Q4 2020 Trxade Group Inc Earnings Call
Good afternoon, ladies and gentlemen, and thank you for standing by welcome to the tracks aid group fourth quarter and fiscal year, 2020 earnings Conference call. During today's presentation, all parties will be in a listen only mode.
Following the presentation. The conference will be opened for questions. This conference is being recorded today March 29th 2021 and the earnings press release accompanying this conference call was issued at the close of market today.
Annual report, which is included the company's results of operations for the fiscal year ended December 31st 2020, what's filed with the S. E. C. Today on our call today is toxic group's founder Chairman and Chief Executive Officer, Sir and the job, So and Howard Das its financial Chief Officer.
The replay of this call and webcast will be available for the next 30 days on the company's website under the NASDAQ Meds link. The company website also includes more supporting industry information at the time I would like to turn the call over to Mr. Howard on the company's Chief Financial Officer Howard the floor is yours. Thank you you may be.
Ken.
Thank you operator, and thank you for joining us today I would like to welcome you to our fourth quarter and full year, 2020 of financial results Conference call.
A press release announcing our fourth quarter and for your financial results was issued after the close of market today and is posted on our website.
We have also published a copy of the presentation that accompanies this call and webcast on our website and furnished such press release and presentation to the SEC on form 8-K.
Statements made on this call and webcast include forward looking statements. These statements include but are not limited to our outlook for the company.
And statements that estimate or project future results of the operations or the performance of the company and.
Excluding the potential continued impact of COVID-19 on the company's business and results of operations.
These statements speak only as of the date hereof and the company assumes no obligation to revise any forward looking statements that may be made in today's press release.
Paul or webcast, except as required by law.
These statements do not guarantee of future performance and are subject to risks uncertainties and assumptions.
Please refer to the press release and the risk factors and documents, we file with the Securities and Exchange Commission and the.
Including our most recent annual report on form 10-K for information on risks uncertainties and assumptions that may cause actual results to differ materially from those set forth and such statements.
In addition, during today's call and webcast, we will discuss both GAAP financial measures and certain non-GAAP financial measures, which we believe are useful as supplemental measures of tracks Eight's performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP.
The results.
And find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results and our earnings press release on.
Unless otherwise stated all financial comparisons and this call will be our results for the comparable period of fiscal 2019.
At this time I would like to turn the call over to sort of on a job who the company's chief Executive Officer, Sharon the floor is yours.
Thank you Howard.
2020 was a milestone year for all of the health Saturday of Society Company.
And as we continue to innovate and grow and expand.
Despite the challenges of a global pandemic.
The increased revenues by 130 per cent for the year and.
Testament to all of the teams continued innovation and the development of flow of breakthrough digital health care.
So are we sort of IP platform.
Before we do and more detailed walk through of financial and operational results for the fourth quarter, and 2020 year for.
For those of you knew the the company.
Like to walk you through who we are how we are just realizing the retail pharmacy experience for the optimization of drug procurement prescription journey and patient engagement.
Prior to the launch of tax paid obtaining the drug courts, and independent pharmacy, once and extremely laborious time, and inefficient process and didn't know inside of transparency and to a fair market price of.
What all of Douglas for paying for the same drug.
Traditionally the whole sellers would provide unfavorable payment tons slow delivery.
And at a difficult conundrum for that approximately 21000 and independent pharmacies nationwide.
We identified this marketing efficiency and that's what allows the incredible the Prudential and these independent pharmacies.
Which together of maintained approximately $73 7 billion and yet.
On the purchasing power and proceeded to launch traction.
We designed the own and operate the business the business that based marketplace platform, bringing together the nation's independent pharmacies with the aggregated national of pharmaceuticals and suppliers too.
To provide a uniquely efficient and transparent and buying and selling process.
Our platform lack of independent pharmacies know that they are exceeding the fair price for competing for players on a fan of payment terms and often with the next day delivery.
We believe it's the radical price transparency and economy of scale and competition and longest suppliers leads up to a 10% reduction and the pharmacy sort of land and lot of drug purchase costs for that.
Doug level of savings of up to 90 per cent and set and pharmaceutical products.
Our platform sales and pharmacists from having to manually compare prices across the distributor's saving hundreds of hours of unnecessary nab of annually and eliminating the negative reimbursement of fulfilling and prescription at a loss.
Oh, the revenue model is simple.
Well, the paint and administrative fee of up to six per cent of the buying price on the generic pharmaceuticals, and up to one person and Brad and pharmaceuticals, and pass through or pardon me sort of a platform.
Similar to like Paypal on where you felt like more of them.
To date and have seen incredible success and garnering attention from independent pharmacies nationwide validating of our business model.
We currently have approximately 11800 and put us and it just start of members on our platform.
Of course anything over 50% of market penetration and until the 'twenty 1000 independent pharmacies nationwide.
We have of libertarians the other significant fixes since the launch of our problems should market class platform.
Moving to exist and.
Complementary business, where we can leverage our strong retail pharmacy network and core competencies and technology.
These include on the bottom how our telehealth subsidiary annualized made out of pharmacy Aeronautics distribution.
In fact, as and enabling infrastructure put on the bottom of house business the business business to consumer platforms.
And that's what allows the future of business lines. We're currently having development.
And particularly pleased to announce the recent launch of all the new subsidiary of my checks the cause of developing do you still have the passport to help facilitate the safe reopening of the global economy.
The need this do any share two we brought on Jim's Savannah, and the accomplish strategist and leadership experience and travel and tourism and location based on the Penguin industries.
And I know his lead the do you still have that our passport we plan to launch with the leverage what state of the art and Gibson and blockchain technology.
The can fill all of the private help that off of users and other in front of the secure exchange of data between the passport of hold on and nobody fire.
When evaluating initial rollout of locations internationally and given the pay per use model believes this could be of significant revenue potential.
Potential into 2020 one.
During the fourth quarter of 2020, we've made progress with our tracks and drug procurement marketplace, adding 328, new registered members, but of your and total of approximately 11800, plus they just start of members.
And we continue to scale.
Exciting new affiliated services, such as our telehealth platform and all of digital have the passport and initiatives.
We anticipate continued top line growth in the coming years.
Well on on how our telehealth subsidiary.
Difficult strikes and the fourth quarter for propel adoption nationwide more rapidly.
We signed and exciting partnership with the can't be hedge health care services.
And affordable health care for the patients of the approximately 100 of kidney drug retail pharmacies on the east coast and realize more of about 2 million Rx and just go on card members of kidney assist the company Proacting and fully integrated pharmacy benefits manager.
Cracks here and it has multiple subsidiaries that are well positioned within the business the business business to consumer space because he never just stick on the help.
And our Virginia, and and work to bridge, the gaps and the health care.
Tax rate of and focus on three main deliverables.
First the drug procurement optimization, so that we can help reduce the cost of medication for the.
His experience of our current offering to include primary vendor contracts and better use of cost and minimizing algorithms with the goals of.
Prompting pharmacies to significantly increase the spend on all of the marketplace.
Secondly, the utilization of patient health for the reasons as it relates to prescription journey optimization cuts.
Customers why out of and are expected to be more and logged better informed on the other medication and well.
The thing and enhanced communication that I haven't.
We intend to create a smart prescription much like we created a day and smarter drug supply chain.
This will allow customers to get the right medication and the right time and a reduced cost something the unless the has been struggling to solve the effect of tolling.
Thirdly can you do consumer carries engagement and.
And the ability to also offer of customers' convenient access to providers at all times.
Our ehealth the passport on a lot of.
How's the vaccination sort of acres and we believe our tele health and pharmacy services program and they can just one stop solution for consumers looking to simplify the health care needs.
On the capital market front, we were proactive throughout the fourth quarter and attending two investor conferences, the virtually and the rest of the summit and the Diamond equity research and Wednesday and growth and the additional.
All of the goal of enhancing broader investor awareness of our company.
The simplify we intend to bring the doctor of pharmacy and to a customer's home for the non urgent care and expensively and instantaneously and almost end to end solution the industry desperately index.
Yeah.
Also on COVID-19 has may of 'twenty, and 'twenty and challenging year for many well done and of personal and business level.
We were lucky and 2020 that the pandemic had only limited effect on our operations, causing minimal delays and all of our supply chain, but otherwise on materially and negatively affecting any of our operating results and Pat and we currently see continuing into 2020 one.
I'd like to now turn the call over to our Chief Financial Officer, Howard Daas to walk through some key financial highlights from the fourth quarter of 2020.
Thank you Sir and.
Let us discuss fourth quarter, 2020 results.
Revenues for the fourth quarter of 'twenty, and 'twenty increased 17, 1% to $2 million.
Compared to revenue of 1.7 million and the same quarter last year the.
The increase in revenue was primarily due to revenue generated by the trackside platform and trucks a prime.
Gross profit and the fourth quarter of 2020 decreased by 90% to point 1 million or six five per cent of revenues.
Compared to the gross profit of $1 3 million or $76 five per cent of revenues and the same quarter last year.
The decrease in gross profit was primarily attributable to higher costs associated with tracks, a prime transactions and the inventory.
Tori write down.
Operating expenses and the fourth quarter of 'twenty, and 'twenty were $2.4 million compared to $1.6 million and the same quarter last year.
This increase was primarily due to the loss on impairment of goodwill and an increase and employees with our expansion into business to consumer sales.
Net loss and the fourth quarter of 'twenty, and 'twenty was $2.3 million or 29 cents per basic and diluted share outstanding.
As a result of the 726000 the loss on impairment of goodwill and the $1.081 million of inventory write down and.
Compared to other net loss of $5 million or four cents per basic and diluted share outstanding and the same quarter last year.
Adjusted EBITDA, a non-GAAP financial measure of decreased two of negative $1.4 million compared to a positive for point $2 million and the same quarter last year.
Let us now discuss fiscal 2020 results.
Revenue for the 2020 year increased to 133 per cent to $17 1 million compared to revenue of $7 4.002 million 19.
The increase in revenue was due to revenue generated by attracts a platform.
And I can say prime and the Integra of pharma solutions, our wholly owned subsidiary, which revenue increased from personal protective equipment sales related to the COVID-19 pandemic.
Gross profit in fiscal 'twenty, and 'twenty increased 17, 2% of $5 $7 million or <unk> 33 per cent of revenues.
Compared to gross profit of $4 9 million or $65 five per cent of revenues for the last year.
The decrease in gross profit percentage was primarily attributable to higher costs associated with tracks, a prime and Integra farmer transactions.
Operating expenses, and 'twenty, and 'twenty were $8 $2 million compared to $4 $7 million last year.
This increase is primarily due to the loss on impairment of goodwill and increase and employees with our expansion into business to consumer sales.
The initiatives and non cash compensation.
Net loss in 'twenty, and 'twenty was $2.5 million or 33 cents per basic and diluted share outstanding compared to a net loss of $3 million or five cents per basic and diluted shares outstanding last year.
Adjusted EBITDA for the year ended 2020 was point $1 million compared two point.
Eight 5 million for the year ended 2019.
Looking at our balance sheet cash and cash equivalents were $5 9 million as of December 31, 2020 compared with $2 9 million as of December 31 2019 the.
The increase in cash was due to our fully underwritten offering of equity of which closed in February of 'twenty 'twenty.
We do not currently foresee the need for further capital to support our business.
With that I will turn the call back to Suriname for closing remarks.
Yeah.
Thank you Howard on.
Throughout the year.
Continue to drive of a business for ward, achieving several key milestones in order and depending on the road map.
The focus on innovation and development.
The various complementary growth opportunities.
This is an exciting time for tracks and I believe we are better positioned to create sustainable value for all of our stockholders debt at any price timing of the company's history.
With that I'll turn it over for the operator to begin the question and answer session operator.
Thank you Sir we will now begin the question and answer session.
The reminder, if you have a question. Please press the star followed by the one on your Touchtone phone. If you would like the withdraw your question press. The star followed by the true and if you are using speaker equipment, you'll need to lift the handset before making your selection one moment, while we poll for questions.
Our first question comes from the line of Allen Klee with Maxim Group You May proceed with your question.
Yeah.
Allen you May proceed with your question.
Can you hear me Hello.
Yes, we can get and now we can hear you on them Oh, Okay, I'm, sorry, and the and the tracks a lot of good morning, Good afternoon, and the tracks aid platform segment well what are you hearing from your customers in terms of how they were impacted in the quarter from.
From the combination of the pandemic and.
Just people being less sick from staying at home and and is there any sense of how how they're feeling I'm going into 'twenty one on those two metrics.
And that's a good question Alan Yes, it does.
And frankly and lot of impact the people, who are not travel and people don't want to go to the stores and picking up the medication and I'm talking about the maintaining of some litigation and so on and so for the visiting less doctors.
But we see that are based on the vaccination going forward or people in the travel come to normalcy, and then start increasing going today sort of independent stores and picking up the medications and and so on and so forth.
And there's still people on shaky and some other students are not open yet of that.
The states of keep opening up and I wish.
C motor and the male patients with visit these independents and then they start buying more on our platform.
Okay, Yeah on one of them health, Yeah, and I believe there were three chains of pharmaceutical chains, where you've signed deals with can you tell US and addition to Kenny of their two other ones kick the can.
Can you give us a sense of all of those three.
How many.
The farm independent pharmacies, they represent and potential patients.
Yeah.
And you have those happened and this particular first quarter of this year after the kidney drugs.
And now with the support of Nash and Uh Huh. That's the thing you have almost like on 160 to 192 retail stores and brochure and the taxes. They have it on the 150 to 175 stores.
The implementation will take the living longer even though they've signed up the I agree with the creation of the band packs and the information flow and getting into the retail store of it'll take us a quarter to two quarters and before we see any reasons.
Thank you I'll ask one other question and then I'll get back in the queue and ask for more later on.
With price for tracks a prime can you explain a little of.
What you were spending on and the quarter and and.
And how you're thinking about that going forward.
The primary knees and we started trucks had prime is some of these suppliers don't.
Half of the minimums and that and these pharmacies mishandles many of us even though there is the grant of being for example, the product is only 50 bucks and they have interest and that but that did not meet the minimum on the south of that particular supplier. So we are offering.
And the suppliers to achieve that goal through all of our trucks had prime model and so there are they are logged on the required minimums. So that we can combine to the peoples.
And three suppliers packages into one big package and send it to the pharmacy, so that they can save on the.
Transportation costs at the same time.
And will meet the minimum set of required weighted suppliers. So they actually advantage to the board suppliers has allowed the axon for pharmacies.
Yes.
Okay. Thank you very much.
Okay.
Our next question comes from the line of Jean narrow mirror with Colliers you May proceed with your question.
Thanks, Good afternoon.
Couple of things.
And just saran, if we could just kind of start with your number of pharmacy members. You indicated you added over 300 and the quarter to get you to 11800, yet that that number the total number of seems to be the same as it was last quarter and <unk>.
Going back I think a year ago, there were about closer to 12000, and so on the one hand, you're growing pharmacies, but it sure seems like Theres, some natural attrition and the business as well could you could you elaborate on that thanks.
And sure Jean.
It's the pharmacy and the we call. It is 11800 member registered members I Wouldnt segregated that out of the pharmacies. The reason is we're trying to get into the new segment of the medical clinics urgent cares and those of the things. So the number of to answer the question of 11800 plus.
The power to help me for the exact number that I don't remember the last quarter, but there is because of the pandemic. Some pharmacies for may not have been.
And I still sustaining and the business that they might of course shut it down.
And the attrition we see it on the platform.
We're not losing that many of pharmacy says we are adding.
Gotcha Gotcha, Okay. That's that's good to hear and in terms of just staying on the platform here your revenue was.
Down slightly sequentially and I understand that may be due to.
Two of the holidays, and and fewer and fewer business days, but what is your feeling about the same store growth are you is the amount of product being purchased per pharmacy delivery and get the level that you would expected it to.
And definitely we had an impact of pandemic because of the less number of patients are visiting the stores and data buying less and if you look at it and 2019 to 2020 and.
And we might have seen some spike, but you'll figure out sort of come into the 'twenty. One 'twenty. One has the new stores would it be opening up a lot of new stores. The same stores out of opening up from the pandemic coming out of the pandemic. So it's really odd ball of 2020, how the platform is growing the totality of the actual growth, but we see.
And when compared to the 2019 December one and 7 million to 2020 2 million. That's a period of platform on tracks and Prime and there is no P. P and much sales and there. So we see some growth and there, but despite the holidays and despite the less number of pharmacies opened up we see the impact, but it's all about of the per store.
For the purchase of growth for our core <unk> per month is the focus that we have adding the new categories on our platform are helping them to get to the other health care services like for example, the bottom how we'll be able to promote the Mr. Patient and next time you have of need you don't need to come to out of our store at least you can speak to the doctor and at least we can out of India.
And on and pharmacies can deliver the.
Drugs for them and those of the things that we tried to help.
And that these pharmacies and buy more and more of our own platform as we keep on adding more and more outside of wishes to that independent store.
And it makes sense. So when we think about platform growth this year.
It sounds like it's going to continue to grow is it fair to say that it'll accelerate the.
Because of where we're reopening the economy were come in and coming out of the pandemic. So we should we should probably see a truck seat growth accelerate from where it was in 2020 and more broadly speaking are you providing guidance for for 2020 one.
And we usually don't provide the guidance because we are still at a growth phase and because of the revenue drivers between the platform and bottom help on our med checks and.
Where are the growth a point and so there's still not and inflicted pointed up taking net growth. So that's the reason we are unable to provide any guy.
Guidance on that but and we should see the and growth both on the platform side, we're seeing the retail store and option of desert bottom out and of course of the Manitex launch as the.
Vaccinations and no debt.
And I'll go into the open up and <unk>.
Got it and I see the article in Wall Street also today the bite on the administration is looking into getting the the vaccination of passports and stuff. So to answer your question what are the growth phase, we still not able to provide any guidance on the revenue at this day.
Yeah, and that makes sense and last question and then from my and is on the P. P E sales.
It it they fell considerably during the quarter and I'm just wondering if that was the main reason for the inventory write down and is this 300000 or so are the right level to think about going forward. Thank you.
Yeah, because we want to focus on the platform, where we have the tech margins.
And we weren't aware of write off of a couple of on time opportunity sales.
I'd say, if the opportunity presents and this year, we will pick it up whether it's the vaccination of Samsung or whatnot.
Yeah.
Primary focus is on the technology platform on them help and metrics.
Okay. Thank you.
As a reminder, if you would like to ask the question. Please press star one on your telephone keypad.
And I, thank all of the poll for questions.
Our next question comes from the line of Howard Halpern like Tag, which brothers you May proceed with your question.
Well good afternoon guys.
Ah Thanks, Ralph and how is that in terms of the truck fleet from them. What what are the costs that were incurred a net loss.
All of you know grows from what at what would gross margin and the fourth quarter.
And as the product costs right. That's the technology, we just book on our margin and then that's the tech margin horses and.
She had prime there is the cost of goods.
And keys like that of the cost of course, because actually and reentry that we'll be carrying on it. So that's the reason you see the cost of goods high there.
So if you exclude that and the AR and inventory write down and what what would your gross margins of approximately in the fourth quarter.
Howard on the electric debt.
Yeah My rule Bear with me one second.
Right.
And so and the AR and the fourth quarter of without the inventory write down our gross margin was just a little over 61 per cent.
First of all of 2019, which was $76 five per cent.
And and that's primarily because in 2019, we had no tracks a prime sales. So we really had no cost of goods sold really hardly at all in 2019.
Okay. So going forward, that's the key plus area without.
And you know E. B E sales that should be at a base that we should be looking at going for all of them for modeling purposes.
And that's our goal to maintain.
Of evidence between 60% to 70% of the across the margins on it because as I mentioned and we want to stick to our technology business and we haven't and a fair gross margins and so we want to continue to monitor that and maintain that a pattern.
Okay and.
So.
And I don't know if you have.
Exact number but you're.
No what E P.
We're approximately in the 20.
2020 just so.
For comparison purposes, and she's gonna have really platform and technology gross going forward. So we can compare apples to apples going forward.
And we don't view the detailed.
And Howard the level of financials, but we havent segmented wise on the Panther platform sales as well as Integra, primarily and Tegra is but you have both tracks at prime on PPE and their so we tried to give as much of a segmented, but we don't have detailed product level breakup.
And I will take a little time to.
The linked to it.
Okay. So so but when you were talking about and the very beginning we should the sales growth.
And you're really talking about what platform sales growth not necessarily integra sales growth from 'twenty to 'twenty one.
Yes, our focus is toxic and platform traction and prime and bottom out and med Tech space, Yes, okay.
And also.
Are you planning to wants the CX product before the end of the the ear and will it be more the domestic launch or global on.
And we're looking at and all angles of Madison, we were talking to various potential customers of like stadiums and Madison Square garden, or we got the other and feed ablate stadiums and travel.
Travel and cruise lines and stuff and we are speaking and then we're trying to get a beat on our.
Clients sometime in the second quarter and our official launch towards the summer out of the travel well do more of it picks up during the.
Travel season this year.
Okay, Okay, guys keep up the good work.
Thank you Holly.
Our next question.
Most of the line of Allen Klee with Maxim Group May proceed with your question.
Yes, hi for for the passport product.
That you're developing how and if.
If you were to sell that to two.
Just two and event that someone's going to the event.
And I Wonder how do you envision that it would work that the app is given to someone who's showing up there is it for.
Could you could you explain that.
Sure.
That's great talent for our consumers, it's the free to use them I don't know where a plot of partner with the businesses to actually paying for all of our part of scan basis.
Our model is a like for example, you you'll cost or a consumer of the paying for of the ticket price of the scanning costs will be included in it but of our way of thinking of anywhere between a penny to 10 cents of depending on where and whether it's an international or domestic.
But it's part of cash basis average kind of time the scan in and out. So that's the way and you may ask why when Theyre coming outside we wanted to make them and maintain the integrity and he did not pass it on the passport to somebody else to get it and so we wanted to make sure that the per scan basis and no doubt that we manage and we charge them on a per scan basis.
And sometimes it may include it and the ticket prices are sometimes it's up to the business and how they wanted to maintain open up save the economy.
But we will be charging for the businesses for ease of use by the consumers.
Okay, Great and my last question and I don't think it's you're one of the things you've mentioned is the priority, but I still wanted to just know what your thoughts are the community specialty pharmacy segment.
How do you what are your priorities for your goals.
For the segment for 'twenty one.
And it's going to keep on growing and normal trend because of as I mentioned on previous calls our CSB and Integra has adhesives.
For our products to be a beta tested our alpha test and before they go into the markets and well.
Look the use these and has there.
We're generating the revenues and at the same day or there are not out of main drivers are we use them as the research on for other product launches.
Okay, great. Thank you so much.
Okay.
Ladies and gentlemen, we have reached the end of today's question and answer session I would like to turn this call back over to Mr. Stern of dry Poole for closing remarks.
Thank you operator and also like the Tech all of you for joining our earnings conference call.
And we look forward to continuing to update you on our ongoing progress and growth and.
Speaking with you again on our first quarter 2021 call.
Good day and able to answer any of your questions. Please reach out to our IR from MZ group, who would be more than happy to assist.
For any of you who may have joined the call and progress and member of direct replay of this call and webcast will be available for the next 30 days on the company website under the NASDAQ match link and.
More information regarding the financial information disclosed on this call and webcast, including the cancellation of a and non-GAAP financial statement statements can be found on our press release, which we filed after the close of the market today.
This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation and enjoy the rest of your evening.
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