Hello, Welcome to the Neighbourly Pharmacy Inc.'s annual shareholder meeting. Please note today's meeting is being recorded. There will be a question and answer session later in the session. You may submit questions for this session at any time by clicking on the Q&A icon. It is now my pleasure to turn today's meeting over to Mr. Stuart M. Elman, the Chairman of the Neighbourly's board of directors. Mr. Elman, the floor is yours. Great. Thank you, operator. Good afternoon, everyone, and welcome to Neighbourly Pharmacy's annual shareholder meeting. My name is Stuart Elman, and I'm Chairman of Neighbourly's board of directors, and I'll be acting also as Chairman of today's meeting. I'm joined for today's events by Mr. Skip Bourdo, Neighbourly's Chief Executive Officer, and Mr. Billy Wong, our Chief Financial Officer. Following the official business of this meeting, Skip and Billy will briefly review Neighbourly's strategy and financial highlights and will conclude by answering any questions submitted by shareholders. Prior to the formal portion of today's meeting, I'd like to take a moment to highlight some Neighbourly key successes and accomplishments in this past year against what was a challenging operating background. The team remained focused on executing Neighbourly's growth, continuing the expansion of our pharmacy footprint across Canada, now spanning across 291 locations, while driving a healthy 2.9% same store sales growth and a 70% increase in profitability during fiscal 2023. This performance was impressive in light of the ongoing pharmacist labor shortages and interest rate hikes, which put pressure on our balance sheet. With adversity comes strength, and I commend Skip and the entire Neighbourly team for their relentless focus on patient care and growing our footprint across Canada while optimizing the health of our business. Initiatives are underway to strengthen talent recruitment, including introducing a pharmacy partner model to retain the best and brightest of our pharmacy operators, digital pharmacy tools to adherence and enhance patient experience, enhanced rigor around pharmacy strategy and operations with the appointment of Alicia Matthews-Kent as our VP of Pharmacy, along with inventory management and pricing optimization to drive profitability and cash flow. At the same time, the team remained laser-focused on M&A execution while successfully integrating Rubicon into our network. Neighbourly has now entered a new integrated financial management system, which has increased the efficiency of the finance team and enabled the team to identify an additional CAD 500,000 in synergies from the Rubicon acquisition. In addition to Rubicon's 100 location, Neighbourly acquired another 12 pharmacies throughout fiscal 2023, once again solidifying its position as Canada's largest and fast-growing network of community pharmacies. I give credit to our leaders and our teams across every one of our 291 communities for accomplishing so much, all while preserving a positive, inclusive, and performance-driven culture. Neighbourly Pharmacy was once again recognized as one of Canada's Best-Managed Companies for the third year in a row. This would not be possible without the team's dedication, talent, and deep expertise, and certainly not without our exceptional pharmacy teams and their ongoing commitment to supporting the healthcare needs of Canadians. Before we begin, I would like to set out a few rules for the conduct of today's virtual meeting. I remind you that registered shareholders and duly appointed registered proxy holders are the only persons entitled to participate, ask questions, or vote during the meeting. You may do so using instant messaging on the virtual interface. When asking a question, please indicate which entity you represent, if any, and confirm that you are indeed a registered shareholder or a duly appointed proxy holder. Questions will generally appear shortly after they are submitted but will only be addressed during the question period at the end of the meeting, provided that questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting. Questions or comments containing inappropriate language or that are otherwise disruptive to the orderly conduct of the meeting for all shareholders will not be published nor answered. Questions which were already answered or that are redundant or repetitive will not be published or answered. For the purposes of the meeting today, voting on all matters will be conducted by a single electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on all business items at the same time. Voting will be open at the beginning of the formal part of the meeting and will remain open throughout the same. This will allow you to choose to vote on each resolution as soon as voting opens or wait until the conclusion of the discussion on each resolution prior to casting your votes. Only registered holders of common shares of record as of June 14th, 2023 or their duly appointed proxy holders are permitted to participate, ask questions, and vote at the meeting. When you are asked to vote, you will receive a message on the virtual platform requesting you to register your votes. You only have a certain period of time to do so. If you have already voted by proxy, it is not necessary to vote again. Please note if you do vote again, only your vote cast during the meeting will be counted, and the vote that you submitted by proxy will be revoked. On behalf of the board of directors, I wish to express thanks to those shareholders who have submitted their proxy in advance of today's meeting. To expedite the formal part of the meeting, I, as chairman, will move all motions, and no motion will be seconded. We will now proceed with the formal portion of today's meeting. I call to order the annual meeting of the company's shareholders. With the consent of the meeting, I appoint Zev Zelman, Corporate Secretary of the company, to act as secretary of the meeting. In addition, I appoint Computershare Investor Services Inc., through its representatives, as scrutineer for the meeting. The scrutineer will report on the number of common shares represented in person and by proxy at this meeting and report the voting results. The scrutineer has already provided me with a copy of the report on attendance at the meeting, which indicates that at least 25% of shares entitled to vote at the meeting are present in person or by proxy, and at least two persons entitled to vote are actually present or represented by proxy. Therefore, this meets the quorum requirement in the company's bylaws, and as such, we are permitted to proceed with the meeting. A copy of the final report of attendance will be filed with the records of the meeting. I have here the certificate of our transfer agent, Computershare, indicating that proper notice of the meeting has been given in accordance with the CBCA and by the bylaws of the company. Accordingly, unless there's an objection, I will dispense with the reading of the notice of meeting, and I hereby direct that a copy of the notice with proof of mailing be kept with the Secretary with the records of the meeting. The purposes of today's meeting are set out in detail in the management information circular dated June 20, 2023. Copies of circular were made available to shareholders on or around June 27th, together with the notice of the meeting and form of proxy. Copies of the management information circular and other meeting materials are available under the company profile on the SEDAR+ website. Accordingly, I will dispense with the reading of the notice of the meeting. You should note that proxies lodged before this meeting allow management of the company to cast a significant number of votes. Based on the number of shares represented at this meeting, the members of management here with me today will be able to determine the outcome of all motions that will go to a vote today. I may therefore declare the motions which will go to a vote today as carried, even though all the votes may not yet have been counted or a final report may not yet be available. I shall do this simply to keep up the pace of the meeting. Under the company's articles, the chair of the meeting can propose motions, and no motion proposed at the meeting of shareholders is required to be seconded. As noted earlier, in order to expedite the meeting, I will propose certain motions and will not call for a seconder, but this is in no way intended to inhibit any questions or discussions with respect to motions. I now declare that this meeting was properly called and duly constituted for the transactions. I propose to omit the reading of the minutes of the annual general meeting of shareholders held on August 2nd, 2022, and that they may be considered adopted. The minutes will be kept in the company's books at its registered office and will be available for consultation by any shareholder on demand. We now move to the formal part of today's agenda. Please note that voting is now open and will remain open throughout the formal portion of the meeting. The first item of business is the presentation of the company's consolidated financial statements for the fiscal year ended March 25th, 2023, as well as the auditor's report thereon. These financial statements and the auditor's report were made available on SEDAR+ on June 8th, 2023. Unless there's an objection, I will dispense with the reading of those reports. We now move on to the next item on today's agenda, which is the election of seven individuals to Neighbourly Pharmacy's board of directors. The term of office of the directors is from today until the next annual meeting of shareholders or until such time as their successors have been duly elected or appointed. As described in the management proxy circular, the board has determined that seven people should be elected as directors and has proposed seven candidates to hold such office for the ensuing year. In addition to Mr. Skip Bourdo, our Chief Executive Officer, and myself, five independent and highly qualified individuals are also being proposed for election as directors. The biographies of the nominees are included in the company's proxy circular, made available to shareholders in connections with this meeting. Each of the persons nominated has expressed his desire to serve as a director of Neighbourly Pharmacy and has confirmed that they are prepared to do so. Each of them further qualifies to serve as a director under the provisions of the CBCA. The company did not receive notice of any director nominations in connections with the meeting in accordance with the company's advance notice bylaw. Accordingly, the only persons eligible to be nominated for election to the board of directors of the company are the management nominees. Since there are no other nominations, I move a motion to elect the following directors, Skip Bourdo, Josh Blair, Rita Winn, Dean McCann, Robert O'Meara, Valerie Sorbie, and myself, Stuart Elman. The motion is now on the floor. The CBCA requires that each director nominee be elected. Proxies have been solicited for each of the seven pro qualified persons listed in the circular, and the form of proxy for voting on the election of directors sets out each proposed nominee separately and allows shareholders to vote for each director individually. I now invite you to vote on the election of the directors. The next item of business is the appointment of Ernst & Young LLP as the auditors of the company for the ensuing year until the next annual meeting of shareholders, and to authorize the directors of the company to fix the remuneration of the auditors. Ernst & Young has served as auditor of the company since May of 2017 and has informed the company that it is independent with respect to the company within the meanings of the rules of professional conduct of the Chartered Professional Accountants of Ontario. The audit committee of the board has approved, subject to shareholder confirmation, the appointment of Ernst & Young as the auditors of the company. I move that Ernst & Young be appointed auditors of the company until the next annual meeting of shareholders and that the directors be authorized to fix their remuneration. I now invite you to vote on the appointment of the company's auditors. The next and last item of business is the consideration and approval of an ordinary resolution in respect of the company's Omnibus Incentive Plan. As more fully described in the management information circular and in accordance with the applicable requirements of the Toronto Stock Exchange, the shareholders are asked as part of the ordinary resolution to approve all unallocated options, rights, and other entitlements issuable under the Omnibus Incentive Plan in order to renew the Omnibus Incentive Plan for a further period of three years. The board of directors determined that the renewal of the Omnibus Plan is in the best interest of the company and unanimously recommended that shareholders vote in favor of the ordinary resolution approving such renewal. The full text of the ordinary resolution is included in the management information circular. I remind you that to be passed, this resolution must be approved by a majority of the votes cast at the meeting by holders of common shares present virtually or represented by proxy and who are entitled to vote at this meeting. I now invite you to vote on the approval of the resolution regarding the renewal of the company's Omnibus Incentive Plan. Since we've covered all the topics on the meeting agenda, we will now take a short break in order to allow registered shareholders and proxy holders to vote if they have not already done so. If you have not yet cast your vote in respect of each of today's business items for this meeting, please do so now. I remind you that if you have already voted by proxy, it is not necessary to vote again. I now declare voting concluded. Thank you all for voting. At this point, there's no further business to come before the meeting. Please note that based on the proxies received to date, all matters submitted for approval today have been approved. I direct that the voting results be included in the minutes of meeting. Detailed results for each vote will be made publicly available and subsequently filed on SEDAR+ within the next 24 hours. As there is no further business to be brought before the meeting, I move and second that the formal portion of today's meeting be concluded, and I now declare the formal part of the meeting closed. Skip and Billy will now discuss Neighbourly's overall strategy and key financial drivers for the creation of sustainable long-term shareholder value. Thank you to everyone listening. We are grateful for both your time and your support. Skip and Billy, please go ahead. Thank you, Stuart. Good afternoon, everyone. Before we begin, I would also like to advise everyone that certain comments you will hear today are forward-looking statements that involve assumptions, risks, and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. We refer you to our disclaimer regarding forward-looking statements and the risk factors contained in our annual information form for the year ended March 25th, 2023, which is available on SEDAR+. The presentation also makes reference to certain non-IFRS measures. Reconciliation of these measures is available within our MD&A for fiscal 2023 and our MD&A for the first quarter fiscal 2024, both of which are available on SEDAR+. I'll start by providing a view of Neighbourly's most up-to-date footprint across Canada. Following the transformational acquisition of Rubicon and the acquisitions of another 12 pharmacies in the last 12 months, Neighbourly now has 291 locations from coast to coast, substantially strengthening our network in Western Canada. The ongoing execution of our M&A strategy has established our company as the largest and fastest-growing operator of independent pharmacies across Canada, and this remains our key focus over the foreseeable future. As a reminder, our business model is simple. We acquire and consolidate independent pharmacies across Canada and add them to our existing network of pharmacies. Our ideal acquisition targets are located in smaller, less competitive markets and have a defined focus upon healthcare delivery. They generate the majority of their revenue from prescription medications and share our values of placing patients first. As a result, these pharmacies often act as the center of care within their communities. Once we acquire and integrate a pharmacy, we like to infuse a best-of-both mindset, preserving what makes each pharmacy unique and thriving while introducing proven best practices from Neighbourly to help it grow and allowing each location to benefit from Neighbourly scale. The seamless and fast in-integration of independent pharmacies, combined with our carefully targeted acquisition approach, has been a cornerstone of Neighbourly success and will maintain this focus as we pursue the next phase of our growth. I'd like to take a moment to walk you through our refined strategic priorities, which guide the execution of our growth strategy. After joining Neighbourly earlier in the year, I quickly recognized that the company's positive, patient-focused culture was a unique asset that we need to protect and nurture. As such, our first priority is attracting and retaining top-notch talent that preserves Neighbourly's unique culture. We have strengthened our talent recruitment efforts to include campus recruitment and referral programs. We also officially launched our pharmacy partner model and are consistently staying connected to the teams through quarterly surveys and weekly town hall meetings, where we give everyone a voice and enable them to be part of Neighbourly's success story. Our second strategic priority is centered around refining our lens with respect to acquisitions, which I touched on a bit earlier, and this is to infuse the best of both mindset. While we still strive to keep patient disruption to a minimum and protect what makes each pharmacy unique, we're very focused on identifying ideas and programs from acquired locations to scale around the network. We also actively look to implement proven best practices from Neighbourly to improve top-line performance, profitability, and cost efficiencies. Our third priority is our focus of providing a differentiated patient experience with specialized programs and digital tools. Stuart already mentioned our phased rollout approach of digital pharmacy tools. We're just getting started. Additionally, most of our locations are serving as a primary healthcare hub in their communities. We believe that we can differentiate by providing enhanced clinical services by encouraging our pharmacists to practice at the top of their license. This connects us to our fourth priority, which is the idea of encouraging freedom within a framework. This is about enabling our pharmacy to customize offering and patient care to serve their communities how they see fit, while holding them accountable with specific growth targets. To empower our teams, we have introduced periodic reporting and financial reviews that allow them to understand their performance against the network, while at the same time enabling them to share learnings, tips, and best practices. We've already seen the early fruit from best practices in the successful rollout of minor ailment prescriptions in British Columbia, learning from the growing pains of Ontario and Alberta. Our fifth and final strategic priority is about strengthening the growth trajectory of our organic business through exploring new opportunities to drive growth in script count, clinical services, pricing, and inventory management optimization and front-store initiatives that complement our pharmacy offering. These strategic priorities I just reviewed have helped us refine our focus as we continue to drive our growth through three fundamental drivers: acquisitions, organic improvements, and external tailwinds. Our M&A strategy remains a core growth engine. Neighbourly's footprint has expanded from a single pharmacy in 2016 to now 291 locations across Canada. We've been able to achieve this growth in part because of the highly fragmented nature of the Canadian pharmacy space. There are currently more than 11,500 pharmacies across Canada. Sixty-four hundred of these, well over half, are independently owned and operated. Of this number, approximately 3,500 meet our acquisition criteria. We've established a great track record of success with these targets as we've developed a reputation as the acquirer of choice. As a result, we're often the first call for long-standing independent pharmacy owners as they begin to consider options around retirement, succession planning, or a sale of their business. Our confidence in our ability to execute our strategy is founded in our strong reputation as Canada's acquirer of choice. That reputation has been built upon our ability to move through the acquisition process at an owner's preferred pace and our track record of delivering a seamless integration process. I'm happy to state that our acquisition pipeline is as robust as ever, and we're pursuing the most attractive opportunities out there. The second growth driver is delivering a stable and consistent rate of growth in our underlying business. While we may not see the same level of prescription growth as more urban areas, we tend to benefit from higher prescription values per patient, which drive our same-store pharmacy sales. Our focus continues to be putting patients first by delivering specialized programs, clinical services, and digital tools to retain and grow our patients. I see an opportunity to continue to grow our core by optimizing organic script growth, introducing our new digital pharmacy tools to improve the patient experience, improving medication adherence, and prioritizing front-store initiatives to complement our pharmacy offering. Additionally, we have several pricing and inventory initiatives to help optimize our margin performance and working capital efficiency. Our third growth driver is from the favorable external tailwinds that support the pharmacy industry across Canada. These include the scope of practice for pharmacists across the country, which has expanded more in the last 10 years than in the 50 years preceding it. In many provinces, pharmacists have gained the ability to treat minor ailments, perform medication reviews, and administer vaccines. Most recently, Ontario and British Columbia started on the expanded scope journey with the introduction of minor ailment prescriptions. This expansion of services is certain to continue for several reasons. It increases the accessibility of critical services, it helps reduce the cost of healthcare delivery, and it's simply necessary to treat Canada's aging population. With 67% of our stores located in small communities where older demographics are most prevalent, we benefit from the stability and predictability of prescriptions linked to an aging population. Prescription demand increases meaningfully after age 45 and even more significantly again after age 65. Today, 6.8 million Canadians are over the age of 65. In 15 years' time, that number will increase to more than 10 million. As Canadians age, so do the, their demands for healthcare services and prescription medication. Currently, more than half of Neighbourly's patients are over 50 years of age, and they drive over 72% of our gross margin, in part due to the increased demand for healthcare services that inevitably come with age. The needs of this population serve to underscore the fact that pharmacy is foundational to the health of Canadians, particularly within small communities across Canada. Being there to serve as the primary health hub in those small communities is in Neighbourly's DNA, shaping our focus as we continue to grow and strengthen our business. With that, I'll turn it over to Billy. Thank you, Skip, and good afternoon, everyone. As both Skip and Stuart mentioned, Neighbourly has had impressive growth and footprint expansion over the years since inception. This growth is evidenced in our financial results over the past few years, which highlight the critical role acquisitions have played. Over the course of the past two years, we have more than doubled our pro forma revenue to over CAD 880 million and adjusted EBITDA to CAD 97 million. While acquisitions will continue to be our core growth engine, we will also look to continually strengthen the health of our underlying organic business, and Skip has already discussed some of the initiatives we have on the go. Given the importance of acquisitions to Neighbourly's growth, it is imperative that we retain a robust capital foundation and significant financial flexibility. As we navigate through this period of rising interest rates, we are laser-focused on several key aspects that should help manage our acquisition spend, increase free cash flow, as well as optimize the use of our resources and return on investments. The first area of focus is around prioritizing acquisitions with higher EBITDA contributions. This will not only optimize the EBITDA contribution of each acquisition, but also to allocate our talent and capital resources to their most efficient use possible. The second area of focus is to continue to test lower multiples. In a challenging interest rate environment where approval of financing and closing on transaction is not always a certainty, we have the financial flexibility to promptly and efficiently close R&R deals. This often makes us the acquirer of choice for transactions where the certainty and timing of closing are valued more by the seller than maximizing the financial return. Where possible, we look for opportunities to reflect this in, as a lower purchase price multiple. Third, we have targeted initiatives in place to reduce our investments in working capital at the pharmacy and front shop level, all intended to optimize our levels of available free cash, which would be deployed to fund our M&A activity and reduce leverage. Our pro forma net debt level is approximately CAD 344 million. This results in pro forma leverage of 3.5 x, and this is a level which we feel comfortable in continuing executing our M&A strategy while maintaining a firm focus on the key aspects I mentioned earlier. Our pro forma EBITDA, along with CAD 130 million of undrawn debt capacity, leaves us well-positioned to continue our acquisition strategy without the need to rely on additional equity issuances. I'll turn the call back to Stuart to conclude today's meeting. Thank you. Great. Thank you so much, Skip and Billy. Before concluding this meeting, we would be pleased to answer questions from any registered shareholder or duly appointed proxyholder who wishes to address this meeting. I ask that all registered shareholders or duly appointed proxyholders who would like to ask a question to use the instant messaging feature of the virtual platform to do so. We will answer as many questions as time permits. When asking your question, please state your name, the entity you represent, if any, and confirm that you are a registered shareholder or a duly appointed proxyholder. Please limit your questions to topics related to today's subject matter and keep your questions short and to the point. We will now give attendees a brief moment to type in their questions. For each question we answer, we will summarize the question and read out loud the name of the person who asked such question and, if applicable, the entity the person represents. We would like to remind you that questions which were already answered or that are redundant or repetitive will not be published nor answered. Okay, seems there are no questions. There being no further questions, we're now going to conclude the question and answer portion of this meeting. On behalf of management, our board of directors, and our employees, I would like to take the opportunity to thank everyone for attending the meeting today. I would like to thank all of our shareholders for their commitment and support, and we look forward to your attendance again next year. This concludes the meeting. You may now disconnect.
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