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 10, 2022
MEDAVAIL HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
|(Commission File Number)|
4720 East Cotton Gin Loop, Suite 220,
(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 10th, 2022, MedAvail Holdings, Inc. ("MedAvail" or the "Company") issued a press release regarding its financial and operational results for the three months ended September 30th, 2022. 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 10th, 2022, MedAvail hosted a conference call and webcast to discuss the Company's financial and operational results for the three months ended September 30th, 2022.
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 10th, 2022.
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 10, 2022
|By:||/s/ Ramona Seabaugh|
| || |
Chief Financial Officer
MedAvail Reports Third Quarter 2022 Financial Results
PHOENIX, Ariz. – November 10, 2022 – MedAvail Holdings, Inc. (Nasdaq: MDVL) (“MedAvail”) a technology-enabled pharmacy company, today reported financial results for the three months ended September 30, 2022.
“During the third quarter, we made significant progress on our key milestones – we achieved and exceeded our target of 100 dispensing MedCenters, delivered gross margin expansion for the second consecutive quarter, and reached savings of 26% on our cash burn rate over the fourth quarter of 2021. We are also pleased with our third quarter performance; despite some headwinds, we continued to meaningfully broaden our retail pharmacy footprint and continued to expand our technology pipeline,” said Mark Doerr, chief executive officer of MedAvail. Looking ahead to the remainder of 2022 and beyond, we are confident that we are well positioned with a clear pathway to deliver long-term profitable growth, as we continue our focus and strong execution across our strategic priorities.”
Recent Operational Highlights
•Ended third quarter of 2022 with 104 MedCenter total net cumulative deployments, a 28% increase year to date
•Ended third quarter of 2022 with 103 MedCenter total net dispensing deployments, a 52% increase year to date
•Expanded partnership with Cano Health to open nine additional SpotRx locations in South Florida
•Entered into a new scalable agreement with Aegis to open one initial SpotRx in Orlando
•Announced that PharmCo Rx Pharmacy plans to implement five MedCenters in Florida under a technology agreement with MedAvail
•Ended third quarter with 11.3% gross margins, an improvement from 8.2% during the second quarter, continuing consecutive quarter over quarter margin expansion
•Achieved in the third quarter savings of 26% over the cash burn rate in the fourth quarter of 2021
•Achieved pharmacy operating costs savings of 10%, excluding increased non-cash accelerated amortization expense, as compared to the same prior year period
Third Quarter 2022 and Recent Financial Highlights
All comparisons, unless otherwise noted, are to the three months ended September 30, 2021.
•Total revenue increased 98% to $11.5 million
•Total revenue by segment
◦Retail Pharmacy Services revenue increased 105% to $11.2 million
◦Pharmacy Technology revenue remained unchanged at $0.3 million
•Net operating loss was $11.8 million compared to $11.3 million
•Adjusted EBITDA loss of $9.4 million compared to $10.1 million
•Cash and cash equivalents as of September 30, 2022, were $27.2 million
Full Year 2022 Financial Outlook
MedAvail expects total revenue for full year 2022 to be at least $42 million, representing growth of at least 90% over full year 2021 revenue.
The company is raising guidance of 30 to 35 net new dispensing deployments for full year 2022 to at least 40 net new dispensing deployments.
MedAvail will host a conference call at 1:30 p.m. PT / 4:30 p.m. ET on Thursday, November 10, 2022, to discuss its third quarter 2022 financial results. The conference call can be accessed by registering online for the live audio webcast on the “Investor Relations” section of MedAvail’s website at: https://investors.medavail.com. The webcast will be archived and available for replay after the event.
Definition of Key Metrics
Net Dispensing Deployments
We define net dispensing deployments as sites that are live, meaning that such sites have payer network acceptance, pharmacy board approvals and trained clinical staff or clinical account managers.
Net Cumulative Deployments
Net cumulative deployments includes dispensing deployments and installed not yet dispensing deployments, but excludes decommissioned clinics, pilots and demo sites.
MedAvail Holdings, Inc. (NASDAQ: MDVL) is a technology-enabled pharmacy company, 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.
Non-GAAP Financial Measures
MedAvail refers to certain financial measures that are not recognized under U.S. generally accepted accounting principles ("GAAP") in this press release, including adjusted EBITDA. See the schedules to this press release for additional information and reconciliations of such non-GAAP financial measures.
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 and cost savings projections and expectations for growth and profitability; customer demand and expansion plans; margin, utilization and cost reduction improvements; improvements in deployment efficiency and speed; 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 MedAvail’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 29, 2022, MedAvail’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022, filed with the SEC on November 10, 2022, and other filings MedAvail makes with the SEC in the future. Additional information is also set forth in MedAvail’s Annual Report on Form 10-K for the year ended December 31, 2021, MedAvail’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2022, 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.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
|Three Months Ended September 30,|
|Pharmacy and hardware revenue||$||11,266 ||$||5,659 |
|Service revenue||195 ||133 |
|Total revenue||11,461 ||5,792 |
|Cost of products sold and services:|
|Pharmacy and hardware cost of products sold||10,113 ||5,539 |
|Service costs||56 ||67 |
|Total cost of products sold and services||10,169 ||5,606 |
|Pharmacy operations||4,392 ||3,750 |
|General and administrative||6,087 ||5,320 |
|Selling and marketing||2,126 ||1,909 |
|Research and development||178 ||232 |
|Total operating expense||12,783 ||11,211 |
|Other gain (loss), net||— ||7 |
|Interest income||— ||7 |
|Loss before income taxes||(11,806)||(11,271)|
|Income tax expense||— ||(2)|
|Net loss and comprehensive loss||$||(11,806)||$||(11,273)|
|Net loss per share - basic and diluted||$||(0.15)||$||(0.34)|
|Weighted average shares outstanding - basic and diluted||80,045,995||32,750,831|
(1) Certain activity was reclassified to be consistent with the current presentation, see comparative tables that follow.
MEDAVAIL HOLDINGS, INC.
Operating Expense Reclassifications
|Three Months Ended September 30, 2021|
|Current presentation||As previously reported||Change|
|Pharmacy operations||$||3,750 ||$||2,395 ||$||1,355 |
|General and administrative||5,320 ||6,805 ||(1,485)|
|Selling and marketing||1,909 ||1,779 ||130 |
|$||10,979 ||$||10,979 ||$||— |
MEDAVAIL HOLDINGS, INC.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
|September 30,||December 31,|
|Cash and cash equivalents||$||27,196 ||$||19,689 |
|Restricted cash||676 ||400 |
Accounts receivable (net of allowance for doubtful accounts of $186 thousand for September 30, 2022, $66 thousand for December 31, 2021)
|2,262 ||1,189 |
|Inventories||6,401 ||3,916 |
|Prepaid expenses and other current assets||2,863 ||2,191 |
|Total current assets||39,398 ||27,385 |
|Property, plant and equipment, net||6,370 ||5,692 |
|Intangible assets, net||1,580 ||2,300 |
|Right-of-use assets||2,270 ||2,538 |
|Other assets||233 ||228 |
|Total assets||$||49,851 ||$||38,143 |
|Liabilities and Stockholders' Equity|
|Accounts payable||$||2,006 ||$||2,477 |
|Accrued liabilities||1,383 ||1,530 |
|Accrued payroll and benefits||2,869 ||2,733 |
|Deferred revenue||70 ||83 |
|Current portion of lease obligations||728 ||682 |
|Total current liabilities||7,056 ||7,505 |
|Long-term debt, net||9,751 ||9,538 |
Long-term portion of lease obligations
|1,738 ||2,027 |
|Total liabilities||18,545 ||19,070 |
|Commitments and contingencies|
Common shares ($0.001 par value, 300,000,000 shares authorized, 80,045,696 and 32,902,048 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively)
|80 ||33 |
|11,148 ||1,373 |
|Additional paid-in-capital||255,642 ||216,685 |
|Accumulated other comprehensive loss||(6,928)||(6,928)|
|Total stockholders' equity||31,306 ||19,073 |
|Total liabilities and stockholders' equity||$||49,851 ||$||38,143 |
MEDAVAIL HOLDINGS, INC.
Supplemental Financial Information - Segments
|Retail Pharmacy Services||Pharmacy Technology||Total|
|Three Months Ended September 30, 2022|
|Pharmacy and hardware revenue:|
|Retail pharmacy revenue||$||11,162 ||$||— ||$||11,162 |
|Hardware||— ||— ||— |
|Subscription||— ||104 ||104 |
|Total pharmacy and hardware revenue||11,162 ||104 ||11,266 |
|Software||— ||94 ||94 |
|Maintenance and support||— ||48 ||48 |
|Installation||— ||— ||— |
|Professional services and other||— ||53 ||53 |
|Total service revenue||— ||195 ||195 |
|Total revenue||11,162 ||299 ||11,461 |
|Cost of products sold and services||10,047 ||122 ||10,169 |
|Segment gross profit||$||1,115 ||$||177 ||1,292 |
|Retail Pharmacy Services||Pharmacy Technology||Total|
|Three Months Ended September 30, 2021|
|Pharmacy and hardware revenue:|
|Retail pharmacy revenue||$||5,445 ||$||— ||$||5,445 |
|Hardware||— ||106 ||106 |
|Subscription||— ||108 ||108 |
|Total pharmacy and hardware revenue||5,445 ||214 ||5,659 |
|Software||— ||51 ||51 |
|Maintenance and support||— ||44 ||44 |
|Installation||— ||11 ||11 |
|Professional services and other||— ||27 ||27 |
|Total service revenue||— ||133 ||133 |
|Total revenue||5,445 ||347 ||5,792 |
|Cost of products sold and services||5,366 ||240 ||5,606 |
|Segment gross profit||$||79 ||$||107 ||186 |
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 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
| ||Three Months Ended September 30,|
|Adjustments to calculate EBITDA:|| |
|Interest income||— ||(7)|
|315 ||260 |
Income tax expense
|— ||2 |
Depreciation and amortization (1)
|1,616 ||526 |
|Adjustments as follows:|
|Share-based compensation expense||565 ||365 |
(1) Excludes $164 thousand and $213 thousand in operating lease amortization for the three months ended September 30, 2022, and 2021, respectively.
2 MedAvail Holdings, 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 Annual Report on Form 10-K filed on March 29, 2022 and on our Quarterly Report Form 10-Q filed on November 10, 2022. 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 extent to which the impact of the COVID-19 pandemic, the ongoing military action launched by Russian forces in Ukraine, or the impact of other global economic conditions, including any economic effects stemming from adverse geopolitical events, an economic downturn and changes to inflation or interest rates has on MedAvail’s businesses, operations, and financial results, including the duration and magnitude of such effects, will depend on numerous factors, which are unpredictable and how quickly and to what extent normal economic and operating conditions are affected or impacted. 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. Safe Harbor Statements
3 Pharmacy and Technology Businesses Powered by the MedCenter SPOTRXTECHNOLOGY Solution for Value-Based Medicare Providers Solution for pharmacy providers Telepharmacy & Telehealth Improves patient access and satisfaction Enhances provider satisfaction Increases medication adherence Augments reimbursement for value-based care providers Selling MedCenter and Software Licenses ▶ Helps address labor market challenges ▶ Economically expands pharmacy hours ▶ Establishes pharmacy self-checkout Embedding Pharmacy Services in Clinics ▶ Helps address patient adherence ▶ Quicker, more ready access to pharmacy ▶ Direct provider access to pharmacy Remote Dispensing – New Prescriptions Automated Will Call Bin – Refills
4 SpotRx: Rapid Scaling through Hub and Spoke Model Unique embedded pharmacy model results in improved patient medication adherence and satisfaction Rapid in-clinic, embedded deployment through proprietary MedCenter technology Open Centralized Pharmacy Hubs in Each SpotRx Service Area 1 MedAvail Third Quarter 2022 Financial Results released November 10, 2022 Cost-effective for providers with a small physical footprint Helps improve provider engagement and reduce burnout On-site SpotRx account support for patients and clinic staff 8 pharmacy hubs in 4 states 103 MedCenter net dispensing deployments1
5 Meeting the Needs of Medicare Patients and Clinic Providers 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 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%
6 Initial Target Markets – Estimated $16.5B1 of Annual Prescription Revenue CALIFORNIA $4.5B Live 2020 ARIZONA $0.6B Live 2019 ILLINOIS $2.2B Targeting FLORIDA $3.7B Live 2021 TEXAS $3.6B Targeting MICHIGAN $2.0B Live 2020 Increasing Medicare population and prescription utilization Growing with expanding clinic partners while propelling new partnerships Meeting rising demand with proven model and scalable infrastructure for key markets 1 Internal estimates based on 2017 CMS Medicare Provider Utilization and Payment Data: Part D Prescriber 2 Internal estimates based on clinic qualification model and projected patient adoption rate 3 The ~15% is calculated as 103 dispensing MedCenters as of 9/30/22 divided by the ~700 clinics referenced Market Penetration in Current 4 States of Operation, ~15%3 ~700 Clinics with Current Partners in 4 States of Operation Equates to ~$500M Market Opportunity2
7 Medication Adherence Impact on Star Rating & Reimbursement Embedded physical pharmacies Retail pharmacies in medical office buildings Acquires Behavioral health retail pharmacy Acquires Large, vertically-integrated players embracing embedded pharmacy Health systems integrating pharmacies EMBEDDED PHARMACY OPPORTUNITY Potential for Improved Outcomes • 3.4x better adherence at employer-sponsored sites with Embedded Pharmacy(Aguilar et al, 2015) • Higher medication adherence resulted in cost savings of $58 per member per month (Wright &Gorman 2016) Improved Reimbursement/ Less Risk for Providers and Plans3 • Medicare directly ties physician reimbursement to medication adherence: 4- & 5-star MA plans receive pay for performance bonuses of ~$500/member/year • Improving from a 3- to a 4-Star Rating can increase annual health plan revenues by 13.4 % to 17.6% *Based on EQUiPP July 2022 Reporting for SpotRx SpotRx PDC Scores4 88.0% 87.0% 85.0% 93.0% 93.2% 92.5% Hypertension Cholesterol Diabetes PDC Score 5-Star Goal 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 3 Source: https://www.ajmc.com/contributor/jason-rose/2019/08/medication-adherence-the-lever-to-improve-medicare-advantage-star-ratings 4 PDC 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. For example, a 90-day supply of a drug refilled after 100 days (90÷100) yields a PDC Score of 85% (Proportion of Days Covered)
8 First Fills Facilitated by Increasing MedCenter Utilization 11.1% 17.2% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% M e d C e n te r / D T C U ti liz a ti o n % 17.1%12.9% 33% INCREASE in MedCenter Utilization Utilization of the MedCenter increased from 12.9% from August ‘21 to January ‘22 to 17.1% for the 6 months ending July ‘22
9 Broadening Footprint with Strong Partnerships ARIZONA CALIFORNIA MICHIGAN FLORIDA 21 3 4 Simple to embed integrated pharmacy solution Delivering high patient & provider satisfaction Driving improved patient outcomes: adherence Leading to better clinic reimbursement
10 Expanding with Strategic Partners into New Clinics and Markets 2.5 1 Identified signifies contracted or contracted plus deployed. 2.5 Enterprise Value-Based Partner ▶ 2 initial sites in MI in Dec. 2020 ▶ 13 active dispensing sites ▶ 6 more identified in MI & AZ1 2.5 2.5 ▶ 3 initial sites in FL in Nov 2021 ▶ 22 active dispensing sites in FL ▶ 4 more identified in FL1 ▶ 3 initial sites in FL in Oct 2021 ▶ 12 active dispensing sites in FL & CA ▶ 13 more identified in FL1
11 Deployment Momentum Drives Strong Revenue Growth Net Cumulative Deployments1 Dispensing YoY Revenue Growth2 $3.8 $9.3 FY19 FY20 FY21 Total Consolidated Net Revenue QoQ Revenue Growth $7.3 $9.1 $11.2 $11.5 Q4 2021 Q1 2022 Q2 2022 Q3 2022 $22.1 Consolidated Net Revenue +145% Y/Y +138% Y/Y FY 2020 FY 2021 Q3 2022 104 81 46 103 1 Deployments not Dispensing 13 68 8 38 +23% QoQ • 2022 full year total revenue to be at least $42M • Net New Dispensing Units: At least 403 FY 2022 Outlook 1 Net cumulative deployments excludes decommissioned clinics, pilot and demo sites. 2 Net revenue in 2020 excludes a non-recurring benefit recognized in conjunction with a commercial agreement from 2018. 3Net Dispensing Units are defined as sites that are live, meaning that such sites have payer network acceptance, pharmacy board approvals and trained clinical staff or clinical account managers. +3% QoQ +25% QoQ
12 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 Year 1 Year 2 Year 3 Notes 1. Sites included have been dispensing for continuous 18 months or longer, total sites as of 12/31/21 is 13. 2. Revenue ramp rates based on historical actuals for at least 18 months. Sites with less than three years of actuals, used most recent two-month average straight-lined for remaining months. ($ in millions) 75th Percentile Median KEY DRIVERS IMPACTING REVENUE RAMP Timing • New or existing clinic • New or existing market Volume Drivers • Clinic staffing • Patient penetration rates Average Sales Price Drivers • Payer mix • Prescription type (days supply, brand, generic, specialty) Historical Site Revenue Ramp
13 Driving Targeted Key Milestones • Planned 20% reduction in quarterly cash burn by: o Gross margin expansion o Greater hub pharmacy utilization as clinics onboard and mature o Optimization of clinic and pharmacy labor o G&A leverage: existing team able to support increase in scale • Targeting mid-teens1 long-term gross margin • Technology business segment building a pipeline for 20232, leveraging EPIC integration Exceeded in Q3 2022 Continued traction • 50% Growth in dispensing MedCenters to over 100 in existing markets • 20% Reduction in quarterly cash burn • 8-9% Gross margin target by Q1 2023 1 Target based on industry average (Drug Channels Institute, Adam Fine, 2021) 2 Based on Second Quarter Earnings Call commentary on August 11, 2022
14 $37,498 $1,541 Segmented LTM Revenue1 (USD in thousands) 1 For the twelve months ended September 30, 2022 MedCenter kiosk and software & maintenance for customers that operate their own pharmacies Revenues comprise of initial lump sum payments upon integration and monthly payments for software & maintenance Technology RevenuePharmacy Revenue Customer branded and customized patient workflow utilizing integration with customer pharmacy management system Revenue from prescription & OTC product dispensing out of MedCenter and delivered to patients’ homes Full-service retail pharmacy platform where a centralized pharmacy supports and operates a network of MedCenters Segment focuses on the Medicare market (65+ year old) and at-risk providers Complementary Deployment Models Drive Expansion
15 Investment Highlights Proprietary technology platform enables on-site pharmacy integral to medication adherence Highly scalable hub & spoke model enables margin expansion & operating leverage Large $16B TAM in current states of operation with ~$500M from ~700 clinics existing SpotRx partners Near-term technology market expansion opportunities with pharmacy management integrations
17 Supplemental Financial Information AT-RISK CLINICS PROVIDERS Consolidated Statement of Operations (Unaudited)
18 Supplemental Financial Information AT-RISK CLINICS Operating Expense Reclassifications (Unaudited) (In thousands) Current Presentation As Previously Reported Change Pharmacy operations 2,593$ 1,911$ 682$ General and administrative 5,676 6,515 (839) Selling and marketing 1,534 1,377 157 Research and development 168 168 - 9,971$ 9,971$ -$ (In thousands) Current Presentation As Previously Reported Change Pharmacy operations 3,085$ 2,292$ 793$ General and administrative 5,737 6,646 (909) Selling and marketing 1,613 1,497 116 Research and development 201 201 - 10,636$ 10,636$ -$ (In thousands) Current Presentation As Previously Reported Change Pharmacy operations 3,750$ 2,395$ 1,355$ General and administrative 5,320 6,805 (1,485) Selling and marketing 1,909 1,779 130 Research and development 232 232 - 11,211$ 11,211$ -$ Q3 2021 Q1 2021 Q2 2021
19 Supplemental Financial Information AT-RISK CLINICS PROVIDERS Revenue and Cost of Products Sold and Services (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 Revenue: Pharmacy and hardware revenue: Retail pharmacy revenue 3,418$ -$ 3,418$ 4,494$ -$ 4,494$ 5,445$ -$ 5,445$ 6,846$ -$ 6,846$ Hardware (1) - 241 241 - 123 123 - 106 106 - - - Subscription - 122 122 - 108 108 - 108 108 - 108 108 Total pharmacy and hardware revenue 3,418 363 3,781 4,494 231 4,725 5,445 214 5,659 6,846 108 6,954 Service revenue: Software integration (1) - - - - - - - - - - - - Software - 33 33 - 41 41 - 51 51 - 134 134 Maintenance and support - 31 31 - 40 40 - 44 44 - 47 47 Installation - 16 16 - 12 12 - 11 11 - - - Professional services and other - 166 166 - 212 212 - 27 27 - 145 145 Total service revenue - 246 246 - 305 305 - 133 133 - 326 326 Total revenue 3,418 609 4,027 4,494 536 5,030 5,445 347 5,792 6,846 434 7,280 Cost of products sold and services 3,329 378 3,707 4,435 422 4,857 5,366 240 5,606 6,901 741 7,642 Segment gross profit (loss) 89$ 231$ 320$ 59$ 114$ 173$ 79$ 107$ 186$ (55)$ (307)$ (362)$ Q1 2021 Q2 2021 Q3 2021 Q4 2021
20 Supplemental Financial Information AT-RISK CLINICS Revenue and Cost of Products Sold and Services (Unaudited)
21 Supplemental Financial Information AT-RISK CLINICS Adjusted EBITDA – Non-GAAP Reconciliation (Unaudited)
22 Supplemental Financial Information 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, share-based compensation expense, and non-recurring inventory impairment charges. 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.