GUD Knight Therapeutics Inc

Knight Therapeutics Inc. (TSX: GUD) ("Knight" or “the Company”), a leading pan- American (ex-US) specialty pharmaceutical company, today reported financial results for its second quarter ended June 30, 2024. All currency amounts are in thousands except for share and per share amounts. All currencies are Canadian unless otherwise specified.

Q2 2024 Highlights

Financial Results

• Delivered record revenues of $95,573, an increase of $5,668 or 6% over the same period in prior year driven by growth of our key promoted products partly offset by our mature products.
• Gross margin of $47,337 or 50% of revenues compared to $37,493 or 42% of revenues in the same period in prior year.
• Adjusted EBITDA1 was $15,744, an increase of $1,475 or 10% over the same period in prior year.
• Adjusted EBITDA per share1 of $0.16, an increase of $0.03 or 23% over the same period in prior year.
• Net loss was $1,942, compared to net income of $1,840 in the same period in the prior year.
• Cash outflow from operations was $1,086, compared to $1,486 in the same period in prior year.

Corporate Developments

• Completed the NCIB launched in July 2023 with a total purchase of 5,999,524 shares at an average price of $4.87 for aggregate cash consideration of $29,231.
• Shareholders re-elected Jonathan Ross Goodman, Samira Sakhia, James C. Gale, Robert N. Lande, Michael J. Tremblay, Nicolás Sujoy and Janice Murray on the Board of Directors.

Products

• Entered into an exclusive supply and distribution agreement for Jornay PM™ (methylphenidate HCI extended-release capsules) for Canada and Latin America.

Subsequent to quarter-end

• Launched a NCIB in July to purchase up to 5,312,846 common shares of the Company over the next year.

“I am excited to report that for the six months ended June 30, 2024, we delivered record revenues of over $180 million and adjusted EBITDA of over $29 million. This strong performance is the result of the growth of our key promoted products and of our commercial execution across Canada and Latin America. In addition, we have expanded and strengthened our pipeline and will be leveraging our existing neurology infrastructure with the in-licensing of Jornay PMTM, our third neurology product added in the last nine months,” said Samira Sakhia, President and Chief Executive Officer of Knight Therapeutics Inc.

1 Adjusted EBITDA and Adjusted EBITDA per share are non-GAAP measures. Refer to section Non-GAAP measures for additional details.

SELECTED FINANCIAL RESULTS REPORTED UNDER IFRS[In thousands of Canadian dollars]
			Change					Change
	Q2-24	Q2-23	$1		%2	YTD-24	YTD-23	$1		%2
Revenues	95,573	89,905	5,668		6 %	182,177	172,502	9,675		6%
Gross margin	47,337	37,493	9,844		26%	89,036	78,255	10,781		14%
Gross margin %	50%	42%				49%	45%
Selling and marketing	13,264	12,874	(390	)	3%	25,913	23,539	(2,374	)	10%
General and administrative	12,099	9,119	(2,980	)	33%	22,637	18,225	(4,412	)	24%
Research and development	5,806	4,336	(1,470	)	34%	10,786	8,523	(2,263	)	27%
Amortization of intangible assets	11,674	11,274	(400	)	4%	22,546	22,445	(101	)	—%
Operating expenses	42,843	37,603	(5,240	)	14%	81,882	72,732	(9,150	)	13%
Operating income (loss)	4,494	(110)	4,604		4185%	7,154	5,523	1,631		30%
Net (loss) income	(1,942)	1,840	(3,782	)	206%	(6,488)	(2,097)	(4,391	)	209%

1 A positive variance represents a positive impact to net income (loss) and a negative variance represents a negative impact to net income (loss)2 Percentage change is presented in absolute values

SELECTED FINANCIAL RESULTS EXCLUDING IAS 291[In thousands of Canadian dollars]
			Change					Change
	Q2-24	Q2-23	$		%	YTD-24	YTD-23	$		%
Revenues	94,121	90,400	3,721		4%	179,917	173,067	6,850		4%
Gross margin	45,281	40,244	5,037		13%	85,977	81,630	4,347		5%
Gross margin %	48%	45%				48%	47%
Selling and marketing	12,968	12,985	(17	)	—%	25,461	23,698	1,763		7%
General and administrative	11,578	9,188	2,390		26%	21,790	18,075	3,715		21%
Research and development	5,577	4,623	954		21%	10,417	8,725	1,692		19%
Amortization of intangible assets	11,699	11,189	510		5%	22,545	22,314	231		1%
Operating expenses	41,822	37,985	3,837		10%	80,213	72,812	7,401		10%
EBITDA1	15,641	14,269	1,372		10%	29,230	32,506	(3,276	)	10%
Adjusted EBITDA1	15,744	14,269	1,475		10%	29,333	32,506	(3,173	)	10%
Adjusted EBITDA per share1	0.16	0.13	0.03		23%	0.29	0.30	(0.01	)	3%

1 Financial results excluding the impact of IAS 29, EBITDA, adjusted EBITDA and adjusted EBITDA per share are non-GAAP measures. Refer to section “Non- GAAP measures” for additional details.

RevenuesFor the quarter ended June 30, 2024, revenues excluding the impact of IAS 29 were $94,121 an increase of $3,721 or 4% mainly driven by a growth of $7,125 or 11% from our key promoted products offset by a decline in our mature products. The table below provides revenues by therapeutic area.

	Excluding the impact of IAS 291
			Change
Therapeutic Area	Q2-24	Q2-23	$		%
Oncology/Hematology	35,625	27,935	7,690		28%
Infectious Diseases	37,824	45,567	(7,743	)	17%
Other Specialty	20,672	16,898	3,774		22%
Total	94,121	90,400	3,721		4%

1 Revenues excluding the impact of IAS 29 is a non-GAAP measure, refer to section “Non-GAAP measures” for additional details.

The increase in revenues is explained by the following:

• Oncology/Hematology: The oncology/hematology portfolio grew by $7,690 due to the continued growth of key promoted products including Lenvima®, Akynzeo®, Trelstar® and the launch of Minjuvi® in Brazil.
• Infectious Diseases: The infectious diseases portfolio decreased by $7,743 driven mainly by the timing of orders for Ambisome® under the MOH contract, a decrease in the demand of Impavido® partly offset by the growth of our key promoted products including Cresemba® and timing of orders for certain products. During Q2-24 the Company delivered $8,900 of Ambisome® to MOH compared to $18,000 in Q2-23.
• MOH Contract: The Company signed a contract with the Ministry of Health of Brazil for Ambisome® in December 2022 ("2022 MOH Contract"). Knight delivered a total of $34,600 under the 2022 MOH Contract as follows: $7,000 in 2022, $25,200 in 2023 ($2,400 in Q1-23, $18,000 in Q2-23 and $4,800 in Q4-23) and $2,400 Q1-24. In December 2023, Knight signed a new contract with the MOH ("2024 MOH Contract") and delivered $6,800 in Q1-24 and $8,900 in Q2-24. The total MOH sales Ambisome® delivered in Q2-24 and YTD-24 was $8,900 and $18,100, respectively.

• Other Specialty: The other specialty portfolio increased by $3,774, primarily driven by the commercial transition of Exelon® from Novartis to Knight. As a result of advanced purchases by certain customers in Q1-23, the revenues of Exelon® were negatively impacted in Q2-23.

Gross marginExcluding the impact of IAS 29, gross margin as a percentage of revenues was 48% in Q2-24 compared to 45% in Q2-23. The increase in the Q2-24 gross margin, as a percentage of revenues, was due to product mix including a lower proportion of Ambisome® sales to MOH.

Selling and marketing ("S&M") expenses: For the quarter ended June 30, 2024 S&M expenses excluding the impact of IAS 29, were $12,968 in Q2-24 compared to $12,985 in Q2-23, a decrease of $17. There was no significant variance.

General and administrative ("G&A") expenses: For the quarter ended June 30, 2024 G&A expenses excluding the impact of IAS 29, were $11,578 in Q2-24 compared to $9,188 in Q2-23, an increase of $2,390 or 26%. The increase was mainly driven by an increase in structure and compensation expenses.

Research and development ("R&D") expenses: For the quarter ended June 30, 2024 R&D expenses excluding the impact of IAS 29, were $5,577 in Q2-24 compared to 4,623 in Q2-23, an increase of $954 or 21%. The increase was driven by an increase in product development activities in connection with our pipeline products and medical initiatives related to key promoted products. Knight invested $815 in Q2-24, an increase of $795 versus the prior year on its pipeline development activities. All costs related to development activities have been expensed which typically include regulatory submissions, analytical method transfers, stability studies and bio equivalence studies.

Adjusted EBITDAFor the quarter ended June 30, 2024, adjusted EBITDA increased by $1,475 or 10%. The increase was driven by a higher gross margin partly offset by higher G&A expenses, mainly related to structure and compensation increase and an increase in R&D expenses mainly due to an increase in our product development activities behind our pipeline.

SELECT BALANCE SHEET ITEMS[In thousands of Canadian dollars]
	June 30,2024	December 31,2023	Change
			$		%
Cash, cash equivalents and marketable securities	152,668	161,825	(9,157	)	6%
Trade and other receivables	135,203	141,684	(6,481	)	5%
Inventories	103,645	91,834	11,811		13%
Financial assets	115,728	128,369	(12,641	)	10%
Accounts payable and accrued liabilities	84,821	90,617	(5,796	)	6%
Bank loans	50,952	61,866	(10,914	)	18%

Cash, cash equivalents and marketable securities: As at June 30, 2024, Knight had $152,668 in cash, cash equivalents and marketable securities, a decrease of $9,157 or 6% as compared to December 31, 2023. The decrease is mainly due to the settlement of upfront and milestone payments in connection with product licensing agreements including Qelbree™, IPX203, Jornay PM™ and Cresemba®, principal and interest payments on bank loans and repurchase of shares through the NCIB, partly offset by the cash inflows from operations. The cash inflows from operating activities were $29,795 driven by the operating results adjusted for noncash items such as depreciation, amortization as well as decrease in working capital of $3,576. The decrease in working capital was mainly due to a decrease in accounts receivable driven by the timing of collections from customers and an increase in inventory excluding the impact of IAS 29 driven by the timing of sales and purchases of inventory.

Bank loans: As at June 30, 2024, bank loans were at $50,952, a decrease of $10,914 or 18% as compared December 31, 2023 due to principal repayments of bank loans as well as the depreciation of the Brazilian Real and Colombian Pesos.

Corporate Updates

NCIB

On July 11, 2024, the Company announced that the Toronto Stock Exchange approved its notice of intention to launch a NCIB (“2024 NCIB”). Under the terms of the 2024 NCIB, Knight may purchase for cancellation up to 5,312,846 common shares of the Company which represented 10% of its public float as at June 30, 2024. The 2024 NCIB commenced on July 15, 2024 and will end on the earlier of July 14, 2025 or when the Company completes its maximum purchases under the NCIB. Furthermore, Knight entered into an agreement with a broker to facilitate purchases of its common shares under the NCIB.

During the three-month period ended June 30, 2024, the Company purchased 205,661 common shares at an average price of $6.04 for aggregate cash consideration of $1,242 under the 2023 NCIB. Subsequent to the quarter-end up to July 31, 2024, the Company purchased an additional 165,000 common shares at an average purchase price of $5.67 for an aggregate cash consideration of $936.

The Company has purchased an aggregate of 42.5 million shares at an average price of $5.70 since the launch of its share buy back program in 2019.

Financial Outlook Update

Financial Outlook

Knight provides guidance on revenues on a non-GAAP basis. This is due to both the difficulty in predicting Argentinian inflation rates and its IAS 29 impact.

For fiscal 2024, Knight has increased its financial guidance on revenues and now expects to generate between $355 million to $365 million in revenues up from $335 to $350 million. The adjusted EBITDA1 is expected to be approximately 16% of revenues. The change in the financial outlook is primarily due to an improvement in forecasted LATAM currencies against the Canadian dollar as well as an acceleration of investments on our pipeline products. The guidance is based on a number of assumptions, including but not limited to the following:

• no revenues or expenses for business development transactions not completed as at August 7, 2024
• no unforeseen termination to our license, distribution & supply agreements
• no interruptions in supply whether due to global supply chain disruptions or general manufacturing issues
• no new generic entrants on our key pharmaceutical brands
• no unforeseen changes to government mandated pricing regulations
• successful commercial execution on product listing arrangements with HMOs, insurers, key accounts, and public payers
• successful execution and uptake of newly launched products
• no material increase in provisions for inventory or trade receivables
• no significant variations of forecasted foreign currency exchange rates
• inflation remaining within forecasted ranges

Should any of the assumptions differ, the financial outlook and the actual results may vary materially. Refer to the risks and assumptions referred to in the Forward-Looking Statements section of this news release for further details.

1 Revenues excluding the impact of IAS 29 and adjusted EBITDA are a non-GAAP measure. Refer to the definitions in section “Non-GAAP measures” for additional details.

Conference Call Notice

Knight will host a conference call and audio webcast to discuss its second quarter ended June 30, 2024, today at 8:30 am ET. Knight cordially invites all interested parties to participate in this call.

Date: Thursday, August 8, 2024Time: 8:30 a.m. ETTelephone: Toll Free: 1-800-836-8184 or International 1-289-819-1350Webcast: www.knighttx.com or WebcastThis is a listen-only audio webcast. Media Player is required to listen to the broadcast.

Replay: An archived replay will be available for 30 days at www.knighttx.com

About Knight Therapeutics Inc.

Knight Therapeutics Inc., headquartered in Montreal, Canada, is a specialty pharmaceutical company focused on acquiring or in-licensing and commercializing pharmaceutical products for Canada and Latin America. Knight's Latin American subsidiaries operate under United Medical, Biotoscana Farma and Laboratorio LKM. Knight Therapeutics Inc.'s shares trade on TSX under the symbol GUD. For more information about Knight Therapeutics Inc., please visit the Company's web site at www.knighttx.com or www.sedarplus.ca.

Forward-Looking Statement

This document contains forward-looking statements for Knight Therapeutics Inc. and its subsidiaries. These forward-looking statements, by their nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Knight Therapeutics Inc. considers the assumptions on which these forward-looking statements are based to be reasonable at the time they were prepared but cautions the reader that these assumptions regarding future events, many of which are beyond the control of Knight Therapeutics Inc. and its subsidiaries, may ultimately prove to be incorrect. Factors and risks, which could cause actual results to differ materially from current expectations are discussed in Knight Therapeutics Inc.'s Annual Report and in Knight Therapeutics Inc.'s Annual Information Form for the year ended December 31, 2023 as filed on www.sedarplus.ca. Knight Therapeutics Inc. disclaims any intention or obligation to update or revise any forward-looking statements whether because of new information or future events, except as required by law.

CONTACT INFORMATION:

Investor Contact:
Knight Therapeutics Inc.
Samira Sakhia	Arvind Utchanah
President & Chief Executive Officer	Chief Financial Officer
T: 514.484.4483	T. +598.2626.2344
F: 514.481.4116
Email: IR@knighttx.com	Email: IR@knighttx.com
Website: www.knighttx.com	Website: www.knighttx.com

NON-GAAP MEASURES[In thousands of Canadian dollars]

The Company discloses non-GAAP measures and ratios that do not have standardized meanings prescribed by IFRS. The Company believes that shareholders, investment analysts and other readers find such measures helpful in understanding the Company’s financial performance. Non-GAAP financial measures and adjusted EBITDA per share ratio do not have any standardized meaning prescribed by IFRS and may not have been calculated in the same way as similarly named financial measures presented by other companies.

The Company uses the following non-GAAP measures.

Revenues and Financial results excluding the impact of hyperinflation under IAS 29

The Company applies IAS 29, Financial Reporting in Hyperinflation Economies, as the Company's Argentine subsidiaries used the Argentine Peso as their functional currency. IAS 29 requires that the financial statements of an entity whose functional currency is the currency of a hyperinflationary economy be adjusted based on an appropriate general price index to express the effects of inflation.

Revenues and financial results under IFRS are adjusted to remove the impact of hyperinflation under IAS 29. The impact of hyperinflation under IAS 29 is calculated by applying an appropriate general price index to express the effects of inflation. After applying the effects of translation, the statement of income is converted using the closing foreign exchange rate of the month.

Revenues and financial results excluding the impact of hyperinflation under IAS 29 allow results to be viewed without the impact of IAS 29 thereby facilitating the comparison of results period over period. The presentation of revenues and financial results excluding the impact of hyperinflation under IAS 29 is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

The following tables are reconciliations of financial results under IFRS to financial results excluding the impact of hyperinflation under IAS 29.

	Q2-24				YTD-24
	Reported under IFRS	IAS 29 Adjustment		Excluding the Impact of  IAS 29	Reported under IFRS	IAS 29 Adjustment		Excluding the Impact of  IAS 29
Revenues	95,573	(1,452	)	94,121	182,177	(2,260	)	179,917
Cost of goods sold	48,236	604		48,840	93,141	799		93,940
Gross margin	47,337	(2,056	)	45,281	89,036	(3,059	)	85,977
Gross margin (%)	50%			48%	49%			48%
Expenses
Selling and marketing	13,264	(296	)	12,968	25,913	(452	)	25,461
General and administrative	12,099	(521	)	11,578	22,637	(847	)	21,790
Research and development	5,806	(229	)	5,577	10,786	(369	)	10,417
Amortization of intangible assets	11,674	25		11,699	22,546	(1	)	22,545
Operating income (loss)	4,494	(1,035	)	3,459	7,154	(1,390	)	5,764

	Q2-23			YTD-23
	Reported under IFRS	IAS 29Adjustment	Excluding the Impact of IAS 29	Reported under IFRS	IAS 29Adjustment	Excluding the Impact of IAS 29
Revenues	89,905	495	90,400	172,502	565	173,067
Cost of goods sold	52,412	(2,256)	50,156	94,247	(2,810)	91,437
Gross margin	37,493	2,751	40,244	78,255	3,375	81,630
Gross margin (%)	42%		45%	45%		47%
Expenses
Selling and marketing	12,874	111	12,985	23,539	159	23,698
General and administrative	9,119	69	9,188	18,225	(150)	18,075
Research and development	4,336	287	4,623	8,523	202	8,725
Amortization of intangible assets	11,274	(85)	11,189	22,445	(131)	22,314
Operating income	(110)	2,369	2,259	5,523	3,295	8,818

Revenues and Financial results at constant currencyRevenues and financial results at constant currency are obtained by translating the prior period revenues and financial results from the functional currencies to CAD using the conversion rates in effect during the current period. Furthermore, with respect to Argentina, the Company excludes the impact of hyperinflation and translates the revenues and results at the average exchange rate in effect for each of the periods.

Revenues and financial results at constant currency allow results to be viewed without the impact of fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of revenues and financial results under constant currency is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

The following tables are reconciliations of financial results under IFRS to financial results and financial results at constant currency.        

Q2-23								YTD-23
	Reported under IFRS		IAS 29Adjustment		Constant Currency Adjustment		Constant Currency	Reported under IFRS	IAS 29Adjustment		Constant Currency Adjustment	Constant Currency
Revenues	89,905		495		112		90,512	172,502	565		3,592	176,659
Cost of goods sold	52,412		(2,256	)	(224	)	49,932	94,247	(2,810	)	1,453	92,890
Gross margin	37,493		2,751		336		40,580	78,255	3,375		2,139	83,769
Expenses
Selling and marketing	12,874		111		(53	)	12,932	23,539	159		205	23,903
General and administrative	9,119		69		301		9,489	18,225	(150	)	501	18,576
Research and development	4,336		287		20		4,643	8,523	202		96	8,821
Amortization of intangible assets	11,274		(85	)	233		11,422	22,445	(131	)	128	22,442
Operating income	(110	)	2,369		(165	)	2,094	5,523	3,295		1,209	10,027

EBITDA

EBITDA is defined as operating income or loss adjusted to exclude amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases.

EBITDA allows results to be viewed without the impact of amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation) but to include costs related to leases fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of EBITDA is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

Adjusted EBITDA

Adjusted EBITDA is defined EBITDA adjusted for acquisition costs and non-recurring expenses.

Adjusted EBITDA allows results to be viewed without the impact of amortization and impairment of intangible assets, depreciation, purchase price allocation accounting adjustments, and the impact of IAS 29 (accounting under hyperinflation), acquisition costs and non-recurring expenses but to include costs related to leases fluctuations in foreign currency exchange rates thereby facilitating the comparison of results period over period. The presentation of adjusted EBITDA is considered to be a non-GAAP measure and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

The following table is a reconciliation of operating income (loss) to EBITDA and adjusted EBITDA.

	Q2-24		Q2-23		YTD-24		YTD-23
Operating income (loss)	4,494		(110	)	7,154		5,523
Adjustments to operating income (loss):
Amortization of intangible assets	11,674		11,274		22,546		22,445
Depreciation of property, plant and equipment and ROU assets	1,495		884		3,204		2,796
Lease costs (IFRS 16 adjustment)	(982	)	(636	)	(1,864	)	(1,367	)
Impact of IAS 29	(1,040	)	2,857		(1,810	)	3,109
EBITDA	15,641		14,269		29,230		32,506
Acquisition and transition costs	103		—		103		—
Adjusted EBITDA	15,744		14,269		29,333		32,506

Adjusted EBITDA per share

Adjusted EBITDA per share is defined as Adjusted EBITDA over number of common shares outstanding at the end of the respective period. The presentation of adjusted EBITDA per share is considered to be a non-GAAP ratio and does not have any standardized meaning under GAAP. As a result, the information presented may not be comparable to similar measures presented by other companies.

The following table calculates adjusted EBITDA per share as follows:

	Q2-24	Q2-23	YTD-24	YTD-23
Adjusted EBITDA	15,744	14,269	29,333	32,506
Adjusted EBITDA per common share	0.16	0.13	0.29	0.30
Number of common shares outstanding at period end (in thousands)	101,327	107,177	101,327	107,177

SELECTED FINANCIAL RESULTS AT CONSTANT CURRENCY[In thousands of Canadian dollars]
	Excluding impact of IAS 29
		Constant Currency1	Change				Constant Currency1	Change
	Q2-24	Q2-23	$		%	YTD-24	YTD-23	$		%
Revenues	94,121	90,512	3,609		4%	179,917	176,659	3,258		2%
Gross margin	45,281	40,580	4,701		12%	85,977	83,769	2,208		3%
Gross margin %	48%	45%				48 %	47 %
Operating expenses	41,822	38,486	(3,336	)	9%	80,213	73,742	(6,471	)	9%
EBITDA	15,641	14,227	1,414		10%	29,230	33,915	(4,685	)	14%
Adjusted EBITDA	15,744	14,227	1,517		11%	29,333	33,915	(4,582	)	14%
Adjusted EBITDA per share	0.16	0.13	0.03		23%	0.29	0.31	(0.02	)	6%

1 Financial results at constant currency is a non-GAAP measure. Refer to section “Non-GAAP measures” for additional details.

INTERIM CONSOLIDATED BALANCE SHEETS[In thousands of Canadian dollars][Unaudited]
As at	June 30, 2024	December 31, 2023
ASSETS
Current
Cash and cash equivalents	60,807	58,761
Marketable securities	88,028	95,657
Trade receivables	84,976	88,722
Other receivables	5,835	7,427
Inventories	103,645	91,834
Prepaids and deposits	4,601	4,881
Other current financial assets	8,631	15,753
Income taxes receivable	4,087	2,080
Total current assets	360,610	365,115
Marketable securities	3,833	7,407
Prepaids and deposits	7,283	7,767
Right-of-use assets	6,673	6,190
Property, plant and equipment	14,814	11,669
Intangible assets	295,548	289,960
Goodwill	84,604	79,844
Other financial assets	107,097	112,616
Deferred income tax assets	20,510	19,390
Other long-term receivables	44,392	45,535
Total non-current assets	584,754	580,378
Total assets	945,364	945,493

INTERIM CONSOLIDATED BALANCE SHEETS (continued)[In thousands of Canadian dollars][Unaudited]
As at	June 30, 2024	December 31, 2023
LIABILITIES AND EQUITY
Current
Accounts payable and accrued liabilities	77,808	85,366
Lease liabilities	2,569	1,728
Other liabilities	1,801	1,046
Bank loans	16,988	17,850
Income taxes payable	918	1,182
Other balances payable	5,745	6,857
Total current liabilities	105,829	114,029
Accounts payable and accrued liabilities	7,013	5,251
Lease liabilities	4,587	5,497
Bank loans	33,964	44,016
Other balances payable	26,222	27,012
Deferred income tax liabilities	4,948	2,817
Total liabilities	182,563	198,622
Shareholders' equity
Share capital	540,945	540,046
Warrants	117	117
Contributed surplus	25,662	25,991
Accumulated other comprehensive income	51,820	29,829
Retained earnings	144,257	150,888
Total shareholders' equity	762,801	746,871
Total liabilities and shareholders' equity	945,364	945,493

INTERIM CONSOLIDATED STATEMENTS OF INCOME (LOSS)
[In thousands of Canadian dollars, except for share and per share amounts]
[Unaudited]
	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Revenues	95,573		89,905		182,177		172,502
Cost of goods sold	48,236		52,412		93,141		94,247
Gross margin	47,337		37,493		89,036		78,255
Expenses
Selling and marketing	13,264		12,874		25,913		23,539
General and administrative	12,099		9,119		22,637		18,225
Research and development	5,806		4,336		10,786		8,523
Amortization of intangible assets	11,674		11,274		22,546		22,445
Operating income (loss)	4,494		(110	)	7,154		5,523
Interest income on financial instruments measured at amortized cost	(1,960	)	(2,015	)	(4,096	)	(4,194	)
Other interest income	(624	)	(1,072	)	(1,129	)	(2,245	)
Interest expense	2,284		3,004		4,861		5,795
Other expense	(42	)	(310	)	(211	)	(216	)
Net loss (gain) on financial instruments measured at fair value through profit or loss	665		(3,939	)	16,932		7,908
Foreign exchange loss (gain)	5,542		4,918		3,608		4,845
Gain on hyperinflation	(2,084	)	(908	)	(6,380	)	(1,636	)
(Loss) income before income taxes	713		212		(6,431	)	(4,734	)
Income tax
Current	1,245		33		2,914		2,139
Deferred	1,410		(1,661	)	(2,857	)	(4,776	)
Income tax expense (recovery)	2,655		(1,628	)	57		(2,637	)
Net income (loss) for the period	(1,942	)	1,840		(6,488	)	(2,097	)
Basic and diluted net income (loss) per share	(0.02	)	0.02		(0.06	)	(0.02	)
Weighted average number of common shares outstanding
Basic	101,330,154		108,475,559		101,251,374		109,988,526
Diluted	101,330,154		108,678,732		101,251,374		109,988,526

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS[In thousands of Canadian dollars][Unaudited]
	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
OPERATING ACTIVITIES
Net (loss) income for the period	(1,942	)	1,840		(6,488	)	(2,097	)
Adjustments reconciling net income to operating cash flows:
Depreciation and amortization	13,169		12,158		25,750		25,241
Net loss (gain) on financial instruments	665		(3,939	)	16,932		7,908
Unrealized foreign exchange (gain) loss	(4,124	)	(809	)	(6,329	)	(2,062	)
Other operating activities	3,078		407		(3,646	)	(92	)
	10,846		9,657		26,219		28,898
Changes in non-cash working capital and other items	(11,932	)	(11,143	)	3,576		(26,068	)
Cash inflow (outflow) from operating activities	(1,086	)	(1,486	)	29,795		2,830
INVESTING ACTIVITIES
Purchase of marketable securities	(41,625	)	(76,334	)	(77,922	)	(185,550	)
Proceeds on maturity of marketable securities	69,674		75,200		91,990		181,168
Investment in funds	(1,072	)	(148	)	(1,203	)	(170	)
Purchase of intangible assets	(16,735	)	—		(26,817	)	(7,667	)
Other investing activities	1,511		5,482		1,339		7,705
Cash inflow (outflow) from investing activities	11,753		4,200		(12,613	)	(4,514	)
FINANCING ACTIVITIES
Repurchase of common shares through Normal Course Issuer Bid	(1,242	)	(13,951	)	(1,242	)	(24,465	)
Principal repayment of bank loans	(6,930	)	(5,422	)	(8,659	)	(6,009	)
Proceeds from bank loans	747		1,443		1,292		2,090
Other financing activities	(3,937	)	(4,165	)	(5,650	)	(5,583	)
Cash outflow from financing activities	(11,362	)	(22,095	)	(14,259	)	(33,967	)
Increase (decrease) in cash and cash equivalents during the period	(695	)	(19,381	)	2,923		(35,651	)
Cash and cash equivalents, beginning of the period	62,835		56,218		58,761		71,679
Net foreign exchange difference	(1,333	)	1,007		(877	)	1,816
Cash and cash equivalents, end of the period	60,807		37,844		60,807		37,844
Cash and cash equivalents	60,807		37,844		60,807		37,844
Marketable securities	91,861		103,779		91,861		103,779
Total cash, cash equivalents and marketable securities	152,668		141,623		152,668		141,623