Q4 2021 TRxADE Health Inc Earnings Call
Good afternoon, ladies and gentlemen, thank you for standing by welcome.
Welcome to trick shade health's.
Fourth quarter and annual 2021 earnings conference call.
During todays presentation, all parties will be in a listen only mode.
Following the presentation the conference will be opened for questions.
The earnings press release accompanying this conference call was issued at the close of the market today.
The annual report, which includes additional information regarding the company's results of operations for the year ended December 31, 2021 was filed with the S. E C earlier today.
On our call today is tricks aid helps.
Founder Chairman and Chief Executive Officer, Sharon I'll drop off and Howard Das, It's Chief Financial 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's web site also includes more supporting industry information.
At this time I'd like to turn the call over to Howard Das The company's 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 fourth quarter and annual 2021 financial results conference call.
Our press release announcing our 2021 fourth quarter and annual financial results was issued after the close of market today and is posted on our website.
We have also furnished such press release to the SEC on form 8-K.
Finally, we have 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 operations or the performance of the company, including a 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.
Call or webcast, except as required by law.
These statements do not guarantee future performance and are subject to risks uncertainties and assumptions.
Please refer to the press release and the risk factors and documents, we filed with the Securities and Exchange Commission, including our most recent annual report on Form 10-K .
And our subsequently filed quarterly reports on Form 10-Q 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, where we will discuss 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 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.
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 job pool the.
The company's Chief Executive Officer, Sharon the floor is yours.
Thank you Howard we saw margin improvement has that revenue base to return to the core track FID pharmaceutical exchange platform by year end 'twenty.
'twenty one.
So you can expect a drop off in the one time personal protective equipment sales. The good magazine 2020, which were driven by the initial onset of the COVID-19 pandemic.
Our nationwide footprint continues to grow and we have relentlessly focused on exciting new ways to expand.
Proportional wallet share within our large growing network of registered users by better enabling them to service their prospective customers. The end users further growing their loyalty to their local retail pharmacy.
Before we would do a more detailed walkthrough of our financial and operational results for the year 2021 and fourth quarter and the year ended December 31, 2020 one for those of you who are new to the company I'd like to walk you through who we are how we are realizing the retail pharmacy speed.
Again through the optimization of drug procurement prescription journey and patient engagement.
Prior to the launch of Taxane.
Doug codes as an independent pharmacy, with an extremely laborious and time and efficient process.
Inside our transparency into a fair market price or what other without paying for the same drug.
Traditional wholesalers would provide unfavorable payment dumbs slowed already created difficult conundrum, because the opportunity.
<unk> 57900, independent pharmacies and thought of it or the medical clinics nationwide.
We identified this marketing efficiency as well as the incredible potential in these independent pharmacies and clinics.
It's still good theyre, maintaining estimated approximately 67 1 billion in annual purchasing power and proceeded to launch the vaccine.
We design and operate our business to business that based market platform.
Bringing together the nation's independent pharmacies, but then that created the national pharmaceutical suppliers to provide a uniquely efficient and transparent buying and selling process.
Our platform, that's independent pharmacies know that they're receiving a fair price from a competing suppliers and a fan of payment terms offered the next day delivery.
We believe this radical price transparency economy of scale and competition amongst suppliers needs up to a 10% reduction in their pharmacies total annual drug purchase costs with a drug level savings of up to 90% on certain pharmaceutical products.
Our platform things pharmacies from having to manually compare prices across not just computers saving hundreds of ourself unnecessary labor annually and eliminating negative reimbursement are fulfilling a prescription at a loss.
Our revenue model is simple.
They paid an administrative fee of up to 6% of the buying price on a generic pharmaceuticals and up to 1% on branded drugs that pass through or pharmaceutical platform similar to a paypal or we felt like model.
To date, we have seen incredible success in garnering attention from independent pharmacies and clinics nationwide validating our business model.
At the end of 2020 , one we had over 13100 plus the registered members on our platform with approximately 175 near registered members added in the fourth quarter alone.
In February 2022, the company announced the formation with an exchange health LLC, a joint venture sauce at X L. L C and pharmaceutical platform.
[noise] sauce, Alex will provide pharmaceutical manufacturers a single platform to optimize the sale and distribution of their inventory directly to large pharmaceutical biotech across multiple classes of trade.
It's orthotics opens the market to short dated well, one stock and slow moving pharmaceuticals that would otherwise be subject to destruction.
Tax rate anticipated growth in this joint venture in 2022 as more progress through manufacturers' I'd expect it to address the public need, but enhanced medication accessibility and reliable supply of cost effective pharmaceuticals.
We have eliminated a significant sector since the launch of the aforementioned marketplace platform.
We're doing it just in complementary business, where we can leverage our strong retail pharmacy network and core competencies in technology.
These include bottom how thorough telehealth subsidiary, which for the year ended 2021 had approximately 22000 application downloads with an approximately $10 nine person patient registration right.
However, many of our relationships are still in the rollout phase and have yet to generate significant revenues.
And the capital market front, we were proactive in 2020 , one attending for Premier Investor conferences I call. It a fifth annual Investor Conference Hitachi Wainwright, 23rd annual Global investment Conference and Ben Jaguar Health Care Conference and finally, the LD micro main event.
This week at the maximum virtual growth conference I'll be presenting on the panel technology, improving health care, which will be held on March 30th at 130 P. M Eastern daylight time.
We attended a conference with the goal of enhancing brought out in Westborough Radnet Socal our 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 fourth quarter of 2021, and the full year ended December 2020 one.
Thank you Sharon.
Let us discuss fourth quarter 2021 results.
Revenues for the fourth quarter of 2021 increased 19, 7% to $2.4 million compared to revenue of 2.0 a million dollars in the same quarter last year the.
The increase in revenue was primarily due to revenue generated by the trackside platform and tracks a prime.
Gross profit in the fourth quarter of 2021 increased 831% to one point to $4 million or 51, 9% of revenues compared to $1 million or six 5% of revenues in the same quarter last year.
The increase in gross profit was primarily due to.
To revenue generated by trackside platform, which has a lower cost of sales.
Operating expenses for the fourth quarter of 'twenty, and 'twenty, one where $2.0 million compared to $2.4 million in the same quarter last year. This decrease was due primarily to a loss of impairment of goodwill recognized in the same quarter last year, which was a one time charge.
Net loss in the fourth quarter of 2021 was point $8 million or 10 cents per basic and diluted outstanding share compared to $2 $3 million or 29 cents per basic and diluted.
Share outstanding as.
As a result of $726000 loss of impairment of goodwill and a one time $1.081 million inventory write down of P. P E items compared to the same quarter last year.
Adjusted EBITDA and non-GAAP financial measure decreased to negative <unk> $8 million compared to a negative $1.4 million in the same quarter last year.
Let us now discuss the fiscal 2021 results.
Revenues for the 2021 year decreased 42, 2% to $9 $9 million compared to $17 $1 million in 2020.
The decrease in revenue was due to revenue generated by Integra pharma solutions, our wholly owned subsidiary.
Revenue was from personal protective equipment sales relating to the COVID-19 pandemic in 2020.
Gross profit in fiscal 'twenty, 'twenty, one decreased 16, 8% to $4 $7 million or 48% of revenues compared to $5 $7 million or 33% of revenues for the same period last year.
The increase in gross profit percentage was primarily attributable to higher margins associated with trackside platform revenue, which has a lower cost of sales.
Operating expenses in 'twenty, and 'twenty, one where $10.0 million compared to $8 $2 million last year.
This increase is primarily due to the loss on inventory investment and an increase in IP initiatives in our bottom health and alliance pharma companies.
Net loss in 'twenty, 'twenty, one was $5 $3 million or 65 cents per basic and diluted share outstanding.
Compared to $2 $5 million or 33 cents per basic and diluted share outstanding last year.
Adjusted EBITDA for the year ended 2021 was negative $3 $7 million compared to a positive $1 million for the year ended 2020.
Looking at our balance sheet cash and cash equivalents were $3 $1 million as of December 31, 2021 compared with $5 $9 million as of December 31 at 2020 did.
The decrease in cash was mainly do it through our I T initiatives with bottom Health Alliance pharma and a loss on inventory investment.
With that I will turn the call back to surrender for closing comments.
Thank you Howard and somebody will focusing on exciting strategies to drive forward our core business.
I think we are building an incredibly compelling health care ecosystem 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.
That I will turn it over to the operator to begin the question and answer session operator.
Thank you at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset.
Before pressing the star keys, one moment, please while we poll for questions.
Okay.
Our first question comes from Allen Klee with Maxim Group. Please proceed with your question.
Good afternoon.
Could you talk a little more about your new pharmaceutical joint venture until and in terms of how you think about what the opportunity is in <unk>.
And how you think about the timing of rolling this out thank you.
Sure Alan Thank you good afternoon.
That's why it's Opex if you look at the total U S agenda drug market reached almost like $127 8 billion in 2020 alone.
But it seems like a product that becomes short dated Woodstock, a slow moving over time and become off contract.
So asada marketplaces innovative platform that offers an alternative sales channel to manufacturers to sell these off contract pharmaceuticals to a national distributors chain pharmacies grocery chain somehow about pharmacies that substantially lower pricing in bulk.
Its marketplace offers proprietary algorithms.
Yes.
Client pricing transparency and negotiation tools to improve product sets so too.
I'll answer your question how long we just started this in February of 2022 of this joint venture.
Spend all of it or the big change wildly I still supplying ataxia platform focuses on our independent pharmacists.
Yeah.
Yeah.
Thank you and then my follow up question is is there any commentary you can give us on how you're thinking about 2022.
Elements as we still have that grow up phase, what I'm able to give you that.
Members, because that's you're seeing that new initiatives orthotics, and all that we charge administrative fees and up to 20% paid by the manufacturer to support our purchase price on the pharmacy.
I'll pass it on our platform.
As in the taxpayer and even 6% of our bike price and hygienic. So these initiatives have started most recently.
To see how fast and this technology players possible attached to it as well as hostile that's what will take place. So that's what he thought we are unable to give you a projection.
Continues to grow both platforms.
Okay.
Great. Thank you so much I'll get back in queue.
Hum.
Our next question comes from Howard Halpern with <unk> Brothers. Please proceed with your question.
Hi, guys.
Little bit of a view on how.
Supply chain has maybe changed a little bit between generics and branded products as he returned to a more normal.
Pattern for you.
I'll take a first stab at it and I'll, let Howard give you more than that also.
We still see some of the supply chain of events.
More.
Rolling into this year as everybody understands the waters going on and some of them that come generic pharmaceuticals, primarily come from.
India or China out of Europe that has an impact on it.
You can see the branded sales on our platform with a generic of course, if you look at our numbers, we would make more money on the agenda sales unless percentages on the branded.
You can see that.
Some of the fall through that but I think it's going to pick back up.
To the normalcy.
As we see in the second grade coming.
Quarters, like second and third quarters.
Howard do you want to add anything.
Yeah, No Howard I would I would concur with Saran I think the wholesalers are telling us right now that they're starting to see a little bit better view and supply of the generics, which is where they make their money as well just like we make it on our platform. So we think that's becoming more normalize although it's quite got there yet.
Okay.
My follow up would be could you talk a little bit about.
Group purchasing organization and how that is progressing and where will that revenue flowing to will that be in Canberra.
Segment first.
Yes, the G P O.
It's still coming onto the platform side.
Completely until they can take outside the reason is that we want.
G P O us to bring in more and more pharmacies to come onto our platform and buy their products.
So we don't distinguish from there.
Okay. Okay. Thanks, I'll hop back in.
Our next question is a follow up from Allen Klee with Maxim Group. Please proceed with your question.
Yeah.
For your telemedicine efforts could you talk a little about.
How youre thinking about the.
The pick up in and kind of what your strategies will be going forward to I know, it's very early to to to increase the adoption.
Yeah.
Yes, Alan if you look at it in 2020 , one we brought in a big wholesalers.
To say that wholesale or the big grocery chains.
Winn, Dixie and Berkshire, Hathaway, and so on and so forth.
If you look at the 2022, we signed and launched a KOL bonds with 163 gross wells or some guy some much in those markets.
And along with our independent pharmacies.
Approximately added in the last quarter.
Nestle.
Picking up the momentum.
We're not there yet.
So if you look at it we have around 22000 downloads as I mentioned, approximately 11% of them convert it into that.
Ah patient registrations.
Could could you tell us.
This is my follow up the total amount of.
Customers are theoretical customers that you could penetrate and maybe what a reasonable penetration rate of them could be when you're when you're finally scaled up a range of how how.
How you would think about it you know that could be you know a couple of years from now, but how should we maybe think of that.
Sure.
Don't have that much clarity on the Winn Dixie Big live Oak shares spots are nice, but I'll give you what we have visibility on our 13100 class.
Members in that.
I'm, serving almost like 15 to 20 million patients.
So even if I can can what next.
The next four to five years, 10% of that it's a million patients that are out there.
A $20 power substation per month, that's worth.
It can have on our potential and can grow on top of that.
Yeah.
Great since.
Try to ask another question since I I think there might be I'm, not holding anybody else up.
Your expenses, where we're.
A bit better this quarter.
And you didn't have like one time things.
Okay.
How do you think about like your plans to grow expenses operating expenses relative to revenue.
I'll take a stab at it and then in Alaska.
I want to join.
As I mentioned, you've seen the gross margin increase I think relatively we keep these expenses standardized.
Now, it's the market platform has to pick up more and more.
Their per wallet share per month.
Existing platform, we tried to see more and more product volume going through our member network.
More and more margin increase.
Howard do you want to add anything.
Yeah I think those are the those are the key points are there Alan I think the expenses have been stabilized really got off on a monthly basis and that is now it's just kind of a a decision on whether we want to keep them at those levels or or or change them relative to how the revenues coming in.
Alright, thank you.
You answered a question about your G. P. L T P O.
It seem like that could be a very large opportunity when it scales up I wasn't quite sure I understood your answer in terms of.
How youre thinking about the timing of I'm getting.
Getting them operating and cause if you could provide some color on that.
So we've just launched the concept a few quarters ago, we still yet to see the full blown Epo. So we're going to continue to go through that R&D board, rather quarter, we'd be able to give you a more elaborate answer.
Towards the second quarter.
Okay great.
Maybe a last question when you talk to your independent pharmacies.
What are they saying are the biggest challenges, they're facing now and how they're feeling about the relative.
The demand outlook today, maybe versus a year ago.
Sure.
As you have seen they also saw the pinch and the.
And our supply chain and squeezed from the big boxes, there are insurance companies or the DIR fees and so on and so forth that's what he's doing.
All our platform trying to spend more on our platform.
In addition to that.
Are there more.
So the telehealth description sort of walking into this box changed and that's where the where we've launched our bottom how do we want to empower our independence.
Our bottom held so that at least they can offer to their patients. So the next time the patient has been until they ultimately those prescription can walk into my independent stores that walking into but also the box ship through that and that's another opportunity.
Let's see the other opportunities in that.
Telehealth, there that's coming up at the tail events and so on and so forth. Those are the prescriptions that they can these independents can see so that they can sustain in that business in the long run.
Great. It sounds like you have a lot of a lot of great opportunities. So thank you so much.
Thank God.
Our next question is a follow up from Howard Halpern with Tag, which brothers. Please proceed with your question.
Uh huh.
Two quick ones, where are you in terms of the specialty pharma.
You were able to operate in.
That remember we have not segregated.
But we can probably give you the more detailed but right now I don't have it top of my head.
Yeah.
It's more than half the country right.
Yeah, we are.
Look at our out of our total member network wherever we are going with this is how.
How long the independent pharmacy is like a 21000.
And plus we have expanded into the clinics almost another 30 to $40 in combined put together are owned and 57000 member and you can go after auto which I only have about 13100 plus members on my platform.
Okay.
And the final one is.
Its a crime how successful.
What how how much consumer acceptance or your customer acceptance are you seeing and is that revenue.
You had a very good fourth quarter and integra.
That revenue flowing through to the Integra segment.
Yes, absolutely revenues flowing through and take out pharma like we're still at a nascent stage.
Hum.
He isn't even a substantial results in that model.
So if you look at it it's only not even.
Less than 10% of the top line the other news or tracks a prime revenues. So we have to see that product or at least see that model.
Growing substantially.
Okay. Okay. Thanks.
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 I'll drop offs for closing remarks.
Thank you operator.
Also like to thank you all for joining our earnings call.
For this call.
Look forward to continuing to update you on our ongoing progress and grow.
But unable to answer any of your questions. Please reach out to our IR department at email IR at <unk> Dot Com the company would be more than happy to assist.
But any of you who may have joined the call and progress. They remember that a replay of this call and webcast will be available for the next 30 days on the company's website under the NASDAQ call them matched link and that is that more information regarding the financials.
Disclosures on this call and webcast, including the cancellation of non-GAAP financial information can be found in our press release, which we filed after the close of the market today.
I would've gone.
This concludes today's conference you may disconnect your lines at this time. Thank you all for your participation.
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