Condensed Consolidated Interim Financial Statements
(Expressed in thousands of Canadian Dollars, except per share amounts)
MEDICURE INC.
Three months ended March 31, 2024 (unaudited)
In accordance with National Instruments 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed the unaudited financial statements for the three months ended March 31, 2024.
Condensed Consolidated Interim Statements of Financial Position (expressed in thousands of Canadian dollars, except per share amounts) (unaudited)
Note | March 31, 2024 | December 31, 2023 | ||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 6,074 | $ | 6,369 |
Accounts receivable | 3 | 5,375 | 4,794 | |
Inventories | 4 | 3,322 | 2,900 | |
Prepaid expenses | 1,201 | 1,143 | ||
Total current assets | 15,972 | 15,206 | ||
Non-current assets: | ||||
Property and equipment | 642 | 736 | ||
Intangible assets | 5 | 8,804 | 8,940 | |
Goodwill | 6 | 3,178 | 3,102 | |
Other assets | 77 | 75 | ||
Total non-current assets | 12,701 | 12,853 | ||
Total assets | $ | 28,673 | $ | 28,059 |
Liabilities and Equity | ||||
Current liabilities: | ||||
Accounts payable and accrued liabilities | $ | 7,677 | $ | 7,603 |
Income taxes payable | 16 | 16 | ||
Current portion of lease obligations | 266 | 315 | ||
Total current liabilities | 7,959 | 7,934 | ||
Non-current liabilities | ||||
Lease obligations | 210 | 229 | ||
Total non-current liabilities | 210 | 229 | ||
Total liabilities | 8,169 | 8,163 | ||
Equity: | ||||
Share capital | 8(b) | 81,014 | 81,014 | |
Contributed surplus | 10,781 | 10,723 | ||
Accumulated other comprehensive loss | (5,490) | (5,989) | ||
Deficit | (65,801) | (65,852) | ||
Total equity | 20,504 | 19,896 | ||
Total liabilities and equity | $ | 28,673 | $ | 28,059 |
Commitments and contingencies | 9(a) & 9(d) |
See accompanying notes to the condensed consolidated interim financial statements.
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Condensed Consolidated Interim Statements of Net Income (Loss) and Comprehensive Income (Loss) (expressed in thousands of Canadian dollars, except per share amounts)
(unaudited)
For the three months ended March 31 | Note | 2024 | 2023 | ||
Revenue, net | $ | 5,694 | $ | 5,628 | |
Cost of goods sold | 4 & 5 | 1,797 | 1,832 | ||
Gross profit | 3,897 | 3,796 | |||
Expenses | 1,974 | ||||
Selling | 2,038 | ||||
General and administrative | 1,209 | 906 | |||
Research and development | 676 | 526 | |||
Finance costs: | 3,859 | 3,470 | |||
(51) | |||||
Finance (income) expense, net | 5 | ||||
Foreign exchange loss, net | 7 | 24 | |||
(44) | 29 | ||||
Net income before income taxes | $ | 82 | $ | 297 | |
Income tax expense | (31) | (7) | |||
Net income | $ | 51 | $ | 290 | |
Other comprehensive income (loss): | |||||
Item that may be reclassified to profit or loss | |||||
Exchange differences on translation | 499 | ||||
of foreign subsidiaries | (25) | ||||
Other comprehensive income (loss), net of tax | 499 | (25) | |||
Comprehensive income | $ | 550 | $ | 265 | |
Income per share | 8(d) | $ | 0.00 | ||
Basic | $ | 0.03 | |||
Diluted | 8(d) | $ | 0.00 | $ | 0.03 |
See accompanying notes to the condensed consolidated interim financial statements.
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Condensed Consolidated Interim Statements of Changes in Equity (expressed in thousands of Canadian dollars, except per share amounts) (unaudited)
Accumulated | |||||||||||
Share | Contributed | other | Equity | ||||||||
comprehensive | |||||||||||
Note | Capital | Surplus | loss | (Deficit) | Total | ||||||
Balance, December 31, 2022 | $ | 80,917 | $ | 10,476 | $ | (5,458) | $ | (64,930) | $ | 21,005 | |
Net income for the three months ended | |||||||||||
March 31, 2023 | - | - | - | 290 | 290 | ||||||
Other comprehensive loss for the | |||||||||||
three months ended March 31, 2023 | - | - | (25) | - | (25) | ||||||
Transactions with owners, recorded directly in | |||||||||||
Equity | |||||||||||
Stock options exercised | 8(c) | 24 | (10) | - | - | 14 | |||||
Share-based compensation | 8(c) | 49 | - | - | 49 | ||||||
Total transactions with owners | 24 | 39 | - | - | 63 | ||||||
Balance, March 31, 2023 | $ | 80,941 | $ | 10,515 | $ | (5,483) | $ | (64,640) | $ | 21,333 | |
Accumulated | |||||||||||
other | |||||||||||
Note | Share | Contributed | comprehensive | Equity | Total | ||||||
Capital | Surplus | loss | (Deficit) | ||||||||
Balance, December 31, 2023 | $ | 81,014 | $ | 10,723 | $ | (5,989) | $ | (65,852) | $ | 19,896 | |
Net income for the three months ended | - | - | - | 51 | 51 | ||||||
March 31, 2024 | |||||||||||
Other comprehensive income for the | |||||||||||
three months ended March 31, 2024 | - | - | 499 | - | 499 | ||||||
Transactions with owners, recorded directly in | |||||||||||
Equity | |||||||||||
Share-based compensation | 8(c) | 58 | - | - | 58 | ||||||
Total transactions with owners | - | 58 | - | - | 58 | ||||||
Balance, March 31, 2024 | $ | 81,014 | $ | 10,781 | $ | (5,490) | $ | (65,801) | $ | 20,504 |
See accompanying notes to the condensed consolidated interim financial statements.
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Condensed Consolidated Interim Statements of Cash Flows
(expressed in thousands of Canadian dollars, except per share amounts) (unaudited)
For the three months ended March 31 | Note | 2024 | 2023 | |
Cash (used in) provided by: | ||||
Operating activities: | $ | 51 | ||
Net income for the period | $ | 290 | ||
Adjustments for: | 31 | |||
Current income tax expense | 7 | |||
Amortization of property, plant and equipment | 104 | 107 | ||
Amortization of intangible assets | 5 | 440 | 434 | |
Share-based compensation | 8(c) | 58 | 49 | |
Finance (income) expense, net | (51) | 5 | ||
Unrealized foreign exchange loss | 7 | 24 | ||
Change in the following: | 3 | (479) | ||
Accounts receivable | (581) | |||
Inventories | 4 | (357) | 430 | |
Prepaid expenses | (58) | 201 | ||
Accounts payable and accrued liabilities | 86 | (796) | ||
Interest received, net | 63 | 10 | ||
Income taxes paid | (27) | (7) | ||
Cash flows (used) from in operating activities | (132) | 173 | ||
Investing activities: | 5 | (87) | ||
Acquisition of intangible assets | (27) | |||
Cash flows used in investing activities | (87) | (27) | ||
Financing activities: | (76) | |||
Repayment of lease liability | (76) | |||
Cash flows used in financing activities | (76) | (76) | ||
(Decrease) increase in cash and cash equivalents | (295) | 70 | ||
Cash and cash equivalents, beginning of period | 6,369 | 4,857 | ||
Cash and cash equivalents, end of period | $ | 6,074 | $ | 4,927 |
See accompanying notes to the condensed consolidated interim financial statements.
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Notes to the Condensed Consolidated Interim Financial Statements (expressed in thousands of Canadian dollars, except per share amounts) (unaudited)
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Reporting entity
Medicure Inc. (the "Company") is a company domiciled and incorporated in Canada and as of October 24, 2011, its Common Shares are listed on the TSX Venture Exchange ("TSX-V"). Prior to October 24, 2011 and beginning on March 29, 2010, the Company's Common Shares were listed on the NEX board of the TSX-V. Prior to March 29, 2010, the Company's Common Shares were listed on the Toronto Stock Exchange. Additionally, the Company's shares were listed on the American Stock Exchange (later called NYSE Amex and now called NYSE MKT) on February 17, 2004 and the shares ceased trading on the NYSE Amex effective July 3, 2008. The Company remains a U.S. Securities and Exchange Commission registrant. The address of the Company's registered office is 2-1250 Waverley Street, Winnipeg, Manitoba, Canada, R3T 6C6.
The Company is a biopharmaceutical company engaged in the research, development and commercialization of human therapeutics. Through its subsidiary Medicure International, Inc., the Company has rights to the commercial product AGGRASTAT® Injection (tirofiban hydrochloride) in the United States and its territories (Puerto Rico, U.S. Virgin Islands, and Guam). AGGRASTAT®, a glycoprotein GP IIb/IIIa receptor antagonist, is used for the treatment of acute coronary syndrome including unstable angina, which is characterized by chest pain when one is at rest, and non-Q-wave myocardial infarction.
In September 2019 the Company acquired ownership of ZYPITAMAG® from Cadila Healthcare Ltd., India ("Zydus") for the U.S. and Canadian markets. Under terms of the agreement, the Company previously had acquired U.S. marketing rights with a profit-sharing arrangement in December 2017. With this acquisition the Company obtained full control of the product including marketing and pricing negotiation for ZYPITAMAG®. ZYPITAMAG® is used for the treatment of patients with primary hyperlipidemia or mixed dyslipidemia and was approved in July 2017 by the U.S. Food and Drug Administration ("FDA") for sale and marketing in the United States. On May 1, 2018 ZYPITAMAG® was made available in retail pharmacies throughout the United States.
On December 17, 2020, the Company, through its subsidiary, Medicure Pharma Inc. acquired and began operating Marley Drug, Inc. ("Marley Drug"), a leading specialty pharmacy serving customers across the United States.
The Company's ongoing research and development activities include the continued development and further implementation of a new regulatory, brand and life cycle management strategy for AGGRASTAT® and the development of additional cardiovascular products. The Company continues to seek to acquire or license additional cardiovascular products. - Basis of preparation of financial statements
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Statement of compliance
These condensed consolidated interim financial statements of the Company and its subsidiaries were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and Interpretations issued by the International Financial Reporting Interpretations Committee ("IFRIC").
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard ("IAS") 34 Interim Financial Reporting and have been prepared using the same accounting policies and methods of application as those used in the Company's audited consolidated financial statements for the year ended December 31, 2023. These condensed consolidated interim financial statements do not include all of the information required for full annual consolidated financial statements and should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2023.
The condensed consolidated interim financial statements were authorized for issue by the Board of Directors on May 28, 2024.
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Statement of compliance
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Notes to the Condensed Consolidated Interim Financial Statements (expressed in thousands of Canadian dollars, except per share amounts) (unaudited)
2. Basis of preparation of financial statements (continued)
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Basis of presentation
The consolidated financial statements have been prepared on the historical cost basis except for contingent consideration and the investment in Sensible Medical which are measured at fair value. - Functional and presentation currency
The condensed consolidated interim financial statements are presented in Canadian dollars, which is the Company's functional currency. All financial information presented has been rounded to the nearest thousand dollar, except where indicated otherwise. - Use of estimates and judgments
The preparation of these consolidated financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.
Information about key assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment to the carrying amount of assets and liabilities within the next financial year are included in the following notes to the consolidated financial statements for the year ended December 31, 2023: - Note 3(c)(ii): The valuation of the royalty obligation
- Note 3(e): The accruals for returns, chargebacks, rebates and discounts
Chargebacks are considered the most significant estimates and result from wholesalers selling the Company's products to end hospitals at prices lower than the wholesaler acquisition cost, which results in variable consideration for the Company. The provision is estimated using historical chargeback experience, timing of actual chargebacks processed during the year, expected chargeback levels based on the remaining products in the wholesaler distribution channel and pricing differences. Estimating the chargeback accrual is complex and judgmental due to the level of uncertainty involved in management's estimates for product that remains in the wholesaler distribution channel as at year-end, the extent of product sales that were expected to be subject to chargebacks and pricing differences.
- Note 3(i): The measurement and useful lives of intangible assets
- Note 3(q): The measurement and valuation of intangible assets and contingent consideration acquired and recorded as business combinations
- Note 3(I): Impairment of non-financial assets
The Company's annual goodwill impairment test is based on value-in-use calculations that use a discounted cash flow model. These calculations require the use of estimates and forecasts of future cash flows. The recoverable amount is most sensitive to the discount rate, revenue growth rate, and operating margin. The key assumptions used to determine the recoverable amount are further explained in note 9 of the consolidated financial statements for the year ended December 31, 2023.
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Notes to the Condensed Consolidated Interim Financial Statements (expressed in thousands of Canadian dollars, except per share amounts) (unaudited)
3. Accounts Receivable
March 31, 2024 | December 31, 2023 | |||
Trade accounts receivable | $ | 5,708 | $ | 4,426 |
Other accounts receivable | 498 | 368 | ||
$ | 6,206 | $ | 4,794 |
As at March 31, 2024, there were three customers with amounts owing greater than 10% of the Company's accounts receivable which totaled 92% in aggregate (Customer A - 39%, Customer B - 12%, Customer C - 41%). As at December 31, 2023, there were three customers with amounts owing greater than 10% of the Company's accounts receivable which totaled 94% in aggregate (Customer A - 32%, Customer B - 16%, Customer C - 46%).
4. Inventories
March 31, 2024 | December 31, 2023 | |||
Finished product available-for-sale | $ | 2,365 | $ | 2,048 |
Finished retail pharmacy product available for sale | 482 | 306 | ||
Unfinished product and packaging materials | 475 | 546 | ||
$ | 3,322 | $ | 2,900 |
Inventories expensed as part of cost of goods sold during the three months ended March 31, 2024 amounted to $1,925 (2023
- $1,631). During the three months ended March 31, 2024, the Company recorded a recovery of $281 through cost of goods sold on the condensed consolidated interim statement of net income and comprehensive income, relating to insurance proceeds from inventory which had previously been damaged during import.
During the three months ended March 31, 2024 and March 31, 2023, the Company did not write-off any inventory that had expired or was otherwise unusable through cost of goods sold on the condensed consolidated interim statement of net income and comprehensive income.
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Notes to the Condensed Consolidated Interim Financial Statements (expressed in thousands of Canadian dollars, except per share amounts) (unaudited)
5. Intangible assets
Patents and | Brand | ||||||||||||
Drug | Names and | Customer | |||||||||||
Cost | Licenses | Approvals | Trademarks | list | Software | Total | |||||||
At December 31, 2022 | $ | 1,256 | $ | 25,996 | $ | 4,860 | $ | 5,926 | $ | 781 | $ | 38,819 | |
Additions | - | - | - | - | 270 | 270 | |||||||
Effect of movements in | |||||||||||||
exchange rates | (29) | (610) | (114) | (139) | (20) | (912) | |||||||
At December 31, 2023 | $ | 1,227 | $ | 25,386 | $ | 4,746 | $ | 5,787 | $ | 1,031 | $ | 38,177 | |
Additions | - | - | - | - | 87 | 87 | |||||||
Effect of movements in | |||||||||||||
exchange rates | 29 | 622 | 116 | 141 | 25 | 933 | |||||||
At March 31, 2024 | $ | 1,256 | $ | 26,008 | $ | 4,862 | $ | 5,928 | $ | 1,143 | $ | 39,197 | |
Patents and | Brand | ||||||||||||
Drug | Names and | Customer | |||||||||||
Accumulated amortization | Licenses | Approvals | Trademarks | list | Software | Total | |||||||
At December 31, 2022 | $ | 366 | $ | 21,042 | $ | 4,441 | $ | 2,270 | $ | 76 | $ | 28,195 | |
Amortization | 178 | 611 | 52 | 735 | 160 | 1,736 | |||||||
Effect of movements in | |||||||||||||
exchange rates | (12) | (506) | (105) | (68) | (3) | (694) | |||||||
At December 31, 2023 | $ | 532 | $ | 21,147 | $ | 4,388 | $ | 2,937 | $ | 233 | $ | 29,237 | |
Amortization | 45 | 153 | 13 | 183 | 46 | 440 | |||||||
Effect of movements in | |||||||||||||
exchange rates | 13 | 519 | 107 | 73 | 4 | 716 | |||||||
At March 31, 2024 | $ | 590 | $ | 21,819 | $ | 4,508 | $ | 3,193 | $ | 283 | $ | 30,393 | |
Patents and | Brand | ||||||||||||
Drug | Names and | Customer | |||||||||||
Carrying amounts | Licenses | Approvals | Trademarks | list | Software | Total | |||||||
At December 31, 2023 | $ | 695 | $ | 4,239 | $ | 358 | $ | 2,850 | $ | 798 | $ | 8,940 | |
At March 31, 2024 | $ | 666 | $ | 4,189 | $ | 354 | $ | 2,735 | $ | 860 | $ | 8,804 |
In September 2019 the Company acquired ownership of ZYPITAMAG® for the U.S. and Canadian markets. Under terms of the agreement, Zydus received an upfront payment of U.S. $5,000 (CDN $6,775) and U.S. $2,000 (CDN $2,710) in deferred payments to be paid in equal instalments annually over the next four years, as well as contingent payments on the achievement of milestones and royalties related to net sales. The Company previously had acquired U.S. marketing rights with a profit-sharing arrangement. With this acquisition the Company obtained full control of marketing and pricing negotiation for ZYPITAMAG®. Upon completion of the acquisition $8,930 was recorded within patents and drug approvals relating to the upfront and deferred payments and $1,457 was transferred from licenses to patents and drug approvals pertaining to the cost of the previously acquired license over ZYPITAMAG®. The initial amortization period pertaining to the ZYPITAMAG® intangible assets was 4.3 years. During the year-ended December 31, 2021, management applied a prospective change to the amortization period of ZYPITAMAG® license to extend the amortization period of the asset by 7 years, consistent with the term of the licensing agreement. The remaining amortization period of the ZYPITAMAG® license is 6.8 years as at March 31, 2024.
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Notes to the Condensed Consolidated Interim Financial Statements (expressed in thousands of Canadian dollars, except per share amounts) (unaudited)
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Intangible assets (continued)
The Company had determined there were no indicators of impairment as at March 31, 2024. As at March 31, 2024, intangible assets pertaining to AGGRASTAT® were fully amortized. - Goodwill
Retail and Mail | ||
Order Pharmacy | ||
At December 31, 2022 | $ | 3,177 |
Effects of movements in exchange rates | (75) | |
At December 31, 2023 | $ | 3,102 |
Effects of movements in exchange rates | 76 | |
At March 31, 2024 | $ | 3,178 |
The Company performed an annual impairment test for the year-ended December 31, 2023 with respect to the goodwill acquired as part of the Marley Drug acquisition. The recoverable amount of the Retail and Mail Order Pharmacy CGU, in which Marley Drug is included, has been determined based on value in use.
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Key assumptions used in valuation calculations
The calculation of value in use for all the CGUs or group of CGUs is most sensitive to the following assumptions:
- Discount rate
Discount rates reflect the current market assessment of risks specific to each CGU or group of CGUs. The discount rate was estimated based on the weighted average cost of capital calculated based on the Company's performance relative to its industry. This rate was further adjusted to reflect the market assessment of any risk specific to the CGU or group of CGUs for which future estimates of cash flows have not been adjusted. The discount rate used during the value in use assessment completed at December 31, 2023, was 13.40%.
(ii) Operating margin
Forecasted operating margins are based on actual operating margins, less operational expenses achieved in the preceding years, plus adjustments to normalize the forecast for any non-reoccurring items. Margins are kept constant over the forecast period, with the exception of adjustments made in relation to inflation in future periods, unless management has started an efficiency improvement process.
(iii) Revenue growth rates
Revenue growth rates are based on approved budgets, published research, and current customer contracts. Management considers various factors when assessing revenue growth rates used within their assessment, including, but not limited to, changes in customer demographic and attrition of current customer base. The revenue growth rate used during the value in use assessment completed at December 31, 2023 was approximately 2%.
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Medicure Inc. published this content on 28 May 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 28 May 2024 21:34:39 UTC.