Mr. Steve King reports

ALARIS EQUITY PARTNERS ANNOUNCES $100 MILLION BOUGHT DEAL OFFERING OF TRUST UNITS, US$95 MILLION INVESTMENT INTO A NEW PARTNER, DISTRIBUTION INCREASE AND AMENDMENT TO CREDIT FACILITY

Alaris Equity Partners Income Trust has arranged a $100-million bought deal equity offering, a $95-million (U.S.) investment into a new partner, Nexus Enterprises LLC, an amendment to its credit facility and a 2.6-per-cent increase to its quarterly distribution. Unless otherwise stated, all numbers in this news release are presented in Canadian dollars.

The offering

Alaris has entered into an agreement with a syndicate of underwriters led by CIBC Capital Markets, Acumen Capital Finance Partners Ltd. and National Bank of Canada Capital Markets, as lead underwriters, pursuant to which the underwriters have agreed to purchase, on a bought deal basis, 4,465,000 trust units of the trust at a price of $22.40 per unit for aggregate gross proceeds of approximately $100-million. The trust has also granted the underwriters an option to purchase up to an additional 669,750 units issued under the offering, on the same terms and conditions, exercisable in whole or in part at any time, up to 30 days following closing of the offering to cover overallotments and for market stabilization purposes, for additional gross proceeds of up to approximately $15-million.

The trust intends to use the net proceeds of the offering (including from the overallotment option, if applicable) to partially repay outstanding indebtedness under its senior credit facility, which may be subsequently redrawn and used to finance future investments in new partners (as defined below) and for general trust purposes.

The units will be offered by way of short form prospectus which will be filed with the securities regulatory authorities in each of the provinces of Canada, other than the province of Quebec, and may also be placed privately in the United States in transactions exempt from, among other things, registration under the United States Securities Act of 1933, as amended. Completion of the offering is subject to customary closing conditions, including receipt of all necessary regulatory and stock exchange approvals, including the approval of the Toronto Stock Exchange. The offering is expected to close on or about Sept. 28, 2026.

Nexus investment

Alaris is pleased to announce that it has completed a $95-million (U.S.) investment into Nexus. Nexus provides independent clinical reviews, utilization management services and independent dispute resolution services in the clinical review space.

"Alaris is proud to announce our partnership with the team at Nexus. Nexus has built a wonderful business in the U.S. health care dispute resolution industry. The company displays all of the characteristics that have defined Alaris's investments over our 22 years: free cash flow generation, no debt, low capex, and, maybe most importantly, an ownership and management team that specifically wanted to stay in the business and build future value.

"We're looking forward to facilitating that growth with Ed and his team," commented Steve King, president and chief executive officer of Alaris.

Alaris's investment consists of $75-million (U.S.) of preferred equity and $20-million (U.S.) of common equity. The preferred equity investment is broken into $60-million (U.S.) of non-redeemable preferred equity (subject to standard repurchase rights after three years) and $15-million (U.S.) of redeemable preferred equity, which is subject to a mandatory cash sweep redemption at par for five years. The preferred equity provides Alaris with an initial annualized distribution of $9.75-million (U.S.), translating into a pretax annualized distribution yield on preferred capital invested of 13 pepr cent. The distribution will adjust annually based on the per cent change in Nexus's annual gross profit, subject to a collar of plus or minus 8 per cent. The proceeds of the Nexus investment were used for a minority recapitalization. Alaris expects the Nexus investment to be accretive to run rate cash flow on a pro forma basis following the completion of the offering, including after giving effect to the full exercise of the overallotment option.

With the closing of the Nexus investment, Alaris has now deployed approximately $258.2-million in capital year to date. The addition of Nexus to Alaris's suite of partners reflects Alaris's disciplined investment strategy targeting strong, profitable private businesses that expand the trust's growing and diversified cash flow base through preferred investments, while offering meaningful participation in partner value creation through its common equity investments.

Distribution increase

Alongside the Nexus investment, Alaris is pleased to announce that its board of trustees has approved a 2.6-per-cent increase to the trust's quarterly distribution. The increase brings the quarterly distribution to 39 cents per unit and the annual distribution to $1.56 per unit, with Alaris payout ratio expected to remain within its target of 65 per cent to 70 per cent. Pending formal declaration by the board of trustees, the first increased distribution will be in respect of the trust's third quarter distribution payable to unitholders of record on the close of business on Sept. 30, 2026.

Senior credit facility amendments

In connection with the Nexus investment, Alaris's subsidiaries completed an amendment to the senior credit facility, which included: (i) increasing the available amount of its senior credit facility to $500-million (U.S.) from $450-million (U.S.); and (ii) a temporary increase in the financed debt to contracted EBITDA (earnings before interest, taxes, depreciation and amortization) (as defined in the senior credit facility) covenant from 3.00:1 to 3.25:1 until the end of the year. The financed debt to contracted EBITDA covenant will revert back to 3.00:1 commencing in the first quarter of 2027.

About Alaris Equity Partners Trust

Alaris's investment and investing activity refers to providing, through the wholly owned subsidiaries of Alaris, structured equity to private companies to meet their business and capital objectives, which includes management buyouts, dividend recapitalization, growth and acquisitions. Alaris achieves this by investing its unitholder capital, as well as debt, through the acquisition entities, in exchange for distributions, dividends or interest, as well as capital appreciation on both preferred and common equity. The principal objective is to generate predictable cash flows for distribution payments to its unitholders while growing net book value through returns from capital appreciation. Distributions, other than common equity distributions, from the partners are adjusted annually based on the percentage change of a top-line financial performance measure such as gross margin or same-store sales, and rank in priority to common equity position.

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