• Expanded Eye-Care portfolio by signing two agreements to market up to 16 sterile eye drops in Canada
• Entered into a non-binding letter of intent to acquire a Quebec-based CMO
• Filed supplemental information to the FDA to qualify Steri-Med for manufacturing ointment products for the US market
• Secured $17.5 million bank financing
• Redeemed $3.3 million publicly listed convertible debentures trading as LSL.DB

BOUCHERVILLE, QC , Aug. 25, 2025 /CNW/ - LSL PHARMA GROUP INC. (TSXV: LSL) (the "Corporation" or "LSL Pharma"), a Canadian integrated pharmaceutical company, today reported third consecutive record quarterly revenues and its financial results for the second quarter of its 2025 fiscal year, ended June 30, 2025 ("Q2 2025" and "Year-to-date 2025"). All amounts are presented in thousands of Canadian dollars.

Q2 & YTD 2025 FINANCIAL HIGHLIGHTS (comparisons are to the respective 2024 periods)

• Revenues were $7.2 million and $13.8 million for Q2 and YTD 2025, compared to $4.2 million and $8.4 million, representing increases of 72% and 66% respectively;
• Adjusted EBITDA was $1.0 million and $2.0 million for Q2 and YTD 2025, compared to $0.7 million and $1.2 million, representing increases of 56% and 66% respectively;
• Net loss was $0.4 million and $0.5 million for Q2 and YTD 2025, compared to $0.5 million and $0.8 million, representing improvements of 25% and 32% respectively;
• CMO revenues increased 165% and 215% respectively for Q2 and YTD 2025 reflecting the impact of the Virage Santé and Dermolab Pharma acquisitions;

Q2 2025 AND SUBSEQUENT CORPORATE HIGHLIGHTS

• Expanded Eye-Care portfolio by signing two agreements to market up to ten (10) eye-care products in Canada. The two agreements have since been amended to include up to 16 new products, 6 of which have already been filed with Health Canada.
• Entered into a non-binding letter of intent to acquire a Quebec-based CMO. The transaction, if completed, would be accretive and add $8 to 10 million to the CMO segment revenues.
• Filed supplemental information to the FDA to qualify Steri-Med for manufacturing ointment products for the US. Approval is expected before year-end 2025 and would initially permit the manufacture of Avaclyr.
• Secured $17.5 million bank financings from Desjardins and BDC to provide some $6 million of additional financing/facility after redemption and repayment of publicly listed convertible debentures and other bank debts.

"We achieved record revenues in Q2 2025 for the third consecutive quarter following the successful acquisition of Dermolab late last year. The growing contribution of the CMO segment as more than offset the softer performance from the Eye-care segment which is evidencing the negative YoY comparison to the strong non-recurrent sales achieved in 2024 resulting from 2 product shortages in the US and Canada", mentioned Francois Roberge, President and CEO of LSL Pharma. "Our Eye-care operations continued to meet key development and strategic milestones with 1) the filing of supplemental information to the FDA to secure approval to manufacture Avaclyr and other products for the US market; 2) signing of 16 and filing of 6 new Eye-care products with Health Canada; 3) continued development of five "first-to-market" generic ointment products for the Canadian and US markets, and 4) continued progress with the installation and validation of the new production line", added M. Roberge.  

"The signing of a new $7.5 million operating line of credit with Desjardins has provided in excess of $4 million of working capital flexibility to help fund our operations and growth initiatives. This financing, coupled with the new $10 million term loan from Desjardins and BDC will provide additional liquidity, help eliminate several debts and loans as well as reduce our debt servicing and cost of capital going forward" said Luc Mainville, Executive Vice-president and CFO of LSL Pharma.

Q2 & YTD 2025 FINANCIAL REVIEW

The Company's management's discussion and analysis and consolidated financial statements for the three and six months ended June 30, 2025, are available at the Company's website and at its profile on SEDAR+.

Financial Statements of net income (loss)

Adjusted EBITDA Reconciliation

Adjusted Gross Margin, EBITDA, and Adjusted EBITDA are non-IFRS measures and do not have any standardized meaning under IFRS. As a result, the information presented may not be comparable to similar measures presented by other companies. Refer to Non-IFRS Financial measures for additional details.

Revenues

The Corporation delivered record quarterly revenues in Q2-25, at $7.2 million, up 72% compared to Q2-24.  Due to the addition of Dermolab and Virage Santé, both acquired last year, CMO segment revenues increased by 165% at $6.5 million in Q2-25 compared to $2.4 million for Q2-24. Also, CMO segment revenues benefited from the growth in revenues at LSL Laboratory which is now leveraging the capital investments made over the last 2 years for expanding its service offering and capacity. Revenues from the Eye-care division were $0.8 million for Q2-25, down 57% compared to Q2-24. Last year, Q2-24 revenues benefited from an out-of-stock ("OOS") situation experienced by one of our direct Canadian competitors for Erythromycin. Such OOS situation was resolved at the end of FY-24.

For the YTD periods, LSL Pharma generated revenues of $13.8 million for the first six-months of 2025, up 66% compared to the prior year comparative period. Similar to the quarterly revenues, CMO revenues for the YTD-25 period were up 215% compared to YTD-24 and benefited from the acquisition of Dermolab, Virage Santé and the growth of revenues at LSL Laboratory. The organic growth for the CMO segment considering Dermolab and Virage Santé actual YTD-2024 revenues was 23%.  Eye-care revenues for the YTD-25 period were down 64% compared to the prior year period. The YTD-24 period benefited from the non-recurrent sales of Erythromycin to the US which experiencing a nation-wide OOS stock situation. YTD-24 results also benefited from the OOS situation experienced in Canada by Steri-Med's largest competitor (together the "OOS Revenues"). After eliminating the OOS Revenues from the Eye-Care YTD-24 results, YTD-25 Revenues for the Eye-Care segment are down 11% compared to last year.

Adjusted Gross Profit for Q2-25, after eliminating the impact of depreciation and amortization, stood at $2.7 million, a 43% increase over Q2-24. Adjusted Gross Profits for YTD-25 was $5.2 million, up 56% over the prior year. Adjusted Gross Profit benefited from the contribution of Dermolab and Virage Santé acquired in 2024, as well as the increased production at the Steri-Med plant.

SG&A expenses for Q2-25 were $1.7 million compared to $1.3 million in Q2-24, a 35% increase. SG&A expenses for YTD-25 were $3.4 million compared to $2.2 million for YTD-24 representing a 51% increase.  The respective quarterly and YTD increases were mainly due to the addition of Dermolab and Virage Santé. The increase in SG&A expenses were lower than the increase in revenues as we took advantage of our HO infrastructure. This performance led to the respective 6.6% and 2.4% decreases in the SG&A ratio between the QoQ and YoY periods.

Operating Profit. LSL Pharma generated operating profits of $0.34 million in Q2-25 compared to a $0.26 million in Q2-24. For the YTD periods, operating profit grew from $0.4 million for YTD-24 to $0.8 million for YTD-25. The quarterly and YTD improvements were due to the increase in total revenues, increased production for Steri-Med, as well as the synergies realized from the acquisitions of Dermolab and Virage Santé.

Financial Expenses for Q2-25 were 67% higher than Q2-24 at $0.7 million compared to $0.4 million. Financial expenses for YTD-25 also increased by 47% at $1.3 million compared to $0.9 million for YTD-24. Despite the conversions and repayment of several debt/loans during the year, financial expenses were impacted by the increased expenses on lease facilities at the LSL laboratory, and the addition of the Dermolab lease starting December 2024. We took several initiatives during the last year to reduce the cost of carrying our various loans and debts. These initiatives should help reduce our debt servicing requirements and cost of capital over the coming quarters. During Q2-25, the interest rate on the $5M BDC loan secured late in 2024 and early 2025, was reduced by 1.5% after LSL Pharma met a contractual financial target. A further rate reduction of 1.0% is available for the Corporation based on the FY-25 EBITDA performance.

Net loss. For the Q2-25 period, the Corporation reduced its net loss to $0.4 million, a 25% improvement compared to Q2-24. For the YTD periods, net loss also improved by 32%. The QoQ and YoY performances were due to an increase in gross profit between the periods derived from the increase in revenues as well as lower SG&A and financial expenses as % of total revenues.

EBITDA for Q2-25, after eliminating the impact of financial expenses, depreciation and amortization, was $1.0 million, up more than 4-times over our Q2-24 performance of $0.2 million. The 314% QoQ increase compares to a 153% increase for the YTD-25 period over the YTD-24 EBITDA results.

Adjusted (A) EBITDA. After eliminating share-based compensation and other non-recurrent items, (A) EBITDA for Q2-25 was a $1.0 million compared to $0.7 million for Q2-24, a 56% improvement. (A) EBITDA for YTD-25 was a $2.0 million compared to $1.2 million for YTD-24, a 66% improvement. Our (A) EBITDA performance demonstrates the progress made in implementing our strategic and organic growth initiatives.

Selected Balance Sheet items  

Cash and Cash equivalent ("Cash") at the end of Q2-25 were $5 million compared to $0.3 million at YE-24. Cash included $4.6 million received from the new Desjardins operating line of credit. Such amount was used to repay both the TD bank and Scotia Bank as well as other loans such as Finacces. Repayments took place early July and for that reason the Cash position and our operating line of credit were both higher than normal as at June 30, 2025. On a pro-forma basis, after giving effect to the repayment of loans, our Cash position was $0.4 million.  

Current assets increased by 51% at the end of Q2-25 compared to YE-24. The $7.8 million increase comes mainly from the increase in Cash (see "Cash" above) as well as a $3.3 million increase in inventory, and a $0.3 million increase in accounts receivable. Our inventory level at the end of Q2-25 reflects the increase in operating and commercial activity during quarter compared to the last portion of FY-24 as well as stocking of products at Steri-Med to fulfill anticipated demand for the second half of FY-25. On a pro-forma basis, the increase in Current assets was $3.2 million over YE-24 after netting the impact of the new Desjardins line of credit.

Total Assets increased by 15% at the end of Q2-25 compared to YE-24. The $8.3 million increase is in line with the $7.8 million increase in current assets described above. The increase in total assets also includes a $0.3 million addition to fixed assets related to a litigation with a supplier involved in the relocation of LSL Laboratory in FY-23, as well as a $0.5 million increase in intangibles due to the continued investments in the development of our Eye-care product portfolio. On a pro-forma basis, the increase in total assets was $3.4 million over YE-24.

Operating loans as at June 30, 2025 were $8.2 million compared to $2.6 million as at YE-24. Operating loans included $4.6 million used under the Desjardins operating line to repay the TD and Scotia operating loans as well as other LT loans such as Finacces. As indicated in the Cash section above, these loans were repaid early July 2025 and for that reason amounts borrowed under the operating line were greater than normal. On a proforma basis (after giving effect the planned repayments) our operating line was $5.5 million. The increase was used to reduce the level of trade payables.

Current liabilities have increased by $8.5 million in Q2-25 with accounts payable increasing by $2.0 million, the addition of a $0.75 million note and $0.6 million of other liabilities, partly offset by a $0.3 million decrease in the short-term portion of LTD. Accounts payable also include $0.4 million representing the total cost of a litigation against a supplier involved in the relocation of LSL Laboratory in 2023. The increase in short-term liabilities was in line with the increase in short-term assets. On a pro-forma basis, the increase in total current liabilities was $4.5 million over YE-24.

LT notes payable and LT debt excluding lease liabilities increased by $0.6 million between YE-24 and the end of Q2-25 reflecting further advances from Finacces which were repaid from the proceeds of the new Desjardins operating line of credit (See "Cash" section).

Total liabilities increased by 31% at the end of Q2-25 compared to YE-24. The increase in total liabilities resulted mainly from the increase in short-term liabilities described above. On a pro-forma basis, the increase in total liabilities was $4.2 million over YE-24, representing a 15% increase, and in line with the increase in total assets.

Shareholders Equity decreased slightly in Q2-25 compared to YE-24 reflecting the nominal loss for the period.

Cash from Operations and Financial Position

Cash provided in operations in Q2-25 period was $1.5 million compared to $0.1 million cash used in Q2-24 representing a $1.6 million improvement. The positive variance resulted from changes in non-cash W/C and items not affecting cash providing $1.2 million and $0.3 million more respectively, plus a $0.1 million improvement in net loss from operations. Cash provided in operations for the YTD-25 period was $1.0 million compared to $2.0 million cash used for YTD-24 representing a $3.0 million improvement.  Changes in non-cash W/C and items not affecting cash provided $2.2 million and $0.5 million more cash respectively, plus a $0.3 million improvement in net loss from operations.

Investing activities used $1.0 million of cash during Q2-25 mainly for addition to intangible, as well as a $0.3 million addition to fixed assets following the payment of a litigation with a supplier involved in the relocation of LSL Laboratory in FY-23 compared to $3.2 million in Q2-24 which reflected the purchase of Virage Santé for $2.3 million, as well as addition to fixed assets at Steri-Med and LSL Laboratory. For the  YTD-25 period, investing activities used $1.6 million of cash mainly for addition to intangible and fixed assets at Steri-Med, compared to $3.9 million in Q2-24. For YTD-24, cash was used to purchase Virage Santé as well as addition to fixed assets at Steri-Med and LSL Laboratory, as well as addition to intangibles for the continuous investment in the Eye-care product pipeline.

Financing activities for Q2-25 contributed net proceeds of $4.3 million compared to $3.7 million in Q2-24. Proceeds in Q2-25 came mainly from proceeds of the new Desjardins operating line, and the last $0.5 million tranche of the BDC term loan, while Q2-24 financing activities came mainly from the issuance of units less repayments of debts and loans. For the YTD periods, financing activities generated also included issuance of a $0.75 million note and increased financing from Finacces. For the YTD-24 period, financing activities generated $6.2 million from the proceeds of 2 non-brokered public financings which totalled $7.3 million (gross), net increase in long-term notes payable of $1.2 million less notes, loan and debt repayments for $1.2 million, as well as share issue costs of $0.5 million.

Net cash increased by $4.7 million in Q2-25 compared to $0.3 million in Q2-24, same as for the YTD periods. The variance for the two periods came from the cash received from the new Desjardins operating line which was disbursed at the end of Q2-25 and used early in Q3-25 to repay the loans and operating lines from TD Bank, Scotia Bank, Finacces and others. 

Working Capital remains strong at $5.1 million at the end of Q2-25, a $0.6 million decrease compared to YE-24. LSL Pharma believes that improved operating cash flows, and access to its new $7.5 million operating line of credit (a $4.3 million improvement over the prior TD Bank and Scotia Bank combined facilities) provide adequate financial flexibility to meet its operating and financial obligations. The Corporation is confident in its ability to secure additional capital from conventional lenders or investors should it requires more capital to fund its growth initiatives.

Total net borrowings under credit agreements, plus bank loans and other interest bearing instruments, net of Cash or restricted Cash totalled $18.7 million at the end of Q2-25 compared to $16.5 million at the end of FY-2024. This compares to net tangible assets (total assets less cash and intangibles) of $43.0 million and $39.9 million respectively for June 30, 2025 and Year-end 2024.

Caution regarding forward-looking statements

This press release may contain forward-looking statements as defined under applicable Canadian securities legislation. Forward looking statements include estimates and statements that describe the Corporation's future plans, objectives or goals, including words to the effect that the Company or management expects a stated condition, belief, estimate or opinion, or result to occur. Forward-looking statements may be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "estimate", "believe", "aim", "plan" "continue" or similar expressions. Forward-looking statements are based on a number of assumptions and are subject to various known and unknown risks and uncertainties, many of which are beyond the Corporation's ability to control or predict, that could cause actual results or performance to differ materially from those expressed or implied in such forward-looking statements. These risks and uncertainties include, but are not limited to, those identified in the Corporation's filings with Canadian securities regulatory authorities, such as legislative or regulatory developments, increased competition, technological change and general economic conditions. All forward-looking statements made herein should be read in conjunction with such documents.

Readers are cautioned not to place undue reliance on forward-looking statements. No assurance can be given that any of the events referred to in the forward-looking statements will transpire, and if any of them do, the actual results, performance or achievements of the Corporation may differ materially from those expressed or implied by the forward-looking statements. All forward-looking statements contained in this press release speak only as of the date of this press release. The Corporation does not undertake to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

About LSL Pharma Group Inc.

LSL Pharma Group Inc. is a Canadian integrated pharmaceutical company specializing in the development, manufacturing, and marketing of high-quality sterile ophthalmic pharmaceuticals, as well as cosmetic, pharmaceutical, and natural health products in solid, semi-solid and liquid dosage forms. For further information, please visit the Corporation's website www.groupelslpharma.com.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

SOURCE Groupe LSL PHARMA INC.