NBLY.R Neighbourly Pharmacy Inc

Neighbourly Pharmacy Inc. (TSX: NBLY) (“Neighbourly” or the “Company”), Canada’s largest and fastest growing network of independent pharmacies, announced today that the Company has closed its previously announced public offering (the “Offering”) of 5,175,000 subscription receipts of Neighbourly (the “Subscription Receipts”) at a price of $28.95 per Subscription Receipt for aggregate gross proceeds of approximately $149.8 million, which includes the full exercise of the over-allotment option by the Underwriters (as defined below). The Subscription Receipts were offered by way of a prospectus supplement dated March 14, 2022 to the Company’s short form base shelf prospectus dated October 19, 2021 in all of the provinces and territories of Canada. The Offering was completed through a syndicate of underwriters led by Scotiabank and RBC Capital Markets (together, the “Joint Bookrunners”), and including BMO Nesbitt Burns Inc., National Bank Financial Inc., Desjardins Securities Inc., TD Securities Inc., Cormark Securities Inc. and iA Private Wealth Inc. (collectively the "Underwriters”). The Subscription Receipts are expected to begin trading on the Toronto Stock Exchange (TSX) on Friday March 18, 2022, under the ticker symbol “NBLY.R”.

Neighbourly also announced the closing of its previously announced concurrent private placement (the "Concurrent Private Placement") of 4,150,000 subscription receipts of Neighbourly (the “Placement Subscription Receipts”) to an affiliate of Persistence Capital Partners ("PCP") at a price of $28.95 per Placement Subscription Receipt for aggregate gross proceeds of approximately $120 million. Under the Concurrent Private Placement, Neighbourly also granted PCP the option to acquire up to 622,500 additional Subscription Receipts for a period of 30 days following the closing of the Concurrent Private Placement, which has not yet been exercised.

The aggregate net proceeds of the Offering and the Concurrent Private Placement will be used to finance a portion of the purchase price and related expenses of its previously announced proposed acquisition (the “Acquisition”) of all of the issued and outstanding shares in the capital of the entity that owns and operates, directly or indirectly through its subsidiaries, the network of retail pharmacies known as Rubicon Pharmacies (“Rubicon”).

The net proceeds from the Offering and the Concurrent Private Placement will be held in escrow pending the completion of the Acquisition. If the Acquisition is completed on or prior to 5:00 p.m. on January 10, 2023, the net proceeds will be released to the Company and the Subscription Receipts and Placement Subscription Receipts will be exchanged on a one-for-one basis for common shares of Neighbourly for no additional consideration or further action together with, without duplication, an amount equal to any dividends declared by Neighbourly and payable to holders of common shares of Neighbourly of record as of dates from and including the closing date of the Offering to but excluding the date of closing of the Acquisition, less any applicable withholding taxes.

If the Acquisition is not completed on or prior to 5:00 p.m. on January 10, 2023, if the purchase agreement with respect to the Acquisition is terminated in accordance with its terms or if the Company advises the Joint Bookrunners, PCP and the subscription receipt agent or announces to the public that it does not intend to proceed with the Acquisition, the holders of Subscription Receipts and PCP, as holder of Placement Subscription Receipts, will receive a cash payment equal to the offering price of the Subscription Receipts or the Placement Subscription Receipts, as applicable, plus their pro rata share of the interest actually earned on the escrowed funds during the term of the escrow and their pro rata share of the interest that would have been earned on 50% of the underwriters' fee or capital commitment fee, as applicable, were such fees included in the escrowed funds. 50% of the underwriters' fee was paid upon closing of the Public Offering and the other 50% will be paid upon closing of the Acquisition. 50% of the capital commitment fee (representing 4% of the aggregate subscription price in respect of 3,443,122 Placement Subscription Receipts, representing 9.99% of the issued and outstanding common shares of Neighbourly on the date of announcement of the Acquisition) payable under the Concurrent Private Placement was paid upon closing of the Concurrent Private Placement and the other 50% will be paid upon closing of the Acquisition.

The Acquisition remains subject to customary closing conditions, including regulatory approvals, and is subject to rights of first refusal (“ROFRs”) in favour of certain third parties. Closing of the Acquisition is expected to occur during the first quarter of the Company’s financial year ending March 25, 2023 (the second quarter of calendar year 2022).

About Neighbourly Pharmacy Inc.

Neighbourly is Canada’s largest and fastest growing network of community pharmacies. United by their patient first focus and their role as essential and trusted healthcare hubs within their communities, Neighbourly’s pharmacies strive to provide accessible healthcare with a personal touch. Since 2015, Neighbourly has expanded its diversified national footprint to include 271 locations (on a pro forma basis, after giving effect to the Acquisition), reinforcing the Company’s reputation as the industry’s acquirer of choice.

For more information, please contact investorrelations@nbly.ca or visit www.neighbourlypharmacy.ca.

Neither the subscription receipts nor the underlying Common Shares offered have been, and they will not be, registered under U.S. Securities Act of 1933, as amended, and such securities may not be offered or sold in the United States, absent registration or an applicable exemption from registration. This news release shall not constitute an offer to sell or the solicitation of an offer to buy the subscription receipts or the underlying Common Shares. The offering or sale of the subscription receipts and the underlying Common Shares shall not be made in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Caution Regarding Forward-Looking Statements

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 our future financial results and may include information regarding our financial position, business strategy, growth strategies, financial results, taxes, dividend policy, plans and objectives. In some cases, forward-looking information can be identified by the use of forward-looking terminology such as “expects”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “intends”, “anticipates”, “believes”, 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, 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. Forward-looking information in this news release includes, among other things, statements relating to the Acquisition, the Offering and the Concurrent Private Placement and use of proceeds therefrom, the closing of the Acquisition and timing thereof, the anticipated sources of financing of the Acquisition, the fact that closing of the Acquisition is conditional on certain events occurring, and the receipt of all necessary regulatory and other approvals.

Forward-looking information is necessarily based on a number of opinions, estimates and assumptions that the Company considered appropriate and reasonable as of the date such statements are made in light of its experience and perception of historical trends, current conditions and expected future developments. Such estimates and assumptions include assumptions in respect of our ability to build our market share; our ability to retain key personnel; our ability to maintain and expand geographic scope; our ability to execute on our expansion plans; our ability to continue investing in infrastructure to support our growth; our ability to obtain and maintain existing financing on acceptable terms; currency exchange and interest rates; the impact of competition; the changes and trends in our industry or the global economy; the changes in laws, rules, regulations, and global standards, the satisfaction of all conditions of closing and the successful completion of the Acquisition within the anticipated timeframe, including receipt of regulatory and other required approvals and waivers of ROFRs; the estimated purchase price of the Acquisition, including post-closing adjustments and ROFRs; the receipt of consent of third parties to the change of control triggered by the Acquisition under relevant agreements and store leases; the successful and timely integration of Rubicon in the timeframe anticipated; the realization of the anticipated benefits, economies of scale, operating efficiencies, costs savings and synergies of the Acquisition in the timeframe anticipated, including impacts on growth and accretion in various financial metrics; and the absence of significant undisclosed costs or liabilities associated with the Acquisition, are material factors made in preparing forward-looking information and management’s expectations.

Further, 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 risks and uncertainties related to the Acquisition, including the failure to complete the Acquisition in all material respects in accordance with the purchase agreement with respect to the Acquisition; the failure to obtain, in a timely manner or at all, regulatory and other required approvals and waivers of ROFRs, or to otherwise satisfy the conditions to the completion of the Acquisition; necessary borrowings under the Company’s credit facilities may not be available to fund a portion of the Acquisition; risks related to increased indebtedness after completion of the Acquisition; the failure to receive consents of third parties to the change of control triggered by the Acquisition under relevant agreements and store leases; the failure to realize the anticipated benefits, economies of scale, operating efficiencies, costs savings and synergies of the Acquisition in the timeframe anticipated, or at all; the materiality of post-closing adjustments under the Purchase Agreement; the Rubicon business may be adversely impacted during the pendency of the Acquisition; the risk of potential unforeseen difficulties in integrating the Rubicon business into the Company’s systems and operations; risks related to the dependence of the Company on key employees and the loss of certain key Rubicon personnel; significant undisclosed costs or liabilities associated with the Acquisition may be discovered; risks of reliance on information provided by Rubicon and the risk of inaccurate or incomplete information, historical and/or stand-alone financial information may not be representative of future performance, uncertainty as to expected financial condition and economic performance following the completion of the Acquisition, and heightened exposure to regulatory environment in the Canadian Prairies following the Acquisition; as well as other factors discussed or referred to in the Company’s Management's Discussion and Analysis for the 16-week and 40-week periods ended January 1, 2022 and under the heading “Risk Factors” in the final long form prospectus dated May 17, 2021 filed in connection with the initial public offering of Neighbourly, both of which are available on SEDAR at www.sedar.com under the Company’s profile. 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.

Although we have attempted to identify important risk factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other risk factors not presently known to us or that we presently believe are not material that could also cause actual results or future events to differ materially from those expressed in such forward-looking information. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. No forward-looking statement is a guarantee of future results. Accordingly, you 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 (or as the date they are otherwise stated to be made) and are subject to change after such date. However, 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 in Canada. All of the forward-looking information contained in this news release is expressly qualified by the foregoing cautionary statements.