Q3 2022 TRxADE Health Inc Earnings Call
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Please note. This event is being recorded today with beds, we have shooting at January <unk>, all worked dah and Janet I would now like turn the conference over to the speakers. Please go ahead.
Thank you operator, and thank you for joining us today.
Like to welcome you to our 2022 third quarter financial results Conference call.
Our press release announcing our 2022 third 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.
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 increased interest rates and inflation on the company's business.
And results of operation.
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. This.
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 and 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 <unk> 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 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 Darin <unk>, the Companys Chief Executive Officer.
<unk> the floor is yours.
Okay.
Thank you Janet.
We continue to see improvement in 2022, but our core crack food pharmaceutical exchange platform.
Our nationwide footprint continues to grow.
We remain committed to the focus of exciting new ways to support large growing network over to just or do you just.
With the dollar amount of technology and products for our local pharmacies. We are dedicated to supporting these pharmacies with new innovative products, good better enabling them to service.
Customers strengthening loyalty to their local retail pharmacy.
On October 20 <unk>.
We announced a strategic business to business partnerships with multiple insurance brokerage firms to offer access to telemedicine services for small to medium employer groups.
Okay.
Timber, we announced our partnership with rig for input Carl to deploy daily Medicine services through sharp Rod Pharmacy led locations in New Jersey, New York, Pennsylvania, Connecticut, and Maryland.
These new partnerships in the third quarter of 2022 helped provide affordable and convenient access to their health care.
They also provide exciting new innovative partnerships to assist us in growing our local retail pharmacy business.
Before we do have 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 due to the lagging their retail pharmacy expedient put.
Through the optimization of drug procurement the.
Prescription Jamie and patient engagement.
Prior to the launch of track Fig, obtaining drug courts is an independent pharmacy with an extremely liberal rig timing I appreciate process with no insight transparency and <unk>.
Afraid market price or what are the sort of paying for the same drug.
Traditional wholesalers would provide unfavorable payment terms slow deliveries.
It is difficult to come Andre for the approximately 19400 <unk>.
Pharmacies nationwide.
We identified this marketing efficiency as well as the incredible potential in these independent pharmacies, which together maintain an estimated approximately $67 1 billion in annual purchasing power and proceeded to large truck seat.
We designed and operated a business to business web based market platform, bringing together the nation's independent pharmacies.
<unk> national pharmaceutical suppliers to provide a uniquely appreciate and transfer and buying and selling process.
Our platform independent pharmacies, no data receiving a fair price from competing suppliers.
On a favorable payment terms often with the next day delivery.
We believe this radical price transparency economy of scale and competition among suppliers lead up to a 10% reduction in pharmacies total annual drug purchase costs with a drug level savings of up to 90% on certain pharmaceutical products.
Our platform sales pharmacy from having to manually compare prices across distributors saving hundreds of hours of unnecessary labor annually and eliminating negative reimbursement are fulfilling a prescription at a loss.
Our revenue model is simple.
Behr paint an administrative fee of up to 6% of the buying price on generic pharmaceuticals.
Two 1% and brand pharmaceuticals that pass through our pharmaceutical platform similar to Paypal, a reset like model.
To date, we have seen incredible success in garnering attention from independent pharmacies nationwide validating our business model.
We currently have over 14100 plus.
<unk> members on our platform.
Ultimately 291, new registered members added in the third quarter of 2022 compared to 195 for the third quarter of 2021.
Another exciting growth metric on our track FID platform includes an 18% increase in the volume of sales process that crossover platform in the third quarter of 2022 compared to the same quarter in 2021.
Subsequent to the third quarter on October seven we closed the sale of approximately $1 $75 million of common stock pre funded warrants and warrants.
The net cash proceeds to the company were approximately $1 5 million.
The company plans to use the cash proceeds for working capital.
<unk> is strategic growth plan for our flagship platform <unk> Prime.
The full details of information regarding the transaction can be found in our form 8-K filed with Securities and Exchange Commission on October seven 2022.
I'd like to now turn the call over to our Chief Financial Officer, Janet Hoffman to walk through some key financial highlights from the third quarter of 2022.
Thank you Steven.
And as discussed third quarter 2000 to 2022 results.
Consolidated revenues for the third quarter of 2022 decreased 6% to $2 4 million compared to revenue of $2 6 million in the same quarter last year.
This decrease in revenue is driven by the Czech stayed prime and.
And community specialty pharmacies subsidiaries.
The revenues generated by the truckload platform increased 6% in the third quarter of 2022 as compared to the same quarter in 2021, although checkmate <unk> experienced an 11% decline in revenue for the third quarter of 2022 compared to the same quarter in 2021 there were.
Several other important metrics that we work to improve and.
In the third quarter, we adjusted the checks a prime sales platform implementing automation software and executing on initiatives to reduce overhead expenses and improved gross margin.
Initiatives to improve gross margin included improved vendor pricing and vendor partnerships.
This result, the result of this focus was improved gross margin to a positive 3% compared to a negative 6% for the.
The comparable third quarter of 2022 and 2021, respectively.
Initiatives to reduce overhead expense included software automation and employee restructuring.
As a result of these changes overhead expense was reduced 68% for the third quarter of 2022 compared to the same quarter in 2021.
Moving forward the company is working to grow <unk> Prime revenues with the foundation of reduced overhead and improve gross margin.
The revenue decrease for community specialty pharmacy in the third quarter of 2022 as compared to the same quarter. In 2021 is partially driven by decreased sales in the last week of September due to hurricane Ian.
Gross profit in the third quarter of 2022 increased to $1 4 million or 58% of revenue.
As compared to $1 3 million and 50% of revenue in the third quarter of 2021.
The improved gross margin is due to the increased revenues generated by the Czech Jade platform and the improved gross margins of truck paid prime.
Operating expenses in the third quarter of 2022.
$1 8 million compared to $2 6 million in the same quarter last year.
The expense decrease police comparable periods is partially due to a $630000 bad debt expense recorded in the third quarter of 2021.
<unk> operating expenses for 2021 as compared to 2022.
Other drivers or the 2022 decreased operating expenses in check save time previously discussed and approximately $164000 of bad debt recovery from the amounts written off in 2021.
Net loss in the third quarter of 2022.
Was negative 0.5 million or negative 0.06 per basic and diluted share outstanding.
Compared to a negative $1 3 million or negative <unk> <unk> six per basic and diluted share outstanding for the same quarter in 2021.
Adjusted EBITDA, a non-GAAP financial measure was negative zero point $4 million compared to positive 0.7 million in the same quarter last year.
Looking at our balance sheet cash.
Cash and cash equivalents.
Zero point $3 million as of September 32022.
Compared with $3 1 million as of December 31, 2021.
The cash the decrease in cash is mainly driven by spending on salaries and wages.
875000 spent for inventory purchases for community specialty pharmacy in May of 2022.
225000 spent as part of a legal settlement in February of 2022, and 275000 spent in connection with the formation of Sos RF LLC in February of 2022.
With that I will turn the call back to Suriname for closing remarks.
Okay.
Yes.
Thank you Janet and somebody will focusing on exciting new strategic partnerships to drive forward, our core business, while diversifying our revenue base.
Taken as a whole I think Rob building, an incredible compelling healthcare ecosystem.
Hello, and consumers access to affordable health care, while 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.
Rating's sustainable long term value Portola Felicia shareholders.
With that I'll turn it over to the operator to begin the question and answer session operator.
Thank you we will now begin the question and answer session will have a question. Please press star one.
Our first question comes from Allen Klee Maxim Group.
Good afternoon, and good job on margins and cost control.
Okay.
For trackside Prime.
Can you talk a little strategically of how you think about where it's going to go from from where it is now in terms of.
Do you expect to grow the top line or tour.
Lowered and is there more opportunity on the margin side and how does this.
Explain again, how this helps.
Hope to your customers. Thank.
Thank you.
Yes, that's a great question Alan Thank you for the comment on the gross margin, yes. Our focus is not only the top line, we would like to focus on the gross margin as well as the bottom line also.
And Thats the reason, we retooled our systems that we implement artificial intelligence.
Just the pricing and make sure the customers are well taken care currently the pharmacy you Josh it's.
Spend time go to their primary vendors.
Then come back to our site searching through our track showed prime model, where we can able to give with that access.
Pharmacies before.
Go to the.
The primary contract that can come onto our platform.
And we can do better what kind of.
Product they can buy on our platform.
Kind of a product that can go back to.
Their primary battery they can see upfront what kind of.
Product availability and margins, but they can make at the same time increase that's all captured prime sites.
That's great. Thank you and then.
Are there any any update on.
Hello, Andy.
The metrics you can provide and then maybe.
How do you think about.
With this week burn shop right.
Partnership how youre thinking about rolling that out thank you.
We're still at a nascent season bottom as I mentioned.
Recently that we broadened bottom hulk to empower our independent pharmacies to compete against this box chain stores that are out there like Walgreens and Cvs.
That traction I'm still not.
Hundred percent up to our expectations we're still.
Trying to struggle through that model and I think as we mentioned in the second quarter, we're looking for alternative ways and means.
Getting that bottom hole try to find a strategic buyer or strategic.
Joint venture opportunities.
We're still trying to.
<unk> got access to our independent pharmacies.
Okay. Thank you I'll get back into queue and let other people in them.
Thanks for the yes. Thank you.
Thanks, Adam.
Our next question.
Ken.
How work how firm equity Robert.
Again, congratulations on the margins.
That was nice to see.
In terms of.
A follow on with the bottom health.
Your engagement.
Insurance brokerage firm firms.
Is that potentially going to have a faster uptake in the fall.
<unk> partners is it more geared to may be small small private businesses that might engage in bottom helps.
Thanks, a lot Brian Howard, Yes, that's our intention to go after uninsured.
Less than 50 people employee groups.
So thats, what we are trying to push towards the insurance brokerage firms that already serving those self insured.
Unemployed.
Sure.
Employer groups and that's how it opened up recently.
Two.
Brokerage foreign sources.
The cheering drugstores.
Okay, and can you talk a little bit about where it was.
I know it's early but.
The development of <unk>.
<unk> joint venture is going.
When do you anticipate.
Instead, we're really starting to get rolling in it.
Yes. The concept was good but the adoption is still struggling because the manufacturers are not used to.
This kind of.
Electronic platform.
So there still are going through the traditional opportunities or traditional way of doing business. If you look at it does like attract shared when we started our company back in 2010.
Three years before we can get a.
Customer similar fashion, that's what I thought is there.
<unk> won't be there if we don't.
Then we will be looking for alternate ovation means.
Tried to partner or JV or.
Looking at those kind of opportunities.
And just one last one with improvement and likely continued improvement in gross margins and how you restructured your overhead costs.
We anticipate with just some incremental revenue growth that somewhere in the first half of next year, we might get to operational breakeven in on the income line.
However, we cannot predict that trial soon but we're definitely working towards that.
Positive numbers and.
Top line as well as the bottom line.
Okay, and we're working towards that.
Okay.
Thank you.
Thanks Howard.
Thank you once again it will have a question. Please press star one.
Okay.
Allen Klee Maxim group.
Okay, Hello again.
So your.
Alright.
Your business going after group.
Group purchasing organizations I know that's.
A longer term opportunity, but any update on how thats progressing.
Yeah.
I'm, sorry could you repeat that question. Please.
Yes.
Bose.
Just kind of an update on how thats, how thats progressing working with them to be the primary provider of drugs.
Yet we're still bringing hazard speaking that's the reason you saw the number of members at $2 95 in the third quarter alone when compared to 191 in the third quarter of.
2021.
So that option is still slowly growing but we are trying to get them there.
A variety of drugs like <unk>.
Leaving the breath of our.
The catalog that's what we're focusing as we improve that catalog I think we expect more and more detail purchases through our platform.
Okay great.
Could you give an update on.
Lastly, I think it was last quarter you talked about.
Integra pharma solutions, signing a distribution agreement with <unk> pharmaceuticals.
Kind of what's the status of that.
As I mentioned earlier to Howard the manufacturers' is tough time understanding the electronic platforms. So that's still going very slow.
So probably the middle of next year towards the third quarter of next year, we see yourself kind of results from our partners.
Okay.
And then.
So here.
Your operating expenses came in.
For the quarter at.
Around one 8 million is that a reasonable run rate to think about.
For the for the next few quarters.
Yes.
That's pretty much.
So unless centrally we anticipate exponential growth in the tax rate Prime model that women how to harness on model people into that but I think thats pretty much standard at this time.
Okay, and then Im sorry <unk>.
Apologize my last question I missed.
There was something setup.
Well two things one.
There was something said about the impact of a hurricane in the last week what area was.
Impacted by that and can you quantify what the impact was.
Yes, I will address first and I'll, let John I'd explain that as a community pharmacy with the consumer base.
The reason that people have to walk into the stores and stuff that's worth.
Even though.
Of our directly not got hit.
But most of the federal buildings.
Evacuation zones have been announced since over Manhattan, we have to shut down a warehouse with pharmacy and that's impacted our business Janet thank.
So you can add anything else on two fronts.
That's correct. So the last week, we were unable to fill prescriptions.
But those patients all did.
Come back in subsequent quarter so.
It was it impacted the last week of Q3.
With us having the pharmacy close of not being able to sell those prescriptions.
Do you have a sense of how much of the.
The revenue impact that might have had.
I do not have an exact number.
Revenue impact for Canadian specialty pharmacy was partially driven by that last week of sales in September and then also some revenue adjustments as well that are just standard standard adjustments that you see with payer contracts. So I don't know the exact number for the.
Hurricane impact.
Okay.
Are there any other kind of one time impacts that.
Might it might have been in the quarter.
Youre talking about revenue specifically.
Yes.
Or <unk>.
<unk> or cost.
For example, I think you might have a bad debt recovery did that happen in this quarter.
Yes, so we had.
In 2021 I referenced.
In my section there there was $630000 bad debt write off for <unk>.
Sure Hey, Brian .
And this year, we started a recovery on that bad debt write offs. So in the third quarter, we recovered 164000.
That bad debt write off.
Other than that I.
Cannot think of any significant one time.
That we didn't already know.
Okay great.
Okay.
Thank you so much I appreciate it.
Thanks Kelly.
Thank you. This concludes our question and answer session I would like to turn the conference back over to the speakers for any closing remarks.
Thank you operator.
I would also like to thank you all of you for joining our earnings conference call.
We look forward 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 Department.
It would be more than happy to assist.
Any of you who may have joined the call and progress.
The replay of this call and webcast will be available for the next 30 days on the Companys website under the NASDAQ Matt Link and then for more information regarding the financial information disclosed on this call and webcast, including non reconciliation of non-GAAP financial information.
Installation of non-GAAP financial information can be found in our press release, which we filed after the close of the market today. Thank you all.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
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