GREY WOLF ANIMAL HEALTH REPORTS FIRST QUARTER 2024 FINANCIAL RESULTS

TORONTO, May 23, 2024 /CNW/ – Grey Wolf Animal Health Corp. (TSXV: WOLF) (“Grey Wolf” or the “Company”), a Canadian diversified animal health company, today announced financial results for the three months ended March 31, 2024.

Highlights

• Revenue for the quarter of $6.0 million was flat year over year.

• Gross profit remained consistent at $3.1 million for the quarter compared to $3.2 million for the same period in 2023.

• Adjusted EBITDA¹ remained consistent at $0.9 million for the quarter compared to $0.9 million for the same period in 2023.

“During the first quarter of 2024, the Animal Health business saw solid sell-through of our pharmaceutical, nutraceutical and consumable products to veterinary clinics with double digit sales growth year over year. However, sales of these products to buying groups were flat as our customers tightened inventory levels, which when combined with a decrease in commission and other revenue resulted in a 4.3% decrease in our Animal Health business revenue in the first quarter compared to the same period in 2023. Our Pharmacy business continued to deliver growth year over year with revenues up 4.5% to $3.1 million in the first quarter.

To support the long-term growth of Grey Wolf, we have been investing in our sales and marketing team to drive sales force effectiveness and strategy. As part of this initiative, we incurred a one-time employee settlement cost of $0.2 million in the first quarter. Excluding these costs, our total expenses decreased 3.1% to $2.6 million over the same period in 2023 as we continue to balance spend to ensure continued growth over the long-term. We remain optimistic on the value of our product portfolio for the health and wellbeing of patients while we experience a softening in the market as a result of inflationary pressures across the broader economy” said Angela Cechetto, Chief Executive Officer.

Key Financial Data and Comparative Results

Results of Operations for the First Quarter-ended March 31, 2024

Total revenue for the three-month period ended March 31, 2024 was flat at $6.0 million compared to the same period in 2023. Revenue in the Animal Health business unit decreased by 4.3% to $2.9 million from $3.1 million due to a decline in commission and other revenue. This decline in the Animal Health business unit was offset by an increase in revenue in the Pharmacy business unit by 4.5% to $3.1 million from $3.0 million due to an increase in sales of compounded products.

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Gross margins for the three-month period ended March 31, 2024 were 51.5% compared to 52.5% for the same period in 2023. Gross margins were impacted by reduced margins in the Pharmacy business unit and offset by slightly higher margins in the Animal Health business unit related to product mix.

Total expenses for the three-month period ended March 31, 2024 increased 6.2% to $2.8 million over the same period in 2023. Excluding one-time employee settlement costs incurred during the three-month period ended March 31, 2024, total expenses decreased 3.1% to $2.6 million over the same period in 2023. During the three-month period, there was a decrease in salary, bonus, and benefits related to headcount changes as compared to the same period in 2023. Advertising and promotional expenses also decreased in the first quarter of 2024 as the company focused spend on key products in its portfolio. Finally, there was an increase in distribution expenses as a result of transitioning our warehouse and logistics to a third-party provider in the fourth quarter of 2023. Due to accounting measures, these costs are now reported in distribution expenses compared to previously being reported in depreciation and amortization and interest expenses.

Adjusted EBITDA¹ was $0.9 million in the first quarter 2024 compared to $0.9 million in the same period in 2023, mainly due to decreased net income for the period after adjusting for the one-time employee settlement costs.

Cash and cash equivalents were $5.6 million at March 31, 2024 compared to $7.8 million at December 31, 2023. The Company used cash from operations of $1.8 million, which was primarily impacted by net income for the current period offset by changes in non-cash working capital items, most significantly the change in trade and other receivables and accounts payable and accrued liabilities. Trade and other receivables were impacted by the timing of the Easter holiday as our customer payments generally fall on the last day of the month and since this was a banking holiday these payments were not recognized until after the quarter end.

As at March 31, 2024, the Company had outstanding borrowings of $9.0 million, of which $1.1 million are current and $7.9 million are non-current. The Company’s debt is a fixed rate term loan with an average interest rate of 4.7% until September 2026.

Grey Wolf’s financial statements and accompanying Management Discussion and Analysis for the three months ended March 31, 2024 are available under the Company’s profile on www.sedar.com.

¹Non-IFRS Measures

Management uses both IFRS and Non-IFRS Measures to assess the financial and operating performance of the Company’s operations. These Non-IFRS Measures are not recognized measures under IFRS, do not have a standardized meaning under IFRS and are unlikely to be comparable to similar measures presented by other companies. The Non-IFRS Measures referenced in this press release includes Adjusted EBITDA. The Company defines Adjusted EBITDA as earnings before financing and special transaction costs (including, for greater certainty, fees related to the Qualifying Transaction), interest income, interest and accretion expenses, income taxes, depreciation of property and equipment, depreciation of right of use assets, amortization of intangible assets, share-based compensation, change in fair value of embedded derivatives, foreign exchange gains or losses, and other income. The Company considers Adjusted EBITDA as an additional metric in assessing business performance and an important measure of operating performance and cash flow, providing useful information to help analyze and compare profitability between companies for investors and analysts.

The following table provides a summary of the differences between Grey Wolf’s consolidated IFRS and Non-IFRS financial measures, which are reconciled below:

EBITDA and Adjusted EBITDA

About Grey Wolf Animal Health Corp.‎

Grey Wolf Animal Health Corp., headquartered in Toronto, Canada, is a diversified animal health ‎company founded by a veterinarian to bring to market a broad portfolio of products that meets the ‎unmet needs of veterinarians, clinics and pets. The Company’s strategy is to in-license, acquire or develop innovative prescription and non-prescription products for commercialization in the veterinarian channel ‎in Canada. For additional information, please visit: www.greywolfah.com.‎

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.

Forward Looking Statements

Certain information included in this press release contains forward-looking information with the meaning of applicable Canadian securities laws. This information includes statements concerning the Company’s objectives, its strategies to achieve those objectives, as well as statements with respect to management’s beliefs, plans, estimates, and intentions, and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information generally can be identified by the use of forward-looking terminology such as “outlook”, “objective”, “may”, “will”, “would”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “should”, “plan”, “continue”, or similar expressions suggesting future outcomes or events or the negative thereof. Such forward-looking information reflects management’s beliefs and is based on information currently available. All forward-looking information in this press release is qualified by the following cautionary statements.

Forward-looking information necessarily involve known and unknown risks and uncertainties, which may be general or specific and which give rise to the possibility that expectations, forecasts, predictions, projections or conclusions will not prove to be accurate, assumptions may not be correct and objectives, strategic goals and priorities may not be achieved. A variety of factors, many of which are beyond the Company’s control, affect the operations, performance and results of the Company and its subsidiaries, and cause actual results to differ materially from current expectations of estimated or anticipated events or results.

A more detailed assessment of the risks that could cause actual results to materially differ than current expectations is contained in the Risk Factors section of Grey Wolf’s Management Discussion and Analysis for the three months ended March 31, 2024. The forward-looking information included in this press release is made as of the date hereof and should not be relied upon as representing the Company’s views as of any date subsequent to the date hereof. Management undertakes no obligation, except as required by applicable law, to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

SOURCE Grey Wolf Animal Health Corp.

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