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An Open Letter to Mednow Investors
[October 17, 2022]

An Open Letter to Mednow Investors


Mednow Inc (TSXV: MNOW) (OTCQX:MDNWF) - Mednow Co-Founder and CEO Ali Reyhany shared an open letter with investors detailing key achievements and milestones over the past 18 months as well as important context on the market overall and as it pertains to Mednow specifically. The content of that letter appears below.

Dear Shareholders, Partners, and Friends,

We appreciate your continued trust and support in Mednow as we bring pharmacy into the digital age and improve the pharmacy experience for all Canadians. Our focus remains on delivering real value to the Canadian pharmacy customer and executing on this opportunity. We expect to continue to fuel our growth and provide value for shareholders.

Mednow's goal is nothing short of becoming a Canadian household name. We believe that the pharmacy customer deserves the same convenience and technology upgrades other industries have enjoyed. We have made great strides in our 18 months as a public company, supported by our accomplishments. We enter into this next growth phase for Mednow more confident than ever. 123

It's important to understand the long-term potential of the national digital pharmacy distribution network that has been established by Mednow:

  • Strong Financial Performance: Mednow beats guidance and achieves record Q3 2022 financial results with 225% Q/Q revenue growth and 4,800% Y/Y revenue growth
  • Pharmacy Licenses: 9 Provincially licensed pharmacies make Mednow one of the few national virtual pharmacies in Canada. State-of-the-art distribution infrastructure allows for fast, free prescription delivery across Canada and same-day prescription delivery in major Canadian cities and surrounding areas.
  • Invested in tech: Investing in an area the pharmacy industry desperately needs, Mednow recruited more top talent to bring our in-house technology team to 12 employees. This is the team that built and continues to improve the stable, scalable, secure and proprietary Mednow customer relationship management (CRM) and patient app.

    The Mednow app makes it easy to manage prescriptions and provides patients with instant access to pharmacists, nurse practitioners, and non-prescription product shopping. Built for a virtual pharmacy environment, the app also coordinates delivery and allows Mednow's cloud-based contact center to manage relationships with patients, payors and prescribers.
  • Launched Mednow Virtual Care: In keeping with our pharmacy-centred healthcare approach, Mednow Virtual Care connects patients with pharmacists, doctors and nurse practitioners who diagnose virtually and prescribe medications responsibly.
  • Acquired Medvisit: Canada's largest and most established doctor home visit organization, serving the Greater Toronto Area with "house call" doctor care.
  • Specialty pharmacy acquisitions: Established a comprehensive specialty pharmacy preferred provider network offering to address this high-growth drug category. With high barriers to entry, there are few competitors, and with Mednow's "pharmacy of the future" infrastructure, we believe we have a major competitive advantage.
  • Provider collaboration: By solving administrative challenges and offering clear clinical and educational value to mutual patients, Mednow is positioned as the ideal pharmacy partner for medical clinics and virtual medicine providers.
  • Mednow for Business (MFB): Partnering as the digital pharmacy solution for benefits providers and other organizations offers mutual benefits and allows Mednow to add patients at scale. MFB has secured several partnerships and continues to have discussions with other potential partners.
  • Established product-market fit: I am most proud of how this team turns patients into fans. With over 300 reviews, Mednow has earned and maintains an exceptionally rare 5-star rating on Google. The Google reviews show that we are solving real problems and changing what Canadians expect from their pharmacy. Customer service is our focus, and in a market as price-regulated as pharmacy, personal customer relationships make the difference.
  • Honors and accolades: We have scaled the Mednow team to 60 employees and received honours from Great Places to Work in the categories of Healthcare, Technology, Startups, and for Women.

The macroeconomic climate has created uncertainty for many businesses. We have seen valuations severely decreased over the past 12 months. Some important factors to consider:

  • Pharmacies in Canada have proven to be recession and pandemic proof.
  • With the Canadian healthcare system in crisis we believe there is a need for healthcare innovation and an opportunity for healthcare innovators.
  • We believe pharmacy digitization in Canada is inevitable. With Canada being three to five years behind the US in this regard, we look to US pharmacy digitization as the benchmark.
  • The management team is proven in the pharmacy sector; our co-founders built and operate Care Pharmacies, one of the largest independent and phamacist-owned group of pharmacies in Canada with annual revenues of over C$200M.



Considering all factors, we believe that Mednow is deeply undervalued.

The foundation has been built for Mednow to take charge in the pharmacy space. Mednow went public to access capital and to scale rapidly. We have deployed that capital wisely in infrastructure, the team, the technology platform and key strategic acquisitions.


The best is yet to come from Mednow. I invite you to download the Mednow app (Apple | Android | web browser) or call us (1-855-MEDNOW-1) to see for yourself and take advantage of the great services we have to offer.

Sincerely,

Ali Reyhany

About Mednow

Mednow (TSXV: MNOW) (OTCQX:MDNWF) is a healthcare technology company offering virtual access with a high-standard of care. Designed with accessibility and quality of care in mind, Mednow provides virtual pharmacy and telemedicine services as well as doctor home visits through an interdisciplinary approach to healthcare that is focused on the patient experience. Mednow's services include free at-home delivery of medications, doctor consultations, a user-friendly interface for easy upload, transfer, and refill of prescriptions, access to healthcare professionals through an intuitive chat experience and the specialized PillSmart™ system that packages prescriptions in easy to use daily dose packs, each labelled with the date and time of the next dose.

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.

1 This letter from the Chief Executive Officer of Mednow Inc. ("Mednow", the "Company", "we", or "us"), provided on behalf of the Company contains "forward-looking information" and "forward looking statements" for purposes of applicable Canadian securities laws (collectively, "forward-looking statements"). Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations or assumptions regarding the future of our business, future plans and strategies, our operational results and other future conditions. Forward-looking statements can be identified by words such as "anticipate", "believe", "estimate", "expect", "intend", "may", "plan", "predict", "project", "seek", "target", "potential", "will", "would", "could", "should", "continue", "contemplate" and other similar expressions, although not all forward-looking statements contain these identifying words. These forward-looking statements include all matters that are not historical facts, and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our operational and financial performance including revenue, gross margin and Adjusted EBITDA forecasts, Mednow's growth expectations, the long-term potential of the national digital pharmacy distribution network, market opportunities and estimates relating to market growth. Forward-looking statements are based on our current expectations, beliefs, assumptions, estimates and forecasts about the Company's business and the industry and markets in which it operates, including among others, assumptions relating to: (i) the ability of the Company to successfully expand into additional jurisdictions; (ii) that the telemedicine and pharmacy market will grow at the rate expected; (iii) the availability of financing; (iv) that third party contractors and supplies and regulatory approvals required to conduct the Company's planned activities will be available on reasonable terms and in a timely manner; (v) that general business, legislative and economic conditions will not change in a material adverse manner; (vi) that the Company will receive all approvals required to operate and grow its business as planned; (vii) that the Company will be successful in pursuing revenue, operational and other synergies with its recently completed acquisitions; and (viii) that COVID-19, the ongoing conflict in Eastern Europe, or other global events will not negatively impact the business or personnel of the Company. Despite a careful process to prepare and review the forward-looking statements, there can be no assurance that the underlying opinions, estimates, and assumptions will prove to be correct. By their nature, forward-looking statements involve known and unknown risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, the failure of the Company to realize the benefits of its expansion plans as expected; the inability of the Company to obtain the capital or approvals, permits or licenses required to achieve its business objectives; unanticipated costs; reliance on key management and other personnel; potential downturns in economic conditions; increased competition; failure to effectively synergize the operations of our recently completed acquisitions; changes in laws and regulations; impact of COVID-19 on the business and personnel of the Company; other risks associated with the Company's industry; and those described in greater detail under "Risk Factors" in the Company's final short form prospectus filed on July 15, 2022 on www.sedar.com under the Company's profile. If any of these risks materialize, or if any of the above assumptions underlying forward-looking statements prove incorrect, actual results and developments may differ materially from those made in or suggested by the forward-looking statements contained in this letter.

2 This letter also contains future-oriented financial information and financial outlook information (collectively, "FOFI") as defined under Canadian securities laws, prepared by Mednow's management about Mednow's reasonably estimated prospective results of operations and financial performance and components thereof, all of which are subject to the same assumptions, risks factors, limitations and qualifications set forth in the above paragraphs. Readers are cautioned that FOFI are not guarantees of future performance, and should not be considered as such, since actual results may differ materially from those expressed in FOFI. Accordingly, readers should not place undue reliance on the forward-looking statements or FOFI contained in this letter. Mednow and its management believe that FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgements. FOFI contained in this letter were made as of the date of this letter and is provided for the purpose of describing the belief of Mednow''s management of the anticipated effects of the financing on Mednow's business operations. Readers are cautioned that reliance on such information may not be appropriate for other purposes. Any forward-looking statements that we make in this letter speaks only as of the date of this letter. Mednow does not undertake any obligation to publicly update or revise any forward-looking statements or FOFI other than as required under applicable securities laws.

3 This letter refers to certain measures and ratios that are not recognized measures under International Financial Reporting Standards ("IFRS"). These measures and ratios 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 and ratios are provided as additional information to complement those IFRS measures by providing further understanding of our results of operations from Mednow's management's perspective. Accordingly, the non-IFRS measures and non-IFRS ratios disclosed in this letter should not be considered in isolation or as a substitute for analysis of our financial information reported under IFRS. We use the following non-IFRS measures and non-IFRS ratios in this letter: (i) Adjusted EBITDA (earnings before interest, tax, depreciation and amortization and transaction costs); and (ii) gross margin % (net sales minus the cost of goods/services sold divided by net sales). These non-IFRS measures and non-IFRS ratios are used to provide investors with supplemental measures of our operating performance and thus highlight trends in Mednow's core business that may not otherwise be apparent when relying solely on IFRS measures.


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