SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 8, 2021
MEDAVAIL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
|(Commission File Number)|
6665 Millcreek Dr. Unit 1,
Mississauga ON Canada
(Address of principal executive offices)
+1 (905) 812-0023
(Registrant’s telephone number, including area code)
(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 November 8th, 2021, MedAvail Holdings, Inc. ("MedAvail" or the "Company") issued a press release regarding its financial and operational results for the three months ended September 30th, 2021. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
This information 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.
On November 8th, 2021, MedAvail hosted a conference call and webcast to discuss the Company's financial and operational results for the three months ended September 30th, 2021.
Additionally, attached as Exhibit 99.2 to this Current Report on Form 8-K is an investor presentation that MedAvail may use in presentations to investors beginning November 8, 2021.
The presentation includes a discussion of Operating Results and Adjusted EBITDA, non-GAAP (generally accepted accounting principles) financial measures. The presentation also includes reconciliations of those measures to the most directly comparable financial measures calculated and presented in accordance with GAAP.
The investor presentation attached as Exhibit 99.2 to this Current Report on Form 8-K 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 99.2 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 the Exhibit 99.2.
Item 9.01 Financial Statement and Exhibits.
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: November 8, 2021
|By:||/s/ Ramona Seabaugh|
| || |
Chief Financial Officer
MedAvail Reports Third Quarter 2021 Financial Results
MISSISSAUGA, Ontario and PHOENIX, Ariz. – November 8, 2021 – MedAvail Holdings, Inc. (Nasdaq: MDVL) (“MedAvail”) a technology-enabled pharmacy company, today reported financial results for the three months ended September 30, 2021.
“We are encouraged by our third quarter results, highlighted by our recent partnerships to broaden our footprint in Florida. Our expansion opportunities demonstrate the value proposition of our SpotRx embedded pharmacy model. With each new SpotRx deployment and partnership in our targeted states, we are building a foundation to deliver sustainable and scalable growth,” said Ed Kilroy, Chief Executive Officer of MedAvail. “As we look to the remainder of 2021, we remain focused on continued execution across our initiatives and are confident that we are well positioned with our pipeline opportunities in key markets.”
Third Quarter 2021 Financial and Operational Highlights
All comparisons, unless otherwise noted, are to the three months ended September 30, 2020.
•Total net sales were $5.8 million
•Total net sales by segment
◦Retail Pharmacy Services sales increased 149% to $5.4 million
◦Pharmacy Technology sales decreased 93% to $0.3 million. Net sales for the third quarter of 2020 included a non-recurring benefit of $4.7 million recognized in conjunction with a commercial agreement from 2018; excluding this benefit, Pharmacy Technology sales increased 51%
•14 MedCenter deployments compared to 11 total MedCenter deployments
•Net Loss was $11.3 million compared to a net loss of $2.5 million
◦Net loss of $2.5 million in the third quarter of 2020 included the non-recurring benefit of $4.7 million noted above
•Adjusted EBITDA losses of $10.1 million compared to $5.1 million
•Cash, cash equivalents, and restricted cash totaled $36.3 million as of quarter-end
Full Year 2021 Financial Outlook
MedAvail is reaffirming its revenue guidance of at least $21 million for the full year ending December 31, 2021. The minimum number of new clinics the company expects to deploy in 2021 remains unchanged at 45.
MedAvail will host a conference call at 1:30 p.m. PT / 4:30 p.m. ET on Monday, November 8, 2021, to discuss its third quarter 2021 financial results. A webcast of the conference call can be accessed at https://investors.medavail.com/. The webcast will be archived and available for replay for at least 90 days after the event.
MedAvail Holdings, Inc. (NASDAQ: MDVL) is a technology-enabled pharmacy organization, providing turnkey in-clinic pharmacy services through its proprietary robotic dispensing platform, the MedAvail MedCenter, and home delivery operations, to Medicare clinics. MedAvail helps patients to optimize drug adherence, resulting in better health outcomes. Learn more at www.medavail.com.
Forward Looking Statements
Certain statements included in this press release that are not historical facts are forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Forward-looking statements generally are accompanied by words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "should," "would," "plan," "predict," "potential," "seem," "seek," "future," "outlook," "project," and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding MedAvail's business strategy and market opportunity; potential future revenue projections and expectations for growth; expansion plans; and customer partnerships. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of MedAvail's management and are not predictions of actual performance. Forward-looking statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from the forward-looking statements, including but not limited to risks discussed under the heading "Risk Factors" in both our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (“SEC”) on March 31, 2021, and our Quarterly Report on Form 10-Q, filed with the SEC on August 12, 2021, and other filings MedAvail makes with the SEC in the future. If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. These forward-looking statements speak only as of the date hereof and MedAvail specifically disclaims any obligation to update these forward-looking statements.
SOURCE MedAvail Holdings, Inc.
MEDAVAIL HOLDINGS, INC.
Consolidated Condensed Statements of Operations
(US Dollars in thousands, except share and per share data)
|Three Months Ended September 30,|
|Pharmacy and hardware sales||$||5,659 ||$||3,926 |
|Service sales||133 ||3,219 |
|Total sales||5,792 ||7,145 |
|Cost of sales:|
|Pharmacy and hardware cost of sales||5,539 ||2,132 |
|Service cost of sales||67 ||30 |
|Total cost of sales||5,606 ||2,162 |
|Gross profit||186 ||4,983 |
|Pharmacy operations||2,395 ||1,450 |
|General and administrative||6,805 ||3,464 |
|Selling and marketing||1,779 ||624 |
|Research and development||232 ||154 |
|Merger expenses||— ||1,324 |
|Other gain (loss), net||7 ||— |
|Interest income||7 ||— |
|Loss before income taxes||(11,271)||(2,488)|
|Income tax||(2)||— |
|Net loss per share - basic and diluted||$||(0.34)||$||(1.22)|
|Weighted average shares outstanding - basic and diluted||32,750,831||2,045,686|
MEDAVAIL HOLDINGS, INC.
Consolidated Condensed Balance Sheets
(US Dollars in thousands, except share amounts)
|September 30,||December 31,|
|Cash and cash equivalents||$||35,875 ||$||57,936 |
|Restricted cash||400 ||60 |
|Accounts receivable (net of allowance for doubtful accounts of $27 thousand for September 30, 2021, $40 thousand for December 31, 2020)||1,075 ||1,520 |
|Inventories||4,253 ||2,817 |
|Prepaid expenses and other current assets||762 ||1,534 |
|Total current assets||42,365 ||63,867 |
|Property, plant and equipment, net||4,632 ||3,795 |
|Right-of-use assets||2,902 ||1,239 |
|Other assets||248 ||203 |
|Intangible assets||1,950 ||227 |
|Total assets||$||52,097 ||$||69,331 |
|Liabilities and Stockholders' Equity|
|Accounts payable and accrued liabilities||$||7,075 ||$||4,512 |
|Short-term debt||1,000 ||2,161 |
|Contract liability||317 ||275 |
|Current portion of lease obligations||742 ||665 |
|Total current liabilities||9,134 ||7,613 |
|Long-term debt, net||9,466 ||— |
Long-term portion of lease obligations
|2,279 ||651 |
|Total liabilities||20,879 ||8,264 |
|Commitments and contingencies|
|Common shares ($0.001 par value, 100,000,000 shares authorized, 32,754,925 and 31,816,020 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively)||33 ||32 |
|1,373 ||2,614 |
|Additional paid-in-capital||216,204 ||213,624 |
|Accumulated other comprehensive loss||(6,928)||(6,928)|
|Total stockholders' equity||31,218 ||61,067 |
|Total liabilities and stockholders' equity||$||52,097 ||$||69,331 |
MEDAVAIL HOLDINGS, INC.
Supplemental Financial Information - Segments
(US Dollars in thousands)
|Retail Pharmacy Services||Pharmacy Technology||Total|
|Three Months Ended September 30, 2021|
|Pharmacy and hardware sales:|
|Retail pharmacy sales||$||5,445 ||$||— ||$||5,445 |
|Hardware||— ||106 ||106 |
|Subscription sales||— ||108 ||108 |
|Total pharmacy and hardware sales||5,445 ||214 ||5,659 |
|Software integration||— ||— ||— |
|Software||— ||51 ||51 |
|Maintenance and support||— ||44 ||44 |
|Installation||— ||11 ||11 |
|Professional services and other||— ||27 ||27 |
|Total service sales||— ||133 ||133 |
|Total sales||5,445 ||347 ||5,792 |
|Cost of sales||5,366 ||240 ||5,606 |
|Gross profit||$||79 ||$||107 ||$||186 |
|Retail Pharmacy Services|
Pharmacy Technology (1)
|Three Months Ended September 30, 2020|
|Pharmacy and hardware sales:|
|Retail pharmacy sales||$||2,186 ||$||— ||$||2,186 |
|Hardware||— ||1,625 ||1,625 |
|Subscription sales||— ||115 ||115 |
|Total pharmacy and hardware sales||2,186 ||1,740 ||3,926 |
|Software integration||— ||3,168 ||3,168 |
|Software||— ||15 ||15 |
|Maintenance and support||— ||17 ||17 |
|Installation||— ||— ||— |
|Professional services and other||— ||19 ||19 |
|Total service sales||— ||3,219 ||3,219 |
|Total sales||2,186 ||4,959 ||7,145 |
|Cost of sales||2,042 ||120 ||2,162 |
|Gross profit||$||144 ||$||4,839 ||$||4,983 |
(1) Includes $1.5 million of hardware sales and $3.2 million of software integration sales associated with a non-recurring commercial agreement.
Non-GAAP Financial Measures
To supplement our consolidated condensed 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 non-recurring revenue from a commercial agreement, merger-related expenses, and stock-based compensation expense.
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.
MEDAVAIL HOLDINGS, INC.
Unaudited Reconciliation of GAAP to Non-GAAP Measures
(US Dollars in thousands)
| ||Three Months Ended September 30,|
|Net loss||$||(11,273)|| ||$||(2,488)|
|Adjustments to calculate EBITDA:|| |
|Interest income||(7)||— |
|260 || ||455 |
Income tax expense
|2 || ||— |
Depreciation and amortization (1)
|526 || ||283 |
|Adjustments as follows:|
Non-recurring commercial agreement (2)
|Merger expenses||— ||1,324 |
|Share-based compensation expense||365 ||65 |
(1) Excludes $213 thousand and $150 thousand in operating lease amortization for the three month periods ended September 30, 2021, and 2020, respectively.
(2) Includes $1.5 million of hardware sales and $3.2 million of software integration sales associated with a non-recurring commercial agreement.
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 August 12, 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 aligned with value-based care providers Proprietary technology platform provides additional growth opportunities Highly scalable hub & spoke model; low capital cost Track record of delivering higher medication adherence Medicare-centric, technology enabled, in-clinic embedded pharmacy platform
4 MedAvail – Our Business Model Sell/License Technology Technology Vendor • Sell and license our technology to a select list of large enterprise customers • Customers use their back-end pharmacy operations (pharmacists, inventory) • 20% of revenue1 • SpotRx pharmacy, owned and operated by MedAvail • Turnkey full-stack pharmacy offering • Delivering remote pharmacist consultation through onsite dispensing kiosk, supplemented with home delivery capability • 80% of revenue1 Medicare-centric, embedded pharmacy platform Pharmacy 1 Long-term target
5 Capacity of up to 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 5
6 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 • 19 sites deployed • 350 points of care, 27 hospitals • 9 Initial sites in 2 states • Sam’s Club: 600 stores • 3 hospitals deployed, • 150+ hospitals, 1,800 sites of care
7 SpotRx scales through rapid deployment of hub and spoke model 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 Rapid in-clinic deployment enabled through proprietary technology Localized inventory replenishment Access to first fill and refills through on-site SpotRx MedCenter or home delivery On-site SpotRx clinic account manager for patients and clinic staff Opportunities to drive adherence and satisfaction among clinic patients
8 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 to 5 Star performance Multiple avenues to receive medication, including free courier delivery Patient level data sharing and reporting for providers
9 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
10 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%
11 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
12 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 average PDC per patient 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%
13 SpotRx: Value as an Embedded Pharmacy ___ * Data provided as an illustration 1 A PDC score is calculated based on the number of days supply a drug is dispensed for, divided by the number of days the prescription is in the patient’s possession Adherence Status Internal Patient Number Earliest Known Fill Date Goal Date to PDC1 of 80% Actual Covered Days Trending PDC Score1 Operational Action Savable XXXXX 04/20/2021 12/03/2021 111 83.33% • Place on Auto refill and MedSync Savable XXXXX 03/17/2021 12/03/2021 138 82.53% • Get refills for remainder of the year Savable XXXXX 01/05/2021 12/09/2021 189 79.32% • Clinical Pharmacist adherence counseling • Get refills for rest of the year Savable XXXXX 03/15/2021 12/08/2021 134 79.17% • Work with Clinician for next appointment adherence counseling Savable XXXXX 03/16/2021 12/08/2021 134 79.64% • Work with Clinician to prevent hospitalization Run daily to focus on “at risk patients” and drive adherence, counseling and interventions Enable tracking by clinic, patient, disease state and/or adherence date Leverage for better patient care + management with less reliance on outdated information Real-Time + Operationalized Data including Proportion of Days Covered (PDC) Scores1
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 Targeting FLORIDA $3.7B Expansion 2021TEXAS $3.6B Targeting 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 Strong Revenue Growth Driven by New Deployment Cumulative deployments Cumulative Deployments 1 FY21 guidance was reaffirmed in the third quarter earnings results announcement on November 8, 2021. Excluding one-time non-cash accounting entry for contract revenue recognized in 3Q20, full year 2020 revenue grew approximately 142% y/y. 20 57 FY19 FY20 YoY Revenue Growth1 $3.8 $9.3 FY19 FY20 FY21 E $21M Total Consolidated Net Revenue Quarter-over-Quarter Revenue Growth $4.5 $5.4 $0.5 $0.3 $5.0 $5.8 Q2 2021 Q3 2021 +15% $14.9
17 Target Business Model Target Pharmacy Revenue (SpotRx) 80%-85% of revenue HW/SW Revenue 15%-20% of revenue Gross Margin 20-25% EBITDA ~12-14%
18 Proven Team, Advisors and Investors Ed Kilroy CEO Will Misloski CMO Redmile Group John Dorsey CIO David Feinberg Advisor MANAGEMENT TEAM ADVISOR INVESTORS David Rawlins CCO Joan O’Rourke PRESIDENT, SPOTRx Ramona Seabaugh CFO
20 Supplemental Financial Summary Consolidated Statement of Operations (Unaudited) (In thousands) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Sales: Pharmacy and hardware sales (1) 1,402$ 2,259$ 3,926$ 3,009$ 3,781$ 4,725$ 5,659$ Service sales (1) 10 52 3,219 91 246 305 133 Total sales 1,412 2,311 7,145 3,100 4,027 5,030 5,792 Cost of sales: Pharmacy and hardware cost of sales 1,385 1,826 2,132 3,250 3,526 4,679 5,539 Service cost of sales 47 39 30 96 181 178 67 Total cost of sales 1,432 1,865 2,162 3,346 3,707 4,857 5,606 Gross profit (20) 446 4,983 (246) 320 173 186 Pharmacy operations 1,089 1,116 1,450 2,032 1,911 2,292 2,395 General and administrative 3,500 3,580 3,464 6,018 6,515 6,646 6,805 Selling and marketing 703 570 624 1,146 1,377 1,497 1,779 Research and development 215 163 154 150 168 201 232 Merger expenses - 1,283 1,324 2,084 - - - Operating loss (5,527) (6,266) (2,033) (11,676) (9,651) (10,463) (11,025) Other gain (loss), net 8 - - (118) 161 38 7 Interest income 8 7 - 28 40 27 7 Interest expense (179) (277) (455) (330) (2) (66) (260) Loss before income taxes (5,690) (6,536) (2,488) (12,096) (9,452) (10,464) (11,271) Income tax expense - - - - - - (2) Net loss (5,690)$ (6,536)$ (2,488)$ (12,096)$ (9,452)$ (10,464)$ (11,273)$ (1) Q3 2020 includes $1.5 million of hardware sales and $3.2 million of service software integration sales associated with a non-recurring commercial agreement.
21 Supplemental Financial Summary Sales and Cost of Sales by Segment (Unaudited) (In thousands) Retail Pharmacy Services Pharmacy Technology Total Retail Pharmacy Services Pharmacy Technology Total Retail Pharmacy Services Pharmacy Technology Total Retail Pharmacy Services Pharmacy Technology Total Sales: Pharmacy and hardware sales: Retail pharmacy revenue 1,297$ -$ 1,297$ 1,713$ -$ 1,713$ 2,185$ -$ 2,185$ 2,532$ -$ 2,532$ Hardware (1) - - - - 423 423 - 1,626 1,626 - 352 352 Subscription revenue - 105 105 - 123 123 - 115 115 - 125 125 Total pharmacy and hardware sales 1,297 105 1,402 1,713 546 2,259 2,185 1,741 3,926 2,532 477 3,009 Service sales: Software integration (1) - - - - - - - 3,185 3,185 - - - Software - - - - 10 10 - 15 15 - 3 3 Maintenance and support - 10 10 - 13 13 - 17 17 - 18 18 Installation - - - - 28 28 - - - - 27 27 Professional services and other - - - - 1 1 - 2 2 - 43 43 Total service sales - 10 10 - 52 52 - 3,219 3,219 - 91 91 Total sales 1,297 115 1,412 1,713 598 2,311 2,185 4,960 7,145 2,532 568 3,100 Cost of sales 1,338 94 1,432 1,679 186 1,865 2,042 120 2,162 2,685 661 3,346 Gross profit (loss) (41)$ 21$ (20)$ 34$ 412$ 446$ 143$ 4,840$ 4,983$ (153)$ (93)$ (246)$ (1) Q3 2020 includes $1.5 million of hardware sales and $3.2 million of software integration sales associated with a non-recurring commercial agreement. Q1 2020 Q2 2020 Q3 2020 Q4 2020
22 Supplemental Financial Summary Sales and Cost of Sales by Segment (Unaudited) (In thousands) Retail Pharmacy Services Pharmacy Technology Total Retail Pharmacy Services Pharmacy Technology Total Retail Pharmacy Services Pharmacy Technology Total Sales: Pharmacy and hardware sales: Retail pharmacy revenue 3,418$ -$ 3,418$ 4,494$ -$ 4,494$ 5,445$ -$ 5,445$ Hardware - 241 241 - 123 123 - 106 106 Subscription revenue - 122 122 - 108 108 - 108 108 Total pharmacy and hardware sales 3,418 363 3,781 4,494 231 4,725 5,445 214 5,659 Service sales: Software - 33 33 - 41 41 - 51 51 Maintenance and support - 31 31 - 40 40 - 44 44 Installation - 16 16 - 12 12 - 11 11 Professional services and other - 166 166 - 212 212 - 27 27 Total service sales - 246 246 - 305 305 - 133 133 Total sales 3,418 609 4,027 4,494 536 5,030 5,445 347 5,792 Cost of sales 3,329 378 3,707 4,435 422 4,857 5,366 240 5,606 Gross profit (loss) 89$ 231$ 320$ 59$ 114$ 173$ 79$ 107$ 186$ Q1 2021 Q2 2021 Q3 2021
23 Supplemental Financial Summary Adjusted EBITDA – Non-GAAP Reconciliation (Unaudited) (In thousands) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Net loss (5,690)$ (6,536)$ (2,488)$ (12,096)$ (9,452)$ (10,464)$ (11,273)$ Adjustments to calculate EBITDA: Interest expense, net 171 270 455 302 (38) 39 253 Income tax - - - - - - 2 Depreciation and amortization 243 279 283 298 340 380 526 EBITDA (5,276) (5,987) (1,750) (11,496) (9,150) (10,045) (10,492) Adjustments as follows: Bad debt & service fees - - - 75 - - - Share-based compensation expense 84 86 65 145 260 323 365 Merger related expense - 1,283 1,324 2,084 - - - Other (income) loss, net (8) - - 118 (161) - - Inventory impairment charges - - - 352 - - - Non-recuring commercial agreement (1) - - (4,729) - - - - Adjusted EBITDA (5,200)$ (4,618)$ (5,090)$ (8,722)$ (9,051)$ (9,760)$ (10,127)$ (1) Includes $1.5 million of hardware sales and $3.2 million of service software integration sales associated with a non- recurring commercial agreement.
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.