Mr. Curtis Krawetz reports

ALARIS ROYALTY CORP RELEASES FIRST QUARTER FINANCIAL RESULTS

Alaris Royalty Corp. is releasing its results for the three months ended March 31, 2015.

The results of the quarter are summarized in four key performance metrics, compared with the prior-year period on a per-share basis (the corporation used normalized EBITDA (earnings before interest, taxes, depreciation and amortization) rather than EBITDA to back out the non-cash foreign exchange gains and losses, and a one-time redemption gain).

                                              Three months ending
                                                         March 31,
                                                  2015       2014

Revenue per share                           $     0.59 $     0.55
Normalized EBITDA per share                 $     0.50 $     0.49
Net cash from operating activities per   
share                                       $     0.36 $     0.35
Dividends per share                         $    0.375 $     0.36

Alaris again experienced period-over-period increases in revenue, normalized EBITDA, net cash from operating activities and dividends on a per-share basis in the quarter, a direct result of the continued execution of its business plan to find well-run, successful new private company partners with a long record of sustainable cash flow.

For the three months ended March 31, 2015, the corporation's revenue from its partners was as expected and increased 20.4 per cent to $19.0-million, compared with $15.8-million in the prior-year period. On a per-share basis, the increase was 7.5 per cent. The increase was due to the addition of two new partners in the past 12 months, namely Kimco Holdings LLC and PF Growth Partners LLC (Planet Fitness), and follow-on investments into Labstat International LP, Solowave Design LP, Sequel Youth and Family Services LLC and SM Group International LP (SMI). Each of these transactions added new revenues in the current period compared with the prior year. These new revenues were partially offset by two redemptions in the last six months, namely Quetico LLC in November, 2014, and Killick Aerospace LP in January, 2015. Expenses were as expected in the quarter.

The 2014 cash sweep owed by Labstat of $2,421,106 was paid to Alaris in accordance with the partnership agreement subsequent to March 31, 2015.

At each quarter-end, the corporation reviews the fair value of the preferred units in each of the partners. At March 31, 2015, there were no changes to the fair values of any of the partners. More information is provided in the private company partner update portion of the corporation's management discussion and analysis (MD&A).

For the three months ended March 31, 2015, the corporation recorded earnings of $21.8-million, EBITDA of $27.6-million and normalized EBITDA of $16.1-million, compared with earnings of $11.9-million, EBITDA of $16.5-million and normalized EBITDA of $13.9-million in the prior-year period. The 15.6-per-cent increase in normalized EBITDA in the quarter was due to the net new revenue streams noted above as they were added with minimal additional costs. On a per-share basis, the increase in normalized EBITDA was 3.2 per cent.

KMH update

The corporation continues to work with KMH on a long-term solution to improve cash flow. The timing of collections from KMH's U.S. business, and decreased performance from and closures of some of KMH's U.S. clinics, has resulted in a continuing cash flow constraint that has prevented KMH from paying any material distributions in 2015.

The fair value of the KMH units remains at $52-million and, in the absence of regular cash distributions to support a discounted cash flow valuation, the corporation has used a liquidation value to determine the current valuation. More specifically, the corporation estimated an enterprise value less any senior debt, outstanding promissory notes, unpaid interest and distributions to Alaris to calculate the $52-million value in the corporation's preferred units. Alaris will continue working with KMH's management to determine what level of cash distributions it can expect to receive for the remainder of 2015, based on KMH's available cash flow.

The corporation has accrued $1.89-million in revenue for KMH in the three months ended March 31, 2015, but most of that was not paid in cash and sits as a receivable. While distributions are currently scheduled at $7.5-million for 2015, if KMH does not demonstrate an ability to pay the distributions owing in the second quarter, the corporation intends to stop accruing revenue on the financial statements.

CRA update

Subsequent to March 31, 2015, Alaris received notices of reassessment from the Canada Revenue Agency (CRA) in respect of its taxation years ended Dec. 30, 2009, through to Dec. 30, 2013. Pursuant to the reassessment notices, the CRA has denied the deduction of certain non-capital losses, and scientific research and experimental development expenses, claimed by Alaris during those taxation years. Alaris's total assessed tax liability (including interest and penalties) in respect of the reassessment notices is $26.9-million. Alaris continues to firmly believe its tax filings to date are correct and that it will be successful in defending its position, and, as such, Alaris intends to file notices of objection to contest the reassessment notices. Alaris intends to immediately pay a deposit of 50 per cent of the assessed tax liability (plus interest), or $12.1-million (in addition to the $1.3-million deposit paid in 2014, relating to the July, 2009, tax year), in anticipation of filing of the notices of objection. Alaris has adequate capital available to it to pay both the deposit, as well as any further amount of all tax liabilities, if the reassessment notices are ultimately upheld through the tax adjudication process. Alaris anticipates that legal proceedings through the CRA and the courts will take considerable time to resolve, and the payment of the deposits and any taxes, interest or penalties owing will not materially impact the corporation's payout ratio. The corporation firmly believes it will be successful in defending its position and, therefore, any current or future deposit paid to the CRA would be refunded, plus interest. The corporation will continue to file its tax returns by using the remaining available tax pools.

"We're pleased to be reporting another quarter in line with the outlook we provided in March. The reassessment from the CRA was not unexpected and is just another step in a long process that we still believe will be resolved favourably. We continue to expect a positive resolution from KMH as the business remains profitable in a stable industry. Neither of these issues have any impact on our current monthly dividend as we will pay the CRA deposit out of cash on hand and our annualized payout ratio is below 80 per cent to allow for any short-term issues encountered with a partner," said Darren Driscoll, chief financial officer, Alaris Royalty.

Outlook

Alaris's agreements with its partners provide for estimated revenues to Alaris of approximately $68.3-million for 2015, plus up to another $5.7-million from KMH. Revenues from its partners for the three months ended June 30, 2015, are expected to be approximately $16.6-million, plus up to another $1.9-million from KMH. The corporation has all of its $90.1-million credit facility available for use in future transactions. General and administrative expenses are currently estimated to be $6.5-million for 2015, inclusive of all public company costs. Cash requirements after earnings are expected to remain at minimal levels.

Alaris's financial statements and MD&A are available on SEDAR and on the company's website.

Conference call

Alaris's management will host a conference call at 9 a.m. MST (11 a.m. EST) May 6, 2015, to discuss the financial results and outlook for the corporation. Participants can access the conference call by telephone by dialling toll-free 1-866-223-7781 or 1-416-340-2216. Alternatively, those interested may listen to this event on-line. Please connect to the call or log into the webcast at least 10 minutes prior to the beginning of the event. For those unable to participate in the conference call at the scheduled time, it will be archived for replay until the end of day May 13, 2015. You can access the replay by dialling toll-free 1-800-408-3053 or 1-905-694-9451 and entering the passcode 6311884. The webcast will be archived for 90 days, and is available for replay by clicking on the link the company will have stored under the presentations and events section of the investor section of the company's website. An updated corporate presentation will also be available on the website within the next 24 hours.

   CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

                                        For the three months ended March 31,
                                                       2015            2014
Revenues                                                                    
Royalties and distributions                  $   18,782,040  $   15,488,567 
Interest and other                                  236,606         311,573 
                                             --------------- ---------------
Total revenue                                    19,018,646      15,800,140 
                                             --------------- ---------------
Other income                                                                
Gain on partner redemption                        2,792,457               - 
(Loss) on foreign exchange contracts             (2,048,247)       (359,629)
                                             --------------- ---------------
Total other income                                  744,210        (359,629)
                                             --------------- ---------------
Salaries and benefits                               503,942         337,277 
Corporate and office                                778,110         497,104 
Legal and accounting fees                           304,536         309,474 
Non-cash stock-based compensation                 1,329,335         723,062 
Depreciation and amortization                        29,291          26,616 
                                             --------------- ---------------
Subtotal                                          2,945,214       1,893,533 
                                             --------------- ---------------
Earnings from operations                         16,817,642      13,546,978 
Finance costs                                       784,379       1,165,137 
Unrealized foreign exchange loss (gain)         (10,766,315)     (2,897,622)
                                             --------------- ---------------
Earnings before taxes                            26,799,578      15,279,463 
Deferred income tax expense                       3,143,226       1,650,500 
Current income tax expense                        1,853,587       1,682,129 
                                             --------------- ---------------
Total income tax expense                          4,996,813       3,332,629 
                                             --------------- ---------------
Earnings                                         21,802,765      11,946,834 
                                             --------------- ---------------
Other comprehensive income                                                  
Foreign currency translation differences          6,405,521       1,816,590 
                                             --------------- ---------------
Other comprehensive income for the period,                                  
net of income tax                                 6,405,521       1,816,590 
                                             --------------- ---------------
Total comprehensive income for the period    $   28,208,286  $   13,763,424 
                                             =============== ===============
Earnings per share                                                          
Basic earnings per share                     $         0.68  $         0.42 
Fully diluted earnings per share             $         0.66  $         0.41 

We seek Safe Harbor.