Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- CareRx Corp (CHHHF, Financial) achieved its fifth consecutive quarter of EBITDA growth, demonstrating consistent financial improvement.
- The company successfully renegotiated better supply terms with its principal pharmaceutical wholesaler, contributing to improved margins.
- CareRx Corp (CHHHF) reduced its net debt by almost $25 million over the past year, enhancing its financial flexibility.
- The opening of a new state-of-the-art high-volume fulfillment center in North Burnaby is expected to enhance service delivery and operational efficiency.
- The company has secured almost 3,000 beds for the next year, indicating a robust pipeline and growth potential in the long-term care sector.
Negative Points
- Revenue for the third quarter of 2024 declined slightly to $92.8 million from $93.8 million in the same quarter of 2023.
- The year-over-year revenue decline was primarily due to a net reduction in the average number of beds serviced.
- CareRx Corp (CHHHF) posted a net loss of $360,000 in the third quarter, although this was an improvement from previous quarters.
- There is expected modest variability in costs and margins for the foreseeable future, which may impact financial performance.
- The consolidation of pharmacy operations into the new North Burnaby location involves significant capital expenditure, with net CapEx expected to be about $3 million.
Q & A Highlights
Q: Can you describe the logistics of the new facility in North Burnaby and how it will operate?
A: Puneet Khanna, President and CEO, explained that the facility will replicate the operational workflow and layout of the Oakville center, with a new high-volume packaging solution being tested. The output will be similar to Oakville's.
Q: What financial impact is expected from the consolidation of the pharmacies? Will there be a reduction in expenses or improvement in margins?
A: Davide Pernarella, Interim CFO, stated that the consolidation is part of their plan to achieve double-digit margins in the near future, although specific guidance was not provided.
Q: Regarding the pipeline, you mentioned securing almost 3,000 beds for next year. Are there expectations for bed growth in the fourth quarter or more towards 2025?
A: Puneet Khanna indicated that the growth is expected more towards 2025, with regulatory approvals pending for the secured beds, which are anticipated to be onboarded in the first half of the year.
Q: What is the expected CapEx for the North Burnaby facility, and when will it be incurred?
A: Davide Pernarella mentioned that the total net CapEx for the facility will be about $3 million, primarily incurred next quarter and some in the first quarter of next year.
Q: When do you expect to achieve the double-digit adjusted EBITDA margin target?
A: Puneet Khanna expects to achieve this target by late Q1 or early Q2 of next year, following the full move to the new facility.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
