Mr. Francois Roberge reports

LSL PHARMA GROUP REPORTS RECORD REVENUES AND FIRST QUARTER 2026 RESULTS

LSL Pharma Group Inc. has released its financial results for the first quarter ended March 31, 2026 (Q1 2026). All amounts are presented in millions of Canadian dollars.

Q1 2026 corporate and financial highlights

• Record quarterly consolidated revenues, including full quarter contribution from Laboratoire Du-Var and Juno OTC acquired on Jan. 1, 2026, and to be presented as third business segment;
• Strong Eye-Care revenues show significant market share gains in Canada;
• Q1 2026 profitability temporarily impacted by the three-month Steri-Med Pharma (Steri-Med) production pause, with full production activities having resumed in April, 2026;
• Secured United States Food and Drug Administration certification of Steri-Med to manufacture ophthalmic ointment for the U.S. market;
• Commissioning of new state-of-the-art sterile ointment manufacturing line on track for commercial production by Q1 2027;
• Development of three new ointment products initiated for regulatory filings during FY 2027.
• Binding term sheet signed with Instapill Private Ltd. for the Canadian rights to private label Loratadine 10-milligram orally disintegrating tablets (ODT), a bioequivalent product to Claritin Rapid Dissolve;
• Revolving credit facility increased from $7.5-million to $11-million.

"During the first quarter of 2026, we saw the positive impact of the recent acquisitions of Juno OTC and Du-Var on our operating results and the diversification of our business platform. While profitability during the quarter was temporarily impacted by the Steri-Med production pause and acquisition-related integration costs, we expect the contribution of both Juno OTC and Du-Var to accelerate over the coming quarters as we leverage operational synergies and expand our respective business opportunities," said Francois Roberge, president and chief executive officer of LSL Pharma Group. "At Steri-Med, full production activities resumed in April, 2026, following the acceptance of our remediation plan by Health Canada. Management expects improved operating performance and margin recovery over the coming quarters following the production resumption and integration synergies from recent acquisitions. In addition, having received our first shipments of eye drops, we remain on track for the commercial launch of our eye-care portfolio starting in Q2 2026, which we believe positions the corporation for significant improved operational and financial performance going forward," added Mr. Roberge.

Q1 2026 versus Q1 2025 results

• Record quarterly revenues at $12.3-million up 86 per cent compared with $6.6-million;
• CMO revenues of $6.2-million compared with $5.7-million, a 7 per cent increase;
• Eye-care segment revenues were $1.5-million up 71 per cent from $900,000;
• Private label revenues of $4.6-million compared with nil;
• Adjusted gross profit of $2.9-million compared with $2.4-million;
• Adjusted EBITDA of $500,000 compared with $800,000;
• Net loss of $2.8-million compared with $200,000.

While Q1 2026 profitability was impacted by temporary production interruption costs at Steri-Med, integration expenses related to the Juno OTC and Du-Var acquisitions, and the financing costs associated with the corporation's growth strategy, management believes these factors are largely transitional in nature and expects profitability to improve as production normalizes and operating synergies are realized.

Subsequent to Q1 2026

• First eye-drops shipments received, for market launch during Q2 2026 as planned.

"The Juno OTC and Du-Var acquisitions have diversified our revenue base and added another growth segment to our platform. With production at the Steri-Med plant having resumed in April, we are happy about our first quarter 2026 performance despite the slower activity at the Steri-Med plant resulting from the regulatory driven production halt. Record domestic revenues for our eye-care division, driven by strong market share gains, have offset the financial impact of the slower Steri-Med production activity", said Luc Mainville, executive vice-president and chief financial officer of LSL Pharma Group. The addition of Du-Var and Juno OTC give the corporation significant opportunities for synergies, which will help drive improved financial performance going forward," added M. Mainville.

Financial results

The corporation reports its revenues in three business segments. Revenues from LSL Laboratory, Dermolab Pharma, Virage Sante (VSI) and Du-Var are grouped into the CMO segment. The Steri-Med Pharma revenues are presented in the eye-care segment, and Juno OTC in the company's new private label segment.

First quarter financial results -- three-month period ended March 31, 2026

• The corporation delivered record revenues in Q1 2026 at $12.3-million, up 86 per cent compared with Q1 2025. The year-over-year increase results mainly from to the addition of Juno OTC acquired on Jan. 1, 2026, and to a lesser extent from the addition of Du-Var acquired on Nov. 17, 2025. CMO revenues increased by 7 per cent at $6.2-million in Q1 2026 compared with $5.7-million for Q1 2025. The CMO revenues were down compared with Q4 2025 due the production impact of respective year-end plant production slowdown. The eye-care division posted strong revenues at $1.5-million during the first quarter, up 71 per cent compared with Q1 2025 and driven by record domestic sales in Canada. Finally, the Juno OTC platform contributed $4.6-million compared with nil last year.
• Adjusted gross profit for Q1 2026 after eliminating the impact of depreciation and amortization as well as special and non-recurrent adjustments, stood at $2.9-million, an 18-per-cent increase over Q1 2025. Adjusted gross profit in Q1 2026 was up mainly as a result of the addition of Juno OTC. Adjusted gross profit as a per cent of revenues decreased from 37 per cent to 23 per cent between the two periods, as a result of change in revenue mix, since Juno OTC private label revenues are typically providing lower margins, and represented 38 per cent of the group's total revenues for the quarter.
• The company's gross profit performance in Q1 2026 was impacted by the production halt at the Steri-Med plant (See "Regulatory Compliance - Segment Reporting Section in our Q1 2026 MD&A"). Operating costs are typically allocated to inventory as cost of manufacturing of units produced during the period. No production took place at Steri-Med between mid-December, 2025, and early April, 2026. The company made a special adjustment to its Q1 2026 adjusted gross profit equivalent to the plant operating costs for Q1 2026.
• SG&A (selling, general and administrative) expenses for Q1 2026 were $2.6-million compared with $1.7-million in Q1 2025, a 56-per-cent increase, mainly reflecting the impact of the addition of Du-Var and Juno OTC. The company expects SG&A to reduce over time as the company generates synergies from these acquisitions. Despite the relative increase in SG&A expenses, the ratio of SG&A expenses to revenues has improved from 25 per cent to 21 per cent between the two periods.
• LSL Pharma generated an operating loss of $1.8-million in Q1 2026 compared with a $400,000 operating profit in Q1 2025. The Q1 2026 performance was mainly impacted by the production halt at Steri-Med.
• Financial expenses for Q1 2026 were 67 per cent higher than Q1 2025 at $1.0-million compared with $600,000. The $400,000 increase in financial expenses between the periods was mainly due to the impact of the $12-million convertible debt offering closed in December, 2025, used to finance operations and the Juno OTC acquisition, and representing $300,000 for the quarter.
• Net loss in Q1 2026 was $2.8-million compared with $200,000 in Q1 2025. The net loss performance for Q1 2026 resulted mainly from the increase in SG&A and the production halt at Steri-Med. Production at Steri-Med has resumed in April, 2026, the company expects stronger quarterly performance for the group going forward.
• EBITDA for Q1 2026, after eliminating the impact of financial expenses, depreciation and amortization was a loss of $1.0-million, compared with a gain of $900,000 in Q1 2025. Same as for the net loss performance, the EBITDA results were impacted by the production halt at Steri-Med.
• After eliminating share-based compensation, M&A (merger and acquisition) restructuring charges, and the special/non-recurrent gross profit adjustments, LSL Pharma generated an (A) EBITDA profit of $500,000 for Q1 2026 compared with a (A) EBITDA profit of $800,000 for Q1 2025. The temporary reduction in (A) EBITDA of $300,000 was primarily attributable to the Steri-Med production interruption, acquisition integration costs and incremental SG&A associated with the scaling of the corporation's platform following the Juno OTC and Du-Var acquisitions
• Management expects operational efficiencies, procurement synergies, shared commercial infrastructure and improved manufacturing utilization resulting from the integration of Juno OTC and Du-Var to progressively contribute to margin expansion.

Balance sheet and liquidities

• The company's current assets increased by 9 per cent in Q1 2026 compared with year-end 2025. The $2.2-million increase comes mainly from the $5.0-million increase in inventory, $1.2-million increase in accounts receivable less $4.5-million cash and share deposit for the Juno OTC transaction closed on Jan. 1, 2026. The company's inventory level at the end of Q1 2026 reflects the addition of the Du-Var and Juno OTC inventory less the reduction in inventory at Steri-Med resulting from the Q1 2026 production halt (resumed in April, 2026).
• Total assets increased by $5.3-million at the end of Q1 2026 compared with year-end 2025. The 7-per-cent increase includes respective additions of $2.2-million to current assets described above, $1.2-million and $2.3-million respective increases in intangibles and goodwill mainly because of the Juno OTC acquisition. Increase in intangibles also included the impact of continued investments in the development of the company's eye-care product portfolio.
• Total liabilities increased by 17 per cent since the beginning of the FY 2026. The $8.1-million increase reflects the increase in short-term liabilities resulting from the Juno OTC transaction less the reduction in LTD and LT lease liabilities for the quarter.
• After allocating proceeds from the December, 2025, convertible debenture financing toward the Du-Var and Juno OTC acquisitions, the company's working capital remains strong at $6.5-million at the end of Q1 2026. With production at the Steri-Med plant having resumed in April, 2026, and with anticipated growing contribution from the recently acquired entities, LSL Pharma believes that improved operating cash flows and access to its newly increased $11-million operating line of credit provide adequate financial flexibility to implement its operating and financial obligations. Following the Du-Var and Juno acquisition, LSL Pharma's working capital assets used for supporting the revolving credit facility now exceed $24-million. Tangible net assets stood at $59-million at the end of Q1 2026, compared with $35-million of net borrowing, representing a 0.6:1 leverage ratio which is adequate considering the quality of the company's assets and projected performance. Average cost of interest-bearing debt is also favourable at 8.2 per cent.

Regulatory compliance -- Steri-Med

• During Q1 2026, Steri-Med temporarily postponed sterile filling activities for a three-month period (January to March, 2026) following its biennial Health Canada inspection, in order to complete and submit an enhanced corrective and preventive action plan requested by Health Canada. During this period, the site continued non-filling activities and maintained commercial operations through existing inventory levels, resulting in no impact on customer supply or sales activities.
• As of April 2, 2026, Health Canada accepted the plan submitted by Steri-Med and full production activities resumed. The corporation continues to execute the plan in collaboration with Health Canada and does not anticipate any issues in completing the remaining measures within the agreed timelines.

Financial statements and MD&A

LSL Pharma Group's financial statements and management's discussion and analysis for the first quarter 2026 are available on SEDAR+ and on the corporation's website.

About LSL Pharma Group Inc.

LSL Pharma Group is a Canadian integrated pharmaceutical company specializing in the development, manufacturing and commercialization of high-quality sterile ophthalmic pharmaceutical products, as well as pharmaceutical, cosmetic and natural health products in solid, semi-solid and liquid dosage forms. Leveraging its technical expertise, certified facilities and experienced management team, LSL Pharma delivers high-quality solutions that meet the most stringent industry standards. The wholly owned subsidiaries of LSL Pharma include Steri-Med Pharma Inc., LSL Laboratory Inc., Virage Sante Inc., Dermolab Pharma Ltd., Laboratoire Du-Var Inc. and Juno OTC Inc.