Neighbourly Announces First Quarter 2022 Results
Neighbourly Announces First Quarter 2022 Results
Canada NewsWire
TORONTO, Aug. 3, 2021
Acquisitions Drive Revenue and Adjusted EBITDA Improvements of Over 50% Subsequent to the Quarter, Successfully Closed Acquisitions of 14 Previously Announced New Locations
TORONTO, Aug. 3, 2021 /CNW/ - Neighbourly Pharmacy Inc. ("Neighbourly" or the "Company") (TSX: NBLY), Canada's largest and fastest growing network of independent pharmacies, today announced its financial results for the twelve-week period ended June 19, 2021 (the "first quarter 2022").
"We're very pleased with Neighbourly's results for the first quarter, which provide further evidence of the success of our acquisition strategy," stated Chris Gardner, the Company's Chief Executive Officer. "Locations added to our network over the past four quarters accounted for approximately 83% of our quarterly revenue increase. The acquisition and integration of community pharmacies is the foundation of our company's long-term growth strategy. Across Canada, there are currently more than 3,600 independent pharmacies that meet our acquisition criteria, and we look forward to engaging with their owners as we continue to expand our network over the year ahead."
"Neighbourly's first quarter results also reflect the first steps towards a normalization of our business following the impact of COVID-19," concluded Mr. Gardner. "Our pharmacy teams have administered well over 70,000 COVID-19 vaccinations to date, including more than 44,000 in the first quarter alone. I am exceptionally proud of the role these teams are playing in Canada's recovery from the pandemic. Their commitment gives me great confidence in Neighbourly's future."
First Quarter 2022 Highlights
- Revenue for the first quarter 2022 increased by 55.2% to $85.3 million, driven by the addition of 40 pharmacies over the prior four quarters.
- Adjusted EBITDA1 for the first quarter 2022 increased by 54.1% to $10.1 million, primarily due to the incremental profitability of pharmacies added to the Company's network.
- Net Loss for the first quarter 2022 was $76.9 million, primarily due to $74.1 million of one time and non-cash items related to both the change in fair value of financial liabilities with the conversion of Preferred shares and Warrants into common shares concurrent with the IPO (as defined below), net of the gain on debt modification, and IPO related costs.
- Same-store sales2 for the first quarter 2022 increased by 8.2%, primarily due to a normalization of business volumes following the impact of COVID-19 in the comparative twelve-week period ended June 20, 2021(the "first quarter 2021").
- Pro-Forma Revenue3 of $419.8 million.
- Pro-Forma Adjusted EBITDA4 of $51.0 million.
- On May 25, 2021, the Company successfully completed its initial public offering ("IPO") of 10,295,000 million common shares for total gross proceeds of approximately $175 million, and a concurrent private placement of 1,058,823 common shares for total gross proceeds of approximately $18 million. The Company also entered into an amendment to its amended and restated credit agreement, which is comprised of a $150 million revolving credit facility and a $100 million term credit facility.
- The Company announced the acquisition of 13 pharmacies during the first quarter 2022. Subsequent to the first quarter 2022, the Company announced the acquisition of one additional pharmacy. The Company completed these acquisitions on July 26, 2021 and June 22, 2021, respectively.
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1 Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure at the conclusion of this news release. |
2 Same-store sales represents sales from stores that were owned and operated by the Company for the entirety of both periods and is a supplementary financial measure that is commonly used in the industry. Neighbourly calculates same-store sales using revenue determined in accordance with IFRS. |
3 Pro-Forma Revenue is a non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure at the conclusion of this news release. |
4 Pro-Forma Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure at the conclusion of this news release. |
First Quarter 2022 Financial Results
(in $ millions) | First Quarter | |||
2022 | 2021 | Change | ||
Revenue | $85.3 | $55.0 | 55.2% | |
Same-Store Sales Growth (%)1 | 8.2% | 0.1% | ||
Corporate, General, and Administrative ("CG&A") Costs2 | $2.8 | $2.0 | 36.2% | |
CGA Costs as a Percentage of Revenue (%) | 3.3% | 3.7% | ||
Adjusted EBITDA3 | $10.1 | $6.6 | 54.1% | |
Adjusted EBITDA Margin (%) | 11.9% | 12.0% | ||
Net Income (Loss) | ($76.9) | ($5.0) | (1451.1%) | |
Pro-Forma Revenue for the 52 weeks ended4 | $419.8 | |||
Pro-Forma Adjusted EBITDA for the 52 weeks ended5 | $51.0 | |||
1Same-store sales represents sales from stores that were owned and operated by the Company for the entirety of both periods and is a supplementary financial measure that is commonly used in the industry. Neighbourly calculates same-store sales using revenue determined in accordance with IFRS. | ||||
2Corporate, general & administrative costs represents costs incurred at the corporate level (as opposed to costs incurred at the store level) and is a component of Operating, general and administrative expenses. | ||||
3Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure at the conclusion of this news release. | ||||
4Pro-Forma Revenue is a non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure at the conclusion of this news release. | ||||
5Pro-Forma Adjusted EBITDA is a non-IFRS measure. See "Non-IFRS Measures" and the reconciliation to the most directly comparable IFRS measure at the conclusion of this news release. | ||||
Impact of COVID-19
In March 2020, Neighbourly experienced a temporary and significant change in consumer buying patterns for both prescriptions and essential products due to consumer uncertainty in the early days of the pandemic. These buying patterns were also impacted by the 30-day fill policy implemented by most provincial governments, which temporarily increased prescription counts and decreased average prescription value during the first quarter 2021.
As a result of this policy and the subsequent normalization of both prescription counts and average prescription value, the Company's same-store sales for the first quarter 2022 increased by 8.2%, compared to an increase of 0.1% for the first quarter 2021, while same-store prescription count decreased by 2.1% for the first quarter 2022, compared to an increase of 8.0% for the first quarter 2021.
While the future impact of the pandemic is unknown, the variability in same-store sales has largely normalized, and the Company anticipates generating consistent same-store sales improvement. While new prescription volumes remain below pre-pandemic levels, they have been growing quarter over quarter as the economy reopens.
Declaration of Dividend
Neighbourly announced today that a quarterly dividend will be paid on October 12, 2021, to the Company's common shareholders of record on September 14, 2021. The amount of the dividend will be $0.045 for each common share. This dividend is an "eligible dividend" for Canadian income tax purposes.
Further, Neighbourly reiterates that a quarterly dividend will be paid on September 7, 2021, to the Company's common shareholders of record on August 17, 2021, with respect to the period spanning from the closing of the IPO to June 19, 2021, the last day of first quarter 2022. The amount of such dividend will be $0.013 for each common share. This dividend is also an "eligible dividend" for Canadian income tax purposes.
Conference Call and Webcast Information
A conference call will be held at 8:30AM Eastern on August 3, 2021 to discuss Neighbourly's financial results for the first quarter 2022. Participants may join the Company's conference call by dialing 416-764-8650 or 1-888-664-6383 (ID: 98168501). For those unable to participate, playback will be made available an hour after the event at 416-764-8677 or 1-888-390-0541, utilizing passcode 168501#. The webcast of the call will also be archived and available on the Company's website.
The conference call will also be available via webcast on the Investor section of Neighbourly's website at https://investors.neighbourlypharmacy.ca/events-and-presentations.
Neighbourly's unaudited consolidated financial statements and accompanying notes, and Management's Discussion and Analysis for the twelve-weeks ended June 19, 2021 are available on the Company's website at www.neighbourlypharmacy.ca and on SEDAR at www.sedar.com.
About Neighbourly Pharmacy Inc.
Neighbourly is Canada's largest and fastest growing network of community pharmacies. United by their patient first focus and their role as essential and trusted healthcare hubs within their communities, Neighbourly's pharmacies strive to provide accessible healthcare with a personal touch. Since 2015, Neighbourly has expanded its diversified national footprint to include 146 locations, reinforcing the Company's reputation as the industry's acquirer of choice.
Non-IFRS Measures
This press release makes reference to certain non-IFRS measures, such as Adjusted EBITDA, Pro-Forma Adjusted EBITDA, and Pro-Forma Revenue. Refer to the Company's Management's Discussion and Analysis for the twelve-weeks ended June 19, 2021 for a definition of those non-IFRS measures. These measures are not recognized under International Financial Reporting Standards ("IFRS") and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. These non-IFRS measures are used to provide readers with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that market participants frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. See the financial table at the conclusion of this press release for a reconciliation of Adjusted EBITDA, Pro-Forma Adjusted EBITDA, and Pro-Forma Revenue to the most directly comparable IFRS measures.
Key-Performance Indicators
This press release makes reference to certain key performance indicators, such as Same-store sales and corporate, general & administrative costs. We monitor key performance indicators to help us evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions. These key performance indicators are also used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use industry metrics in the evaluation of issuers. Our key performance indicators may be calculated in a manner different than similar key performance indicators used by other companies.
Forward-Looking Statements
This press release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking information may relate to our future financial results and may include information regarding our financial position, business strategy, growth strategies, financial results, taxes, dividend policy, plans and objectives. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "expects", "estimates", "outlook", "forecasts", "projection", "prospects", "intends", "anticipates", "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances.
Forward-looking information in this news release includes, among other things, statements relating to the acceleration of our growth, the pursuit of additional acquisition opportunities, the payment of dividends, same-store sales improvements and the expected impacts of the ongoing COVID-19 pandemic on our results of operation.
Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that the Company considered appropriate and reasonable as of the date such statements are made in light of its experience and perception of historical trends, current conditions and expected future developments, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the risk factors set forth in the Company's Management's Discussion and Analysis for the twelve-weeks ended June 19, 2021 and under the heading "Risk Factors" in the final long form prospectus dated May 17, 2021 filed in connection with the IPO. If any of these risks or uncertainties materialize, or if the opinions, estimates, or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information.
Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this press release represents the Company's expectations as of the date of this press release (or as the date they are otherwise stated to be made) and are subject to change after such date. However, the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws in Canada. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
First quarter ended | ||
in 000's | June 19, 2021 | June 20, 2020 |
Revenue | $85,345 | $54,994 |
Cost of sales | $53,137 | $33,768 |
Gross profit | $32,208 | $21,226 |
Operating, general and administrative expenses | $22,672 | $14,690 |
Acquisition, transaction and integration costs | $18,352 | $358 |
Depreciation and amortization | $4,745 | $3,810 |
Operating income (loss) | ($13,561) | $2,368 |
Finance (income) cost, net | ($7,107) | $3,542 |
Change in fair value of financial liabilities | $67,228 | $3,786 |
Loss before income taxes | ($73,682) | ($4,960) |
Income taxes expense | $3,254 | $0 |
Net loss for the period | ($76,936) | ($4,960) |
Attributable to: | ||
Shareholders of the Company | ($77,128) | ($4,960) |
Non-controlling Interest | $192 | $0 |
($76,936) | ($4,960) | |
Loss per share | ($7.50) | ($10.80) |
Condensed Consolidated Statements of Financial Position
in 000's | June 19, 2021 | March 27, 2021 |
Assets | ||
Current | ||
Cash | $112,405 | $45,914 |
Trade and other receivables | $14,957 | $17,202 |
Inventory | $46,420 | $44,886 |
Prepaid expenses and deposits | $1,661 | $1,611 |
Assets held for sale | $1,665 | $2,715 |
Total current assets | $177,108 | $112,328 |
Property and equipment, net | $8,285 | $8,296 |
Right-of-use assets | $33,965 | $31,703 |
Intangible assets, net | $103,018 | $105,425 |
Goodwill | $180,853 | $180,853 |
Deferred tax assets | $666 | $1,717 |
Other assets | $226 | $297 |
Total non-current assets | $327,013 | $328,291 |
Total assets | $504,121 | $440,619 |
Liabilities and shareholders' equity | ||
Current | ||
Accounts payable and accrued liabilities | $43,006 | $49,191 |
Promissory notes payable | $62 | $802 |
Current portion of long term borrowings | $625 | $5,575 |
Current portion of mortgages payable | $146 | $146 |
Current portion of lease liabilities | $10,264 | $9,972 |
Preferred shares liability | $0 | $295,844 |
Total current liabilities | $54,103 | $361,530 |
Long-term borrowings | $84,197 | $190,920 |
Mortgages payable | $1,123 | $1,159 |
Lease liabilities | $27,844 | $26,155 |
Deferred tax liabilities | $17,004 | $15,295 |
Warrant liability | $0 | $4,358 |
Total non-current liabilities | $130,168 | $237,887 |
Total liabilities | $184,271 | $599,417 |
Shareholders' equity | ||
Share capital | $555,537 | $23 |
Contibuted Surplus | $958 | $348 |
Deficit | ($243,300) | ($165,632) |
Non-controlling interest | $6,655 | $6,463 |
Total shareholders' equity | $319,850 | ($158,798) |
Total liabilities and shareholders' equity | $504,121 | $440,619 |
Condensed Consolidated Statements of Cash Flows
First Quarter ended | ||
in 000's | June 19, 2021 | June 20, 2020 |
Operating | ||
Net loss for the year | ($76,936) | ($4,960) |
Adjustments to net income for non-cash items | ||
Depreciation and amortization | $4,745 | $3,810 |
Share based compensation | $610 | $48 |
Gain on disposal of property and equipment | ($8) | $0 |
Finance (income) costs, net | ($7,107) | $3,542 |
Change in fair value of financial liabilities | $67,228 | $3,786 |
Income tax expense | $3,254 | $0 |
Lease renewals and modifications | ($21) | ($145) |
Expected credit loss expense | $11 | $0 |
Income taxes recovered (paid) | ($537) | $25 |
Change in non-cash operating working capital | ($4,781) | $1,648 |
Net cash from operating activities | ($13,542) | $7,754 |
Financing | ||
Proceeds from issuance of common shares, net of issuance costs | $188,075 | $0 |
Repayment of promissory notes payable | ($740) | $0 |
Repayment of long-term borrowings | ($100,168) | ($3,223) |
Transaction costs related to long-term borrowings | ($1,915) | ($70) |
Repayment of mortgage payable | ($36) | $0 |
Interest paid | ($1,678) | ($2,682) |
Dividends paid | ($540) | $0 |
Payment of lease liabilities | ($2,716) | ($1,801) |
Proceeds from exercise of warrants | $9 | $0 |
Net cash from financing activities | $80,291 | ($7,776) |
Investing | ||
Acquisition of property and equipment | ($189) | ($124) |
Acquisition of intangible assets | ($112) | $26 |
Restricted cash, net | $0 | $893 |
Interest received | $43 | $0 |
Net cash from investing activities | ($258) | $795 |
Net change in cash | $66,491 | $773 |
Cash, beginning of period | $45,914 | $3,907 |
Cash, end of period | $112,405 | $4,680 |
Reconciliation from IFRS to Non-IFRS Measures
The following table provides a reconciliation of loss and comprehensive loss to Adjusted EBITDA and Pro-Forma Adjusted EBITDA, and of Revenue to Pro-Forma Revenue, for the periods indicated:
First Quarter | 40 weeks ended | ||
in 000's | 2022 | 2021 | 2021 |
Loss and comprehensive loss for the period | -$79,936 | -$4,960 | -$85,557 |
Income tax expense (recovery) | $3,254 | - | $2,591 |
Finance (income) costs, net | -$7,107 | $3,542 | $12,462 |
Fair value changes of financial liabilities | $67,228 | $3,786 | $76,619 |
Depreciation and amortization | $4,745 | $3,810 | $15,308 |
Impairment loss | - | - | $116 |
Acquisition, transaction and integration costs | $18,352 | $358 | $6,821 |
Share-based compensation | $610 | $48 | $138 |
Adjusted EBITDA | $10,146 | $6,584 | $28,498 |
Revenue | $85,345 | $54,994 | $251,500 |
Adjusted EBITDA margin | 11.9% | 12.0% | 11.3% |
Pro-Forma Adjusted EBITDA | |||
Adjusted EBITDA for the 12 weeks ended June 19, 2021 | $10,146 | ||
Adjusted EBITDA for the 40 weeks ended March 27, 2021 | $28,498 | ||
Incremental Adjusted EBITDA for new stores acquired after June 20, 2020 as if owned on | $4,016 | ||
Incremental Adjusted EBITDA for stores acquired, or to be acquired on or after June 19, 2021 to date as if owned on June 20, 2020 | $6,853 | ||
Adjustment for professional, other fees and COVID-related for the 12 weeks ended June 19, 2021 | - | ||
Adjustment for professional, other fees and COVID-related for the 40 weeks ended March 27, 2021 | $1,518 | ||
Pro-forma Adjusted EBITDA for the 52 weeks ended June 19, 2021 | $51,031 | ||
Pro-Forma Revenue | |||
Revenue for the 12 weeks ended June 19, 2021 | $85,345 | ||
Revenue for the 40 weeks ended March 27, 2021 | $251,500 | ||
Incremental Revenue for new stores acquired after June 20, 2020 as if owned on June 20, 2020 | $30,758 | ||
Incremental Revenue for stores acquired, or to be acquired on or after June 19, 2021 to date as if owned on | $52,208 | ||
Pro-forma Revenue for the 52 weeks ended June 19, 2021 | $419,811 | ||
SOURCE Neighbourly Pharmacy Inc.
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