Q2 2022 TRxADE Health Inc Earnings Call
Good afternoon, ladies and gentlemen, thank you for standing by.
Welcome to track each health second quarter 2022 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. Its earnings press release accompanying this conference call was issued at the close of the close of the market today the.
The quarterly report, which includes additional information regarding the company's results of operations for the quarter ended June 32022 was filed with the S E C or at least today.
On our call today is <unk> founder Chairman and Chief Executive Officer, Sharon is Europe .
And Janet Huffman, Chief Financial Officer.
The replay of this call and webcast will be available for the next 30 days on the Companys Web web site under the NASDAQ Meds like the company's web site also includes more supporting industry information.
At this time I'd like to turn the call over to Janet Hoffman, The company's Chief Financial Officer, Jenny the floor is yours.
Yeah.
Thank you operator.
And thank you for joining us today I'd like to welcome you to our 2022 second quarter financial results Conference call.
A press release announcing our 2022 second quarter 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.
Statements made on this call and webcast will include forward looking statements.
Statements include but are not limited to our outlook for the company.
Statements that estimate or project future results of <unk>.
Operations or the performance of the company.
These statements speak only as of the date hereof and the company assumes no obligation except as required by law to revise any forward looking statements that may be made in today's press release call or webcast.
These statements do not guarantee future performance and are subject to risks uncertainties and assumptions.
For information on risks uncertainties and assumptions that may cause actual results to differ materially from forward looking statements. Please refer to the press release.
Risk factors included in our most recent quarterly report and our most recent annual report and other documents, we file with the Securities and Exchange Commission.
These documents include but are not limited to our most recent quarterly report on Form 10-Q.
And any subsequently filed periodic report.
Current report on form 8-K.
In addition, during today's call and webcast, we will discuss non-GAAP financial measures, which we believe are useful as supplemental measures of check stage performance. These non-GAAP measures should be considered in addition to not in and not as a substitute for or in isolation.
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 2021.
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 surrender job to the company's Chief Executive Officer Darrin.
Thank you Janet.
We continue to see revenue improvement in 2022.
And our revenue base continues to return to the call to track food pharmaceutical market platform.
Our nationwide footprint continues to grow.
We are relentlessly focused on exciting new ways to support our large and growing network of registered users.
<unk> technology and products that enable them to try to be as bad aspect to customers.
Users.
Strengthening their loyalty to their local retail pharmacy.
Before we would do it more detailed walk through our financial and operational results of the quarter.
For those of you who are new to the company.
I'd like to walk you through who we are how we are utilizing became pharmacy experience. So the optimization of drug procurement.
Ascription journey and patient engagement.
Prior to the launch of track food.
Training drug cost as an independent pharmacy is an extremely laborious time and efficient process with no inside a trial scratchy into freight market price or whatnot or something of the same drug.
Traditional wholesalers would provide unfavorable payment terms slow delivery well create a difficult conundrum for about approximately 19400 independent pharmacies nationwide.
We identified this marketing efficiency as well as incredible potential in these independent pharmacies, which took about maintained an estimated approximately 60 751 billion.
Youre purchasing power and proceeded to launch traction.
We decide on an operating and business to business web based marketing platform.
I'm going to go down the nations independent pharmacies.
Greater national pharmaceutical supplier.
To provide a uniquely efficient.
When buying and selling process.
Our platform of less independent pharmacies, no, but they are receiving their fair price from competing well and a fair payment terms and often with next day delivery.
We believe this radical price transparency economy of scale and competition among suppliers needs up to a 10% reduction in their pharmacy, it's total annual drug purchase costs with that.
Doug level savings of up to 90%.
I'm certain pharmaceutical products.
Our platform sales pharmacies from having to manually compare prices across distributors.
Having hundreds of hours of unnecessary labor annually and eliminating negative reimbursements are fulfilling a prescription at a loss.
Our revenue model is simple.
We're a paradigm administrative fee of up to 6% of the buying price on a generic pharmaceuticals and up two 1% on branded pharmaceuticals, the pass through of a pharmaceutical platform similar to Paypal visa like model.
To date, we have seen incredible success in garnering attention from these independent pharmacies nationwide validating our business model.
Our traction platform currently has over 13815 registered members.
New registered members in 2022, representing approximately 658, new members in the first half of 'twenty to 'twenty two.
339, new members added in the second quarter of 2020 to itself.
This is compared to 198 for the second quarter of 2021 and 421 of the first half 2020 one.
Another exciting growth metric on our trucks and platform includes a 21% in Kazan cancel volume processed across our platform in the second quarter of 2022 compared to the same quarter of 2021.
Our traction platform revenue also increased 11% in the second quarter of 2022 compared to the second quarter on 2020 one.
Gotcha and Prime has also experienced exciting growth in the corner.
Comparing the second quarter of 'twenty to 'twenty, two 2021.
Let's say, one 4 million increase in revenue and increases in the number of lagers caused by approximately 330%.
I can't Prime also reflected a 713% increase in the number of units sold for the second quarter of 2022 compared to the same quarter in 2020 one.
We expect this growth to continue in 2022.
Prime also announced a distribution agreement with the gods pharmaceutical in July of 2022.
Our agreement with golf as the single source and multi source products. Good attraction Prime catalog directly the manufacturer of golf's pharmaceuticals.
The partnerships and the.
So the mission of helping our independent pharmacies and their members access top medication products.
Out of the tracks at Health network.
In partnership with the GOG pharmaceuticals, and diversify our product offering and use our commitment to our independent pharmacists.
On the capital markets front, we continue to be initiated we're taking are presented at the maximum what sort of growth conference on the panel technology, improving healthcare held on March 30th.
I also attended the LD micro Invitational held on June seven through.
June nine.
We have turned that corner for instance, with the goal of enhancing broader investor I ran ourselves for our company.
I'd like to note on the call over to our Chief Financial Officer, John Hoffman to walk through some key financial highlights from the second quarter of 2022.
Thank you Sharon.
That's a tough second quarter 2022 result.
Revenues for the second quarter of 2022 increased 73% to $3 3 million.
Compared to revenue of $1 9 million in the same quarter last year.
Increase in revenue was primarily due to revenue generated by our check based platform and try to take time.
Due to increased revenues generated by the check point platform and so I think prime gross profit increased to $1 2 million in the second quarter of 2022 compared to 800000 for the same period in 2021.
As a percent of revenue our gross profit decreased to 36% in the second quarter of 2020, two as compared to 44% in the second quarter of 'twenty or 'twenty one.
Operating expenses in the second quarter of 2022 were $2 3 million compared to $3 4 million in the same quarter last year.
The expense decrease when these comparable period is primarily due to a $1.2 million loss on inventory investment recognized in 2021.
They can only increasing operating expenses for 2020, one as compared to 2022.
Net loss in the second quarter of 2022 was $1 1 million or 0.13 per basic and diluted share outstanding.
Compared to two.
Two 6 million or 0.32 per basic and diluted share outstanding for the same quarter in 2020 one.
Adjusted EBITDA, a non-GAAP financial measure.
It was a negative $1 1 million for the quarter ended June 30th 2022.
Parents and negative one 2 million in the same quarter last year.
Looking at our balance sheet cash and cash equivalents were 1 million as of June 30th 2022.
Compared with $3 1 million as of December 31st 2021.
The decrease in cash was mainly due to our I T initiatives.
Our investment in Sos Iraq.
Increased salaries and wages.
Well expenses and other administrative expenses.
As well as the cash prepayments for inventory that will fulfill a sales order in the third quarter of 2022.
With that I will turn the call back to surrender so.
For closing remarks.
Thank you Janet.
In summary, well.
Focusing on exciting new strategic partnerships to drive forward, our core business, which is our marketplace, while diversifying our revenue base.
Taken as a whole I think we are building an incredible compelling healthcare ecosystem.
Allowing consumers access to affordable health care.
And exciting value proposition for all stakeholders.
I look forward to seeing what the future holds as we continue our rapid pace of operational execution.
You're adding sustainable long term value for mono my philosophy on orders.
With that I'll turn it over to the.
The operator to begin the question and answer session.
Operator.
Thank you Sir 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 you touched home phone if you'd like to withdraw your question press. The star followed by the two and if you are using speaker equipment. It will lead to the handset before making your selection.
Yeah.
Right.
And our first question comes from the line of Allen Klee with Maxim Group. Please proceed with your question.
Good afternoon.
Can you give us a sense of Hum.
Think that we will have sequential revenue growth for each quarter for the rest of 'twenty two.
First of all thank you.
We still continues to see some issues in the supply chain as well as the expenses in <unk>.
Transportation charges.
That's the word some expenses so towards the revenue, we see a little bit of sequential growth.
Uh huh.
We feel confident that we'll be having a sequential growth in the next two quarters, yes.
Yeah.
Great and then.
In terms of your gross margins.
They were hit a little bit with I believe two tracks a prime.
Expanding is.
Do you believe that that over the rest of the year that the the gross.
Margins should should stay at the level, they're at now or should improve or how should we think about that.
Janet do you want to take that question.
Sure not a problem youre right the gross margin.
From a dollar perspective increase from a percent of revenue did decrease because they're.
They're there.
There are the cars on the platform side are there or not right and so when we grow the Ips revenue, we will see them increased cogs as well we've made some.
Adjustments, there and I think that we will see some sustained gross.
Gross margin as we move through the last two quarters of the year.
Okay any update on.
Your and so S R X.
Partnership and also on the a general purpose.
The G P OS that you're working on.
Yeah, the Srs auto cars.
Our partners have just started a week.
The deal back in February it took.
Because a couple of months to even.
Pitching the technology to the manufacturer so we probably won't see any of that I wouldn't use the rest of the year hopefully probably in the first quarter over the next year, we will try to see some revenues I've thought about Gpus are concerned we're continuing to add.
More and more members that's what do you see the membership growth I think Uh huh.
Earlier, the first quarter, the second quarter, Charles 39, overall 600, plus members that we've added in the.
For six months, so that's what where you see a lot of the GPO pharmacies are joining our platform.
Thank you I'll jump back in the queue.
And as a quick reminder, when you went out of your questions you made Chris Star one on your telephone Keypad. My next question goes to the line of Howard Halpern with <unk> Brothers. Please proceed with your question.
Good afternoon guys.
Good afternoon Howard.
If you could provide maybe a little bit more color on the recently announced agreement with golf and.
Are you seeking.
Other.
The other products with Walt or other pharmacies to do that kind of distribution and what kind of business opportunity is there for that personalized I guess distributions.
Our main products are out of our main customer bases independent pharmacies right. So we're trying to bring in manufacturers' has access to these specialty drugs that are independent pharmacies don't have so those relationships will give them the access to the drug in the first place.
The higher margin.
They can get from the reimbursements. So that's how he is bringing the manufacturer direct horses going through a big wholesale chairing our wholesalers.
That they can lose the margin and we're trying to bring the manufacturer direct to my independent pharmacies.
Okay and.
Just in terms of.
Operating expenses are are we going to see that.
I guess improve a little bit as you know as time goes by with some cost cutting measures or Oh are we in that $2 $2 million range for the foreseeable future.
As you're aware.
All the industries are facing similar inflation issues. So we have to take care of our employees by increasing their salaries, otherwise, we get threatened by they're leaving and stuff. So I probably see that next two to three quarters are sustainable at that level, two plus 3 million level.
Leading to 2023, when we're able to see some improvements in those expenses.
Okay, and just one one additional question.
With.
The prime offering growing fairly.
Fairly rapidly.
You know and you talked about how the gross margin, but you have to add any operating expenses are.
Or.
You know as prime grows or a U S. Prime grows your operating expenses for that are really.
Relatively fixed.
Well, that's an excellent question, our except the shipping charges. So I think we want to go after our electronic because we are focusing on the technology platform. So we would like to try to do the drop shipment.
Directly from the D fees to the customer bases are instead of repairing their shipping costs. So going forward, we try to see.
Sustainable expenses and accept the product cost and we should see the higher margin on their own.
Okay, Okay, guys keep up the good work.
<unk>.
And our next question comes from the line of Allen Klee with Maxim Group. Please proceed with your questions.
Hi, just just in terms of your.
In terms of the volumes that you're doing of sales through the trackside platform can you give any commentary on if there are any changes in the mix of.
Generic like the percent that generics is of the total mix.
Yeah, no that's sort of another one Alan I think as the supply chain issues globally still pushing the pressure on the branded drugs, they're not available locally here most of the generic products comes from either India or are there parts of the world. So we see the same trend Uh huh.
We'll go next to six months to a 15 months and we see the same trend more of a brand versus last January that are flowing through our platform.
Okay. Thank you.
Okay.
And we have reached the end of the question and answer session I'll now turn the call back over to Sharon for any closing remarks.
Thank you operator I'd also like to thank you all of you for joining our earnings call Conference call. We look forward to continuing to update you on the ongoing progress in growth.
Unable to answer any of your questions. Please reach out to our.
Investor relation Department.
It will be more than happy to assist.
For any of you who might have joined the call and progress 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 a marriage link and have more information regarding the financial.
Disclose on this call or webcast during a reconciliation of non-GAAP financial information can be found in our press releases release, which we filed after the close of the market today. Thank you all.
Okay.
And this concludes today's conference and you may disconnect your lines at this time thank.
Thank you and have a great day.
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