CareRx Q2 2025 presentation: Sequential growth and return to profitability

Introduction & Market Context

CareRx Corporation (TSX:CRRX) presented its second quarter 2025 financial results on July 31, 2025, highlighting sequential revenue growth and continued improvement in profitability. The company, which provides pharmacy services to seniors care facilities across Canada, reported modest quarter-over-quarter gains while achieving a significant turnaround in net income compared to the year-ago period.

The company’s stock closed at $2.84 on July 30, 2025, down slightly by 0.35% ahead of the earnings presentation. CareRx shares have been trading in a 52-week range of $1.71 to $3.24, suggesting moderate volatility in investor sentiment over the past year.

Quarterly Performance Highlights

CareRx reported Q2 2025 revenue of $91.4 million, representing a 2% increase from the $89.6 million reported in Q1 2025, though slightly below the $92.0 million recorded in Q2 2024. The company ended the quarter with 91,062 beds under service, with an average of 90,048 beds serviced during the period.

As shown in the following chart of quarterly revenue performance:

The company attributed the quarter-over-quarter revenue increase primarily to growth in the average number of beds serviced, which rose 2.7% compared to Q1 2025, despite being down 0.7% year-over-year.

Adjusted EBITDA reached $8.0 million in Q2 2025, up from $7.8 million in Q1 2025 and $7.5 million in Q2 2024. This represents a 6.7% year-over-year improvement and a 2.6% sequential increase.

The following chart illustrates the steady improvement in Adjusted EBITDA:

Notably, CareRx’s Adjusted EBITDA margin expanded to 8.8% in Q2 2025, an increase of 60 basis points year-over-year and 10 basis points quarter-over-quarter. The company attributed this margin improvement to operational efficiencies and cost-saving initiatives implemented during the quarter.

Detailed Financial Analysis

Perhaps the most significant financial achievement in Q2 2025 was CareRx’s return to profitability. The company reported net income of $0.6 million, compared to a net loss of $1.4 million in Q2 2024 and net income of $0.2 million in Q1 2025.

The following chart shows this dramatic improvement in net income:

According to the presentation, this elimination of net loss was primarily driven by a non-cash adjustment related to an intangible asset impairment recorded during Q2 2024 due to the sale of a non-core pharmacy location. Additional factors included decreases in finance costs, depreciation, and amortization expenses, partially offset by increases in transaction, restructuring, and other costs.

The company’s balance sheet showed $8.7 million in cash and $34.8 million in net debt as of June 30, 2025, resulting in a net debt to Adjusted EBITDA ratio of 1.1x. This represents a decrease in cash and increase in net debt compared to Q1 2025, when the company reported $11.2 million in cash and $33.4 million in net debt.

CareRx explained that the quarter-over-quarter decrease in cash balance and increase in net debt was due to the retirement of a vendor take-back loan and timing of certain working capital items.

Strategic Initiatives

A key highlight of the presentation was the reorganization of CareRx’s executive leadership team to support strategic priorities. The company introduced several key executives, including Adrianne Sullivan-Campeau as Chief Employee and Customer Experience Officer, Travis Featherstone as Chief Clinical Officer, Alpinder Grewal as Chief Operating Officer, Erwin Van Hout as Senior Vice President of Information Technology, and Suzanne Brand as Chief Financial Officer.

The following slide details the new leadership structure:

This reorganization appears designed to strengthen CareRx’s operational capabilities and customer focus, with the company emphasizing "People • Process • Payoff" as its guiding principles.

Forward-Looking Statements

CareRx outlined several growth drivers for the coming quarters. The company noted that new beds onboarded in Q2 will have full revenue contribution in Q3, potentially boosting future financial results. Management also highlighted a robust sales pipeline and observed that large national and regional customers continue to build new homes and acquire smaller competitors, creating additional growth opportunities.

This forward-looking perspective aligns with statements made during the Q1 2025 earnings call, where CEO Puneet Khanna emphasized the company’s commitment to enhancing shareholder value and organic growth. The sequential improvement in financial metrics suggests that CareRx’s strategic initiatives are beginning to yield positive results.

As the company continues to navigate the Canadian long-term care pharmacy market, investors will likely focus on CareRx’s ability to maintain its margin improvements while accelerating revenue growth through both organic expansion and potential strategic acquisitions.

Full presentation:

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