Q2 2021 TRxADE Health Inc Earnings Call
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Good afternoon, ladies and gentlemen, thank you for standing by.
Welcome to track seats tracks. It helps the second quarter 2020.1 earnings conference call. During today's presentation, all parties will be in a listen only mode.
Following the presentation the conference will be open for your questions.
The earnings press release and accompanying this conference call and what you should have.
The close of the market today the.
Quarterly report, which includes additional information regarding the company's results of operations for the quarter ended June 30 of 2021 was filed with the STC earlier today on our calls and he is tracks and eat helps founder Chairman and Chief Executive Officer, Sharon of Jericho, and Howard Das as Chief Financial Officer.
The replay of this call and webcast will be available for the next 30 days on the Companys website under the NASDAQ next leg.
The company's web site and also includes more supporting industry information.
At this time I'd like to turn the call over to Howard Das and the Companys Chief Financial Officer, Howard what was yours.
Thank you operator, and thank you for joining.
Joining us today I'd like to welcome you to our second quarter 2021 and financial results Conference call.
Our press release announcing our second quarter financial results was issued after the close of the market today and is posted on our website. We've awful. So first such press release 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 operations or the performance of the company.
Including the potential continued impact of COVID-19 of the company's bill.
And the results of operations.
These statements speak only as of the date hereof, and the company and assumes no obligation to revise any forward looking statements that may be in todays press release call or webcast. These statements do not guarantee future performance and are subject to risks uncertainties and assumptions.
<unk> please.
Please refer to the press release and the risk factors and documents, we file with the Securities and Exchange Commission, including our most recent annual report on form 10-K, and the subsequently filed quarterly reports on form 10-K, 10-Q, including the form 10-Q for the second quarter.
For information on risks.
And 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 non-GAAP financial measures, which we believe are useful to supplement measures of tracks eight's performance the.
These non-GAAP measures should be considered.
In addition to and not as a substitute for or in isolation from GAAP results.
You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results and our earnings press release.
Unless otherwise stated all financial comparisons and this call will be to our.
As for the comparable period of fiscal 2020.
At this time I'd like to turn the call over to surrender of jar of Poo, the company's Chief Executive Officer, Sarah and the floor is yours.
Thank you Howard.
2020.1 has it been the year Foundation and building as we.
The continued to drive all of our telehealth and innovation.
Importing the core of the strength of all of our pharmaceutical exchange platform.
Despite the ongoing challenges to the pharmaceutical supply chain.
And by the COVID-19 pandemic.
We were able to drive strong incremental margin growth.
We're working to produce.
And the company and future success and its complementary telehealth business segments.
And Edison.
Citing smoothed off of affiliated sort of research a lot of exchange platform to comprehensive telehealth solution.
Continuing to broaden the reach as a company.
And part.
Within and pharmacies at the technology to make them indispensable and local health hubs.
Before we do it more detailed walk through our financial and operational results for the quarter.
For those of you who did the company I'd like to walk you through who we are how we are digitalized and the retail pharmacy.
The experience.
2 of the optimization of drug procurement, the prescription journey and patient engagement.
Prior to the launch of <unk>.
During the course of an independent pharmacy, and extremely laborious and time and efficient process with no inside of transparency.
ANC into a fair market price of.
Or what other sort of paying for the same drug.
Traditional wholesalers would provide unfavorable paint and clubs.
So delivery and create a difficult conundrum for approximately 21000 independent pharmacies nationwide.
We identified.
Part of this marketing efficiency as well of the incredible potential and these independent pharmacies, which together are maintained.
73.7 billion and annual purchasing power and proceeded to large truck sales.
We designed and.
And the operating business the business that based market.
From.
Bringing together the nation's independent pharmacies with the.
It created a national pharmaceutical suppliers too.
Provide a uniquely efficient and transparent buying and selling process.
Our platform lots of independent pharmacies, no the debt are receiving a fair price from competing suppliers.
And the sale of payment terms and often with next day delivery.
We believe this radical price transparency and economy of scale and competition among the suppliers needs up to 10 per cent reduction and the pharmacy total annual drug purchasing cost.
Drug label, the savings of up to 90.
Per cent and certain pharmaceutical products.
Our platform sales of pharmacies from having to manually compare prices across the distributors.
Saving hundreds of hours of unnecessary lever annually and eliminating negative reimbursement of fulfilling the prescription at a loss.
Our revenue model is simple.
The operating and administrative fee of up to 6 per cent of the buying process and a generic pharmaceuticals and up to of 1% of bad and pharmaceuticals and pass through our pharmaceutical the platform similar to Paypal and visa like model.
The date, we have seen incredible.
Credible success and garnering attention from independent pharmacies nationwide.
Validating of our business model.
We currently have around 12007 hundred plus the registered members on our platform with the.
Approximately 195, new registered members added in Q2.
The affordable grow the exchange.
How big and to partner with group purchasing organizations also known as the G. P O S.
Which allow us to secure dozens if not of hundreds of pharmacies that are the ones.
These GPO agreements can result in pharmacies purchasing and majority of their pharmaceutical from practices that debt.
And then of smaller portions and many do given the nature of outsized.
Outsized impact and all the time.
And the volume and therefore revenue book.
We announced our first of the GPO deal with quality care and May 2021.
The G P O spanning 10 states and expect the land additional gpus and the coming months.
We expect the GPO is will continue to drive pharmacies to purchase more products to the platform.
We have liberated the significant success since the launch of the aforementioned marketplace. The move into adjacent complementary business, where we can liberties of our strong retail pharmacy net.
Network and core competency and technology.
These include bottom out of telehealth subsidiary and realized the mail order pharmacy and at ex distribution.
And in 2020..1 we are focused on driving forward award adoption channels to broaden the reach of our bottom out.
Telehealth partnerships signing strategic partnerships with the brand name nationwide stores, such as the Big Lie Kinney drugs Pro Act bookshop grocery and support of Nash most recently with Dixie.
The build of a truly national platform of partners to complement our immense.
The independent Pharmacy network.
Approximately 500 stores offer a bottom of outside of wishes to thousands of users and all 50 states and expect to continue to growth in the quarters to come and as we ramp up of our strategic partnerships and anticipate an increasing number of employers turning to our.
Turnkey telehealth solution.
1 of them, how telehealth and the second quarter had approximately 7000 and 744 application downloads and approximately $6.3 per cent patient registration right.
The total application the downloads for the year at over $12.
And 100.
And approximately 6.8% of patient registration right.
Many of our relationships are still and the rollout phase where do you expect these numbers to increase and into 2022.
We continue to integrate and exciting new solutions and to the bottom of health offering.
And my including a direct to patient prescription the coupon platform through our partnership with the single care.
The capability to street and patient Labradors directly with the <unk>.
And how virtual electronic medical records and.
And the remote patient monitoring.
These product enhancements paired.
And for digital marketing strategy, and really driving up provide us with the accelerated access into new key markets alongside of our enterprise retail partners.
Our new subsidiary of my checks, which has developed a health passport App and then Concord headwinds as the government local and national.
National and international continue to change the requirements regarding COVID-19, which include testing masked mandates.
We're evaluating the next steps needed for any additional rollouts at this time.
And the capital market trends, we were proactive throughout the second quarter of 2000.
And we probably wont attending 2 investor conferences, the LD micro invitational and the planet Microcap showcase all with the goal of enhancing broader investor awareness of all of our growing company.
I would like to now turn the call over to of our Chief Financial Officer Howard Dos.
The walk through some key financial highlights from the second quarter of calling 'twenty 1.
Thank you Sharon.
Revenues for the second quarter of 2021 were $1.9 million as compared to revenues of 6.6 billion and the same quarter last year the.
The decrease in revenue was primarily due to non.
Recurring sales of personal protective equipment PPE in 2020 related to the COVID-19 pandemic.
The supply chain disruption continue to affect the wholesaler supply of generic drugs.
This has an effect on revenue from the platform more branch Jerry of lower fees and generics.
And the brand percentage of products.
And non read of the platform increased in Q2, which has a direct effect on the revenue.
Gross profit and the second quarter of 'twenty, 'twenty, 1 and totaled $8 million or 44 of 4.3 per cent of revenues compared to gross profit of 2.1 million or 34, and 4% of revenues and.
Ex border last year the.
The increase in gross profit percentage was the result of a greater percentage of the revenue from tracks a platform in 2020.1.
In 2020 of the larger share of was from P. P E sales, which carry a lower percentage of gross margin.
Operating expenses in the second quarter of 'twenty or 'twenty 1.
The same report $4 million compared to $2.5 million and the same quarter last year.
This change is primarily due to and the inventory investment loss of $1.2 million and the current period.
Net loss of the second quarter of 2021 was $2.6 million or 32 cents per basic and diluted share outstanding.
And work Dream.
Compared to a net loss of <unk> 5 million or 7 cents per basic share outstanding and the same quarter last year.
Adjusted EBITDA, a non-GAAP financial measure was negative $1.2 million for 2020, 1 second quarter compared to positive point of 2.7 million.
Stay the same quarter last year.
Looking at the balance sheet cash and cash equivalents were $4.5 million as of June 30th 2021 compared with $5.2 million as of March 31.2020.
I'll now turn the call back to sort of in for closing comments.
Thank you Howard.
And as we continue to drive far more of our cortex.
The exciting catalysts such as the addition of new group purchasing organizations.
What do we believe can drive and near term the time to operating profitability.
We believe that this taken in tandem with all the complimentary to the house.
How's the basketball business as well.
And as for our innovation driven growth.
And of course to what the fruits of the halls.
And we continue all of the rapid pace of our personnel of execution, creating sustainable long term value for all of the fellow shareholders.
With that ill turn it over to the operator to begin the question.
Oh, the answer session all of them.
True.
Thank you Sir we will now begin the question and answer session. As a reminder, if you have the question. Please press the star followed by the 1 on your touch coming from it.
If you'd like to withdraw your question press the star from 92, and if you are using speaker equipment.
You will need to lift the handset before making your selection.
1 moment, please while we poll for questions.
Yes.
Yeah.
And our first question is from from <unk>.
Allen Klee with Maxim Group. Please proceed with your question.
Oh, good afternoon for the track sales.
That form a drug platform.
2 questions related to that first.
What's your thoughts on the timing for normalization of the mix between generics and branded and then second with your announcement of the quality.
Quality care, the pharmacies G P O where you can.
Get a majority of purchases relative to your traditional.
Can you help us understand 1 like.
Are these exist with these existing customers are brand new ones and then.
Can they switchover right is it exclusive or can they switch over right away or that they have to wait a while for <unk>.
Contracts with the big 3 to go away. Thank you.
Sure Alan.
Great question. Thank you.
First of all of it first of all amounts of your patent and my question.
Still as.
Our India most of the genetics comes from the Indian subcontinent, and some of the Apis come from the Chinese country. So as we still see the radiant and Delta variant is prevalent in those countries.
We still see the supply chain issues are the same dam and the demand.
And usually in the month of June.
June and before the price of the go sometimes July the more flat and sales happen.
And as you've seen our branded and percentage of revenue is less than 1 person and we're supposed to generic so we got a double whammy on that.
Revenue from for the.
A pandemic and as well as the supply chain.
The your second question as to where we can see the GPU.
As we started in May 2021 of this partnership.
It takes a little time to understanding the process and show them the value and so.
And so we've tried to see probably towards the.
And of this 2000 and.
And 21 and beginning of 2022.
Great, Okay, and then on.
On the bone health.
You signed up Winn, Dixie, which sounds.
The.
Like that's where it could potentially be very mature.
Material.
On top of the others.
Yeah.
And you gave some good statistics I think I might've missed them, but you said, what the penetration rates and where could.
Could you maybe just say them again, and then like what is that like how many how many potential customers do you have.
That could go into your telehealth. So we can think about given these beginning penetration rates and as they grow what that could mean thank you.
Sure. Let me give you the number of first and then I'll jump back into the actual the partnerships.
The second quarter alone we have 7007.
724 application downloads of approximately 6.3% patient registration rates.
When we look at the total application the order from the ear of 12900 and that.
Approximately $6.8 per cent patient registration group.
These numbers are primarily with our own growth and we haven't.
Even considered I havent, even seen the partnership's material like the level members because of its flat to up and go through the retail levels. For example of index. If you just signed up even though.
Our main focus is for the uninsured and underinsured patients.
By the time.
And it leads us to the retail level and able to address this need it takes a little bit of time and that's the reason, we probably see the majority of growth as I mentioned.
And 2022.
Yeah.
Thank you so much and I'll I'll jump back and ask some questions later.
Thank you.
And then as a quick reminder, if anyone asking the questions you May press star and the number 1 on the telephone keypad to join the queue.
Our next question is from Jim Manheimer would call of your Securities. Please proceed with your question.
Thanks, excuse me good afternoon surround and Howard Thanks for the update I wanted to just.
Just delve in a little bit more into the platform business you talked about the weakness there with respect to fees on branded pharma being lower than generics when I think about that the the price of the brand of drug is also much much higher than the generic so.
You can talk a little bit in terms of blended rate how.
How did how did the fees shake out.
The combined basis or blended basis relative to historical patterns.
Sure, Jim and I realize that's at the local Howard also tag along and after that if you look at the sales volume from our first quarter of the second quarter, we definitely see an increase of the percentage.
And when it comes out of the revenues because of.
<unk> done because of as I mentioned, the blended it and they were close to 3 per cent and the blended rate on that.
The reason and true 3 times the 3 per cent of the 1.9 and is the actual revenue and that he was getting them and how do you want to add anything else is growth.
Yeah, No gene and I think.
I think youre right on there the.
The dollar volume of.
Product that went through the system of higher because the.
The the brands carry the higher price.
But that higher price still does not reflect.
Does that help when and where we're getting such a low percentage on the job.
And on the transaction through the system. So are the blended rate was lower this quarter than the previous quarters.
Okay, no that makes sense.
And I wanted to follow up on the on the prior question considering the various telehealth contracts, you've signed with B y and Winn Dixie Spartan.
And others.
When does this begin to appear in the revenue or and where does it will there be a separate telehealth line item and when would it become material enough for us to see that and be able to track that.
So what were anticipating and I'm probably in the first quarter.
And the 2020.2 we've tried to make it as a separate line items.
And until the time, it's and that option phrased as I mentioned and as motor and Motorola and sort of happening and these are big partnerships.
Has to pick up or down from a corporate and the retail store and.
And that's what we're doing and we can see the conversions and 2.
Crush and registrations and subscriptions and so on and so forth and we can give.
Our first quarter of 2020 of them.
Okay. That's helpful. Thanks, and last 1 from me then with respect to some of the other initiatives you have in say the digital health passport, where med checks.
And as you call it.
And how do we think about the revenue opportunity there and it seems that theres a lot of competition emerging with clear and several others. So just wondering how you're positioning there.
Yeah, as I mentioned, and we have a lot of the headwinds for the Manitex specific.
And because if you look at the Florida and other states you cannot ask any of those.
And employers are of of restaurants, you haven't panned out of it almost like a $5000. If you ask have you taken the vaccination.
And that's kind of the political environment and the masked mandates and may be coming and the future and we see.
And the headwinds.
Revenue model and as part of a scam basis.
But right now.
If I, let them build into the government sponsored.
And even app stores are not a we are alive and the Apple, but still having the struggles with the Android are to make it up and running unless I'm convinced of the valid.
A lot of it the government so.
And to answer your question, it's a per scan basis, the number but I wouldn't model did not change for the vaccination, but our eventual growth you'll see it in the house passports carrying the health records and so all of that and so forth and that.
Probably the pushed all of it from the 2020.2 towards the end of it.
Okay great.
And it again.
Thank you Jim.
And our next question is from Howard Halpern with <unk> Brothers. Please proceed with your question.
Good afternoon guys.
Uh huh.
In terms of.
The partnerships with the bottoms.
Thanks for the out.
There are you working now with these partners to begin promoting.
Motions within their stores are as we head into the third.
And fourth quarters of this year and anticipation of a you know.
Sign ups for next year.
Sure Howard that's an excellent partner yes.
And I'm here working on and rollout of each individual partnerships and and.
And gave our marketing efforts and they out of marketing other program and at the same time, we're also of marketing.
And to the common goal to increase the memberships.
Yeah, we see and we expect to see more and more of this at all.
And I was happy.
And well try to see the motor and motivation registrations.
And in terms of you know I know you've made a lot of the diet.
The investment.
In the first half of the year is that is there.
And I kind of continue at the same rate or should we model down a little bit of that type of expense from the second half of the year.
And as we had the tapping of down yes that it would be less expensive, but if we look at the balance sheet to be cleaned up most of our non and if we look at the non-GAAP best.
And the things that we have at all of the write offs of lot of Vermont, and but not the IP infrastructure development and Nike investments that have been doing for the future.
Here our growth of these products and so it can make that up or down a little bit.
But not that much.
Okay, and just from my understanding on the G. P. G. P. O is that's going to be under the trucks aid platform and carry the same type of.
Of margins of a percentage of a percentage of the.
The actions or is it going to be more negotiated.
And it should be cutting if of sat on the platform and the gross margin should be the same because it's a tech platform, we wouldn't be kind of cutting and independently of that type of product.
All of it.
Okay, and just 1 last 1 and I know you talked about the blended rate of 3%, but are you still.
The trends are.
A good volume of transactions pass through your system, even if it is slanted more towards the branded products.
Yes, as I mentioned earlier, the run compared to first quarter over the other we'd have at least 2.
And the exact person and how it helped me out but the definitely we saw the increase yeah.
Thank you.
Yeah.
Yeah the.
We don't really give the number of the dollar volume and it goes through the system, but yeah. We had a we had higher volume going through the system and the second quarter than the first quarter and and the transactions as well.
Okay.
Hey, Thanks, guys.
And our next question is from Allen Klee with Maxim Group. Please proceed with your question.
Yes, Hi, I just wanted to follow up on the G. P o's.
Is the way to look at that and that these are all new.
Pharmacies and the.
But what do you have to wait until you can but they may have a contract with the big 3 so when that contract and then you have the potential so the so there's a timing issue or is it.
Something that can happen sooner.
And it's just a timing issue, but at the same time of trying.
Per come as the contracts out of getting another new all the phase and that's the reason it's important to sign the GPO program early enough. So that we can make them kind of worse and Michigan itself from.
Okay, and and anything else you're hearing.
The or maybe from your customers on the 1 of the independent pharmacies just in terms of.
How they're thinking about business coming back and.
How much maybe they would think about using yourselves versus not using you guys.
I'll answer that and 2 for the 1 when we started this business and the beginning of this year the more in 'twenty 1000, independent pharmacies and as we look at off of 6 months actually and independent pharmacies from of 'twenty, and 'twenty and sort of March of 2020.2 per day actually new independent pharmacies number has increased and.
And so the number.
The independent pharmacies and goods.
And at the same time and so we are focusing for a platform on the clinic side and clinical like put the outreach and the other smaller and you know changed and so we expect to grow not only of the pharmacy side of it should we expect to go onto the clinical side of the business also.
Answer the question.
Remember a few days of the mindset.
So the supply chain issue, but it's coming out of the pandemic and they're some of the business should go back to normalcy towards the end of the year unless and until the Delta really in terms of.
And the majority of impact locally here and as well as international.
Great. Thank you so much.
What we see.
And we have reached the end of our question and answer session I'll now turn the call back over to the Syrian and as you ramp of with any final remarks.
Thank you operator.
Also like to think of all of your lot of joining for all of the earnings conference call.
And of course, the continuing to update you on our.
I'm going to progress and growth.
And so what I'm able to answer any of your of questions. So please reach out to all of our IL from MZ group.
The more than happy to assist and organize a call with us and thank you.
Yeah.
Yeah.
Yeah.
Thank you for your participation you may now disconnect.
Good day.
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Okay.
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Sure.
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Uh huh.
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Uh huh.
Yeah.
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