Medicure : 2022 Annual Report

Consolidated Financial Statements

(Expressed in thousands of Canadian dollars, except per share amounts)

MEDICURE INC.

Year ended December 31, 2022

MANAGEMENT REPORT

The accompanying consolidated financial statements have been prepared by management and approved by the Board of Directors of Medicure Inc. (the "Company"). Management is responsible for the information and representations contained in these consolidated financial statements.

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The significant accounting policies, which management believes are appropriate for the Company, are described in note 3 to these consolidated financial statements. The Company maintains a system of internal control and processes intended to provide reasonable assurance that assets are safeguarded and to ensure that relevant and reliable financial information is produced.

The Board of Directors is responsible for reviewing and approving these consolidated financial statements and overseeing management's performance of its financial reporting responsibilities. An Audit Committee of non-management Directors is appointed by the Board. The Audit Committee reviews the consolidated financial statements, audit process and financial reporting with management and with the external auditors and reports to the Board of Directors prior to the approval of the audited consolidated financial statements for publication.

Ernst & Young LLP, the Company's external auditors for the years ended December 31, 2022, 2021 and 2020, who are appointed by the shareholders, audited the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) to enable them to express to the shareholders their opinion on these consolidated financial statements as at and for the years ended December 31, 2022, 2021 and 2020. The report from Ernst & Young LLP follows.

/s/ Albert Friesen		/s/ Haaris Uddin
Dr. Albert D. Friesen		Haaris Uddin
Chief Executive Officer		Chief Financial Officer
April 06, 2023

Report of independent registered public accounting firm

To the Shareholders and the Board of Directors of

Medicure Inc.

Opinion on the financial statements

We have audited the accompanying consolidated statements of financial position of Medicure Inc. [the "Company"] as of December 31, 2022 and 2021, the related consolidated statements of net income (loss) and comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2022 and the related notes [collectively referred to as the "consolidated financial statements"]. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

Basis for opinion

These statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ["PCAOB"] and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: [1] relate to accounts or disclosures that are material to the financial statements and [2] involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Assessment of accrual for chargebacks

Description of the matter	As described in Note 3(e) to the consolidated financial statements,
	revenues from product sales are recorded net of estimated
	chargebacks. Chargebacks result from wholesalers selling the
	Company's products to end hospitals and pharmacies at prices
	lower than the wholesaler acquisition cost, which results in variable
	consideration for the Company. The accruals are calculated using
	historical experience, timing of actual chargebacks processed
	during the year, expected chargeback levels based on the
	remaining products in the wholesaler distribution channel and
	pricing differences. Estimated chargebacks are presented within
	accounts payable and accrued liabilities on the consolidated
	statement of financial position as of December 31, 2022.
	Auditing the estimated chargeback accruals are complex and
	judgmental due to the level of uncertainty involved in management's
	estimate for products that remains in the wholesaler distribution
	channel as at December 31, 2022, and to the extent of product
	sales that are expected to be subject to chargebacks and pricing
	differences.
How we addressed the matter in our audit	To test the Company's estimated chargeback accruals, our audit
	procedures included, among others, testing the completeness,
	accuracy, and relevance of the underlying data used by
	management to estimate the accruals through reconciliation to third-
	party agreements and third-party reports indicating actual
	chargebacks. We evaluated the estimated wholesaler inventory
	levels by obtaining third-party distribution channel reports and
	assessing inventory turnover of each product at the wholesaler. We
	inspected wholesaler agreements and end hospitals and
	pharmacies agreements and compared pricing differences to the
	chargeback rate used by management to estimate the accruals. We
	performed a retrospective review to determine the historical
	accuracy of management's estimates of chargebacks against actual
	results. We evaluated the monthly trailing analysis of actual
	chargebacks processed during the year. We performed sensitivity
	analyses to determine the effect of changes in assumptions on the
	chargeback accruals.

Valuation of goodwill relating to the Retail and Mail Order Pharmacy cash-

generating unit ["CGU"]

Description of the matter	As described in Note 3(l) to the consolidated financial statements,
	goodwill is tested for impairment at least annually, or when
	circumstances indicate that the carrying value may be impaired at
	the cash-generating unit level ["CGU"].
	Auditing management's annual goodwill impairment test is complex
	and highly judgmental due to the significant estimation and
	judgment applied by management in determining the recoverable
	amount of the Retail and Mail Order Pharmacy CGU. In particular,
	the estimated recoverable amount is sensitive to significant
	assumptions, such as changes in discount rate, revenue growth
	rate, and operating margin.
How we addressed the matter in our audit	To test the estimated recoverable amount of the Company's Retail
	and Mail Order Pharmacy CGU, we performed audit procedures
	that included, among others, testing the significant assumptions
	discussed above and the underlying data used by the Company in
	its analysis. We compared the significant assumptions used by
	management to the CGU's historical results and third-party industry
	data. We assessed the historical accuracy of management's cash
	flow projections, revenue growth and operating margin by
	comparing management's past projections to actual performance.
	We performed sensitivity analyses of the revenue growth rate,
	discount rate and operating margin to evaluate the changes in the
	recoverable amount of the Retail and Mail Order Pharmacy CGU
	that would result from changes in the assumptions. We involved our
	valuation specialists to assist us in our evaluation of the valuation
	methodology used in determining the recoverable amount, as well
	as the discount rate used by comparing to external data sources.

We have served as the Company's auditor since 2020.

Winnipeg, Canada	/s/ Ernst & Young LLP
April 6, 2023	Chartered Professional Accountants