to patients and their providers. Our areas of specialization are pharmaceuticals and oral health products, and we commercialize those products primarily in Canada. That's the largest revenue footprint that we have in the business. But on the pharmaceutical side, we have customers outside of Canada for certain of our brands that we own The IP or the brand itself. And we have every intention of expanding our oral health business to also generate sales outside of Canada. It's a quick look at our brand wall. So this is a mix of our oral health and pharmaceutical brands. Let me dive into the numbers for the second quarter and first half of the year. So on the left-hand side of your screen, you see a summarization of our reporting segments, the second quarter, generated just over $11.1 million of pharmaceutical revenue, which represented an increase of 14% to the year ago. I'm going to skip down. Our legacy business, insecticides, generated just over half a million dollars, a 32% increase to the year ago. And then our oral health business generated just over $8.2 million in the quarter. And there's no comparable for that. I will speak a little bit more about our oral health business Later on in the presentation, if you are an ongoing kind of follower of the BioSyent story, you'll know that we acquired that business on March 1st. And so this is actually our first full reporting quarter where the oral health business is included in our business performance and results. So overall, in sum, total company revenue, just a shade under $20 million for the quarter, representing a 95% increase to the year ago. Moving over to the right-hand side of the screen, you see kind of how those numbers look on a six-month basis. So pharma, just under $22 million for the quarter. Oral health, once again, no comparable for 2025. And in that case, we're just adding one month. That's the month of March to the Q2 number. So $11.2 million in oral health revenue. Robert March, Marnie Mccormick, René Goehrum We're not really comparing apples to apples above. When we're actually reporting revenue and revenue performance down below in the dialogue box, we can report to you that the oral health business compared quarter over quarter Q2 to Q2 a year ago. When we did not own it, up 9%, same for the first half. So high single-digit growth. We think that there continues to be growth in that asset as we move forward. So how does that then flow through the balance of the financials? You see on this slide a build of Q2 24, 25, and 26. So our revenue progression from just under $9 million in Q2 two years ago to just under $20 million in Q2 of 2026. So that was the 95% growth that we spoke of. Our EBITDA for the quarter, On the right-hand side of your screen, just a shade under $5 million, representing an 80% growth versus a year ago, which itself represented a 35% growth to the prior year. Net income after tax for Q2 of 26 came in at $2.85 million, an increase of 41%. I've got some comments later on the presentation of the, I'll call it the accounting impact of the oral science acquisition. But you see 41% NEAT growth in Q2 versus 28% growth in the year ago. So a strong progression on a net income after tax basis coming close to our NEAT. Fully diluted EPS came in at 25 cents for the quarter. That's 39% ahead of year ago. And our return on equity, you can see, continues to progress positively now that we've deployed cash into the acquisition of oral science. I think you'll see continued strong performance in the 20% plus range on return on equity calculated. So in the first half, just reminding you again that first half performance only include four months of the oral health business. So 60% revenue growth, EBITDA at 8.62 million, up 45% to the year ago, just under 5.2 million plus 20% and fully diluted EPS at 45 cents. comparing favorably plus 19% to the year ago. So how does that then flow through on a trailing 12-month basis for earnings? So first of all, the performance in the quarter itself, the profit performance represented our 64th consecutive profitable quarter. We came profitable for the first time in Q3 of 2010. And since then, we have been profitable every quarter up until Q2 of this year. So on a TTM basis, ending June 30th, our EPS fully diluted was $0.85, compares favorably to $0.72 a year ago and $0.60 two years ago. And then comparable periods, so trailing 12 months ending on June 30th. In the green dialog box, you see an adjustment of the EPS. So for the purposes of illustrating the business to you, the only adjustment we've made are one-time Thank you for joining us. We have a good deal of detail out in the public domain and in our filings on CDAR, both presentations, press releases, annual reports, MD&A. So I encourage you, if you're interested to learn more, to refer to those. You'll start seeing References to that in February of this year and then, of course, our acquisition as of March 1st of 2026. So Oral Science is operating as the new oral health business unit of BioSyent, the primary place of business, although it is a kind of national across Canada business. The operations are headquartered in Brossard, Quebec, which is the southern suburb of Montreal. And as a reminder, we purchased the business for $25.5 million. That included a significant amount of working capital, $6.3 million. At close, there was excess working capital above the purchase agreement terms. There were an additional $1.85 million of excess working capital, which we paid for. And also as a way of reminder, there is a performance earn out based on profitability of the business over a calculated period. And we will have that fully kind of reconciled and completed. with payments made by probably late Q1 of 2027 or possibly that spills over to the very beginning of Q2 of 2027. So based on the front purchase price and the business performance before we bought it, that implies less than six times multiple on EBITDA. You'll see in the notes to the financials, you'll see how the purchase price has been allocated. I don't want to spend too much time The detail there, as I say, you can find that in the financial statements. I just wanted to draw your attention to the intangible assets. So the amount that has been allocated to intangibles, just under $19.1 million. So I wanted to point out to you how that then impacts our income statement. So we are amortizing the intangible assets that come with the acquisition of World Science, and that is coming out at a rate of $250,000 a month. So you'll see in Q2 of 2026, $750,000 of additional amortization expense on those intangible assets. And in the first half, that worked out to $1 million because it is a full quarter plus a month. So four times $250,000. So you'll be seeing, you know, probably for the first time, if you've been a longer time shareholder, you'll see some difference in our income statement versus our EBITDA, a little bit of a spread. And that is really driven by the amortization of the intangibles. So as we move forward with our business, we're operating two revenue platforms, one in pharmaceutical products, one in oral health. We will continue to invest in growth for both of those platforms. And we are working on maximizing sales of assets that we own, both in oral health and in pharmaceutical outside of Canada as well. So we already have existing revenue outside of Canada on SpecPharma. and we have several projects underway to generate revenue from new customers outside of Canada as well. So I wanted to touch on a couple of additional highlights for the quarter. We're on a YTD basis. You see, we've been making a regular dividend payment. So our dividends went up by 10% this year versus a year ago. We've paid in March and June. We've declared an additional dividend payment for September. You'll recall that we had paused our NCIB somewhat as we were working on the oral science transaction. And so that's back in action is the best way to describe it. On a YTD basis, we've repurchased just under 219,000 shares. YTD June 30th, I should say. Actually, on a YTD basis, that number is higher. I'm not sure if we've yet reported that on SETI. But the quantum of purchases has continued. We've been active in the market. So that is, you know, continues to feature as an important part of our capital allocation. Fairmax was named the number one recommended oral iron supplement now for the 11th consecutive year. And that continues to be an important asset and ballast for our business as we move forward. The other exciting news in the quarter was the Health Canada approval of Thiconvy. Thiconvy is a new liquid oral solution of levothyroxine, the first and only in Canada. Thiconvy is indicated for the management of hypothyroidism and thyroid-stimulating hormone suppression. So this is suited for patients, adults and children, that have difficulty swallowing solid meds. It also offers a really good option for healthcare professionals and their patients when Flexible dosing and small dose accuracy is required, so instead of splitting tablets, which often happens in this therapeutic class. Health Canada approved the product in May, and we intend to launch it in the first quarter of 2027. So with Thiconvy, Fairmax, and our new oral health acquisition of Oral Science, we have a number of interesting and important assets in our portfolio and a horizon of growth drivers as we move forward to defined in years. But of course, when you're not a product development company, when you're primarily in licensing and or acquiring, then the process of looking for, finding, negotiating, and transacting on acquisitions and in licensing is important, and that is an ongoing process, so we fully expect that Our portfolio will look different in a year, two, and three years than it does today, and that is just a core part of our strategy. I wanted to touch today very briefly on the macroeconomic and geopolitical environment. There's as much or more uncertainty today than there was, say, at the very peak of COVID. We are navigating that environment. I'm recording this presentation just maybe 12 hours after Robert March, Marnie Mccormick, René Goehrum We're in the brand business, so we're keeping a close eye on that. There's nothing that I can tell you that gives us certainty one way or another. We'll just keep being diligent and keeping our eye on the environment and trying to make sure that our business can respond to the signals that the market is sending us. A quick check-in on our balance sheet. I do this really to kind of take you back to December 31st, where we had just under $32 million of cash in GICs. We transacted on the oral science purchase on March 1st. When we did so, we had $8 million of debt on our balance sheet. That $8 million of debt has now been paid down to $2 million, and we expect that debt to be fully repaid by the end of September. Our balance sheet continues to be strong and positions us for continued work in licensing and acquisition, as I've mentioned previously. In fact, we expect our balance sheet largely to look as it did Just immediately before we transacted on oral science, we expect by the end of next year our balance sheet to be back into that position. As you kind of read through our cash generation in the business, calculate our EBITDA, and if we are debt-free, we're not paying interest. So the cash generation of the business is strong. The conversion of the profitability to cash continues to be solid, and we continue to look for opportunities to expand our portfolio. It's a good way to segue into our capital allocation approach. We've been asked this for quite some period of time, including when we had a lot of cash on the balance sheet relative to the revenue in the business. The first answer is always that our capital, its purpose is to serve the strategy in the business, grow revenue, grow profit, and diversify our portfolio. However, we have a capital-light cash-generating business model that Business model has not changed with the acquisition of oral science. And so we do have from time to time and on an ongoing basis, capital in excess of what's required to execute our strategy. So we started buying back shares in late 2018. Since we started that NCIB program, we have deployed $26.5 million to share buybacks. As I've indicated, I think that number is higher now through July and the beginning of August, representing 3.4 million shares that have been repurchased and retired. I believe somewhere in the orders of 23, 24% of our fully diluted shares as at the date when we started the program have now been reduced. We started paying a dividend in Q4 of 22. And since then, including our upcoming dividend payment, we've returned over $8 million in dividends. to shareholders, and we've been solidly growing the dividend at double digits annually. So we are a growth story. That is clear from our business performance. We are returning capital to shareholders. We're investing in that growth. We've launched seven branded products since the summer of 2020. We're deploying capital. We've made two acquisitions in the last less than 24 months, Tabilia and WorldScience. both of them attractive rates, one less than five times EBITDA and the other less than six. So we'll continue looking for opportunities to deploy capital, but we will wait for our pitch. I often highlight this slide towards the end of the quarterly presentations just to remind shareholders and to reinforce to new folks that are taking a look at BioSyent. We discontinued the use of share options as a form of equity incentive compensation. We discontinued, I believe it was in the beginning of 2019. So we're literally now seven years deep into that. So we have a small number of options still outstanding. That number is dwindling, has not been growing obviously because we're not issuing new options. What we've turned to are issuance of restricted share units. And what we've been doing is buying shares in the open market and holding them in trust as our obligations on our RSU program come due. So we've been quite the opposite of dilutive in how we're managing our incentive equity compensation. I wanted to thank you for your attention, for checking in on us. If you're a shareholder, thank you for your support. And we look forward to continuing to report the progress that we're making with the business. Thank you.