TORONTO, May 1, 2025 /CNW/ - Andlauer Healthcare Group Inc. (TSX:AND) ("AHG" or the "Company") today reported its financial results for the three-month period ended March 31, 2025 ("Q1 2025").

Q1 2025 Summary

Effective March 1, 2025, AHG entered into a joint venture (the "Joint Venture") to combine its packaging subsidiary, Nova Pack Ltd. ("Nova Pack"), with NowPac Inc. ("NowPac"), a privately-owned Toronto-based company specializing in contract packaging services for the healthcare sector;
Revenue totaled $166.1 million, an increase of 3.1% compared to $161.1 million for the three-month period ended March 31, 2024 ("Q1 2024");
Operating income was $21.6 million, compared to $21.2 million in Q1 2024;
Net income, which includes a gain of $5.0 million on the deconsolidation of Nova Pack, was $20.2 million, or $0.51 per share (diluted), compared to $14.9 million, or $0.35 per share (diluted), in Q1 2024;
EBITDA¹, excluding the gain on deconsolidation of Nova Pack, totaled $40.0 million, compared to $39.6 million in Q1 2024; and
EBITDA Margin¹, excluding the gain on deconsolidation of Nova Pack, was 24.1%, compared to 24.6% in Q1 2024.

Subsequent Event

On April 24, 2025, AHG announced that it had entered into a definitive arrangement agreement (the "Arrangement Agreement") with affiliates of UPS (NYSE:UPS) (collectively, "UPS") under which UPS has agreed to acquire AHG via an all-cash transaction that values AHG at an equity value of approximately $2.2 billion (the "Transaction"). Under the terms of the Arrangement Agreement, shareholders of AHG will be entitled to receive C$55.00 per share in cash. A copy of the Arrangement Agreement and a material change report regarding the Transaction are available on the Company's SEDAR+ profile at www.sedarplus.ca.
The Transaction is to be considered by shareholders at a special meeting of shareholders to be held on June 24, 2025. A management information circular with respect to the matters to be considered at that meeting will be filed by AHG on SEDAR+ at www.sedarplus.ca, and will been mailed to shareholders.
The completion of the Transaction will be subject to approval by the shareholders of AHG, court and applicable regulatory approvals or clearances, as well as other customary closing conditions. Subject to the satisfaction of the conditions set out in the Arrangement Agreement, the Transaction is expected to be completed in the second half of 2025.
The Transaction is supported by Michael Andlauer, Chief Executive Officer of the Company and the indirect holder of 53.2% of the Company's outstanding shares and 82.0% of the votes entitled to be cast to approve the Transaction.

As a result of the Transaction, the Company will no longer be holding an earnings conference call on Friday May 2, 2025.

"Our results for the quarter reflect continued organic growth in our Canadian specialized transportation network and logistics and distribution product line. Our packaging solutions revenue for the quarter reflects just two months of operations, prior to entering into our joint venture with NowPac, but it was also performing well. This joint venture is off to a good start. Solid performance in our Canadian operations continues to be largely offset by reduced contributions from our US-based truckload businesses," said Michael Andlauer, Chief Executive Officer of AHG. "Subsequent to quarter end, we entered into a definitive arrangement agreement to be acquired by UPS via an all-cash transaction, which upon closing, will provide meaningful and immediate value for our shareholders."

Selected Consolidated Financial Summary

	Three months ended March 31,
($CAD 000s, except per share amounts)	2025	2024	Variance
Revenue
Logistics and distribution	42,559	37,918	12.2 %
Packaging solutions	4,079	4,942	(17.5) %
Healthcare Logistics segment	46,638	42,860	8.8 %
Ground transportation	108,475	106,388	2.0 %
Air freight forwarding	8,362	7,995	4.6 %
Dedicated and last mile delivery	18,803	17,745	6.0 %
Intersegment revenue	(16,190)	(13,850)	16.9 %
Specialized Transportation segment	119,450	118,278	1.0 %
Total revenue	166,088	161,138	3.1 %
Operating expenses	144,522	139,895	3.3 %
Operating income	21,566	21,243	1.5 %
Gain on consolidation of subsidiary	5,020	--	N/A
Share of profit from equity-accounted joint venture, net of tax	292	--	N/A
Net income	20,225	14,923	35.5 %
Foreign currency translation adjustment	(212)	5,537	N/A
Total comprehensive income	20,013	20,460	(2.2) %
Earnings per share – basic	$ 0.52	$ 0.36	$ 0.16
Earnings per share – diluted	$ 0.51	$ 0.35	$ 0.16
Earnings per share – basic, excluding gain on deconsolidation of subsidiary	$ 0.39	$ 0.36	$ 0.03
Earnings per share – diluted, excluding gain on deconsolidation of subsidiary	$ 0.38	$ 0.35	$ 0.03
Select financial metrics
EBITDA¹	45,018	39,592	13.7 %
EBITDA Margin¹	27.1 %	24.6 %	250 bps
EBITDA¹, excluding gain on deconsolidation of subsidiary	39,998	39,592	1.0 %
EBITDA Margin¹, excluding gain on deconsolidation of subsidiary	24.1 %	24.6 %	(50) bps

Q1 2025 Financial Results

Consolidated revenue increased by 3.1% to $166.1 million, compared with $161.1 million in Q1 2024. The increase was primarily attributable to organic growth in the Company's Canadian specialized transportation network and logistics and distribution product line, partially offset by a revenue decline in the Company's US-based truckload businesses (Boyle Transportation and Skelton USA) and the deconsolidation of Nova Pack, as discussed below.

Revenue for the healthcare logistics segment totaled $46.6 million, an increase of 8.8% compared with $42.9 million in Q1 2024. The increase reflects 12.2% growth in the Company's logistics and distribution revenue, partially offset by a 17.5% decline in packaging revenue. The increase in logistics and distribution revenue was attributable to increased revenue from Accuristix and Logistics Support Unit (LSU) Inc. ("LSU") clients, reflecting a combination of larger shipments, generating increased transportation revenue, and planned rate increases which took effect in the fourth quarter of 2024. The decrease in packaging revenue was attributable to the deconsolidation of AHG's packaging subsidiary, Nova Pack, for the month of March in Q1 2025. Effective March 1, 2025, Nova Pack was deconsolidated when 50% of its shares were contributed to the Joint Venture as partial consideration for Nova Pack acquiring NowPac.

Revenue in the specialized transportation segment totaled $119.5 million, an increase of 1.0% compared with $118.3 million in Q1 2024. Ground transportation revenue for Q1 2025 was $108.5 million, an increase of 2.0% compared with Q1 2024, reflecting organic growth in the Company's Canadian ground transportation network and increased fuel surcharge revenue, partially offset by a decline in revenue for AHG's US-based truckload businesses. Ground transportation revenue, excluding fuel, in the Company's Canadian network increased by approximately 8.7% in Q1 2025 compared to Q1 2024. Ground transportation revenue, excluding fuel, in the Company's US-based truckload businesses decreased by 19.3% in Q1 2025 compared to Q1 2024. Air freight forwarding revenue for Q1 2025 increased by 4.6% compared to Q1 2024, and dedicated and last mile delivery revenue increased 6.0% in Q1 2025 compared to Q1 2024, reflecting continued organic growth.

Cost of transportation and services was $84.8 million, or 51.0% of revenue, compared with $82.5 million, or 51.2% of revenue, for Q1 2024. The increase was in line with revenue and higher fuel costs. During Q1 2025, fuel rates were approximately 2.6% higher than in Q1 2024. AHG continued to carry certain idle equipment costs in its US-based truckload businesses arising from a lower volume of truckloads as the Company continues to focus on revenue quality.

Direct operating expenses were $26.6 million, or 16.0% of revenue, compared with $26.3 million, or 16.3% of revenue, for Q1 2024. The increase was primarily attributable to growth in AHG's logistics and distribution product line.

Selling, General and Administrative Expenses were $15.2 million, or 9.1% of revenue, compared to $12.8 million, or 8.0% of revenue, for Q1 2024. The increase was attributable to an increase in legal and professional fees in connection with the Nova Pack Joint Venture, the Transaction and other corporate development activities.

Operating income was $21.6 million, an increase of 1.5% compared with $21.2 million for Q1 2024. The increase was primarily attributable to organic growth in the Company's Canadian specialized transportation network and logistics and distribution product line, partially offset by lower contributions from Boyle Transportation and Skelton USA.

Effective March 1, 2025, Accuristix Inc., a subsidiary of AHG, contributed 50% of the issued and outstanding shares of its wholly owned subsidiary, Nova Pack, and cash of approximately $6.1 million to an entity controlled by the NowPac shareholders (the "JV Partner") in exchange for Nova Pack acquiring 100% of the issued and outstanding shares of NowPac. Accuristix recorded its investment in the Joint Venture at fair value of approximately $15.0 million, comprising 50% of the fair value of the enterprise. Accuristix recognized a gain of $5.0 million on deconsolidation of its investment in Nova Pack upon contributing 50% of its interest in Nova Pack to the JV Partner.

Net income for Q1 2025 was $20.2 million, or $0.51 per share (diluted), including the $5.0 million gain on deconsolidation of Nova Pack, compared with $14.9 million, or $0.35 per share (diluted) in Q1 2024. Excluding the gain on deconsolidation, net income for Q1 2025 was $15.2 million, or $0.38 per share (diluted). Higher segment net income for AHG's healthcare logistics operating segment primarily reflects increased revenue from AHG's logistics and distribution clients, partially offset by the decrease in net income attributable to deconsolidating Nova Pack for the month of March 2025. Higher segment net income before eliminations for AHG's specialized transportation segment was primarily attributable to organic growth in the Company's Canadian specialized transportation network, partially offset by lower contributions from Boyle Transportation and Skelton USA. The $0.03 increase in earnings per share, excluding the gain on consolidation of Nova Pack, in Q1 2025 compared to Q1 2024 partially reflects the accretive impact of the Company's share buyback programs.

Total comprehensive income for Q1 2025 was $20.0 million, compared to $20.5 million for Q1 2024. Total comprehensive income differs from net income due to the acquisition of foreign operations (Boyle Transportation and Skelton USA), which resulted in a negative foreign currency translation adjustment of $0.2 million in Q1 2025, compared to a positive foreign currency translation adjustment of $5.5 million in Q1 2024.

Earnings before interest, taxes, depreciation and amortization ("EBITDA")¹, excluding the gain on deconsolidation of Nova Pack, for Q1 2025 totaled $40.0 million, an increase of 1.0% from $39.6 million in Q1 2024. The increase was due to the factors discussed above and primarily reflects organic growth in the Company's Canadian specialized transportation network and logistics and distribution product line, partially offset by lower contributions from AHG's US-based truckload businesses. EBITDA¹ attributable to Boyle Transportation and Skelton USA was approximately $3.0 million lower in Q1 2025 compared to Q1 2024. EBITDA Margin¹, excluding the gain on deconsolidation of Nova Pack, was 24.1% in Q1 2025 compared to 24.6% in Q1 2024. The decline primarily reflects the decreased contribution from the Company's US-based truckload businesses.

Dividend

The Company paid a dividend (encompassing the period from January 1, 2025 to March 31, 2025) in the amount of $0.12 per subordinate voting share and multiple voting share on April 15, 2025.

Subject to financial results, capital requirements, available cash flow, corporate law requirements and any other factors that AHG's Board of Directors may consider relevant, it is the Company's intention to declare a quarterly dividend of $0.12 per subordinate voting share and multiple voting share on an ongoing basis until the closing of the Transaction.

Shares Outstanding

On July 2, 2024, the Company commenced its second normal course issuer bid for up to a maximum of 1,770,429 of its subordinate voting shares, or approximately 10% of its public float as of June 26, 2024, over the following 12-month period. As of March 31, 2025, a total of 339,234 subordinate voting shares, including 72,700 subordinate voting shares during Q1 2025, had been purchased and cancelled pursuant to the Company's current NCIB.

As a result of the announcement of the Transaction, the Company's previously announced automatic share purchase plan established in connection with its current normal course issuer bid has terminated in accordance with its terms. The Arrangement Agreement restricts any further purchases under the Company's current normal course issuer bid, which will formally terminate on July 1, 2025.

As at March 31, 2025, there were 18,377,054 subordinate voting shares and 20,807,955 multiple voting shares issued and outstanding.

Financial Statements

AHG's unaudited interim consolidated financial statements and related Management's Discussion & Analysis ("MD&A") for Q1 2025 are available on the Company's website at www.andlauerhealthcare.com and under AHG's profile on SEDAR+ at www.sedarplus.ca.

About AHG

AHG is a leading and growing supply chain management company offering a robust platform of customized third-party logistics ("3PL") and specialized transportation solutions for the healthcare sector. The Company's 3PL services include customized logistics, distribution and packaging solutions for healthcare manufacturers across Canada. AHG's specialized transportation services in Canada, including air freight forwarding, ground transportation, dedicated delivery and last mile services, provide a one-stop shop for clients' healthcare transportation needs. Through its complementary service offerings, available across a coast-to-coast distribution network, AHG strives to accommodate the full range of its clients' specialized supply chain needs on an integrated and efficient basis. The Company also provides specialized ground transportation services, primarily to the healthcare sector, across the 48 contiguous U.S. states. For more information on AHG, please visit: www.andlauerhealthcare.com.

Forward-looking Information

This news release contains forward-looking information and forward-looking statements (collectively, "forward-looking information") within the meaning of applicable securities laws. Forward-looking information may relate to the Company's future financial outlook and anticipated events or results and may include information regarding the Company's financial position, business strategy, growth strategies, addressable markets, budgets, operations, financial results, taxes, dividend policy, plans, objectives and expectations. Particularly, information regarding the Company's growth expectations, performance, achievements, payment of dividends, activity under the normal course issuer bid, prospects, potential acquisitions, financial targets or outlook is forward-looking information. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as "plans", "targets", "expects", "budget", "scheduled", "estimates", "outlook", "forecasts", "projection", "prospects", "strategy", "intends", "anticipates", "believes", "commencing" or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might", "will", "will be taken", "occur" or "be achieved". In addition, any statements that refer to expectations, intentions, targets, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management's expectations, estimates and projections regarding future events or circumstances. Such forward-looking statements are qualified in their entirety by the inherent risks, uncertainties and changes in circumstances surrounding future expectations which are difficult to predict and many of which are beyond the control of the Company.

Statements regarding the anticipated benefits of the Transaction for the Company, Shareholders and other stakeholders, including, plans, objectives, expectations and intentions of UPS or the Company; statements regarding the timing and receipt of Shareholder, court and regulatory approvals in respect of the Transaction; anticipated timing of the special meeting to approve the Transaction; the satisfaction of the conditions precedent to the Transaction; payment of dividends; the proposed timing and completion of the Transaction;; and other statements that are not statements of historical facts are all considered to be forward-looking information.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions, including but not limited to those assumptions described under the heading "Cautionary Note Regarding Forward-Looking Information" in the Company's MD&A for Q1 2025. Forward-looking information is subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the risk that the Transaction will not be completed on the terms and conditions, or on the timing, currently contemplated; that the Transaction may not be completed at all, due to a failure to obtain or satisfy, in a timely manner or otherwise, required shareholder, court and regulatory approvals and other conditions to the closing of the Transaction or for other reasons; the risk that competing offers or acquisition proposals will be made; the negative impact that the failure to complete the Transaction, for any reason, could have on the price of the subordinate voting shares of AHG or on the business of AHG; the possibility of adverse reactions or changes in business relationships resulting from the announcement or completion of the Transaction; risks relating to the Company's ability to retain and attract key personnel during and following the interim period; the possibility of litigation relating to the Transaction; credit, market, currency, operational, liquidity and funding risks generally and relating specifically to the Transaction, including changes in economic conditions, interest rates or tax rates; and those other factors discussed under the heading "Risk Factors" in the Company's annual information form dated February 26, 2025, which is available on the Company's profile on SEDAR+ at www.sedarplus.ca. If any of these risks or uncertainties materialize, or if the opinions, estimates or assumptions underlying the forward-looking information prove incorrect, actual results or future events might vary materially from those anticipated in the forward-looking information. Accordingly, investors should not place undue reliance on forward-looking information, which speaks only as of the date made. The forward-looking information contained in this news release represents the Company's expectations as of the date of this news release and are subject to change after such date and the Company disclaims any intention or obligation or undertaking to update or revise any forward-looking information whether as a result of new information, future events or otherwise, except as required under applicable securities laws.

(1) Non-IFRS Financial Measures

This news release contains certain non-IFRS measures. These measures are not recognized measures under IFRS, do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Rather, these measures are provided as additional information to complement those IFRS measures by providing further understanding of the Company's results of operations from management's perspective. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of the Company's financial information reported under IFRS. AHG uses non-IFRS measures including "EBITDA" and "EBITDA Margin". These non-IFRS measures are used to provide investors with supplemental measures of the Company's operating performance and thus highlight trends in its core business that may not otherwise be apparent when relying solely on IFRS financial measures. AHG also believes that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. AHG management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and to determine components of management compensation.

EBITDA

AHG defines EBITDA as net income for the period before: (i) income tax expense (recovery); (ii) interest income; (iii) interest expense; and (iv) depreciation and amortization.

AHG believes EBITDA is a useful measure to assess the Company's financial performance because it provides a more relevant picture of operating results by excluding the effects of expenses that are not reflective of the Company's underlying business performance.

EBITDA Margin

AHG defines EBITDA Margin as EBITDA divided by revenue. EBITDA Margin represents a measure of the Company's profitability expressed as a percentage of revenue.

AHG believes EBITDA Margin is a useful measure to assess the Company's financial performance because it helps quantify the Company's ability to convert revenues generated from clients into EBITDA.

Reconciliation of EBITDA

($CAD 000s)	Three Months Ended March 31,
	2025	2024
Net income	20,225	14,923
Income tax expense	5,223	5,445
Interest expense	1,956	1,579
Interest income	(323)	(695)
Depreciation and amortization	17,937	18,340
EBITDA¹	45,018	39,592
Gain on deconsolidation of subsidiary	(5,020)	--
EBITDA¹ excluding gain on deconsolidation of subsidiary	39,998	39,592

SOURCE Andlauer Healthcare Group Inc.

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