Mr. Steve Saviuk reports

VALEO PHARMA REPORTS RECORD ANNUAL REVENUES FOR FISCAL YEAR 2023

Valeo Pharma Inc. today released its financial results for the fourth quarter and year ended Oct. 31, 2023.

Fourth quarter and year-end 2023 results and highlights:

• Revenues of $53.9-million for 2023 versus $27.7-million for 2022, up 94 per cent;
• Revenues of $13.1-million in Q4 2023 versus $12.7-million in Q4 2022, up 4 per cent;
• Adjusted gross profit of $16.9-million for 2023 versus $9.4-million for 2022, up 80 per cent;
• Adjusted gross profit of $2.6-million in Q4 2023 versus $3.6-million in Q4 2022, down 29 per cent;
• Two thousand twenty-three net loss of $27.8-million versus $25.7-million for 2022;
• Q4 2023 net loss of $9.2-million versus $9.3-million in Q4 2022;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) loss of $10.9-million for 2023 versus $14.5-million for 2022, down 25 per cent;
• Adjusted EBITDA loss of $4.5-million for Q4 2023 versus $2.9-million loss in Q4 2022, up 56 per cent;
• Enerzair and Atectura prescribing physicians reached 2,967 at the end of Q4 2023, a 19-per-cent growth for the quarter and 161-per-cent increase year over year.

"Valeo delivered another year of significant growth in 2023 with annual revenues and adjusted gross profit increasing 94 per cent and 80 per cent respectively over 2022. Our three main pillars of growth, Enerzair, Atectura and Redesca, all experienced growing revenues, market share gains and are positioned for further growth in 2024," said Steve Saviuk, chief executive officer. "Our main focus for 2024 is to accelerate our path to profitability, in our ongoing effort to drive value for our shareholders. We look forward to seeing the impact of our recently implemented cost reduction initiatives and organizational realignment measures materializing, starting in the first quarter of 2024, and having full impact by the third quarter of 2024."

Commenting on the fourth quarter and fiscal 2023 results, Pascal Tougas, Valeo's chief financial officer, said: "Although our fourth quarter of 2023 was more challenging in terms of EBITDA and cash management, our team remains fully focused on the execution of our currently ongoing and upcoming business initiatives. This will enable us to reap the benefits associated with the recently implemented and upcoming operating expenses reduction measures, while effectively supporting the dynamic growth of our core assets. We expect continued revenue growth and sequential improvements in our results starting in the first quarter of the current year and continuing throughout 2024 as we accelerate our path towards profitability."

Fourth quarter 2023 financial results

• Revenues were $13.1-million for the quarter ended Oct. 31, 2023, compared with $12.6-million for the quarter ended Oct. 31, 2022, representing a 4-per-cent increase. Valeo revenue growth momentum temporarily affected by adjustments to carrying provisions for rebates and sales returns.
• Adjusted gross profit was $2.6-million for the quarter ended Oct. 31, 2023, compared with $3.6-million for the quarter ended Oct. 31, 2022, representing a 29-per-cent decrease. The decrease over the previous comparable period is directly impacted by adjustments to carrying provisions and, to a lesser extent, some unfavourable product mix, which is being addressed as part of the company's focus on accelerating its path to profitability.
• Net loss was $9.2-million for the quarter ended Oct. 31, 2023, compared with $9.3-million for the quarter ended Oct. 31, 2022. The 1-per-cent decrease in net loss in Q4 2023 resulting mainly from the offset between gross profit negatively impacted by sales provisions versus depressed debt evaluation.
• Adjusted EBITDA loss was $4.5-million for the quarter ended Oct. 31, 2023, compared with $2.9-million for the quarter ended Oct. 31, 2022, a 56-per-cent increase.

Year 2023 financial results

• Record YTD revenues of $53.9-million for the 12 months ended Oct. 31, 2023, compared with $27.7-million for the 12 months ended Oct. 31, 2022, representing a 94-per-cent increase.
• Adjusted gross profit was $16.9-million for the 12 months ended Oct. 31, 2023, up 80 per cent compared with $9.4-million for the 12 months ended Oct. 31, 2022.
• Net loss of $27.8-million for the 12 months ended Oct. 31, 2023, compared with $25.7-million for the 12 months ended Oct. 31, 2022. The 8-per-cent increase in net loss is predominantly due to the increase in financial expenses ($3.3-million) and the increase in S&M (sales and marketing) expenses ($4.0-million) to support the new business unit, which were only partly offset by gained sales traction and gross profit ($6.8-million).
• Adjusted EBITDA loss of $10.9-million for the 12 months ended Oct. 31, 2023, compared with an adjusted EBITDA loss of $14.5-million for the 12 months ended Oct. 31, 2022, a 25-per-cent improvement.

Q4 2023 highlights

• In October, 2023, the company was recognized by the Report on Business as one of Canada's top growing companies with a three-year revenue growth rate over 300 per cent;
• In September, 2023, the company entered into a credit facility agreement with Accord Financial Inc. The $5-million credit facility is secured by a first rank lien on the corporation's short-term assets, and bears interest at the Scotiabank's prime rate plus an applicable margin. Borrowings under the credit facility are expected to be used for working capital and other general corporate purposes.
• In August, 2023, the company closed a $4.5-million financing comprising a non-brokered private placement offering of 13,999,997 units of the company at a price of 28 cents per unit for gross proceeds of $3.92-million. Each unit consisted of one Class A share of the company and one-half share purchase warrant of the company. Each full warrant entitling the holder to purchase one share in the capital of the company at the price of 35 cents per warrant share for a period of 60 months from the closing date of the offering. The non-brokered private placement included the participation of Investissement Quebec for $2.0-million and $1,421,000 from insiders. In addition, the company secured a loan agreement with a related party for a principal amount of $580,000 bearing annual interest at a rate of 12 per cent.

Fourth quarter 2023 subsequent events

• In November, 2023, the company announced the undertaking of a series of initiatives to reduce operating costs and drive operational efficiency. The corporation also announced the appointment of Pascal Tougas as its new chief financial officer, effective Nov. 20, 2023.
• In November, 2023, the corporation announced the appointment of Richard Lajoie to its board of directors and the retirement of Maureen C. Brennan from its board of directors. Mr. Lajoie was president of Bausch Health, Canada, from 2017 to 2021 before being promoted to president of Ortho Dermatologics U.S. based in New Jersey. Prior to Bausch Health, Mr. Lajoie spent 12 years with Novartis Pharmaceuticals in roles of increasing responsibility.

Fourth quarter and year-end 2023 webcast and conference call

Valeo will host a conference call to discuss its fourth quarter and year-end 2023 results and highlights on Tuesday, Jan. 30, 2024, at 8:30 a.m. ET. The telephone numbers to access the conference call are 416-764-8659 and 1-888-664-6392. An audio replay of the call will be available. The numbers to access the audio replay are 416-764-8677 and 1-888-390-0541 using the following access code (959607 followed by the pound key).

Financial statements and MD&A (management's discussion and analysis)

Valeo Pharma's financial statements and management's discussion and analysis for the three-month and 12-month periods ended Oct. 31, 2023, are available on SEDAR+.

About Valeo Pharma Inc.

Valeo Pharma is a Canadian pharmaceutical company dedicated to the commercialization of innovative prescription products in Canada with a focus on respiratory/allergy, ophthalmology and hospital specialty products. Headquartered in Kirkland, Que., Valeo Pharma has all the required capabilities and the full infrastructure to register and properly manage its growing product portfolio through all stages of commercialization.

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