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Company delivers strong pharmacy same store sales performance as its retail footprint expands to 294 locations

TORONTO, Feb. 13, 2024 /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 sixteen-week period ended December 30, 2023 (the "third quarter 2024").

"Neighbourly's third quarter results reflect the continuing strength of our pharmacy business, thanks to our pharmacies' unwavering focus on delivering exceptional patient care," stated Skip Bourdo, the Company's Chief Executive Officer. "The team continued to deliver on our M&A and growth initiatives, adding another two pharmacies to the Neighbourly family," concluded Mr. Bourdo.

Third Quarter 2024 Highlights

• Revenue for the third quarter increased to $284.0 million, up $18.7 million or 7.0% compared to prior year; 69% of the growth was driven by pharmacies acquired in the past 12 months.
• Same store sales¹ growth of 2.7% was driven by strong prescription and clinical services revenue, up 4.6% and 8.3% respectively; partially offset by softer front store sales, down 4.5% against the strong prior year performance of over the counter cold-and-flu medications.
• Adjusted EBITDA² for the third quarter increased to $31.2 million, up $2.6 million or 9.2% primarily due to the incremental contributions from pharmacies added to the Company's network in the past 12 months.
• The Company acquired two pharmacy locations subsequent to the second quarter's earnings release, bringing the pharmacy network to 294 locations across Canada.
• Adjusted Earnings per Share³ for the third quarter of $0.19, compared to $0.17 in the third quarter of 2023.
• Pro-Forma Revenue³ of $905.9 million and Pro-Forma Adjusted EBITDA³ of $98.0 million.

Neighbourly Privatization Highlights

• On January 15, 2024, the Company entered into a definitive agreement (the "Arrangement Agreement"), whereby T.I.D. Acquisition Corp., a newly-formed entity controlled by PCP, would acquire all of the common shares in the capital of the Company, other than those common shares already owned by PCP or its affiliates, at a purchase price of $18.50 per common share, payable in cash plus one contingent value right ("CVR") per common share.
• The CVR will entitle the holder to an additional cash payment of $0.61 per CVR if the Company's Pro-Forma Adjusted EBITDA target of $128.0 million for the fiscal year ending March 28, 2026 is achieved.
• A circular in respect of the transaction was filed and mailed to all shareholders of record as of January 29, 2024 for a special meeting to be held on March 8, 2024.
• The privatization transaction is expected to close by March 15, 2024, subject to shareholder approval and the satisfaction of customary closing conditions.

Selected Third Quarter 2024 Results 

Dividend

Pursuant to the Arrangement Agreement, the Company will not pay any dividends (including the historical quarterly dividend of $0.045) to its shareholders until the closing of the Privatization transaction.

Third Quarter Financial Results 

Neighbourly's unaudited consolidated financial statements and accompanying notes, and Management's Discussion and Analysis for the third quarter 2024 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 294 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", "Adjusted EBITDA Margin", "Pro-Forma Adjusted EBITDA", "Pro-Forma Revenue", "Adjusted Net Income (Loss)" and "Adjusted Earnings (Loss) Per Share." Refer to the Company's Management's Discussion and Analysis dated February 13, 2024 for the sixteen weeks ended  December 30, 2023, which is available under the Company's profile on SEDAR at www.sedar.com, for an explanation of the composition of those non-IFRS measures, an explanation of how these non-IFRS measures provide useful information to investors and the additional purposes for which management uses these non-IFRS financial 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, Adjusted EBITDA Margin, Pro-Forma Adjusted EBITDA, Pro-Forma Revenue and Adjusted Net Income (Loss) 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 news 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 expected completion of acquisitions and timing thereof, the expected impact of acquisitions on the Company's financial results and expected accretion, the payment of dividends, and same store sales improvements.

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. Such estimates and assumptions include the satisfaction of all conditions of closing and the successful completion of probable acquisitions within the anticipated timeframe, including receipt of regulatory approvals. Further, forward-looking information is 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 risks and uncertainties related to probable acquisitions, including the failure to receive or delay in receiving regulatory approvals or otherwise satisfy the conditions to the completion such acquisitions, in a timely manner, or at all, and the reliance on information provided by the relevant sellers, as well as other factors discussed or referred to in the Company's Management's Discussion and Analysis for the sixteen weeks ended December 30, 2023 (the "MD&A") and under the heading "Risk Factors" in the Company's annual information form (the "AIF") filed on June 8, 2023. 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. The opinions, estimates or assumptions referred to above and described in greater detail elsewhere in the MD&A as well as in the "Risk Factors" section of the AIF should be considered carefully by prospective investors. The pro forma information set forth in this press release should not be considered to be what the actual financial position or other results of operations would have necessarily been had the probable acquisitions discussed herein been completed as, at, or for the periods stated.

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) 

Condensed Consolidated Statements of Financial Position   

in 000's			December 30, 2023	March 25, 2023
Assets
Current assets:
Cash			17,488	22,889
Trade and other receivables			38,479	38,236
Inventory			96,952	94,277
Prepaid expenses and other assets			4,598	3,898
Assets held for sale			2,593	2,099
			160,110	161,399
Property and equipment, net			26,329	27,986
Right-of-use assets, net			73,086	80,207
Intangible assets, net			343,242	353,219
Goodwill			487,786	456,311
Deferred tax assets			20,238	19,750
Other assets			1,688	3,129
			952,369	940,602
			1,112,479	1,102,001
Liabilities and Equity
Current liabilities:
Accounts payable and other liabilities			109,278	105,697
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