Mr. Francois Roberge reports

LSL PHARMA GROUP REPORTS RECORD REVENUES FOR THE SECOND QUARTER 2024

LSL Pharma Group Inc. has released its financial and operating results for the three-month and six-month periods ended on June 30, 2024.

"Again during the quarter, LSL Pharma experienced strong demand for our Steri-Med products while our CDMO operations continued to ramp up production following the site relocation and the implementation of new equipment and services," commented Francois Roberge, president and chief executive officer of LSL Pharma. "Virage Sante contributed some revenues and margins during the quarter and we expect to take full advantage of this acquisition over the coming quarters. Following a series of financial transactions aimed at strengthening our balance sheet and provide liquidities to fund our growth initiatives, we are now focusing on executing our organic and strategic growth plan," added Mr. Roberge.

Commenting on the Q2 2024 and YTD 2024 financial results, Luc Mainville, executive vice-president and chief financial officer, said: "The second quarter was another strong quarter as we saw all three businesses operations contribute to our overall results and helping LSL Pharma generate operating profits for the second quarter in a row. Also, our YTD adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] performance is a clear indication of our substantial progress, by improving from a loss of $300,000 for YTD 2023 to a $1.2-million adjusted EBITDA profit this year."

Q2 2024 financial:

• The corporation achieved record revenues in Q2 2024, at $4.2-million, up 106 per cent compared with Q2 2023 and 1 per cent above the prior quarter Q1 2024. During Q2 2024, the company's Steri-Med operations experienced strong domestic demand for its products while its CDMO business continued to take advantage of the increased capacity that followed the site expansion/relocation last year. Revenues also benefited from the revenues from Virage Sante acquired in June.
• Adjusted gross profit for Q2 2024 was of $1.9-million, a 99-per-cent increase over Q2 2023 and 27 per cent over Q1 2024.
• Second consecutive quarterly operating profit stood at $300,000 compared with a $600,000 operating loss in Q2 2023.
• SG&A (selling, general and administrative) stood at $1.3-million for Q2 2024, a 5-per-cent reduction compared with Q2 2023.
• Adjusted EBITDA for Q2 2024 was a $700,000 profit compared with a $300,000 loss for Q2 2023 and $200,000 or 31 per cent over the prior quarter.
• Net loss for the Q2 2024 was $500,000 compared with the net loss of $1-million in Q2 2023. Net loss in Q2 2024 was negatively impacted by the non-recurrent impact of $400,000 of share-based compensation, partly offset by a small $40,000 gain recorded on the acquisition of Virage Sante.

YTD 2024 financial:

• For the YTD periods, revenues were $8.4-million, up $4.3-million or 106 per cent over YTD 2023.
• For the YTD-24 period, the company's gross profit was up 149 per cent at $2.7-million compared with $1.1-million.
• Adjusted gross profit was $3.4-million for the YTD 2024 period compared with $1.6-million for YTD 2023, a 92-per-cent increase.
• Same as for the Q2 2023 period, the EBITDA for YTD 2023 had been impacted by the LSL plant shutdown and the impact of the RTO (reverse takeover).
• For YTD 2024, the (A) EBITDA was a $1.2-million profit compared with a $300,000 loss, a $1.5-million improvement.
• For the YTD 2024 period, net loss was $800,000, down $5.6-million compared with the $6.4-million loss for YTD 2023. Net loss for YTD 2023 was impacted by $4.7-million non-recurrent expenses related to the Iledor reverse acquisition and share-based compensation. Its net results prior to considering such non-cash items improved significantly between the two periods, from a $1.2-million loss for YTD 2023 to a $300,000 profit for YTD 2024.

Q2 2024 corporate highlights

April 23, 2024, LSL Pharma Group closed the second tranche of its private placement financing of units for $3.8-million. The second tranche follows an initial first closing of $2.7-million announced on March 19, 2024, bringing the total gross cash proceeds from that private placement to $6.5-million.

On May 22, 2024, the corporation announced that the convertible unsecured redeemable 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-V under the symbol LSL.DB and began trading on May 24, 2024. For additional details regarding the debentures, please refer to the debenture indenture dated Nov. 1, 2023, which is available under LSL Pharma's issuer profile on SEDAR+.

On June 18, 2024, the corporation announced the acquisition of Virage Sante (VSI), a company specializing in the manufacturing and marketing of natural health products, based in Levis, Que. This acquisition increases LSL Pharma's contract development and manufacturing activities, while creating synergies with its subsidiary LSL Laboratory Inc. (LSL). The purchase price for the acquisition of VSI was $2.5-million, was paid in cash, and will be subject to postclosing adjustments.

On June 26, 2024, the corporation closed the first tranche of a new private placement financing. Pursuant to the financing, the corporation raised $1.5-million and issued 3,727,000 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 24 months following the closing of the financing.

On June 28, 2024, LSL Pharma Group announced addition to its board of directors with Stuart W. Fowler and Joseph Soccodato joining as new members:

• Mr. Fowler has over 25 years of experience in the health sciences space in North America. He led two of Canada's largest ophthalmic pharmaceutical and medical device organizations as president and general manager of Allergan Canada (AbbVie) from 2010 to 2015, as well as president and general manager for Alcon Canada from 2016 to 2020. Mr. Fowler is the co-founder and president of the Aesthetic Medicine Network Inc. AMNI is Canada's largest group of independently owned and operated aesthetically oriented physicians. Mr. Fowler also served as director of Aequus Pharmaceuticals from February, 2020, to March, 2023, and Valeo Pharma from April, 2023, to February, 2024.
• Mr. Soccodato is a certified public accountant and brings 30 years of experience with public, privately held, and private equity backed enterprises in areas such as accounting, treasury, budgeting, M&A (merger and acquisition), operations, and risk management. Mr. Soccodato also worked for some of the world's largest accounting firms. He is currently the chief financial officer of Jacent, the industry leader in strategic impulse merchandising solutions and premier clip strip partner to some of the largest retailers in the United States and Canada.

Q2 2024 subsequent events

On July 15, 2024, the corporation announced the closing of the second tranche of the June 26, 2024, private placement. Financing, for $1-million and issued 2.4 million June, 2024, units at a price of 40 cents per unit. Concurrent to the second tranche, the corporation also settled certain debts outstanding representing $600,000 by issuing 1,400,206 units at a price of 40 cents per unit. The corporation used part of the proceeds of the financing to repay secured debentures totalling $500,000.

Financial statements and MD&A

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

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