Acquisition expands residents serviced by nearly 65% to more than 92,000
TORONTO, Aug. 23, 2021 /CNW/ - CareRx Corporation ("CareRx" or the "Company") (TSX: CRRX), Canada's leading provider of pharmacy services to seniors living and other congregate care communities, announced today that it has closed the previously announced acquisition (the "Acquisition") of the Long-Term Care Pharmacy Division (the "MPGL LTC Pharmacy Business") of Medical Pharmacies Group Limited ("MPGL"). Following completion of the Acquisition, CareRx now serves over 92,000 residents in over 1,500 seniors and other congregate care communities across Canada, further expanding CareRx's leading national footprint.
The MPGL LTC Pharmacy Business is expected to contribute run-rate annualized revenue of approximately $150 million and Adjusted EBITDA of $10 million to $12 million, as well as cost savings synergies of a minimum of $5 million, and is expected to be immediately accretive to CareRx's earnings. The purchase price for the Acquisition was satisfied through the issuance of $70 million of cash and the issuance of 550,359 common shares of CareRx.
"Today marks the most significant step to date in the growth and transformation of CareRx into the clear leader of the institutional pharmacy sector in Canada," said David Murphy, President and Chief Executive Officer of CareRx. "I am proud to welcome our new colleagues from MPGL, and I look forward to working with them to bring our two companies together and deliver a superior service offering to our home operator partners and their residents. The combined business is uniquely positioned to deliver continued growth and shareholder value, while playing a critical role in the provision of healthcare to the most vulnerable Canadians."
Further to the previously announced debt commitment letter that was entered into upon announcement of the Acquisition, the Company has signed an amended and restated credit agreement with Crown Private Credit Partners Inc. ("CPCP"), under which new senior credit facilities of $60 million were advanced to the Company by CPCP and certain participants (the "Senior Facility"). $37 million of the Senior Facility was used to pay a portion of the cash closing price for the Acquisition and related transaction costs, with the remaining $23 million being used to repay the existing term loan with Crown Capital Partner Funding, LP. Interest on the Senior Facility will accrue at an annual rate of between 7.5% and 9% based on applicable financial covenants, and the Senior Facility will mature on the 5th anniversary of the Acquisition closing, subject to certain prepayment rights in favour of the Company.
In addition, upon closing of the Acquisition, the $63.3 million of proceeds raised from the brokered and non-brokered subscription receipt offerings that closed on May 19, 2021 (the "Equity Offerings") were released to the Company given the satisfaction of the applicable escrow release conditions, and the 12,524,880 million subscription receipts that were issued were automatically converted into an equivalent number of common shares of the Company. The proceeds raised from the Equity Offerings were used to pay a portion of the cash closing price for the Acquisition and related transaction costs, as well as for general working capital purposes. Upon closing of the Acquisition, the Company has approximately $32 million of cash on hand and 43,634,832 common shares issued and outstanding.
CareRx is Canada's leading provider of pharmacy services to seniors communities. We serve over 92,000 residents in over 1,500 seniors and other congregate care communities (long-term care homes, retirement homes, assisted living facilities, and group homes). We are a national organization with a large network of pharmacy fulfillment centres strategically located across the country. This allows us to deliver medications in a timely and cost-effective manner and quickly respond to routine changes in medication management. We use best-in-class technology that automates the preparation and verification of multi-dose compliance packaging of medication, providing the highest levels of safety and adherence for individuals with complex medication regimes. We take an active role in working with our home operator partners to promote resident health, staff education, and medication system quality and efficiency.
This press release contains statements that may constitute "forward-looking statements" within the meaning of applicable Canadian securities legislation. These forward-looking statements include, among others, statements regarding the Company's business strategy, plans and other expectations, beliefs, goals, objectives, information and statements about possible future events, including in respect of the Acquisition revenue and Adjusted EBITDA expectations, and integration activities in connection therewith. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "anticipate" or similar expressions suggesting future outcomes or events. Such forward-looking statements reflect management's current beliefs and are based on information currently available to management.
Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those contemplated by such statements. Factors that could cause such differences include the Company's exposure to and reliance on government regulation and funding, the Company's liquidity and capital requirements, exposure to epidemic or pandemic outbreak, the highly competitive nature of the Company's industry, reliance on contracts with key customers and other risk factors described from time to time in the reports and disclosure documents filed by the Company with Canadian securities regulatory agencies and commissions. These and other factors should be considered carefully and readers should not place undue reliance on the Company's forward-looking statements. As a result of the foregoing and other factors, no assurance can be given as to any such future results, levels of activity or achievements and neither the Company nor any other person assumes responsibility for the accuracy and completeness of these forward-looking statements. The factors underlying current expectations are dynamic and subject to change.
SOURCE CareRx Corporation
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