Investor Presentation - November 2021 TSX: CRRX Canada's Largest Seniors Care Pharmacy Provider - Seeking Alpha
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Canada’s Largest Seniors Care Pharmacy Provider TSX: CRRX Investor Presentation November 2021
Forward Looking Statements Certain of the statements contained in this presentation are "forward looking information within the meaning of applicable Canadian securities legislation. Forward looking information includes, but is not limited to, business strategy, plans and other expectations, beliefs, goals, objectives, information and statements about possible future events. Forward looking information generally can be identified by the use of forward looking terminology such as “outlook ”, “objective”, “may”, “will”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plans” or “continue”, or similar expressions suggesting future outcomes or events. You are cautioned not to place undue reliance on such forward-looking information. Forward looking information is based on current expectations, estimates and assumptions that involve a number of risks that are set out under the heading “Risks and Uncertainties” in CareRx’s most recently filed Management’s Discussion and Analysis available on SEDAR at www.sedar.com, which could cause actual results to vary and in some instances to differ materially from those anticipated by CareRx and described in the forward looking information contained in this presentation. No assurance can be given that any of the events anticipated by the forward looking information will transpire or occur or, if any of them do so, what benefits CareRx will derive therefrom and neither CareRx nor any other person assumes responsibility for the accuracy and completeness of any forward looking information. Other than as specifically required by applicable laws, CareRx assumes no obligation and expressly disclaims any obligation to update or alter the forward-looking information whether as a result of new information, future events or otherwise. All dollar figures are in Canadian dollars unless otherwise stated. 2
Canada’s largest and fastest growing provider of pharmacy services to seniors housing communities and other congregate care settings 3 3
The typical senior Medication supply and
in a long-term management is a critical
care or retirement component of seniors home care
home takes • Optimize medication regimen for optimal
resident outcomes
4 to 12 •
•
Ensure highest levels of safety
Minimize hospital visits
Resident oversight by geriatric-certified
medications •
daily clinical pharmacists
4
Never has the level of care for these residents
4 4 been so important
Add an image of a Best-in-Class Institutional pharmacist at work Pharmacy Capabilities • High-volume solutions for cost-effective supply of chronic medication • Highest level of safety and adherence for individuals with complex medication regimes • Industry-leading team of clinical pharmacists who work with home operators to provide exceptional medication management services • Largest national footprint enables delivery of responsive, high-touch, local service 5
Best-in-Class Medication
Management Technology
PACMED® PACVision®
Automated strip Automated pouch
packaging technology verification technology
Digital Pen Nexsys ADC™
Automated dispensing cabinet
PharmaPod PharmaConnect
Medication incident eMAR Interactive patient portal
management system
Technology leadership will increasingly be a competitive
6
6
advantage in providing pharmacy services to seniors housing
communities
Our Growing Strongest Network in the Sector
National Scale
>96,000 beds serviced
seniors housing
>1,600
Geographies: Ontario &
Western Canada
communities
monthly Strong Bed Growth
>3.1 M prescriptions 100,000
>96,000
80,000
361 fulfillment
centres
60,000
40,000 20,000
20,000
1. Prior to planned further consolidation of fulfillment centres resulting
from the integration of the Medical Pharmacies acquisition.
7
Total seniors housing Over the next ~15 years,
beds in Canada the number of beds is
forecast to grow
~425,000 (and growing)
96,000
>2x
23%
9% Comp A
~37,000
1,025,000
Rest of Market
~292,000
68%
~425,000
8 Note: Incumbent bed counts per management estimates; Total
seniors housing beds per CMHC Seniors Housing Report Canada.Multiple Opportunities for Growth
Increase beds under contract
Well capitalized and positioned to win new
large, national and regional contracts
Today • Expand with our seniors housing community
2021 Year-End
customers Target
>96,000 • Add new seniors housing communities
beds
contracts
• Expand into additional provinces
100,000
beds
Make strategic acquisitions
Consolidate a highly fragmented market
through accretive acquisitions to increase
scale and realize operational efficiencies
9
Significant operating leverage as number of beds
9
under contract expandsDisciplined Acquisition Strategy
1 Highly 2 With strong 3 At accretive
complementary synergy potential purchase multiples
Leverage current Ability to realize Highly accretive
market dynamics to substantial synergies acquisitions at
make opportunistic through rationalization, discounts to CareRx’s
roll-up acquisitions improved purchasing average trading
that grow bed count power, and by multiple result in
and improve scale implementing CareRx’s strong value creation
…At Accretive best practices opportunities
Purchase
Multiples
Proven ability to rapidly integrate
10 acquisitions and realize synergiesSuccessful Execution of Acquisition Strategy
May 2020 April 2021 June 2021
Remedy’sRx SmartMeds Rexall
Specialty Pharmacy High-Quality Tuck-In Portion of LTC Pharmacy
Transformational Acquisition Business
Acquisition
• +18,500 beds • +2,400 beds • +4,000 beds
• Created strongest national • Strengthened market position in ON • Included fulfilment centre in
footprint in the sector • Leader in innovation, quality, and Sudbury, Ontario
• Added capacity to scale and customer service
• Expected to contribute annualized
absorb new beds • Expected to contribute annualized run-rate revenue of ~$14 M &
• Integration completed ahead of run-rate revenue of $13 M & nominal Adjusted EBITDA prior to
schedule, realizing $3 M in Adjusted EBITDA of $1.5 M prior to any integration synergies
annual cost saving synergies any integration synergies
Purchase $39 M + up to Purchase $4.5 M + up to Purchase
Price: $5 M earn out Price: Price: $3.5M
$2.9 M earn out
11 All acquisitions performing in line or ahead of expectations
11Medical Pharmacies: Our • Purchase Price:
Largest & Most Significant • $70 M cash
• 550,359 CareRx common shares
Acquisition to Date
• Financing:
August 23, 2021: Completed Acquisition of • $63.3 M private placement
LTC Division of Medical Pharmacies • $39 M incremental debt (and
• Added ~36,000 beds, serviced through 17 centres concurrent refinancing of existing
in Ontario & Western Canada senior and subordinated credit
facilities)
• Further expanded Canada’s largest national
platform
• Immediately accretive to earnings
• Expected to contribute run-rate annualized
revenue of ~$150 M & Adjusted EBITDA of $10-12 M
• Further strengthened best-in-class offering, while
enhancing growth opportunities
On track to realize minimum expected cost savings synergies of $5 M
12
12
One location consolidated in Q3 with four additional locations expected to
be consolidated by end of the yearSuccessful Execution of Our Growth Strategy
Ave. Beds Serviced Revenue Adj. EBITDA Revenue Adj. EBITDA
(000s) (from continuing ops) (from continuing ops) (from continuing ops) (from continuing ops)
($ millions) ($ millions) ($ millions) ($ millions)
81.8 71.3 165.8
15.3
115.8
49.3 45.6 6.9
89.1 92.4
8.7
31.3 27.9 31.4 6.9
29.0 3.8
2.8
3.1
(0.04)
Q3 2018 Q3 2019 Q3 2020 Q3 2021 Q3 2018 Q3 2019 Q3 2020 Q3 2021 Q3 2018 Q3 2019 Q3 2020 Q3 2021 YTD '18 YTD '19 YTD '20 YTD '21 YTD '18 YTD '19 YTD '20 YTD '21
Currently servicing beds >96,000 beds in
13
13 >1,600 seniors and other communitiesA New Baseline for >96,0001 beds
23%
Continued Growth
• Positioned to benefit from increased scale
and enhanced capabilities 77%
• Experiencing accelerated organic growth
• Significantly strengthened position as a
Market Opportunity via
natural consolidator in a highly fragmented
Organic Growth & Acquisitions
market:
• Strong pipeline of opportunities ~329,000 seniors housing beds1
1. Other bed opportunities available, including group homes, corrections
facilities and other congregate living settings.
Better positioned than ever to continue to execute on
14 acquisitions and organic growth in what remains a
14
highly fragmented market1 2 3
Large, high-growth Canada’s largest Leading customer
seniors market seniors care value proposition and
pharmacy provider national network
4 5
Natural consolidator in Significant operating
a highly fragmented leverage
market
15 www.carerx.caCanada’s Largest Seniors Care Pharmacy Provider TSX: CRRX Investor Presentation November 2021
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