Q3 2021 TRxADE Health Inc Earnings Call

Good afternoon, ladies and gentlemen, thank you for standing by welcome to trucks eight health third quarter 2021 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. The earnings press release accompany.

During this conference call was issued at the close of the market today.

Quarterly report and which in which includes additional information regarding the company's results of operations for the quarter ended September 32021 was filed with the S. E. C earlier today on our call today is Chuck State Health founder Chairman and Chief Executive Officer, Sharon RJ ruble and Howard.

Thus, it's fine it's 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 Meds link.

The company's web site also includes more supporting industry information at.

At this time I'd like to turn the call over to Howard Das The Companys Chief Financial Officer, Howard the floor is yours.

Thank you operator, and thank you for joining us today I'd like to welcome you to our third quarter 2021 financial results conference call.

Our press release announcing our third quarter financial results was issued after the close of market today and is posted on our website.

We also have furnished 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 for 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 maybe made in todays press release call or webcast. These statements do not guarantee future performance and are subject to the risks uncertainties and assumptions.

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 subsequently filed quarterly reports on Form 10-Q, including the Form 10-Q for the third quarter.

For information on risks uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.

In addition, during today's call and webcast, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of tracks AIDS performance.

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 at the end of our earnings press release.

Unless otherwise stated all financial comparisons in this call will be to our results for the comparable period of fiscal 2020.

During the question and answer portion of today's call.

Please limit yourself to no more than one question and one follow up.

At this time I'd like to turn the call over to Serena <unk>, the company's Chief Executive Officer.

<unk> the floor is yours.

Thank you Howard.

We saw strong margin improvement.

Our revenue base and they tend to the core Taxane pharmaceutical exchange platform that being.

Being an expected drop off in the plus time personal protective equipment sales go because I think 2020.

What's really driven by the initial onset of the COVID-19 pandemic.

Our nationwide footprint continues to grow we have relentlessly focused on exciting new ways to expand proportional wallet share within our large network of independent.

Pharmacy members.

I better enabling them to service.

And that's affecting customers.

End users.

Growing their loyalty to their local pharmacy.

I would tell you how the subsidiary bottomed.

That's continued to grow as well building that foundation and we believe we can build upon but he has to come not only offerings and advanced telehealth offering, but concurrently allowing customers to retain their own health care data in a secure compliant manner.

It provides an exciting opportunity liberating our large established national footprint of retail.

Retail partners to drive the growth.

Before we do have more detailed walk through our financial and operational results for the quarter.

Those of you and you've been the company I'd like to walk you through the who we are how we have digitalized the retail pharmacy experience to the optimization of the drug procurement prescription journey and patient engagement.

And to the launch of CAC paid obtaining got Cogs as an independent pharmacy is extremely laborious time and efficient process is annoying tied on transparency and the fair market price or what are the are they stopped paying the same truck.

Hey, just got a wholesaler, who would provide unparalleled lupe and tons.

Every and create a difficult conundrum of the approximately 21000 independent pharmacies nationwide.

We identified this marketing efficiency as well as the incredible potential in these independent pharmacies, which to get that to maintain at $174 billion in annual purchasing power and proceeded to launch Taxane.

We design, all operate and business to business web based marketing platform.

Bringing together the nations independent pharmacies.

The national pharmaceutical supplier to provide a uniquely appreciated and craftsman buying and selling process.

Our platform less independent pharmacies know Darius he didn't get paid price some competing suppliers and a fair terms and often with next day delivery.

We believe this radical price transparency.

We have scale and competition among their suppliers makes up to a 10% reduction in pharmacy total annual drug purchase costs in a drug like with savings of up to 90% and some pharmaceutical products.

Our platform SaaS pharmacist from having to manually compare prices across the distributors.

Hundreds of hours of unnecessary labor annually, and eliminating negative reimbursement fulfilling a prescription at a loss.

Our revenue model is simple.

Paid an administrative fee of up to six person of the buying price and a genetic pharmaceuticals and up to one person on brand pharmaceuticals that pass through our pharmaceutical platform similar to Paypal on race I like model.

To date, we have seen incredible success in garnering attention from independent pharmacies nationwide validating our business model.

We currently have over 12950 registered members on our platform at approximately 250 annuity members added in the third quarter alone.

To further grow the exchange.

Got to partner with group purchasing organizations also not a GPO loss, which will allow us to secure dozens if not hundreds of pharmacies at once.

These GPO agreements can result in pharmacies Cortez again majority of their pharmaceutical subtracted.

Rather than a smaller portion as it may do giving them an outsized impact on our transaction volume therefore revenue Cook.

We announced our first GPO deal quality care in May 'twenty, 'twenty, one and GPO spanning 10 states.

We expect the GPS will continue to drive pharmacies to purchase more product or the platform.

We have live live race that was significant success since the launch of before mentioned marketplace platform to more into a.

Complementary business, where we can leverage our strong retail pharmacy network and core competency and technology.

These include bottom health, our Tele health subsidiary as well as they made out of pharmacy Aeronautics visa.

In 2021.

Focused on driving forward and option channels to broaden the reach of our bottom how telehealth partnerships signing strategic partnerships with brand name nationwide stores, such as Winn Dixie Kenny drugs.

Brookside grocery company sponsored mass and most recently big buy foods.

He built a truly national platform partners to complement our immense independent pharmacy network.

Approximately 500 stores off of bottom house that wishes to thousands of users in all 50 States. We expect to continue to grow in the coming quarters to come as we ramp up our strategic partnerships and you anticipate an increasing number of employers turning into our turnkey telehealth solution.

Bottom how telehealth in third quarter at approximately 5925 application downloads within approximately 18, 7% patient registration Greg.

The total application downloads for the year, our over 18750, and approximately 10, 6% patient registration rates.

Many of our relationships are still in the rollout phase, but do we expect these numbers to increase into 2022.

We continue to integrate exciting new solutions into the bottom health offering, including a direct to patient prescription drug coupon platform.

Partnership with single care, they believed to streamline patient elaborate goes directly into bottom how what's your electronic medical records and remote patient monitoring.

And Edison Ballroom How's the recently launched prepaid digital telemedicine passes providing an innovative new way, but uninsured the consumers to gain access to vital health care services, all while concurrently teaming the path for organizations.

Efficiently gift health care to those in need.

We believe that these product enhancements paired with our digital marketing strategy.

Wrapping up provide us with an accelerated access into new key markets alongside our enterprise partners.

And the capital markets trend.

We're proactive in recent months attending for Premier Investor confidence as a colleague fifth annual and investor confidence.

<unk> 20, <unk> annual global investment conference.

He got a health care conference.

The LD micro main event.

All with the goal of enhancing broader investor awareness of our growing company.

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 third quarter of 2021.

Thank you Sir.

Revenues for the third quarter of 2021 were $2 $6 million as compared to revenues of $1 9 million for the second quarter of 2021.

Which increase was a result of our tracks a prime program.

Revenues for the third quarter of 2020 were $6 $3 million. The decrease from 2020 was a result.

Primarily of one time nonrecurring sales of personal protective equipment in 2020 relating to the COVID-19 pandemic that did not continue in 2021.

Gross profit in the second quarter of 2021 totaled $1 $3 million or 52% of revenues compared to gross profit of $1 9 million or 35% of revenues in the same quarter last year.

The significant increase in gross profit margin was a result of less lower margin P. P E sales in 2021.

Operating expenses in the third quarter of 2021 were $2 6 million compared to $1 8 million in the same quarter last year, primarily as a result of it development and marketing investments made in bottom health and an allowance for bad debts of $630000.

Net loss in the third quarter of 2021 was $1 $3 million or <unk> 16 cents per basic and diluted share outstanding.

<unk> to the net profit of $1 million or two cents per basic share outstanding in the same quarter last year the.

The decrease was due in part to an allowance for bad debts of $630000. The.

The company had an accounts receivable with a single customer for the amount of $630000, which was past due and executed a note receivable, which was due on September 30th 2021.

Which was not paid the.

The company has reviewed its policies and does not anticipate additional allowances.

Adjusted EBITDA, a non-GAAP financial measure was negative <unk> 5 million in the third quarter of 2021 compared to a positive <unk> 7 million in the same quarter last year.

Looking at the balance sheet cash and cash equivalents were $3 6 million as of September 30th 2021, compared with $4 5 million as of June 30, 2021.

Cash decreased mainly due to increased spending for the development and marketing of bottom health Med checks health passport.

Meds interacts aid prime.

I'll now turn the call back to surrender for closing remarks.

Thank you Howard in summary, we're focusing on an exciting new strategic partnerships to drive forward our core business.

Diversifying our revenue base.

One exciting thanks to bottom out.

Taken as a while I think we are building an incredibly compelling health care ecosystem.

Giving consumers access to their affordable Coca building, an exciting value proposition for all stakeholders.

I look forward to seeing what the future holds as we continue our rapid pace of operational execution, creating sustainable long term value for my fellow shareholders.

With that I'll turn it over to the operator to begin question and answer session operator.

Thank you Sir we will now be a we will now begin the question and answer session. As a reminder, if you have a question. Please press the star followed by the one on your Touchtone phone if you'd like to withdraw your question press. The star followed by the two and if you are using speaker equipment, you will need to lift the handset before making your selection.

One moment, please while we poll for questions.

Your first question comes from the line of Allen Klee with Maxim Group. Please proceed with your question.

Good afternoon.

For the group purchasing organization a partnership could you explain a little bit more about that it seems like.

You have an opportunity to get a much higher percentage of of the drug sales but.

Could you explain a little more in terms of are you exclusive on that and is it depended on the run off of our contracts with the big three wholesalers how does.

Think about how that could flow into revenues.

Revenues and profits. Thank you.

Sure. Thanks Alan.

Question. The GPO program you are absolutely correct.

Can you just kind of be increasing.

We have not entered into the contract yet.

Because the process is still going on.

Our goal is to enter into a contract with these pharmacies. So that we can become data.

Primarily.

And in that sense, so that a higher percentage of their sales could go through our platform.

To continue the members again, evidenced pharmacy that does 3 million annual revenue.

You can buy a quarter million to $300000 worth of drugs per month.

That's where we are going after.

The GPO program.

Thank you and then my follow up question is on the tracks.

Tracks as a prime segments.

You showed good sequential improvement.

Could you talk about.

In terms of the issues that you've had in the Paas with.

Supply challenges of generic drugs.

Maybe how the total volume of drug sales were and I know the bite and administration is working on some things to try to improve.

Drug sourcing and they.

Actually sat down with the whole supply chain things, they're working on so maybe your thoughts on how.

This issue is going to work itself out thank you.

It's true we still continue to see that our supply issues, but that's classic time actual list price on the supply chain issues because some of these wholesale or still have an access to the drug and that's what you may have seen or percentage the platform revenue might have gone down because when you're able to push through more brand.

So it's just generally so we continues to see the supply chain issues.

Hopefully that will be elevated and chalk the coming quarters.

Thank you.

As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad as a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment. Please while we poll for more questions.

Your next question comes from the line of Howard Halpern with Tag Glitch Brothers. Please proceed with your question.

Good afternoon guys.

But after all of them.

When I talked about incorporating I guess electronic health records into the bottom platform is that your own technology that you bring into the platform that you've developed or is it outside.

Outside technology.

No that's great question again.

As I mentioned earlier, the med tech space, all about that help because accessibility.

Trying to put under the I know it's granted the current scenario is a vaccination report.

Covid testing.

Consider it as a healthy consults obvious that we need to put underneath the bottom because you'll be able to access your health records when you're talking to the telemedicine Doctor. So that's the reason that sexual automatically flow under the bottom hub using our own technology to caddie.

With regards to as I mentioned, that's my checks have been developed in the blockchain. So that you can able to easily access to one doctor to other doctor. So you have your own control on your on the health of the cards. So that we could you can take care of your well being.

That's our intent.

Okay. So to answer your question, yes, it's our own technology.

Okay.

And just.

My second question is just where the.

We can you know based on past history should we be looking at.

Yeah fourth quarter you.

You know, we'll have a seasonal dip in revenue due to the holiday season compared to third quarter results or is that going to go back to.

Historic norms like that.

Yeah. It will go back to the historical norms as you absolutely pointed out most of these pharmacies take towards the end of the quarter pretty much shut down for the summer 'twenty up to rest of the year.

Yes, we see the same historically same client revenue is from the last call.

Okay I just wanted to make sure okay. Thanks.

Your next question comes from line of Nathan Weinstein with Aegis capital. Please proceed with your question.

Hey, good afternoon, and thanks, so much for taking my question.

We just saw a great improvement in gross margins I think that was thanks in large part to the mix, but maybe you can speak to how we might think about margin progression ahead, notwithstanding any of the seasonal factors.

That were raised in the prior question.

Sure.

As we continue to increase our platform.

The margin will try to sustain but then for you are adding to our GPO program, but we will have a cost of goods. So that's me.

Deep into the gross margin, but we tried to have the balance between our technology platform revenue source. So it's all a GPO revenue.

Our intent is to make our pharmacies to come onto our platform by and it's all about the poor wallet share per month is the one that we focus on so we've tried to maintain that margin.

Sometimes the pressure comes from a GPO the cost of goods may drop in gross margin.

Okay fair enough and I appreciate the color.

Your next question is a follow up from Allen Klee with Maxim Group. Please proceed with your question.

Oh hi.

Tank roofs pharmacy segment.

It's not profitable today could you give us an update on what the strategy is there and is there a paas to to move that to breakeven or profitability.

Sure.

Is that pharma.

Nothing about our tracks at Prime So what does that leave you drive attractive Prime model is we want to help all of our independent pharmacies.

Trying to deal with multiple and why I say, it's multiple package boxes that are coming in during the day.

So our model that attracts a prime is wanting wise and one payment model.

And.

That's one where we have continues to surprise on that tax a trial and error.

As we started out very small that have anything prospector costs have eaten away quite impressed with your costs are added up to the.

Lossmaking proposition, but eventually towards the third quarter over fourth quarter, we tried to see profitability at an attractive price.

Thank you.

Another follow up question for Bonum Health care, you have partnerships with the <unk>.

Bunch of.

Change.

We're implementing but you also have an opportunity to just sell it to your own independent pharmacies that you have as customers have.

How are you pursuing I'm trying to get a penetration, but your own independent pharmacies.

So it's fundamentally relaunch at the bottom how to do support and help our.

Our independent pharmacies, even look at it at the most recent purchase of the Walgreens related empty for a pipeline 2 billion, 60%, we want to make and as I.

Given this independent sustainability in the long run, even though we'll partner with other smaller change, but all our focus is empowering our independents and continues to do a constant marketing and help them to create a law.

<unk> Pak.

So we create their website because we give them all the help that they need so that they can drive their patients.

Those websites.

Okay. Thank you so much.

Ladies and gentlemen, we have reached the end of the question and answer session and I would like to turn the call back to Mr. Sharon Andrew <unk> for closing remarks.

Thank you operator.

Also like to thank you all of you for joining our earnings conference call.

CT to continuing to update you on our ongoing progress and growth.

We were unable to answer any of your questions. Please reach out to our IR firm MZ group.

Who would be more than happy to assist.

Please also note that a replay of this call and webcast will be available for the next 30 days on the Companys website under the NASDAQ merge link and more information regarding the financial.

Information disclosed on this call and webcast, including non reconsideration on non-GAAP financial information can be found in our press release, which was filed.

After the close of the market today. Thank you all.

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Yes.

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