Good morning, and welcome to Neighbourly Pharmacy Inc's first quarter 2023 conference call. The speakers on today's call are Chris Gardner, President and CEO of Neighbourly, and Terri Smyth, Chief Financial Officer of Neighbourly. Today's discussion may contain forward-looking information and statements under applicable securities laws that reflect management's current views with respect to future events. Any such information and statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those projected in the forward-looking information and statements. Also, today's commentary will reference several non-IFRS financial measures. Reconciliations between non-IFRS and IFRS measures can be found in Neighbourly's regulatory documents, which are available on their website and on SEDAR. Finally, the speakers' remarks this morning will align with Neighbourly's earnings presentation for the first quarter 2023. This presentation is also available on Neighbourly's website. I will now turn the call over to Chris Gardner. Please go ahead. Thank you, operator, and good morning, everyone. I'd like to begin this morning by formally welcoming Rubicon, their 100 pharmacies, and 1,500 dedicated colleagues to the Neighbourly team. I am truly excited to be working together as we with our shared vision, values, and approach to community care. Our teams are well-positioned to be a leader in healthcare for decades to come. With the Rubicon acquisition successfully closed and the continued momentum on the acquisition front, we are pleased to have added 104 pharmacies to our pharmacy network. We now have 275 locations across Canada, providing exceptional patient care to many under-serviced communities, and I'd like to thank our pharmacy teams for the important role they play in supporting their community's healthcare needs. With the seventh wave of COVID-19 pandemic upon us, our pharmacy teams are once again being asked to step up to increase access to booster shots as eligibility expands across Canada. Now I'd like to turn to our quarterly results, starting with the highlights of Neighbourly's key performance metrics and impacts in the first quarter. I will then let Terri walk you through our financial results in greater detail, and I'll come back to update you on our acquisition pipeline for the year and open it up for Q&A. Now on to the quarter. Please note that since the Rubicon acquisition closed subsequent to the first quarter end, you won't see its performance reflected in our quarterly results until we report Q2 in October. Neighbourly's top-line performance was strong in the first quarter, driven by the successful execution of our acquisition strategy. Since our IPO, we have delivered five consecutive quarters of double-digit revenue and adjusted EBITDA growth, and Q1 was no exception, with revenue up 34% while adjusted EBITDA increased 11%. Revenue growth was largely driven by new acquisitions and came on the back of a 30% increase in prescription count, which totaled 1.9 million in the quarter. Our adjusted EBITDA rate was 11% compared to a year ago, a growth rate which was somewhat muted by the higher mix of clinical format pharmacies compared to a year ago, as well as higher level of relief labor costs, which Terri will cover shortly. Our same-store sales in the quarter increased 1.8%, while same-store script count was up 0.4%. As we mentioned last quarter, we continue to experience a lower level of new prescriptions generated across our network relative to pre-pandemic levels, with the trend being most pronounced in our clinic pharmacies. Excluding clinic pharmacies, our same-store sales increased 2.6%, while our script count was up 1.3% on a same-store basis. We continue to watch closely prescription volumes across our clinic format pharmacies, and we do not expect a return to pre-pandemic volumes in the near to mid-term. As a reminder, approximately 40% of our locations are clinic format locations. Correspondingly, these locations contribute 40% of the pharmacy revenue in Q1, a significant increase compared to the revenue contributions of 32% from a year ago. This is not a surprise, as more than half of the acquisitions completed in fiscal 2022 were clinic pharmacies. While they are important drivers to revenue and gross margin in absolute terms, the rate of profitability at clinic pharmacies tends to be lower. These pharmacies dispense a higher mix of both brand molecules and higher-priced specialty medication, which tend to come at lower margin rates. Make no mistake, while clinic pharmacies are experiencing transient headwinds with respect to new prescription levels, they are a critical source of stability and resilience in our business model, especially during periods of economic downturn, as virtually 100% of the revenues generated are from prescriptions. With Rubicon Pharmacies now added to Neighbourly's network, the mix of clinic pharmacies will come down to approximately 34% of our total network. Additionally, as we previously highlighted, with the acquisition of Rubicon, we anticipate margin rates across Neighbourly to expand in the second quarter due to the evolution of the format and geographic mix. I'll now turn the call over to Terri, who will walk through the financial results in more detail. Thank you, Chris, and good morning, everyone. Neighbourly's results for the first quarter of 2023 comprised a 12-week period and aligned with our expectations. Our results once again demonstrated the effectiveness of our acquisition and integration strategy, as evidenced by the double-digit growth in our key top-line and profitability metrics. Revenue for the first quarter was CAD 114 million, an increase of CAD 29 million or 34% compared to the prior year. This improvement was primarily driven by locations we added to Neighbourly's network over the prior four quarters. These pharmacies contributed 96% of our revenue growth in the quarter. Consistent with our historical trend, 80% of our revenue was generated by pharmacy, which comprised prescriptions and clinical services. Prescriptions were the primary source of growth, with 1.9 million scripts filled in the quarter, while clinical services in the first quarter were up against unprecedented growth in the prior year, driven by the initial rollout of COVID-19 vaccinations in our pharmacies. The remaining 20% of our revenue was generated from front-store sales. The strong contribution of pharmacy once again highlight the strength, stability and resilience of our patient-focused strategy and how serving our patients' pharmacy needs is a foundation for Neighbourly's business. Adjusted EBITDA for the first quarter was CAD 11.3 million, an 11% increase from the prior year. This improvement was primarily due to our new locations' incremental contributions to the bottom line. These contributions were partially offset by two key impacts. One was the higher mix of clinic format pharmacies compared to a year ago, which Chris touched on earlier, and the other impact was the incremental spend on relief wages and travel required to fill current vacancies. As we mentioned last quarter, while pharmacist turnover rates are consistent with historical levels, we are observing that it's taking longer to fill vacant positions. The higher pace of retirements in the industry, likely due to pharmacist fatigue and the reduction of international pharmacy graduates immigrating to Canada during the pandemic, have put a strain on pharmacist availability over the past 6-9 months. This trend was reflected in the elevated ratio of store operating spend to total revenue of 23.2% in the first quarter of this year versus 22.6% in the prior year. Our adjusted EBITDA margin for the first quarter was 9.8%, which was the lower fourth quarter in fiscal 2022 trend, reflecting the mix of clinic pharmacy formats and the labor impacts discussed earlier. Corporate, general and administrative costs were CAD 4.5 million during the first quarter, which equated to 4% of revenues. This compares to CAD 2.7 million or 3.3% in the prior year, and a sequential improvement relative to Q4 2022. While our CG&A costs will continue to increase as our network expands, it will be at a lower rate than the corresponding revenue growth. Therefore, with the one-time step-up of incremental costs associated with becoming a public company largely behind us, our CG&A as a percentage of revenue will decline as we continue to grow. Before I conclude, I'd like to speak briefly to the company's capital structure. Neighbourly continues to operate from a secure financial position. Our pro forma adjusted EBITDA is CAD 95.5 million, which reflects the inclusion of Rubicon as well as the elevated labor costs we have been facing. Our pro forma net debt level, which includes the estimated lease liabilities from the Rubicon acquisition, is CAD 312.7 million, resulting in pro forma leverage of approximately 3.3 x. Following the closing of the Rubicon acquisition, we have approximately CAD 159 million of undrawn debt capacity under our new amended credit facility. We are well positioned to continue to fund our acquisition strategy with our available debt capacity and our strong free cash flow. I'll now turn the call back to Chris. Thank you. Thanks, Terri. As always, I'd like to conclude this call by speaking briefly to our acquisition pipeline. Although we've just completed the largest acquisition in our company's history and possibly the largest one we'll ever undertake, our acquisition pipeline remains as robust as ever. Looking across the Canadian pharmacy landscape, there are approximately 3,500 pharmacies that meet our acquisition criteria. The essential nature of our business and our financial flexibility positions us well to pursue acquisitions to continue to drive future growth. We are in active dialogue with a number of potential targets and remain on track to deliver another 10 locations over the course of fiscal 2023. Now, I would like to close by once again thanking our team members for their incredible efforts in supporting patient care and Canadians' health and wellness since the onset of COVID-19. They have made a real difference, and I could not be prouder of the work that they are doing, especially as we expand access to COVID-19 vaccinations and booster shots. I'll now turn the call back to our operator for questions. Thank you. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a three-tone prompt acknowledging your request, and your questions will be polled in the order they are received. Should you wish to decline from polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. First question comes from Irene Nattel of RBC Capital Markets. Please go ahead. Thanks, good morning, everyone. Starting with a question on Rubicon, please. I guess it's about five weeks now since Rubicon has been part of the Neighbourly family. Can you know, provide any commentary on, you know, how your thoughts are evolving, where you are in terms of synergy capture, and what we should be thinking about in terms of the integration process and incremental synergies possibly? Good morning, Irene. Thanks for the question. It's Chris. I'll just give you a quick update. I mean, you're right. We're kind of in early innings on the Rubicon acquisition. We're five weeks in at this point. We've made meaningful, I think, inroads on integration, on data integration, on, you know, the major KPIs, full data integration and are working on our first consolidated period, actually, in P4 of reporting. We've executed meaningful synergies at this point, about CAD 1 million plus of synergies that we had committed to. You know, we still have a ways to go to meet the previously communicated synergy target, but we're on track to be able to meet that. Overall performance of the network is very much in line kind of with our expectations and, you know, what we had, the work that we had done kind of through that acquisition process. We're very excited about, you know, about the future of the business combined together. You know, we've officially onboarded 1,500 employees and another support center and a number of support center colleagues and are really excited about, you know, the future of our business combined and the future potential of this business as we continue to grow on a much bigger footprint with much larger geographic diversification and a much better mix or a much broader mix of format locations. More to come on that one, but we're, you know, early stages. We're one period in, not a full period of results, but we're closing our first period in P4, you know, combined as a consolidated company, and things are tracking very much in line with our expectations. That's really helpful, Chris. Just wondering, you know, often with M&A, particularly a company like Rubicon that is larger and more sophisticated, sometimes there are things that they do perhaps better than you or differently than you. Have you been able to identify any elements like that where you kinda go, "Hmm, now that's really interesting. I wonder if we can import that here? Yeah, there's a number of things I'd say. You're right. I mean, when you do acquire, and I would say, you know, quite frankly, when we acquire any pharmacy, we tend to find a best practice out of every location and try to replicate it across our network. Rubicon is no different, but a couple of notable exceptions. Rubicon has done, you know, an incredible job, I think, in Western Canada and specifically Manitoba and Saskatchewan on brand awareness and pharmacy recruitment. They have become an employer of choice, you know, in those provinces. They are broadly sought out, you know, for new pharmacy grads, you know, to start their career and to build a career within Rubicon. We're certainly gonna be leveraging, you know, a lot of the techniques and hopefully trying to replicate that success in other provinces across Canada, and that's something that we certainly look to grow. The other thing that they do certainly notably well is they have a bit of an operator model, where their pharmacist has control kind of of the overall business and certainly drives a higher level of consistency and performance. That's something that we certainly, you know, are looking at expanding and kind of changing, you know, some of our incentive programs, as well as kind of scope of pharmacy manager role and pharmacy leader role, as we continue to evolve. On top of that, there's, you know, certainly things that they do well, you know, on accounting processes, payroll processes, HR processes. We're, as I mentioned, kind of on the early innings of putting some of those processes together. Quite frankly, the processes will be a combination of both organizations. You know, where they have done something better in the past, we will shamelessly use it and apply it across all of our pharmacies. If there are learnings, which there are, you know, of where Neighbourly has more sophisticated technology or other programs, you know, we've been rapidly rolling them out into Rubicon locations as well. I think it's very much a give and a get, and we're really excited about taking all the gives and providing some gets, and we've had some pretty good traction so far. Does that help provide some color, Irene? Yeah, it does, and it leads into my next, and I promise, final question, at least for now. Mm-hmm Which is around the situation with pharmacist shortages and vacancies and elevated labor costs. Can you just again provide more detail around how you see that situation evolving and what we should be thinking about in terms of perhaps a higher rate of pharmacist labor on a go-forward basis? Yeah, sure. I can provide a little bit of color around that. As I mentioned, I think in our Q4 call, pharmacy vacancy rates are certainly up, and I don't think that's a phenomenon unique to pharmacy. It's something that's pretty broad in healthcare right now and pretty widely publicized. Despite that, we're doing well. We are managing through the vacancies, but as I mentioned, probably on our Q4 call, it's gonna take a year for this to kinda normalize, and because it does require another graduating cohort to come out of universities to really provide some stability to the labor situation. We've seen, you know, competitors in markets, for example, rationalize hours, you know, reduce hours in some cases. We've actually seen a little bit of consolidation in the industry, which we hadn't seen, I would say, you know, in a couple of years, where, you know, some subpar pharmacies are closing, you know, with lower volumes, and so there's a little bit of consolidation happening. We're seeing that from an inbound activity as well from pharmacy owners that, you know, have tried to open a business and haven't been successful and, you know, are asking us maybe to acquire their script count files. As much as it is a bit of a headwind for us, you know, certainly, you know, until July, August of next year, it's as much a tailwind as well because it's certainly increased the amount of inbound activity that we're getting from pharmacy owners. Because, you know, while we're good, you know, at recruitment, retention, got a, you know, great, I think a very competitive package and a great workplace and culture, independent pharmacies struggle to fill those vacancies when they have vacancies. It often is, you know, burdened by a pharmacy owner's ability to be able to cover all the shifts. There's certainly a level of fatigue amongst pharmacy owners and I think that's been one of the driving factors around the robustness of our acquisition pipeline. You know, long answer to say, you know, this is gonna be around till July or August of next year. We anticipate, you know, a degree of stability post that. Now, that being said, it is getting stabler in certain markets. BC is certainly better than it's been, you know, I'd say two quarters ago. You know, we certainly still have more challenges, I would say, in Western Canada than in Eastern Canada, and we don't, you know, foresee that kind of disappearing anytime soon. But, you know, by July, August of next year, we think this will largely be behind us. Does that help, Irene? Yeah, that really helps. Thanks. I'll get back into the queue. Thanks, Irene. Thank you. The next question comes from Peter Sklar, BMO. Please go ahead. Good morning, Chris. I'm wondering if you could talk a little bit about the comp. Your same-store sales were 1.8%, and I'm just wondering if you could provide some insights when we benchmark against, you know, Shoppers Drug Mart. You know, they reported a comp of 6.1%, and that's the pharmacy excluding the front store. When you look at it on a two-year stack basis, the discrepancy is even wider. Now, like you explained, the higher mix in clinical pharmacy. You said like you're excluding your clinical pharmacies, it's your comp is 2.6%, but, you know, there's still quite a wide margin. I know you have a lot of insights into Shoppers Drug Mart, so I'm just wondering if you could provide some flavor on that gap in the comp. Good morning, Peter, and thanks for that question. Our overall comp performance, you know, for the quarter was good. You know, we still have a bit of a drag on front store that was kind of the carryover of the kind of pre-pandemic or the early pandemic kind of run up in front store sales where, you know, we had double-digit comps, where now we're kind of comparable to that. Largely that is behind us as of P4. We actually, you know, P4 for Q2, first period of Q2, we had front store sales. You know, we don't anticipate front store being a drag on our overall results, you know, compared to what they've been for the past couple of quarters. You know, I think that will make a bit of a difference. I mean, obviously, 80% of our revenue is pharmacy versus that comparable quarter less than 50%. You know, that does make a bit of a difference as well. I think one of the things that's probably notable to highlight as well, Peter, is you know, clinical services make up a large portion of our revenue. We were comparable to a quarter you know, Q1 of fiscal 2022, where our comparable clinical services revenue was up 140%. In this quarter, obviously, you know, as Terri mentioned, we were up against the first wave of COVID vaccinations from last year. Our clinical services were down 21%. Now, for the year, we think clinical services are gonna be relatively flat or slightly up to last year, but it's the timing of when boosters and other things along those lines will happen. Likely in the first quarter and second quarter, we're gonna be down in clinical services just given the large amount that happened, call it from March to July of last year, whereas we think the majority of boosters and vaccinations this year will happen in the fall. The The government kind of indicating a more tailored Omicron-specific vaccination, which will be launching in the fall. You know, around flu time, which is September, October, November, we anticipate, you know, we'll probably have very strong results in Q3. Unfortunately, you know, weaker results in Q1. The other thing that I would say, you know, is very notable, and you know, I don't like to compare ourselves, but we operate very much in rural communities and clinic settings. You know, to your point, 40% of our locations were in clinic settings within the quarter. The majority of our locations operate in rural settings. We do not benefit, for example, with the return to downtown core businesses, which, you know, Toronto, Vancouver, Calgary, major markets across Canada have obviously seen much higher levels of traffic at downtown cores, which is where the majority of large mass merchant pharmacies are located. They certainly stood to benefit from that reopening of downtown cores and probably had a bit of outsized performance as a result of that. Whereas our format is very much focused on smaller markets, rural communities. There wasn't any kind of material change to, you know, patterns in those communities, which I think is somewhat reflected in our numbers. I hope that provides some color, Peter. Yeah. No, that's some good flavor. Then just my second to last question is, on the Rubicon, I believe your synergy target, if I recall correctly, is CAD 2.5 million. Can you talk about, so kind of a two-part question. Can you talk about what the major components are of that synergy? And would there not be like an opportunity for significant synergies in terms of your, I guess, price negotiations with McKesson on generic drugs? I believe that, you know, there isn't an opportunity to reprice brand name drugs just the way the price is regulated. But I believe on generics, there is an opportunity, and I would think you would be a sizable player now with Rubicon. Yeah. Thanks, Peter. You're right. We were targeting CAD 2.5 million of synergies. We're well above the CAD 1 million that have been executed to date. A combination of that is, you know, the central office synergies around, you know, executive leadership and what have you, and rationalization as well as, other synergies around technology and, corporate cross infrastructure, putting the businesses together. A component of that is on, commercial terms and cost synergies and putting the two businesses together. You know, I think we probably mentioned in the past that, you know, Rubicon had scale, right? Our gap on, cost synergies, for example, compared to Rubicon, you know, wouldn't have been that significant. Whereas it is typically very significant versus an independent pharmacy, where we tend to have a much bigger, you know, uplift of cost synergies. That being said, you know, we've added a lot of costs, you know, to our business, and we'll use that as, you know, to our benefit to hopefully get longer term synergies. Reflected in that CAD 2.5 million is a component of cost synergies that are assumed. Okay. Thanks very much. Thanks, Peter. Thank you. The next question comes from Paul Stewardson of iA Capital. Please go ahead. Good morning. Thanks for taking my questions. Just in terms of the clinical pharmacy mix, is this something, you know, with the virtual care taking away some of these new prescriptions, is this something that you're seeing any lessening of in the weeks, you know, through the summer, since the quarter ended? Is that something that we're seeing any improvement on, or is that relatively stable and you're hoping for a change in September once the Ontario reimbursements change? Thanks. Thanks, Paul. It's a good point. The performance of new prescriptions has stayed relatively static. Now, there's been periods where they've been up, and then there's periods where they fall, and typically with COVID-19 waves. Now, that being said, you know, we are anticipating, you know, September with some reimbursement changes happening as well as, you know, kids returning to school, probably more people returning to work settings, that we'll probably see a bit of a difference in performance. I just wanted to clarify, like, the new prescription shortfall we're seeing is not as a result of virtual care. It's more of a result of people not having access to primary care or seeing a physician in person. Given some of the healthcare, you know, staffing shortages that are, you know, being very well publicized right now, obviously there's less people, you know, going into primary care settings as well because of availability. The virtual care codes changes and the reimbursement reduction that will be happening in September in Ontario at least, which we expect probably, you know, will replicate across other provinces, will certainly help. But it doesn't also change the underlying issue, which is that there's a bit of a healthcare staffing shortage. So even if you could see somebody in person, you know, whether or not there is somebody to see, and that's certainly been, I think, a bit of a headwind on the near term. We think the fall, you know, things will get better. We don't, you know, as I indicated, and as Terri's indicated prior, you know, we don't see us getting back to pre-pandemic levels on the mid to near to midterm on new prescription volumes just because it hasn't made a meaningful move, you know, over the last couple of quarters and but we think, you know, likely September will probably be our first chance to see any type of material movement, likely in volume. Does that help, Paul? The only other one from me, just in terms of, and I know you've given a lot of color on the pharmacist vacancies and how that's going. What about non-pharmacist labor shortages? How's the outlook there? It's actually not been as bad in our pharmacies. The majority of our vacancies and the majority of our labor strain, quite frankly, is coming from pharmacists specifically. A little less, I would say, from pharmacy assistants, pharmacy technicians, and then even less when it comes to our front of store, clerk, merchandisers, receivers, and what have you. Just given the fact that the majority of our kind of larger pharmacies with, you know, greater complementary products like that tend to be in rural communities. We haven't really seen a lot of, you know, people exit, you know, careers or shift professions or jobs. Our vacancy rate on front of store and our turnover, quite frankly, on front of store has been relatively comparable to what it was at pre-pandemic level. Because we're not trying to attract a very specific skill set, which is a licensed pharmacist that may not be available, you know, in that market, it's much easier to fill those roles. We're not necessarily experiencing quite the same labor crunch that we've heard kind of in other comparable businesses. Okay, good to hear. All right. Thanks, Chris and Terri. I'll jump back in the queue. Thanks, Paul. Thank you. The next question comes from Derek Lessard of TD Securities. Please go ahead. Yeah, good morning, Chris and Terri. I don't wanna beat a dead horse, but I was just wondering if you could maybe just give us a sense of what the vacancy rate actually is, whether yours or the industry. I guess a follow-up to that is, and does that change with the addition of Rubicon? In other words, like, is the vacancy rate higher or roughly the same in at Rubicon? Thanks, Derek. I don't necessarily have any industry stats on, you know, on what vacancy rates are, across the industry. Anecdotally, I can tell you know, that they are much higher than they were at this point last year, and significantly above that of pre-pandemic levels. You know, for all the reasons, you know, that we've noted kind of in the past, whether it be, you know, pharmacist fatigue, but more so, I would say just the step-up of retirements as well as, a little bit of a step-down of incoming new pharmacists entering Canada, whether it be international pharmacy grads, and as such. With the addition of Rubicon, I would say our vacancy rate is, you know, fairly comparable, probably a little bit elevated just because they operate in less clinical settings, more rural communities. They had a number of vacancies. When we acquired Rubicon, we're working on our combined team and combined efforts to be able to fill those. But what I can tell you is that this is a great example of better together, where if we had a vacancy, and we did have a vacancy in Saskatchewan where there's a neighboring Rubicon pharmacy that had available staffing that could actually cover it and is actually self-fulfilled within those markets. Having a greater concentration of pharmacies within any given geographic location is actually really beneficial for us. That addition of Rubicon actually helps significantly, you know, especially with our locations in Manitoba, Saskatchewan, and also helps with their locations in Alberta, BC, where we have a much stronger concentration of locations. We've already had, you know, great examples of, you know, where we've been able to self-fulfill some of the vacancies on both sides. We anticipate the vacancy rates, you know, not to worsen. I think what's happened to date is kind of embedded in the numbers and will probably be, you know, there for a couple of quarters until we cycle through to next year. We are making some, you know, meaningful improvements on certain vacancies and getting those filled or more permanent solutions. We've certainly been having some success. I'd say the industry is facing exactly, you know, what we're facing, and that's urban, rural, you know, in all settings, right? I would say, you know, if you were to look at comparable companies, the levels of postings are elevated, and they are reacting, right? We've seen, you know, some of our competitors, as I mentioned prior, reduce hours. In some cases, they've kind of thrown in the towel on a marginal location and closed it, rationalized it because of either staffing or just low volume and low contribution. You know, we anticipate that's probably gonna continue over the next 12 months. You know, hopefully it will be largely behind us by, you know, July, August of next year. Okay. Thanks for that, Chris. Maybe just one last one for me. I am curious about some of the organic front store trends that you're seeing and whether or not you got any bump due to the, I guess, the concurrent jump in seasonal flu. Thanks. Front store, as I mentioned, has been a bit of a drag for us. We think that's behind us now. So, you know, we just completed P4. P4 front of store sales comps were very strong, in fact, the strongest they've been in the past two years. That's positive. We've definitely seen and you know, I'm looking at Terri and I'm looking at myself, and we're both coming off a pretty hefty cold here. We have seen material upswing in cough, cold, flu sales, you know, healthy double digits, call it, you know, 30% increases versus last year. Being offset by a lack of kind of other categories, you know, convenience categories, household paper, cleaning, PPE, you know, those type of things. We definitely are seeing an elevated cough, cold, and flu season. We think that will, you know, continue through the balance of the year and probably be very strong, I would say, you know, once we head into the fall. We're definitely seeing definitely a positive momentum on that, certainly, but offset by just some other categories that are kind of underperforming right now. Again, I think by the time we report our Q2 numbers, I think that will be a drastically different story. I think we'll be seeing a little bit more return to normal on front of store sales and it will cease to be a bit of a drag. Okay. Thanks for that, Chris. No problem. Thank you. Thank you. The next question comes from Zachary Evershed of National Bank Financial. Please go ahead. Good morning, everyone. Thanks for taking my questions. I'll take a turn beating a dead horse here. Very interesting comments on labor availability, but could you maybe get into more detail on how you'd address that in the long term if this does persist beyond the second graduating cohort and evolves into more of a structural pharmacist shortage? Thanks. Thanks, Zach, and good morning. You know, we think we're at the worst of the shortage. You know, we think many of the activities that we put in place, you know, are helping and stabilizing and ensuring that we have stability, you know, getting through to the next graduating cohort. We do have other, you know, options, you know, that we could rely upon. Like, we could be rationalizing hours further. You know, I think I've mentioned on prior calls, we've already started down the path of opening up central fill locations in our major provinces. You know, we had a central fill location in Alberta. We're in the process of expanding its capacity so that it can service more pharmacies and take some of that labor burden out of our rural markets and have that filled through automation with staffing in markets with higher availability of staffing. We're doing the same thing in BC. You know, we plan on having that site opened towards the end of August. You know, as disclosed, Rubicon, you know, had two central fill locations in Regina and Saskatoon. We're gonna take advantage of those locations to fulfill our existing locations in those provinces. Now, granted, we had a lighter footprint in those provinces, so not a lot of additional volume going in. We're also in the process of opening up an Ontario central fill. You know, there is definitely a lot of controllable factors that we have at play. You know, not the least of which could be just rationalizing hours and really, you know, reducing operating hours where it makes sense. That's not our goal, and our goal would be, you know, how can we reduce some of that labor burden by taking some of those manual tasks out of the pharmacies, specifically through centralization. You know, I'm talking about compliance packs and compounding and doing some of that work out of central hubs to benefit, you know, all the pharmacies within the province. You know, we don't think honestly things are gonna get worse than they are today. We think the damage that's been done has been done. Right now, you know, we're just stabilizing, adding in centralization. We think, you know, with the next graduating cohort, which is, you know, 1,300 grads, like, that's a material increase of staffing, you know, at this point, at this time next year. We think largely this will be behind us. That's really helpful. Thank you. Last one. Given your credit facility structure, does the rising rate environment change how you approach M&A? No, Zach, it doesn't at all. I mean, particularly with the recent acquisition of Rubicon Pharmacies, adding CAD 39 million of EBITDA, which they similarly have the high free cash flow conversion rate, it doesn't at all change our strategy whatsoever. Oddly enough, though, Zach, it is something that pharmacy owners, independent pharmacy owners do talk about, you know, when they reach out to us, right? They may be in the process of rolling over, you know, their credit agreement, you know, when they financed the business or bought their pharmacy and are facing maybe a higher interest rate on renewal. That's one of the factors that's also driving some of the inbound activity, you know, to us, where, you know, people are considering, you know, should I enter into a new agreement at a higher rate or consider, you know, well, is this the time to sell the business? It doesn't really change our outlook on M&A. In fact, you know, I would say we feel very optimistic about the pace of M&A, and certainly on the 10 that we've guided for the balance of the year on top of the five that have been executed or will be executed by August 22nd. You know, we certainly think we will meet with a high degree of confidence that we'll exceed, you know, that target for the balance of the year. Very interesting. Thanks. I'll turn it over. Thanks, Zach. Thank you. The next question comes from Chris Li, Desjardins. Please go ahead. Morning, Chris and Terri. Just my first question is, you know, just more for a modeling perspective, can you give us a sense of what would be a reasonable assumption for EBITDA margin rates for fiscal Q2 now that Rubicon is fully in the quarter and expected to contribute most of the quarter? Yeah, just maybe any sense of what the margin rate would be for fiscal Q2 would be helpful. Chris, when we talked about the acquisition of Rubicon, just to give you a bit of guidance, we had talked about a 50 basis point-60 basis point improvement post the CAD 2.5 million worth of synergies. So if I were to guide you, I would guide you not that high, but somewhere in the middle as we look forward to Q2 and onward. Directionally, are you saying it should be slightly sort of 50 basis point higher? But go- Sorry. Once we fully realize the CAD 2.5 million of synergies, it will be 50 basis point-60 basis points higher. As we head into Q2, we haven't realized the full potential of those synergies just yet. I'd guide you probably midway to that target, to that longer-term target. Okay. That's helpful. Thanks, Terri. Then maybe another one just with respect to your capital structure. You know, just hypothetically speaking, if you just don't do any M&A for a while, how long do you think it would take you to sort of take your leverage down to closer to your 2.5x target? Chris, that really depends on the timing and the size and the quantity of the acquisitions we do. If I just look to our historical pace of acquisitions pre-Rubicon, we hadn't forecasted out to about 3- 3.5 years would take us to get to our target leverage of the 2.5 x. Again, as Chris has spoken to number of times, the pipeline is really strong. Of course it will really depend on the timing and size of acquisitions. That's going forward. Chris, if we didn't do anything, you know, if we stopped buying today, for example, within 12 months, we would be at our 2.5x leverage. There's that much free cash being generated, you know, by the combined business. Okay. No, that's very helpful. Then, Chris, maybe last one for you. Any meaningful updates on what you're hearing on the drug reforms front, you know, since the last call we did back in June? Yeah, I mean, not much has changed over the past, you know, four or five weeks. No real indication at this point. I mean, we know obviously the next meaningful milestone will be. Well, actually July was the Patented Medicine Prices Review Board changes, but that will be fully compliant likely in January of next year. April of 2023 will be the next milestone when it comes to the Pan-Canadian Pharmaceutical Alliance changes. As you're aware, in April of this year, this past year, or this past April rather, there was additional molecules put into that framework. While there was 3% deflation, you know, on those additional molecules, it really didn't have any kind of material impact in our business. In fact, average value of generics continued to increase, largely because there's a higher degree of pipeline of new generics coming to market this year and over the next two years. The deflation has largely been washed out by new generics that have been coming in, you know, at a higher rate. Overall, I don't really have any update on PCPA 2023. The brand changes are kind of well understood and I don't have any other commentary at this point. Okay, great. Thanks. Thanks so much and all the best. Thanks, Chris. Thanks. Thank you. Ladies and gentlemen, if there are any further questions, please press star one at this time. The next question comes from Irene Nattel of RBC Capital Markets. Please go ahead. Thanks. Just one follow-up. In the MD&A, I think it is, there's a comment in there that you don't expect the increased scope of service in Ontario, with, I guess it's the 15 minor ailments, coming into effect to have a meaningful impact. I was just wondering why you don't think that there's going to be sort of more contribution from those and how we should be thinking about perhaps your scope of service on a broader basis. Thanks, Irene. The reason why we know it's not material, only because clinical services is a really small percentage of our overall revenue, and it's, you know, about 1%. The addition of minor ailments in 55 of our pharmacies, you know, won't have a meaningful improvement on overall revenue, but will have, you know, a notable improvement in margin because it's obviously 100% just given the reimbursement of clinical service with no cost. We do think it's, you know, especially in light of the very well-publicized, you know, healthcare shortages that are happening right now in staffing. You know, Ontario, I think had 15 ER rooms that were not operational this weekend. We do feel like pharmacists really can play a critical role in addressing some of that volume that winds up in ER or in walk-in clinic or in primary care settings. Just given the level of staffing shortages in the healthcare sector, pharmacists are very well positioned, you know, to take advantage of that. The 15 minor ailments today would be pretty consistent to what we see in certain other provinces. You know, it does improve and certainly increase access. We do have, you know, meaningful increased revenues in clinical services, but because clinical services in totality is only about 1% of our revenue, it won't have a big movement on the overall number. Does that help, Irene? Yeah, that really helps. Thanks, Chris. Thank you. There are no further questions at this time. Please continue. Thanks, operator. Thank you everyone for joining the call. That concludes Neighbourly's conference call for the first quarter of fiscal 2023. For those of you who joined us midway this morning, I'd encourage you to revisit our remarks at the beginning of the call related to forward-looking information. A replay of the call and the accompanying presentation will both be available on our website, www.neighbourlypharmacy.ca. Thanks again for joining us this morning, and we look forward to speaking to you again soon.