Q4 2022 TRxADE Health Inc Earnings Call

Speaker 1: Conference Center. The next available conference specialist will be with you momentarily.

Speaker 2: This is a conference operator. How can I help you?

Speaker 3: Hi there, calling in for the TRXADE Health Incorporated earnings call.

Speaker 2: Of course, could I get a first and last name?

Speaker 3: Sure. First name is Rachel. That's R-A-C-H-E-L.

Speaker 3: His last name is Smith, S-M-I-T-H.

Speaker 2: And we'll come very with.

Speaker 3: The company they're calling for is Aera. That's A-I-E-R-A.

Speaker 2: Okay, one moment while I let you through.

Speaker 4: Thank you so much.

Speaker 4: Thank you so much. Thank you.

Speaker 5: Taken as a whole, I think we are building an incredible, compelling ecosystem.

Speaker 5: I look forward to seeing what the future holds as we continue a 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 the question and answer session. Operator.

Speaker 6: Thank you, sir. We will now begin the question and answer session. If you would like to ask a question, please press the star followed by the 1 on your touchtone phone.

Speaker 6: If you would like to withdraw your question, please press the star followed by the 2. And if you're using speaker equipment, you will need to lift the handset before making your selection.

Speaker 6: One moment please while we pull for

Speaker 7: Thank you.

Speaker 6: And our first question is from Allen Kleen with Maxim Group. Please proceed with your question. Government Adjunct drag have been beach agencies see the

Speaker 8: Good afternoon. Can you talk a little about the status of your speaking with group purchasing organizations related to Traxaid Prime? Can you give us some detail about the...

Speaker 8: number of GPOs, the number of pharmacies they represent, and kind of the timing of if you believe that you can get relationships to go live. Thank you.

Speaker 9: Thank you, Alan.

Speaker 9: The traction prime, it's considered as a GPO, but...

Speaker 9: In reality, we almost got 1,300 new pharmacies that are working through that. We don't have any prime relationships under that model yet. We're going through the existing suppliers, but we increased that model to 1,300 pharmacies.

Speaker 8: I'm sorry. I didn't understand. So are you talking?

Speaker 8: Could you explain that again? Are you talking to GPOs, or is it more that you are just working with adding –

Speaker 9: adding pharmacies the way you have been adding pharmacies. I didn't understand. I apologize. Sure. Our TraxEd platform is independent pharmacies. TraxEd Prime model is we want to bring in multiple pharmacy locations under the TraxEd Prime.

Speaker 9: That improved up to 1,300 pharmacies. So for example, a pharmacy has 10 or 15 stores under their umbrella. Those relationships grow up to 1,300 pharmacies.

Speaker 8: Okay, but if they come in under prime, does that mean that it comes in with the prime type margins versus the Traxaid platform type margins? Correct. There is absolutely no Important What makes one those kinds of praise and acronyms or assistant

Speaker 8: Okay, thank you.

Speaker 8: And then the SOSRX partnership that's gotten wound down, what is your future liability for that?

Speaker 9: We don't have any future liabilities for that.

Speaker 8: In your press release, you provide

Speaker 8: full year adjusted EBITDA reconciliation.

Speaker 8: To come up with fourth quarter numbers, there's some numbers in the full year numbers that are not in the prior nine months.

Speaker 8: Should all those numbers go in the adjustments to the fourth quarter or did you change the definitions of any of the items that go into calculating adjusted EVA time?

Speaker 5: We did not change any model that whatever we used to report as a suggested e-beta, we considered the same model. We have not changed anything to report those adjusted e-beta numbers.

Speaker 8: Okay. And then.

Speaker 8: So your gross margin improved in this quarter.

Speaker 8: Well, if I looked at it just for the quarter, backing into the quarter, it would have been 61% for the fourth quarter, the gross margin.

Speaker 10: Do you believe that?

Speaker 9: The gross margin is sustainable at that level or higher going forward? I think the blended gross margin if you look at it is for the entire year is 48%. So once we take out the business to consumer model, we focus on B2B. So we strive to improve that gross margin model.

Speaker 8: Okay, the 48% was for the full year.

Speaker 8: If I backed into the fourth quarter, it was like 61%.

Speaker 8: So I'm trying to understand if as you take out the other businesses, I guess the margin, these other businesses were lower margin. So the blended margin likely improves.

Speaker 11: Crap.

Speaker 9: Because on the B2B model, business to business model, it's a technology platform, right? So our gross margin is higher than the consumer side of it.

Speaker 9: Because on the B2B model, business to business model, it's a technology platform, right? So our gross margin is higher than the consumer side of it. So it shouldn't go corrupt.

Speaker 8: Do you have a target for prime, what margins can be for prime?

Speaker 8: Do you have a target for prime, what margins can be for prime segments?

Speaker 9: As you are aware, Alan, that TruXil Prime was only started last year. We are still trying to stabilize that model to understand so that we can give you more accurate information going forward in a couple of quarters.

Speaker 8: Okay, and then maybe my last question, but if your salespeople talk to the independent pharmacies, what do they say is the best way to do that?

Speaker 8: The reason that they're not buying more. I mean, they're buying a small percent of what they could potentially buy from you guys and what do you think are the reasons why they're not buying more and what are you focused on to try to um, to maximize that.

Speaker 9: That's an excellent question. That's what Traxair is focusing on, that inorganic growth, as you're aware, average pharmacy that does like three to three and a half million annual revenue, they buy anywhere between a quarter million to $300,000 worth of goods. But the primary contracts are dictating them how much they can buy.

Speaker 9: to the secondary sources. That's what we're trying to change, the reminding that the 10 to 15% or 10 to 20% that if they can bring it into our platform. So the two ways that we're trying to improve them, one adding the additional catalog to provide them not only the prescription drugs, the OTCs and stuff.

Speaker 9: and providing the other technological tools whether the DYI or phases and so on and so forth. We want to empower them through the technology so that they can buy more through our platform.

Speaker 8: Okay, got it. So then like going forward is the way to look at the segments. You'll have the tracks aid segment. You won't have community specialty.

Speaker 8: Integra.

Speaker 8: you will still have because that is Traxaid Prime.

Speaker 8: And I guess other is...

Speaker 9: Probably not material until something gets decided with Bonham Health. Is that the way to look at it? Yes, our 100% focus is now on the B2B, business to business, so it's a marketplace and as well as Integra Pharma.

Speaker 8: And community health, that goes away effective the second quarter of 23.

Speaker 7: Correct.

Speaker 7: Okay.

Speaker 8: Okay, thank you so much. Appreciate it.

Speaker 12: No problem.

Speaker 6: Thank you. Our next question is from Howard Halpern with Taglich Brothers. Please proceed with your question.

Speaker 13: Good afternoon, guys.

Speaker 13: In terms of the core Trex-Aid platform, what are you seeing in terms of the mix right now between branded and generics? And will that shift maybe more to generics help accelerate growth over the next couple of years?

Speaker 9: Great question Howard. We are currently the mix approximately 60% generics and 40% brand. That is the reason our fees are low. But yes, the dynamics are changing to move more into the generics. Our goal is to reach up to 70-75%.

Speaker 9: Yeah, back to more normal because the COVID is, I won't say it's gone, but at least the impact on the supply side is gone. So yeah, it's back to normal.

Speaker 13: And in terms of looking at operating expenses, you're obviously going back to the B2B, so you'd be able to streamline where should we...

Speaker 13: I see some of the streamlining affects will be in technology spend professional fees

Speaker 14: More on the...

Speaker 9: More on the technology spend and a little bit on the professional spend to take it to the next level.

Speaker 4: Okay.

Speaker 13: Okay, thanks guys. Everything else has been asked and answered.

Speaker 7: Thank you.

Speaker 6: As a reminder, if you have a question, please press the star followed by the one on your touchstone phone.

Speaker 6: There are no further questions at this time. I would like to turn the floor over to Sarin Ajarapu for closing remarks.

Speaker 9: Thank you operator.

Speaker 9: I would also like to thank all of you for joining our earnings conference call.

Speaker 9: We look forward to continuing to update you on our ongoing progress and growth.

Speaker 9: We are unable to answer any of your questions. Please reach out to our IR department. We will be more than happy to assist. For any of you who may have joined the call in progress, remember that the replay of this call and webcast will be available for the next 30 days on the company's website under the NASDAQ call on meds link More information regarding the financial information disclosed on this call.

Speaker 15: Here.

Speaker 15: The.