Mr. Francois Roberge reports

LSLPHARMA GROUP ANNOUNCES ITS SECOND QUARTER RESULTS

LSL Pharma Group Inc. has released its financial results for the second quarter ended June 30, 2023. The company's management's discussion and analysis and unaudited consolidated financial statements are available on SEDAR+.

"We are pleased with these results that show a constant progression in demand for our products," said Francois Roberge, president and chief executive officer of LSL Pharma. "The strong revenue growth is even more impressive considering production downtime related to the move of LSL Laboratory's activities into a new facility in La Pocatiere during the quarter. Production is ramping up in line with our expectations, which should result in revenue growth exceeding 15 per cent from existing clients over the next several years. Steri-Med also had a solid performance during the quarter, and optimization efforts of its current infrastructure will double its production capacity by the end of 2023, while the addition of new equipment towards the end of 2024 should further double capacity."

Second quarter results

For the three-month period ended June 30, 2023, LSL Pharma generated revenues of $2.0-million, up 43.5 per cent from $1.4-million in the same period a year earlier. The increase reflects successful initiatives to stimulate sales and carried out in prior periods, partially offset by scheduled downtime due to the transition to the new LSL manufacturing facility in La Pocatiere, Que.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), which excludes items that affect comparability, amounted to a loss of $260,000, compared with a loss of $1.4-million last year. The improvement is attributable to a higher gross profit, reaching $692,000 as opposed to a loss of $332,000 last year, while selling and administrative expenses remained relatively stable despite the strong revenue increase.

Net loss for the quarter was $3.1-million, or four cents per share, compared with a net loss of $1.3-million, or two cents per share, in the previous year.

Six-month results

For the first six months of fiscal year 2023, LSL Pharma generated revenues of $4.1-million, representing a 23.6-per-cent increase from $3.3-million for the same period last year. Gross profit reached $1.1-million, compared with a loss of $1.0-million a year earlier. Adjusted EBITDA amounted to a loss of $263,000, marking an improvement from a $2.9-million loss in the prior year. Net loss totalled $7.2-million, or nine cents per share, compared with a loss of $3.6-million, or five cents per share, a year earlier.

Financial situation

Reflecting private placements completed in the first quarter of the year, shareholders equity amounted to $10.5-million as at June 30, 2023, versus $5.6-million at the beginning of the year. The company used a portion of the aggregate net proceeds of $8.4-million to reduce its debt, which stood at $7.2-million, net of cash and cash equivalents, as at June 30, 2023, down from $9.3-million at the beginning of the year.

Working capital also improved from ($7.0-million) as at Dec. 31, 2022, to ($3.7-million) as at June 30, 2023. The improvement is attributable to higher inventories related to production increase at Steri-Med since the beginning of the year to meet growing demand for LSL Pharma's products to a cash balance following private placements and to the reduction of various financial liabilities.

Subsequent event

On Aug. 2, 2023, the company entered into a new $1.5-million short-term credit facility with a Canadian chartered bank. The company subsequently repaid the entire amount due under other financial liabilities. The new short-term financing is secured by a first-ranking hypothec on accounts receivable and inventories.

Departure of chief financial officer

LSL Pharma announces the departure of Sylvain Richer, chief financial officer, for personal reasons and to seek new opportunities, effective Aug. 31, 2023. The company has begun a process to find a successor. Until then, Francois Roberge will assume the role in the interim, and Mr. Richer will remain available to ensure a smooth transition.

Outlook

"The production capacity increase will allow LSL Pharma Group to speed up its product and market developments. First, since the beginning of 2023, the Steri-Med division team has initiated the certification process to market new sterile products that should be launched at the end of 2024 and in 2025. Moreover, progress in our discussions with large [United States]-based clients suggests potential inroads into that important market, possibly in 2025. Meanwhile, the LSL division plans to expand its offering of natural health products before the end of 2024, and remains active in order to capture business opportunities in the United States and Europe. Finally, we continue to evaluate strategic acquisitions that would allow us to further expand our product portfolio," added Mr. Roberge.

About LSL Pharma Group Inc.

LSL Pharma is a Canadian integrated pharmaceutical company, specializing in the development, manufacturing and distribution of high-quality natural health products and dietary supplements in solid dosage forms, as well as high-quality sterile ophthalmic pharmaceutical products.

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