Executive Summary / Key Takeaways

• Medicure Inc. is undergoing a strategic transformation, shifting from a reliance on legacy pharmaceutical products to a diversified healthcare model centered on its direct-to-consumer online pharmacy, Marley Drug, and a robust R&D pipeline in rare diseases and novel chemical entities.
• The Marley Drug platform, bolstered by recent acquisitions of Gateway Medical and West Olympia Pharmacy, is a critical growth driver, offering higher gross margins and patient adherence for ZYPITAMAG by bypassing traditional insurance channels.
• Medicure's R&D efforts, primarily focused on MC-1 for PNPO deficiency, hold significant long-term value through the potential for FDA approval and a Priority Review Voucher, alongside new chemical entities targeting large markets.
• Despite a net loss of $1 million in 2024 and negative adjusted EBITDA of $437,000, the company reported increased total net revenue of $21.9 million and maintains a strong, debt-free balance sheet with $7.2 million in cash as of December 31, 2024.
• Investors should monitor the successful integration of pharmacy acquisitions, progress in the MC-1 Phase 3 trial, and the impact of generic competition on AGGRASTAT sales, as these factors are crucial to Medicure's future profitability and market positioning.

Medicure's Strategic Evolution: Diversifying Beyond Traditional Pharma

Medicure Inc., founded in 1997, has historically focused on delivering life-changing cardiovascular therapies in the U.S. market. Over its 25-year history, the company has evolved, strategically adapting to the dynamic healthcare landscape. While its legacy product, AGGRASTAT, remains a foundational asset, Medicure has embarked on a significant diversification strategy, emphasizing direct-to-consumer engagement through its online pharmacy, Marley Drug, and investing in a promising research and development pipeline. This strategic pivot aims to mitigate pressures from traditional pharmaceutical channels and unlock new avenues for growth and profitability.

The broader healthcare industry is witnessing a shift towards more accessible and cost-effective patient solutions, often bypassing the complexities of traditional health insurers and pharmacy benefit managers (PBMs). Medicure's strategy directly addresses this trend by leveraging its e-commerce platform to offer affordable medications, including its own branded products like ZYPITAMAG. This approach not only enhances patient access but also allows Medicure to capture higher margins, a critical differentiator in a competitive market.

Technological Innovation: Pillars of Differentiation

Medicure's strategic evolution is underpinned by several key technological and operational differentiators that form its competitive moat. For its legacy product, AGGRASTAT, Medicure remains the sole manufacturer of the 3.75 milligram bolus format, a critical dosage typically administered before an infusion unit in hospital settings. This unique formulation provides a specific market advantage despite increasing generic competition.

The acquisition and expansion of Marley Drug represent a significant technological leap for Medicure. This online pharmacy platform is designed to bypass the traditional framework of health insurers and PBMs, which often make affordable medications prohibitively expensive for many Americans. By selling ZYPITAMAG directly through Marley Drug, Medicure achieves a much higher gross margin and observes more than 40% higher adherence rates compared to other retail pharmacies, a direct result of its enhanced customer service and engagement strategies. The company is committed to further investing in its e-commerce website to create a best-in-class experience for customers, solidifying this direct-to-consumer channel as a core competitive advantage.

In its R&D pipeline, Medicure is developing MC-1 for PNPO deficiency, a rare pediatric disease. This investigational product has received Fast Track designation from the FDA, which facilitates an expedited review process. The potential for MC-1 to become the first FDA-approved therapy for this condition could lead to the issuance of a Priority Review Voucher (PRV), an asset that can be redeemed or sold for significant value. Furthermore, Medicure has acquired patent and intellectual property related to new chemical entities (NCEs) that promise improvements over existing lead compounds. These NCEs are in preclinical testing and API development, targeting diseases with very large market potential, positioning them as significant long-term value drivers.

Operational Pillars and Performance

Medicure's business is structured around five core focuses: maintaining AGGRASTAT sales, growing ZYPITAMAG revenue, expanding the Marley Drug online pharmacy, developing MC-1, and advancing its new chemical entities.

AGGRASTAT: A Legacy Product Under Pressure

AGGRASTAT, a treatment for acute coronary syndrome, generated net revenue of $8.1 million in 2024, a decrease from $9.7 million in 2023. This decline was primarily due to pricing pressures from increased competition following the launch of generic tirofiban hydrochloride. Despite these headwinds, Medicure continues to support its extensive U.S. hospital accounts and aims to remain price competitive in targeted ways, leveraging its unique 3.75 milligram bolus format. The cost of goods sold for AGGRASTAT decreased to $2.5 million in 2024, consistent with the lower sales volume. The company's royalty obligation for AGGRASTAT concluded in Q2 2023, which should positively impact future profitability from this segment.

ZYPITAMAG: Direct-to-Consumer Growth Engine

ZYPITAMAG, used for lipid management, is a key growth product. Net revenue from ZYPITAMAG sold through traditional insurance channels increased by 25% from $2.4 million in 2023 to $3.0 million in 2024, driven by greater utilization through Medicare Part D. However, this growth was partially offset by increased wholesaler fees and higher coverage gap payments to PBMs. Crucially, ZYPITAMAG sales through Marley Drug grew by 23% from $2.6 million in 2023 to $3.2 million in 2024. The higher gross margins and adherence rates achieved through the Marley Drug platform underscore its strategic importance for ZYPITAMAG's profitability and market penetration.

Marley Drug: Expanding the Pharmacy Footprint

The Marley Drug online pharmacy business is a central pillar of Medicure's growth strategy. Net revenue for Marley Drug increased by 12.5% from $9.6 million in 2023 to $10.8 million in 2024. This growth was attributed to a favorable change in product mix, increased ZYPITAMAG sales through the platform, and robust generic medication sales, including $807,000 from Brenzavvy tablets in 2024. The company also secured the exclusive sale of sitagliptin, a first generic entry for another popular diabetes medication.

Medicure further expanded its retail pharmacy segment through strategic acquisitions. Subsequent to year-end 2024, the company acquired Gateway Medical Pharmacy for $580,000 and signed an agreement to acquire West Olympia Pharmacy for $975,000, with the latter transaction closing in Q2 2025. These acquisitions are expected to immediately grow the customer and prescriber base for ZYPITAMAG and other branded products, create synergies with Marley Drug, and provide benefits such as faster shipping times to the West Coast and increased purchasing power. For Q2 2025, Gateway Pharmacy contributed $764,000 and West Olympia Pharmacy added $328,000 in net revenue.

R&D Pipeline: Investing in Future Therapies

Medicure's research and development efforts are primarily focused on its Phase 3 study for MC-1 for PNPO deficiency. R&D expenses totaled $3.1 million in 2024, largely dedicated to this clinical trial. The FDA has granted approval for enrollment, and the study is ongoing, with the first patient having completed the enrollment period. The company also refined the MC-1 tablets by removing the coating to speed up absorption, based on clinician feedback. The Phase 3 study is targeting 10 patients, with full enrollment expected in 2025, followed by an accelerated review period due to its orphan disease designation.

Beyond MC-1, Medicure has initiated preclinical testing and API development for new chemical entities, representing a long-term investment in intellectual property with significant market potential. Management anticipates overall R&D expenses for 2025 to remain consistent with 2024 levels, around $3 million, as new IP investments offset potential decreases in MC-1 development costs.

Financial Performance and Liquidity

Medicure reported total net revenue of $21.9 million for 2024, a slight increase from $21.7 million in 2023. Despite this revenue growth, the company recorded a net loss of approximately $1 million, or $0.10 per share, in 2024, compared to a net loss of $922,000, or $0.09 per share, in 2023. This loss was largely driven by non-cash expenses, including $2.3 million in asset amortization, and increased R&D and general and administrative expenses. Adjusted EBITDA for 2024 was negative $437,000, a decrease from $1.9 million in 2023, primarily due to higher Marley Drug cost of goods, lower AGGRASTAT revenue, and increased R&D.

However, recent quarterly results show signs of improvement. For the quarter ended June 30, 2025, total net revenue increased to $6.7 million from $5.2 million in the prior year's quarter. Adjusted EBITDA for Q2 2025 improved significantly to negative $28,000, from negative $514,000 in Q2 2024, and the net loss narrowed to $786,000, or $0.08 per share.

Medicure maintains a strong liquidity position, with approximately $7.2 million in cash as of December 31, 2024, an increase from $6.4 million at the end of 2023. The company remains debt-free, providing a solid financial foundation for its strategic initiatives and acquisitions. Management is actively reevaluating its cash management strategy to optimize finance income through short-term investments.

Competitive Positioning

Medicure operates in a highly competitive biopharmaceutical landscape, facing established giants like Bristol-Myers Squibb (BMY), Pfizer (PFE), and AstraZeneca (AZN). These larger competitors boast diversified portfolios, extensive global distribution networks, and substantial R&D budgets. Medicure, with its more focused approach, carves out a niche by emphasizing patient accessibility and specialized therapies.

While larger players benefit from economies of scale and broader market reach, Medicure's agility and direct-to-consumer model through Marley Drug offer a distinct advantage in specific segments. This platform allows Medicure to bypass the complex and often costly traditional PBM frameworks, leading to higher gross margins and better patient adherence for products like ZYPITAMAG. This direct engagement model is a key differentiator against competitors who primarily rely on traditional distribution channels. Medicure's unique 3.75 milligram bolus format for AGGRASTAT also provides a specific competitive edge in its niche.

However, Medicure's smaller scale presents vulnerabilities. It faces intense pricing pressures for AGGRASTAT from generic competitors, and its R&D investment, while strategic, is considerably smaller than that of its larger rivals. This could impact its innovation speed and ability to compete in high-stakes segments. The company's strategic response involves targeted price competitiveness for AGGRASTAT and leveraging its direct channels for ZYPITAMAG to mitigate PBM pressures and wholesaler fees. The potential for a Priority Review Voucher from MC-1's approval could also provide a significant financial boost, enabling further R&D or strategic acquisitions.

Risks and Outlook

Medicure's outlook is predicated on the successful execution of its diversification strategy. Key risks include continued pricing pressures and generic competition for AGGRASTAT, which could further erode revenue from this legacy product. The Marley Drug business, while growing, faces competition from other online and retail pharmacies, as well as challenges in building customer trust and managing fluctuating cost of goods. Declining PBM reimbursements for insured prescriptions also impact Marley Drug's profitability.

R&D initiatives, particularly the MC-1 Phase 3 study, carry inherent clinical development risks and timelines. While enrollment is ongoing, unforeseen delays could impact the potential for a Priority Review Voucher. Furthermore, general and administrative expenses are expected to remain significant in 2025 due to ongoing legal fees.

Despite these challenges, management's guidance points to a consistent R&D investment of around $3 million in 2025, balancing MC-1 development with new intellectual property. The successful integration of the Gateway Medical and West Olympia Pharmacy acquisitions is expected to create immediate synergies, expanding the customer base, improving shipping logistics, and enhancing purchasing power. Medicure's short-term goals are clear: grow ZYPITAMAG and the broader pharmacy business, maintain AGGRASTAT sales, and advance its new product pipeline. Long-term, the focus remains on developing new chemical entities with large market potential, continuing to build a stable and profitable business for shareholders.

Conclusion

Medicure Inc. is at a pivotal juncture, strategically transforming its business model to thrive in a competitive and evolving healthcare market. The company's deliberate pivot towards a direct-to-consumer online pharmacy model through Marley Drug, coupled with targeted R&D in rare diseases and novel chemical entities, forms the core of its investment thesis. While legacy product AGGRASTAT faces generic headwinds, the robust growth of ZYPITAMAG, particularly through the high-margin Marley Drug platform, and the strategic expansion of its pharmacy footprint through recent acquisitions, demonstrate a clear path to revenue diversification and enhanced profitability.

The potential for a Priority Review Voucher from the MC-1 program and the long-term promise of new chemical entities underscore Medicure's commitment to innovation and future value creation. Despite recent net losses and ongoing operational challenges, the company's debt-free status and healthy cash reserves provide a strong foundation. For discerning investors, Medicure represents an opportunity to invest in a company actively reshaping its destiny, leveraging technological differentiation and strategic acquisitions to build a resilient and growth-oriented enterprise in specialized healthcare markets.