Good morning, welcome to Neighbourly Pharmacy Inc.'s First Quarter 2024 Conference Call. The speakers on today's call are Skip Bourdo, Chief Executive Officer, and Billy Wong, 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. 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 speaker's remarks this morning will align with Neighbourly's earnings presentation for the first quarter of fiscal year 2024. This presentation is also available on Neighbourly's website. I will now turn the call over to Skip Bourdo. Please go ahead. Thanks, operator. Good morning, everyone. I'd like to begin this morning by discussing the progress on our strategic priorities in the first quarter. Then Billy will walk you through our quarterly results in greater detail. Following our prepared remarks, we will open it up for Q&A. I'll start with an update on progress on the talent front. I'm pleased to confirm that we have 16 graduating pharmacists who will be joining the team in the third week of August, now that they have successfully passed their final examinations. This anticipated and much-welcomed development on the labor front is the first step toward a more normalized labor vacancy rate. Another positive development is related to the now official signing of one pharmacy partner in Alberta, with another five partner stores to follow over the next few months. Rolling out this partner model in our high-performing and difficult-to-staff locations will be critical to retaining and recruiting key talent as we continue to grow and acquire. Additionally, we have implemented internal and external referral incentives to ensure we have continued access to the available talent pool. Next, on the acquisition front, the 2 sets of acquisitions we announced earlier in the spring have successfully closed and integrated into our network at the end of June, and I am pleased to share that they are already delivering strong financial contributions. On average, these locations generate CAD 600,000 of EBITDA per store, and this is almost twice the average EBITDA contribution per store for the acquisitions we have completed historically. With M&A continuing to be our core growth engine, we continue to be selective around our targets, prioritizing locations that have higher EBITDA contributions and staffing stability. We have several deals lined up, currently in due diligence stage, and we plan on updating you on our progress in the next couple of months. On the patient experience front, I'm encouraged with the progress we are making on the rollout of our digital pharmacy tools. We have piloted text-enabled reminders and pickup communications at 10 pharmacies and look forward to ramping up the number of participating stores significantly over the coming months, with 30 more in the second quarter and targeting to reach at least 100 stores in our network by the end of the calendar year. Our digitally enrolled customers drive disproportionately higher contributions to revenue and margin, and ensuring we deliver top-notch patient experience to those customers is key. Additionally, as we plan for the fall and winter season, Alicia and team are already working through the details of our national fall immunization campaign, ensuring we have a steady supply of vaccines, a consistent approach to execution, and the necessary resources to support our pharmacy teams. This is the first time in the history of Neighbourly where we've taken a national approach to our fall immunization campaign, leveraging our scale to improve execution as we put our best practices to use. On operational excellence, which I feel very passionate about, last time, we talked about the rollout of an enhanced business review process to identify key trends, exception reporting, and sharing of best practices. These periodic reviews are already in place, and there are specific regional and store-specific action plans the teams have taken back to the field. To facilitate the regional teams' efforts, we have introduced actionable labor reporting to manage pharmacy hours and share best practices around labor scheduling optimization. We also launched our standard operating procedures around inventory cycle counts to improve the accuracy of on-hand inventory reporting, as well as the efficiency of our working capital investments. Finally, with respect to growth initiatives, I am pleased with the progress we are seeing in Ontario and British Columbia following the implementation of increased scope of practice related to minor ailments. Script count in those provinces has increased in the 1%-2% range in the first quarter, leading the way for prescription growth across Canada. In addition, we are making progress on the execution of our pricing initiatives, having identified specific opportunities to optimize gross margin at the pharmacy and front store level. We look forward to measuring and providing an update on our progress in due time. I'll now make a few brief highlights on the quarter before Billy walks you through the financials in more detail. Our sales trend accelerated late in the quarter, delivering same-store sales growth of 4.1%, which came in ahead of expectations. Overall, the performance in Q1 was driven by strong contributions from pharmacy, which benefited from a rebound in prescription activity in both Ontario and British Columbia. Our total revenue in the quarter increased 72% versus prior year to CAD 197 million, and our pharmacy business contributed to 80% of our total sales volume in the quarter. EBITDA margin dollars were just shy of CAD 20 million, while EBITDA margin rate was 10.1% and in line with the trend we anticipated, reflecting the continuing headwinds on the pharmacy labor front. As previously communicated, we anticipate seeing some of the labor pressures easing in the second half of the year, as 16 new pharmacists will officially join by the third week of August. We continue to believe that most of the labor headwinds will be behind us by the summer of 2024, and we have several active initiatives in place focused on managing all aspects of attracting, recruiting, and retaining talent. With this, I'll hand it over to Billy. Thank you, Skip, and thank you everyone for joining us this morning. I'd like to start by highlighting the drivers of our revenue in the quarter, which reflected solid contributions from both our existing store base and recent acquisitions. Revenue for the first quarter was CAD 197 million, an increase of CAD 82.5 million, or 72%, relative to the prior year. Contributions from our Rubicon acquisition drove CAD 72 million in revenue growth, and the balance of our newly acquired or non-comp pharmacies delivered an additional CAD 6 million in revenue growth. The remaining increase came from our existing store network of pharmacies, which drove a same-store sales growth of 4.1%. I'll go through the key drivers of same-store sales performance on the next slide. Pharmacy revenue got off to a strong start in the first quarter, increasing 5.1% on a same-store sales basis on the back of a 0.4% increase in script count. This sales performance reflected tailwinds from the increased scope of practice in Ontario and British Columbia. Front Store sales were 0.5% above prior year as we saw some softening in demand for over-the-counter medications, which had been growing at high single digits over the last few quarters. Offsetting the softness, health and beauty categories, as well as confectionery products, continued to perform strongly. As a reminder, Q1 is the smallest quarter for front store sales, typically seeing only 22% of annual sales volume generated during that time. While clinical services declined 3.5% on a same-store sales basis, this is a sequential improvement relative to the fourth quarter, when clinical services were down 20%. The decline reflects the tail end of COVID-19 services in the prior year. Excluding the COVID-related activities, clinical services grew by 16.1% in the quarter. Adjusted EBITDA for the first quarter was CAD 19.9 million, a 77% increase from the prior year. Growth in EBITDA once again outpaced the growth in revenue this quarter, as we saw gross margin rate increase due to the improved geographic mix following our Rubicon acquisition. Our adjusted EBITDA benefited from the incremental contributions of our new locations, with the Rubicon acquisition accounting for approximately 44% of EBITDA. The adjusted EBITDA margin rate was 10.1%, a 30 basis point improvement relative to Q1 of the prior year. This represented a similar magnitude year-over-year improvement as we experienced in Q4. I'm pleased with yet another quarter of improving operating leverage with our Corporate, General, and Administrative expenses. Corporate G&A expenses came in at 3.5% of revenue, a sequential improvement relative to last quarter and a 50 basis points betterment compared to the prior year. This is due to the scale and timing of incremental synergies identified in our Corporate G&A expenses with the addition of Rubicon's pharmacy network. We anticipate Corporate G&A rates to remain in the 3.5%-3.6% range over the balance of fiscal 2024. As our network continues to expand, we expect our annual corp G&A expenses as a% of revenue to continue to decline. I will conclude with an update of the company's capital structure. Our pro forma adjusted EBITDA, reflecting the 10 new locations we announced recently, is CAD 97 million. These acquisitions, incremental contributions, are partially offset by elevated costs and margin impacts that we have experienced over the past year. 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 investment. The first focus area is around emphasizing acquisitions with higher EBITDA contributions. Skip already touched on this earlier. This will continue to be a guiding principle for us in the foreseeable future. This will allow us not only to optimize the EBITDA contribution of each acquisition, but also 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 a transaction is not always a certainty, we have the financial flexibility to promptly and efficiently close on our 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 as a lower purchase price multiple. Third, as we have indicated on the last couple of calls, we have targeted initiatives in place to reduce our investment in working capital at the pharmacy and front store level. All of these actions are intended to optimize our level of available free cash flow, 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 a pro forma leverage of 3.5x and is at a level with which we feel comfortable to continue 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. With that, I will turn it back to the operator for the Q&A session. Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. If you would like to ask a question, please press star followed by 1 on your telephone keypad. If your question has been answered and you would like to withdraw from the queue, please press star followed by 2. If you are using a speakerphone, please lift your handset before pressing any keys. Please stand by for your first question. Your first question will come from Irene Nattel at RBC Capital Markets. Please go ahead. Thanks, good morning, everyone. I'd like to follow up on, on the last commentary just around debt levels. If we're thinking about the cadence of M&A on a go-forward basis, given your commentary that you're, you're comfortable at 3.5x, should we be looking at forecasted free cash flow and assume, you know, whatever you can, whatever you can buy essentially with that level of free cash flow, that's what we should assume? Or would you be willing to take on incremental borrowings? Hi, Irene. Thanks for the question. The way we've been looking at how many of our acquisitions are going forward and how much incremental borrowing we're taking, we're really looking at acquiring maybe about 10%-20% of pro forma EBITDA each year. The way I think about the debt leverage is that we're comfortable getting up to somewhere in the 3.7x as we quoted last quarter. Where there are strategic opportunities, we will look to, look to see what debt levels we're comfortable with. Really, it's all, it's more about the acquisition, how well it integrates, and what we see as the best use of cash for our future growth. Okay, that's very helpful. Just, just to confirm, on any new debt, kinda just looking, you're probably paying something in the mid to high sevens, is that correct? it would be... Sorry, are you talking about the interest rate? Percent. Yeah, yeah, the rate. Oh, interest rate. The effective rate. Oh, no, it's the effective rate would be high, high eights. Okay. Okay, that's, that, that's very helpful. Then just switching gears, nice step up sequentially in the same-store sales cadence. Can you talk a little bit about what's happening there and, you know, what the role is on, you know, both, both clinical services but also some of the digital tools on a go-forward basis? Thank you. The, the biggest increase we're seeing on... Well, I'll start with script count. Script count, like, the biggest increases and the best things we've seen in trend is really on the Ontario and BC expanded scope of practice. 20% of that script count growth is just scripts that have come from expanded scope of practice. Where somebody comes in for pink eye, and we give them a prescription on top of that. That has been seeing a really good trend, and we continue to see that as, as growth go forward. Like, when I think about the long-term sales trend, we feel very comfortable that we'll get to our long-run rate that we've been talking about, which is around the 2.5%-3.5% mark in Q2 and go forward. The, the other thing I'll mention, Irene, is that on the new prescription side, obviously, which is kind of the leading indicator, we're, we're seeing some nice strength in both Ontario and British Columbia, kind of coming back to pre-pandemic levels, which is, which is really nice to see. You know, overall, across the country, you know, there's a substantial improvement versus you know, Q4, when the gap to pre-pandemic levels was about 13%. We're, we're definitely seeing strength on, on the pharmacy side. which is obviously our core business, and, and we're continuing to invest our, our efforts and our energy around capturing every new prescription. Thank you. That, that's very helpful. Just final question from me, where are we today in terms of clinical services as a% of, of total revenues or, or, or let's call it pharmacy revenues? Clinical service as a percentage of overall revenue is in about 1.5% of overall revenues. Thank you. Thank you, Irene. Thank you, Irene. Your next question will come from George Doumet at Scotiabank. Please go ahead. Yeah. Good morning, Skip and Billy. Maybe Skip, can you give us a bit of an update on how the strategies are going for, for pricing, and for inventory management? When do you expect to benefit from those strategies? Maybe can you, can you frame those opportunities perhaps in terms of margins or, or perhaps in terms of working capital dollars? Yeah. I'll, I'll start with kind of the progress on the timing and appreciate the question, George. We're, we're on track on, on both initiatives. Both the pricing initiative, which, which started, you know, call it 45-60 days earlier than the inventory initiative. Pricing is well underway. We've made our way through a couple of provinces on, on the pharmacy side and several categories on, on the front store side. As we mentioned, last quarter, we expect to see kind of the, the full value pull through in the second half of the year. On track there. On the inventory side, you know, we've, we've piloted our new inventory mins and maxes on, on the pharmacy side of the business with great success. We are prepared to roll that out over the next few weeks, you know, across, across the country, starting with our, our most opportunity locations first. The team is, is assembled and, and ready to go and excited about, about that initiative. As it relates to kind of dollar values and things like that, I'll turn it over to Billy. Thanks, Skip, and thanks, George, for your question. The way we framed up the size of the prize, really, it's a combination of lowering multiples as well as lowering inventory and working capital. We see that about CAD 5 million-CAD 15 million of working capital savings between those two initiatives. Yeah, that's helpful. Thank you very much. Just shifting over to the front store, obviously, we're seeing a little bit of a decelerating comp there. Can you talk to that? Do you think it can go- it can maybe go negative? Is beauty, I guess, is beauty category strong enough of an offset? Maybe give us some color there, please. I don't think it's gonna go into negative. Usually, in the summer is where a lot of our seasonal pharmacies pick up, and we have a number of them in locations where summer is their biggest time, especially some of the locations we recently acquired at Rubicon. We anticipate that to be positive going forward. Yeah. The, the softness that we're seeing is, is primarily in the OTC categories, cough, cold. If you remember, last year, we had a lot of strength in that category. We had kind of an odd summer cough, cold season, kind of emerging out of COVID and people unmasking and things like that. That was, we believe, a kind of an anomaly and a blip in the cough and cold strength. We're seeing the weakness there. To Billy's point, and what you heard earlier, we're seeing strength in, in health and beauty, we're seeing strength in confection, and we're seeing strength in our seasonal locations where tourism is fully back and we're able to, you know, serve those communities and take full advantage of, of our offering. Okay, thanks. Just one last one for, for me, to Billy, maybe. I think last quarter, you called out 80 basis points of, of margin pressure, from labor. Do you have an estimated estimate, maybe that, that more maybe reflects the, the higher wages today? Then maybe more short term, how should we think of, I guess, Q2 margins? Thanks. Q2, if you think about it as a comparison to last year, last year, we just brought on the Rubicon acquisition and labor issues were just starting. If you think about year-over-year, the best way to think about it is that our Q2 EBITDA margins are gonna be slightly better than Q1 and reflective of whatever the year-over-year impact of labor issues are on last year's rate. Okay. Thank you. Thank you, George. Thank you, George. Your next question will come from Stephen MacLeod at BMO Capital Markets. Please go ahead. Great. Thank you. Good morning. Morning, everyone. Just wanted to circle around on the acquisition outlook. You talked about sort of targeting, and you've been successfully targeting acquisitions that have higher levels of EBITDA. I'm just curious, how much of that is reflective of, of something specific about the, the recent locations that you've been acquiring versus your ability to sort of go in and selectively look at, depending on availability, selectively look at pharmacies that have higher EBITDA levels? Yeah. Thanks, Stephen, good morning. You know, I think it's, I think it's a, a combination of, of both. As we said previously, we, you know, we have a very robust pipeline. We're able to prioritize and, and kind of make decisions based on how we want to sequence the acquisitions due to that, that, that robust pipeline. Obviously, you know, we're also in a situation where, you know, we're making sure that we're setting up our timing that aligns with the seller, right? Making sure that all of those stars align, which is not an easy task, and Stephen and team do a fantastic job at managing those relationships and sequencing the acquisitions. Yeah, we're, we're seeing, we're seeing some, you know, some great results, as you know, in the first 10. You know, not all of those pharmacies are, are above the average, but the, the combination of them are. We have a couple of very, solid locations out of the first two acquisitions, that, that closed in the first quarter, and we're seeing that strength continue in the near term. As we indicated, the locations under LOI, which we'll, we'll talk about in, in due course, are seeing that same level of strength. We're happy with what we're seeing. We're, we're prioritizing, you know, staffing stability, which is, is key. We don't, you know, really want to acquire locations that have staffing challenges, and we're keeping those relationships warm as, as things change in the next 12 to, you know, 16 months or so, but feel very confident in our ability to continue to execute the strategy. Okay. That's great color. Thank you. I think you may have mentioned it, Billy, but I just wanted to confirm. Can you talk about what you're seeing on a quarter-to-date basis in terms of overall same-store sales growth? I, I didn't mention it, but what we're anticipating Q2 to be is in the 2.5%-3.5% same-store sales growth range, and that's consistent with our long-run average. Great. Okay. Thanks, Billy. Maybe just finally, CGNA took another nice, sequential step down as a% of sales, so seeing that, that leverage, that leverage coming through. Do you have a long-term target for where you think that number could eventually get to? We don't, but, if throughout the rest of the year, it'll be in that range, the 3.5-3.6. Right. Where there's peaks and valleys, like, Q3 is where we have our largest amount of sales, so you would expect CGNA to be the lowest, and then the, the peak would be in Q4, where payroll deductions, as we said last quarter, was the highest. You'll have peaks and valleys, but the range should be in the 3.5%-3.6%. As we continue to grow larger, that rate will continue to go down every single year. That's great. Thanks for the color, guys. Appreciate it. Thank you. Thank you. Your next question will come from Derek Lessard at TD Cowen. Please go ahead. Yeah, thanks, and good morning, everybody. I wanted to hit on the new starts, new pharmacy starts. You pointed to 16 starting in August, or in 3 weeks in August. I was curious if this is in addition to the 20, or how should we be thinking about it with your commentary around the 20 pre-hires you talked about in previous calls? Yeah. Thank, thanks for the question, Derek. This is not in addition to, this is the same group. 16 passed their tests, and have been able to successfully start with us in a pharmacist capacity behind the counter this month, in August. The others are, and this is consistent with the kind of the pass rate that we've seen in previous years, so it's not out of the norm, but the others will be retaking their test in the fall, and we anticipate bringing them on board and getting them, you know, behind the counter and serving in the pharmacist capacity sometime in the fall season. Okay. Then we're continuing our efforts around, around hiring, you know, off cycle, if you will, or, or the, the available talent in the market and not, not depending wholly on, you know, the graduating class. So our recruiting and our retention efforts are, you know, top of mind and top priority for the whole team, as we talked about, you know, launching our enhanced referral program and really going full steam at recruiting and retention efforts. Yeah. Thanks for that, Skip. I guess a follow-up to that would be: Where do you think you need to be in order to, to achieve that equilibrium that you've been talking about and, you know, getting, getting there to, to next summer? Yeah. So I-- you know, I think the, the number one recruiting tool in my experience here is, is a solid retention plan. So, continuing to improve our retention month-over-month, quarter-over-quarter, is a really important agenda item for us. We're gonna be launching a pharmacist survey, pulse survey, that is gonna go out over the next few weeks, and we'll be prioritizing and kind of being very agile with our activities around retaining our pharmacists and our support teams, which, you know, we haven't talked a ton about, but rest assured, we're focused on our pharmacy assistants and our registered technicians as well. Really critical to surround our pharmacists with solid support teams. We have a one-box leadership model in our store, so our front store also many times are cross-trained to help out in the pharmacy during peak periods and covering vacations. It's a 360 degree kind of effort as it relates to recruiting and retention. You know, what I would say is we're still of the mindset that next year, you know, right around the summer, fall period, we should reach that kind of equilibrium. We're still very confident in that. We're gonna continue to ramp up our efforts on campus, but we're also, you know, refining our employee value proposition and recruiting from the competition as well. We believe Neighbourly is not only the acquirer of choice, we believe Neighbourly is the employer of choice in community pharmacy, we're really proud of that. We're just gonna amplify our message and make sure that the top talent in the market is aware of us and wants to come work for us. We're really proud of the progress that we've made, we're gonna continue to work on it every day. Thanks for that, Skip. Just switching gears a little bit, we've heard from some of the larger retailers having issues around higher shrink, more or less, you know, stemming from theft. Just curious if you guys have seen any of, sort of, those trends in, in your business? No. I, I think one of the things we've benefited from is that our community pharmacies, they know everybody that walks through the door, so shrink hasn't been we haven't seen the increase in shrink in, in our history. It's, it's, it's part of the being, you know, being, being a very good neighbor, being a part of your community. If you know and you can say the name of everybody that walks through the door, I think shrink becomes less a less of an issue, which we're, we're very very grateful for. Yeah, and, and, what I'll add is, you know, I've had experience now on both sides of the border, and, and this is a, this is an area that, that I have, unfortunately, a lot of experience in, is, is shrink. One of the things with a bigger box, like a Shoppers or a Walgreens, it, you know, there's, there's an issue with, with, you know, increased shrink just due to, to visibility and things like that. To Billy's point, the, the nature of our stores being smaller format and, you know, very much entrenched in the communities that we serve, and having less of some of those, you know, high-end beauty products, all, all kind of contributes to, the fact that we have very stable, and, and in-line, shrink levels. Really proud of our teams for just being connected to the communities that they serve, and that it has a, a big halo on a lot of factors of our business, including shrink. Yeah, I figured that. Thanks, guys. One, one final one for me, and maybe for Billy in particular, that your D&A and financing costs have, have been quite elevated for the past few quarters because of Rubicon and, and some gains on, on debt modification. Like, have we lapped those impacts of those one-times yet? For the amortization depreciation, that should be the consistent level that you see. It's around CAD 15 million, and the only time that it should be elevated is if we do any other large acquisitions. For Q3, which has 12, sorry, 16 weeks versus 12 weeks. If you think about D&A and how you model it for the next couple of quarters, it should be CAD 15 million-CAD 16 million, every single quarter except for Q3. As for elevated finance costs, a lot of it would be the interest, so that would continue to be elevated as we continue to have higher interest rates. Yep. Thanks, everybody. Congrats on a good quarter. Thank you, Derek. Thank you, Derek. Ladies and gentlemen, once again, if you would like to ask a question, please press star one now. Your next question will come from Zachary Evershed at National Bank. Please go ahead. Good morning, everyone. Thanks for taking my questions. Morning, Zach. Morning, Zach. How far out do you have visibility on new partners, and what's your targeted pace for additions to the program? Right now, we assigned 1. We're talking to 5. We anticipate that we'll sign those 5 before the end of the year. Really, the, the, the way we're taking it in this program is just really monitoring it, making sure that it lands well, and making sure we have the right tweaks before we expand it. I think 6 we're very comfortable with this year, and then we can, at later on in the year, once all these are final, then we can talk about what the next tranche would look like. There's a lot of interest amongst our pharmacists. I, I don't think it's a lack of interest, it's, it's more of a just making sure we have the right measured approach and have the right program for so it's win-win-win for everyone. That makes sense. Gotcha. Sort of related, given the high demand for new grads, we'd assume you're paying top dollar for new pharmacist compensation. Outside of the partnership program, do you expect this will cause the rest of your pharmacists to seek higher than normal raises? No, we have already gone through that in the past year. After COVID and after the changes last year, we've seen the market rate increase for pharmacists in general, and we don't anticipate that to be a continual pain point in terms of pharmacist wages, especially after next year when there's a new cohort and we get back to a rough equilibrium at pharmacists. I don't anticipate that being a major impact over the course of the rest of after the next cohort next year. Our HR team has done a really nice job of making sure that we're paying market rates down to the community level. You know, yes, we have a couple of locations that are, that are hard to staff, that a partner model would be perfect for, and we're targeting those locations as we've talked about earlier. In the absence of a partner, we may have a, you know, higher rate of pay to recruit and retain talent in some of those locations. It's not a one-size-fits-all, we don't have to pay that same rate in, you know, Calgary, for example, where we don't have a pharmacist shortage. We're taking a very kind of measured approach as it relates to pharmacist pay. We want to be competitive, but, we're, we're making sure that it is appropriate for the specific locations that we're recruiting and retaining. Good color. Thanks. Can you tell us a bit more about the capabilities you're targeting with the digital pharmacy tools? Yeah. This is all about enhancing the patient experience, and it has a, it's a halo effect of enhancing the employee experience as well. Initially, you know, the pilot has proven out that we are able to sign up patients at scale. We have, we have a good level of penetration at our initial 10 stores. We have fantastic feedback that we've built into the program and the rollout. We've seen, first, the number of phone calls that has been diverted from ringing through to the pharmacy, has, has been, you know... We're, we're approaching, I think, 4,000 phone calls in, in our initial pilot stores, which include the first 10 and then just a few, a couple of weeks of the next 30. That is good for patients because they don't have to wait on hold, and they're able to refill their prescription or check store hours or, or do things that are, that are very easy and simple and kind of remove the friction from the process. When a patient enters their, their prescription refill into our system, it automatically enters it into our pharmacy's fulfillment system. It takes two pieces of work out of, out of the process. One is less phone calls into the pharmacy, the second is data entry. It's good for patients, good for employees. The other piece is it's also allowing us to get the prescriptions that are ready into sold status faster. That's great for patients 'cause they get started on their, on their therapy. It's also good for us because we were able to, you know, sell that prescription and, and get cash in the till. It, you know, it's improving adherence, it's improving the number of prescriptions that we fill and get all the way through to sold status, and it's, it's, you know, strengthening the relationships that we have with patients by giving them new and modern tools to help manage their health. We're really encouraged. We, we've got a roadmap, as we indicated earlier in the remarks, to get to over 100 stores this calendar year. We're continuously improving the tools that we offer. Alicia and team are working with the rest of the operators, as well as our IT team, to build a, you know, enhancement roadmap. You should expect to hear kind of continuous improvement on, on our digital tools as we, as we progress the next, you know, 12-24 months. I appreciate that. Thank you. Just one last one for me. Does the focus on higher EBITDA contributors in your M&A pipeline imply that you're taking a step back from or distancing yourself from the guidance for 35-40 locations? What we're targeting is 10%-20% of our pro forma EBITDA as net additional, whether that comes from, you know, 35 locations or, if we end up seeing smaller ones that are very good strategic value, that might bump up the number. I think what we're focusing on is mainly more on the EBITDA contribution versus the actual number of stores. Great, that's clear. Thank you very much. I'll turn it over. Thank you, Zach. Thank you, Zach. Your next question will come from Chris Lee at Desjardins. Please go ahead. Oh, good morning, everyone. Maybe I'll just start out with a couple of clarification question for Billy. Billy, just wanted to confirm, in your answer to one of the previous questions about the EBITDA margin outlook for Q2. I think you mentioned that you expect Q2 EBITDA margin to be slightly better than Q1. Did I hear that correctly? Yes, you did. Okay, that would- Good morning. Oh, good morning. Yeah. And that would be compared to around 11% in the year-ago quarter, and I think you mentioned that the decline is really reflecting the full manifestation of the labor cost pressure that started, you know, happening about a year ago. Is, is that sort of the way, the right way to think about that decline? That's, that's, that's the right way to think about it, Chris. Perfect. Okay. Then maybe just in your answer to Zachary's question about, you know, sort of maybe focusing more on acquiring 10%-20% of your pro forma EBITDA being coming from acquisitions, I'm just wondering, is sort of the last 10 deals that you guys recently announced or closed, I mean, the EBITDA per site was quite good, I mean, in the CAD 500,000-CAD 600,000 per site, which is up about the CAD 300,000-CAD 350,000 that you guys used to do historically. Is that sort of the, the, the target, if you will, kind of, that, that's what you mean by higher EBITDA contribution? Is that kind of the, the level that you guys are aspiring to going forward? I, I, I wouldn't say aspiring to. It is what. The, the way to think about it is that we can prioritize those ones, and, and as we move through our pipeline, where, the ones that are higher EBITDA, and they're good quality, and, and they're available, those are the ones we're gonna prioritize. As we go throughout the year, there may be a number of them, let's just, at the lower range of, say, back to the CAD 300 thousand. Those ones are still attractive, well within, our, our target range, and we may go there. What, what, what, the takeaway should be is to think, "Hey, we've already done 10 at this higher of a level." If we're targeting 10%-20% of our pro forma EBITDA acquisitions, that means go forward, we can, we can do less and still get there. Gotcha. Okay, and then I think in your answer to Irene's question earlier, from a leverage perspective, you kinda mentioned 3.7 is, is kind of where you, you can expect to go to if, based on sort of the metrics you just mentioned. Did I hear that correctly? Yeah, directionally, that's, that's where we're going towards. If there's more strategic opportunities, and where we think it's the, the, the right, thing for our long-term growth, we may end up higher, but that's something that we'll very clearly call out each quarter. Gotcha. Okay. Then I know I asked Skip this question a couple of quarters, straightforward, but, you know, just in terms of what you're seeing, you know, in terms of drug reforms, any changes in generic drug pricing or any changes in reimbursements, anything that you guys are keeping a close eye on these days? Thank you. Yeah. Thank you, Chris. You know, no major changes to report. As I mentioned last quarter, Alicia is, is on board and, you know, we're really, really excited about the start that she's been able to to get off, you know, get off the, the ground right away, hit the ground running, and, and has already attended several industry events. You know, Neighbourly now has a, a seat at the table, and we'll, we'll keep you and the rest up to date as things progress. Nothing new to report at this time, Chris. Perfect. Thanks very much, and enjoy the rest of your summer. Thank you. Thank you, Chris. There are no further questions from the phone lines, so I will turn the conference back to your hosts for any closing remarks. Thank you, operator, and thank you everyone for joining us today. We really appreciate your time, and have a fantastic day. Ladies and gentlemen, this does indeed conclude your conference call for this morning. We would like to thank everyone for participating and ask you to please disconnect your lines.