Mr. Francois Roberge reports

LSL PHARMA GROUP REPORTS RECORD REVENUES AND MARGINS FOR THE FIRST QUARTER 2024

LSL Pharma Group Inc. has released its financial results for the first quarter of fiscal year 2024 ended on March 31, 2024.

"During the quarter, LSL Pharma kept implementing its operating and strategic plan. We continued to invest in our plants to take advantage of strong demand for our products and services. We took additional steps to advance our ophthalmic ointment product development pipeline. We also entered into an agreement to acquire a profitable competitor to be integrated into our contract manufacturing activities. Finally, we successfully completed a series of financial transactions aimed at strengthening and deleveraging our balance sheet," commented Francois Roberge, president and chief executive officer.

Commenting on the Q1 2024 financial results, Luc Mainville, executive vice-president and chief financial officer, said: "So far in 2024, our operating units have delivered record revenues and margins. We look forward to solid quarters ahead, including the positive impact of the acquisition which we hope to complete before the end of the second quarter."

Q1 2024 financial:

• The corporation achieved record revenues in Q1 2024, at $4.2-million, up 106 per cent compared with Q1 2023. Same as for Q4 2023, revenues continued to be positively impacted by strong sales of Erythromycin ophthalmic ointment in the U.S. market following a product shortage. LSL Pharma successfully secured (via its U.S. partner Fera) a temporary licence granted by the Food and Drug Administration to sell its Canadian labelled product to U.S. hospitals. The licence expires in June, 2024. In Q1 2024, the company's CDMO business has started to take advantage of the increased capacity that followed the site expansion/relocation last year.
• Record gross margins for Q1 2024 totalled $1.1-million compared with $400,000 for Q1 2023. Similar to its revenues, the company's gross margins have been positively impacted with sales of Erythromycin product into the United States. Also, the margins have been impacted by the increase of production levels at both plants.
• Adjusted gross margins for Q1 2024 stood at a record level of $1.6-million, a 141-per-cent increase over Q1 2023. Adjusted gross margin per cent was also up at 39 per cent, compared with 36 per cent for Q1 2023.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) for Q1 2024 was a $650,000 profit compared with nil for Q1 2023.
• Net loss for the Q1 2024 was $300,000, a strong performance compared with the $5.4-million loss in Q1 2023.

Q1 2024 business highlights

On March 19, 2024, the corporation announced the closing of a non-brokered private placements for $6.4-million. Pursuant to the financing, the corporation issued 16,086,893 units at a price of 40 cents per unit. Each unit consists of one Class A share of the corporation and one common share purchase warrant. Each warrant entitles the holder, subject to adjustments in certain cases, to purchase one common share at a price of 70 cents for a period of 36 months following the closing of the financing. The financing included $2.7-million in cash proceeds, and the conversion of $3.7-million of the corporation's debts in units.

Subsequent events

On April 23, 2024, LSL Pharma announced the addition of Diane Beaudry and Mario Paradis, as new members to its board of directors. Ms. Beaudry is a certified professional accountant and certified director by the Institute of Corporate Directors, and has extensive experience in the field of finance and boards of directors. Mr. Paradis is actually the interim CFO of Exfo Inc. Prior to this, he was vice-president and chief financial officer of Neptune Wellness Solutions from 2015 to 2019. Prior to 2015, he was vice-president and chief financial officer at Atrium Innovations.

On April 24, 2024, the LSL Pharma Group announced the second and final tranche of its non-brokered private placement financing of units for $3.8-million.

On May 6, 2024, the crporation announced the signing of a binding agreement to acquire a profitable privately held Quebec-based competing CDMO offering complementary manufacturing capabilities and providing important synergies with its existing operations (the target). The $2.5-million purchase price, which will be financed by the proceeds from March/April, 2024, private placements, includes a fully operational manufacturing plant. The transaction is expected to boost LSL Group's revenues by 15 to 20 per cent on an annual basis. LSL Pharma anticipates closing the transaction by the end of Q2 2024.

On May 22, 2024, the corporation announced that the convertible debentures issued pursuant to a $3.3-million brokered private placement completed in tranches on Nov. 1, 2023, and Dec. 8, 2023, had been approved for listing on the TSX Venture Exchange under the symbol LSL.DB and began trading on May 24, 2024. The debentures, which may be redeemable by the corporation, have a maturity date of Oct. 31, 2028, and accrue interest at the rate of 11 per cent per annum. For additional details, please refer to the debenture indenture dated Nov. 1, 2023, available under LSL Pharma's issuer profile on SEDAR+.

Financial statements and MD&A

LSL Pharma Group's financial statements and management's discussion and analysis for the first quarter of fiscal year 2024 are available on SEDAR+ and on the corporation's website.

About LSL Pharma Group Inc.

LSL Pharma Group is an integrated Canadian pharmaceutical company specializing in the development, manufacturing and commercialization of high-quality sterile ophthalmic pharmaceuticals, as well as natural health products in solid dosage forms.

We seek Safe Harbor.