UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 19, 2021
MEDAVAIL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 000-53298 | 90-0772394 | ||||||||||||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) | ||||||||||||
6665 Millcreek Dr. Unit 1,
Mississauga ON Canada
L5N 5M4
(Address of principal executive offices)
+1 (905) 812-0023
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
| Common Stock, par value $0.001 per share | MDVL | The Nasdaq Stock Market LLC | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On May 19, 2021, MedAvail Holdings, Inc. ("MedAvail" or the "Company") began using an investor presentation containing supplemental financial information for each quarter of 2020 and the first quarter of 2021.
The presentation is attached as Exhibit 99.1 to this Form 8-K and the information contained herein, including the presentation, is intended to be furnished under Items 2.02 and 9.01 of this Current Report on Form 8-K, including Exhibit 99.1, and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), except as shall be expressly set forth by specific reference in such a filing.
Item 7.01 Regulation FD Disclosure.
Attached as Exhibit 99.1 to this Current Report on Form 8-K is an investor presentation that the Company may use in presentations to investors from time to time.
The investor presentation attached as Exhibit 99.1 to this Report includes “safe harbor” language pursuant to the Private Securities Litigation Reform Act of 1995, as amended, indicating that certain statements contained in the slide presentation are “forward looking” rather than historical.
The information included in this Item 7.01 and in Exhibit 99.1 shall not be deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section or incorporated by reference in any filing under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The Company undertakes no duty or obligation to update or revise information included in this Report or in any of the Exhibit.
Item 9.01 Financial Statement and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MEDAVAIL HOLDINGS, INC. | ||||||||
Date: May 19, 2021 | By: | /s/ Ed Kilroy | ||||||
Ed Kilroy Chief Executive Officer | ||||||||
Corporate Presentation
2 Safe Harbor Statements Forward-Looking Statements. MedAvail, Inc. (“MedAvail”) cautions you that the statements in this presentation that are not a description of historical fact are forward- looking statements which may be identified by use of the words such as “anticipate,” “believe,” “expand,” “expect,” “grow,” “intend,” “opportunity,” “plan,” “potential,” “project”, “target” and “will” among others. These forward-looking statements are based on MedAvail’s current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of the ability to project future cash utilization and resources need for contingent future liabilities and business operations, the availability of sufficient resources for combined company operations and to conduct or continue planned product development activities, the ability to execute on commercial objectives, regulatory developments and the timing and ability of MedAvail to raise additional capital to fund operations, and other factors , including, but not limited to, those factors discussed in the section entitled “Risk Factors” of our Current Report on Form 10-Q filed May 17, 2021. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. We undertake no obligation to update any of these forward-looking statements for any reason, even if new information becomes available in the future, except as may be required by law The risks and uncertainties may be amplified by the COVID-19 pandemic, which has caused significant economic uncertainty. The extent to which the COVID-19 pandemic impacts MedAvail’s businesses, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous factors, which are unpredictable, including, but not limited to, the duration and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date on which they were made. MedAvail undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they were made, except as may be required by law.
3 Investment Highlights $16B TAM - Medicare Part D revenues across 7,000 clinics in six initial states Embedded pharmacy model delivers unique value proposition Proprietary technology platform provides additional growth opportunities Highly scalable hub & spoke model; low capital cost Track record of delivering higher medication adherence and 5 star ratings
4MedAvail: Transforming Full Service Pharmacy Legacy Pharmacy MedAvail Brick and mortar retail location Proliferation of superfluous non-pharma products Pharmacy wait-times; confusing mail order delivery High capital (~$500K) and operating costs No proactive data sharing with care providers LOCATION FOCUS SERVICE COST FEEDBACK/DATA Embedded at point-of-care Therapeutics High touch in-clinic and delivery service Low capital (~$50K) and operating costs Medication adherence data to providers Better Health OUTCOMES Outstanding Patient EXPERIENCE* *(Aguilar et al, 2015)
5 MedAvail – Our Business Model Sell/License Technology Technology Vendor • 20% of revenue1 • Sell and license our technology to a select list of large enterprise customers • Customers use their back-end pharmacy operations (pharmacists, inventory) • 80% of revenue1 • Turnkey full-stack pharmacy offering • Telehealth platform delivering remote pharmacist consultation through onsite dispensing kiosk, supplemented with home delivery capability Telehealth Pharmacy Platform, Medicare Focused Pharmacy 1 Long-term target
6 Capacity of ~ 1,000 packages, multiple shapes and sizes. Customized inventory to the specific clinic. Dispenses first fills and refills Live audio-visual access to central pharmacy team. Meets all regulatory requirements to act as a full retail pharmacy Remote pharmacist in control of MedCenter, medication is dispensed upon command from pharmacist Our Proprietary technology the MedCenter 6
7 We license and sell our proprietary hardware and software to health systems, retailers and other industry players • Integrated into back-end pharmacy systems • Customized patient workflow • 24/7 help desk support • On-site maintenance support • Customer branding • Manufactured in the USA MedAvail Technology Offers Pharmacy Efficiencies to Third Parties • 16 sites deployed • 350 points of care, 27 hospitals • 9 Initial sites in 3 states • Sam’s Club: 600 stores • 3 hospitals deployed, • 150+ hospitals, 1,800 sites of care
8 SpotRx Achieves Scale Through Technology and Centralized Hubs Unique Pharmacy Model Results in Superior Medication Adherence and Satisfaction 1 Open CENTRALIZED PHARMACY HUB in Each SpotRx Service Area SPOTRX DEPLOYMENTS at Each Clinic Site 2 Live A/V connection to Hub pharmacist Localized inventory replenishment Access to first fill and refills through on-site SpotRx MedCenter or home delivery On-site SpotRx account manager for patients and clinic staff Opportunities to drive adherence and satisfaction among clinic patients
9 SpotRx Pharmacy Model Provides Differentiated Value Proposition On-site support with clinic account manager results in pharmacy as part of care team and customer acquisition Customized medication inventory by clinic with on-site dispensing and access to pharmacy team via MedCenter helps improve adherence Proactive adherence programs driving 5 Star performance Multiple avenues to receive medication, including free courier delivery Patient level data sharing and reporting for providers
10 SpotRx Value Proposition Resonates with Executives & Physicians Source: L.E.K. interviews and analysis. * Importance varies somewhat by size / geographic reach of organization Value proposition Level of importance* Executives Physicians Improved medication adherence Improved Star Ratings Patient satisfaction Administrative savings Ease of implementation and operations Quality reporting Scalability No cost to customer organizations
11 Focused on High Value Patient Customer: Medicare Population Significant VALUE # of 90 DAY Rxs/YEAR GROSS PROFIT/RX Medicare Commercial Medicaid 0 10 15 20 25 305 VALUABLE LOW VALUE HIGHLY VALUABLE MODERATE VALUE On multiple medications (5 = avg) Source: Kaiser Family Foundation; LEK Insights Large, Growing MARKET 2015 2019 2025 54M 65M 76M 31% 34% 50% Medicare Enrollment All Other Medicare Medicare Advantage Concentrated VALUE Patients Revenue Gross Profit 10% of patients drive 60% retail pharmacy industry gross margins Low Value Moderate Value Valuable Highly Valuable 10% 60%
12 Medication adherence impact on Star rating and PMPY cost “… Physicians in particular want medication compliance as high as possible because they are really interested most in clinical outcomes and ensuring a patient is getting what they need to get better …” -VP of Medical Group Operations, CA clinic client “… From a corporate standpoint, increased medication adherence is beneficial because it directly improves the ratings that payers use to determine reimbursements and decreases costs by reducing hospitalizations of patients not taking their medications …” -Medical Director, MI clinic client 32%58% Other 10% Direct impact1 Indirect impact Clinics benefit from reduced cost-of-care and improved Star Ratings as a result of adherence, which results in MA bonuses for capitated and integrated payer-providers Star Ratings / Financial Impact Adherence impacts 42% of Star Ratings1 Net annual healthcare savings of $1-8k per member as a result of adherence2 ~$8k for heart failure ~$4k for hypertension ~$4k for diabetes ~$1k for cholesterol Source: L.E.K. interviews and analysis. 1 Based on CMS; direct includes medication adherence for cholesterol, hypertension, and diabetes medications 2 Based on CVS Caremark study annual health care savings per member Large, vertically-integrated players embracing embedded pharmacy Embedded physical pharmacies Retail pharmacies in MOB Acquires Behavioral health retail pharmacy
13 Our Solution is Driving Better Adherence Our Customers are Happy SpotRx 5 Star Threshold 4 Star Threshold U.S. Industry Average Patient ADHERENCE Patient / Provider / Payor SATISFACTION Patients Net Promoter Score (NPS) ~90 * CMS Star Rating Bands 2020, SpotRx measure over 12 month period from January 2020 to December 2020 ** NPS measured from January 2020 to December 2020, N=6962 *** US average from CMS data Acute Maintenance Diabetes Hypertension Cholesterol 85% 82.6% 92.4% 92.4% 91.5% 88% 85% 90% 88% 88% 86% First Fill Adherence Chronic Adherence* ** “… I think SpotRx is fantastic. I am so glad they are here. I think a lot of patients that use it benefit from this service. I constantly recommend their product because I see the patient satisfaction …” Practice Manager, AZ clinic client “… The feedback from customers is that they are so satisfied with the product and the level of service provided. Overall, we have had a really good experience …” Practice Manager, CA clinic client “… I have only had good experiences with SpotRx, and I know our patients feel the same. There is no request that is not met with a solution or plan. They are a great partner …” Director of Clinical Operations, CA clinic client 75%75% 85% 83% 82%
14 Initial Target Markets – $16.5B of Annual Prescription Revenue STATE SELECTION CRITERIA • Large markets • Favorable regulatory environment for automated dispensing technology • Concentrated prescriber groups OPPORTUNITY $100B Part D medication spend in 2018 $40B Part D spend in our target states $16.5B within 7,000 large clinics seeing ~6.5M Medicare patients/year % of Rx’s Written by Top 20 Groups Concentration enables efficient expansion via enterprise deals ARIZONA 27% CALIFORNIA 23% ILLINOIS 29% TEXAS 26% FLORIDA 50% MICHIGAN 30% CALIFORNIA $4.5B Live 2020 ARIZONA $0.6B Live 2019 ILLINOIS $2.2B Expansion 2021 FLORIDA $3.7B Expansion 2021TEXAS $3.6B Expansion 2021 MICHIGAN $2.0B Live 2020
15 Enterprise Focused Business Development Strategy ARIZONA CALIFORNIA MICHIGAN Business Development Process Lead with large group enterprise deals multiple initial clinic deployments/group Expand within groups and add groups FLORIDA
16 Example of Single Site Economics Target Model at Scale (ex. COVID 19 impact) • IRR of 45% • 5-year ROI of >3x • Initial investment of $50K • Rx volume/day of 40 at scale • Average target customer drives $1,700 rev and $340 gross margin per year • In-clinic CAC $130* • Average target customer fills 17 Rx’s per year *CAC based on analysis from January 2020 to February 2020 Install Year 1 Year 2-5+ 5 Year Total Rx Volume - per Day 20 40 Revenue $ 450,000 $ 1,050,000 $ 4,650,000 Total Gross Profit $ 65,000 $ 180,000 $ 785,000 (-) Initial Investment $ (50,000) $ - $ - $ (50,000) CASH FLOW $ (50,000) $ (30,000) $ 60,000 $ 160,000 Key Metrics
17 Strong Revenue Growth Driven by New Deployments Cumulative deployments1 Cumulative Deployments *2020 revenue figures are unaudited 1 FY21 guidance based on first quarter earnings results announcement on May 12, 2021. Excluding one-time non-cash accounting entry for contract revenue recognized in 3Q20, full year 2020 revenue grew approximately 142% in full year 2020 20 57 FY19 FY20 YoY Revenue Growth1 $3.8 $9.3 FY19 FY20 FY21 E $31M $27M Total Consolidated Net Revenue Quarter-over-Quarter Revenue Growth2 $2.5 $3.4 $0.6 $0.6 $3.1 $4.0 Q4 2020 Q1 2021 +30%
18 Target Business Model Target Pharmacy Revenue (SpotRx) 80%-85% of revenue HW/SW Revenue 15%-20% of revenue Gross Margin 20-25% EBITDA ~12-14%
19 Proven Team, Advisors and Investors Ed Kilroy CEO Will Misloski CMO Redmile Group Neil Prezioso CPO David Feinberg Advisor Ryan Ferguson CFO MANAGEMENT TEAM ADVISOR INVESTORS David Rawlins CCO
20 Appendix
21 Supplemental Financial Summary Consolidated Statement of Operations (Unaudited) (In thousands) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Sales: Pharmacy and hardware sales 1,402$ 2,259$ 3,926$ 3,009$ 3,781$ Service sales (1) 10 52 3,219 91 246 Total sales 1,412 2,311 7,145 3,100 4,027 Cost of sales: - Pharmacy and hardware cost of sales (1) 1,385 1,826 2,132 3,250 3,526 Service cost of sales 47 39 30 96 181 Total cost of sales 1,432 1,865 2,162 3,346 3,707 Gross profit (20) 446 4,983 (246) 320 Pharmacy operations 1,089 1,116 1,450 2,032 1,911 General and administrative 3,500 3,572 3,464 6,026 6,515 Selling and marketing 703 570 624 1,146 1,377 Research and development 215 163 154 150 168 Merger expenses - 1,283 1,324 2,084 - Operating loss (5,527) (6,258) (2,033) (11,684) (9,651) Other gain (loss), net 8 (8) - (110) 161 Interest income 8 7 2 26 40 Interest expense (179) (277) (457) (328) (2) Loss before income taxes (5,690) (6,536) (2,488) (12,096) (9,452) Income tax - - - - - Net loss (5,690)$ (6,536)$ (2,488)$ (12,096)$ (9,452)$ (1) Includes aggregate one-time contract revenue of $4.7 million recognized in Q3 2020.
22 Supplemental Financial Summary Sales and Cost of Sales by Segment (Unaudited) (In thousands) Pharmacy Services Pharmacy Technology Total Pharmacy Services Pharmacy Technology Total Pharmacy Services Pharmacy Technology Total Pharmacy Services Pharmacy Technology Total Pharmacy Services Pharmacy Technology Total Sales: Pharmacy and hardware sales: Retail pharmacy revenue 1,297$ -$ 1,297$ 1,713$ -$ 1,713$ 2,186$ -$ 2,186$ 2,532$ -$ 2,532$ 3,418$ -$ 3,418$ Hardware (1) - - - - 422 422 - 1,626 1,626 - 353 353 - 241 241 Subscription revenue - 105 105 - 124 124 - 114 114 - 124 124 - 122 122 Total pharmacy and hardware sales 1,297 105 1,402 1,713 546 2,259 2,186 1,740 3,926 2,532 477 3,009 3,418 363 3,781 Service sales: Software integration (1) - - - - - - - 3,168 3,168 - - - - - - Software - - - - 10 10 - 14 14 - 20 20 - 33 33 Maintenance and support - 10 10 - 13 13 - 17 17 - 18 18 - 31 31 Installation - - - - 28 28 - - - - 27 27 - 16 16 Professional services and other - - - - 1 1 - 20 20 - 26 26 - 166 166 Total service sales - 10 10 - 52 52 - 3,219 3,219 - 91 91 - 246 246 Total sales 1,297 115 1,412 1,713 598 2,311 2,186 4,959 7,145 2,532 568 3,100 3,418 609 4,027 Cost of sales 1,338 94 1,432 1,679 186 1,865 2,042 120 2,162 2,685 661 3,346 3,329 378 3,707 Gross profit (loss) (41)$ 21$ (20)$ 34$ 412$ 446$ 144$ 4,839$ 4,983$ (153)$ (93)$ (246)$ 89$ 231$ 320$ (1) Includes aggregate one-time contract revenue of $4.7 million recognized in Q3 2020. Q1 2021Q1 2020 Q2 2020 Q3 2020 Q4 2020
23 Supplemental Financial Summary Adjusted EBITDA – Non-GAAP Reconciliation (Unaudited) (In thousands) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2020 Net loss (5,690)$ (6,536)$ (2,488)$ (12,096)$ (9,452)$ Adjustments to calculate EBITDA: Interest expense, net 171 270 455 302 (38) Income tax - - - - - Depreciation and amortization 243 285 286 298 340 EBITDA (5,276) (5,981) (1,747) (11,496) (9,150) Adjustments as follows: Bad debt & service fees - - - 75 - Share-based compensation expense 84 86 65 145 260 Merger related expense - 1,283 1,324 2,084 - Other (income) loss, net (8) 8 - 110 (161) Inventory impairment charges - - - 352 - One-time contract revenue (1) - - (4,729) - - Adjusted EBITDA (5,200)$ (4,604)$ (5,087)$ (8,730)$ (9,051)$ (1) One-time contract revenue of $4.7 million recognized in Q3 2020.
24 Supplemental Financial Summary Non-GAAP Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non- GAAP financial measures: EBITDA, and adjusted EBITDA. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We define Adjusted EBITDA for a particular period as net (loss) income before interest, taxes, depreciation and amortization, and as further adjusted for bad debt and service fees, share-based compensation expense, merger related expenses, other (income) loss, net, non-recurring inventory impairment charges, and one-time contract revenue. We use these non-GAAP financial measures for financial and operational decision-making and as a means to evaluate period-to-period comparisons. We believe that these non-GAAP financial measures provide meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our recurring core business operating results, like one-time transaction costs related to the reverse merger. We believe that both management and investors benefit from referring to these non-GAAP financial measures in assessing our performance and when planning, forecasting, and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to our historical performance and liquidity as well as comparisons to our competitors' operating results. We believe these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of our business. There are a number of limitations related to the use of non-GAAP financial measures. We compensate for these limitations by providing specific information regarding the GAAP amounts excluded from these non-GAAP financial measures and evaluating these non-GAAP financial measures together with their relevant financial measures in accordance with GAAP.