Progressive Care Inc (RXMD)

[JohnCM]

Progressive Care's (RXMD) CEO Shital Mars on Q1 2017 Results - Earnings Call Transcript

May 15, 2017 10:48 PM ET|1 comment| About: Progressive Care, Inc. (RXMD)
05-13-17 Earnings Summary
Progressive Care, Inc. (OTCPK:RXMD) Q1 2017 Earnings Conference Call May 15, 2017 4:30 PM ET

Executives

Shital Mars - CEO

Analysts

Robert Alexander - Private Investor

Richard Parmer - Private Investor

Operator

Welcome to the Progressive Care Incorporated First Quarter Financial Results Conference Call. [Operator Instructions]. Please note that the event is being recorded. And I now, I’d now like to turn the conference over Mrs. Mars, Chief Executive Officer. Please go ahead.

Shital Mars

Good afternoon everyone. It’s a pleasure to speak with you this afternoon after publishing our first quarter results. I'm going to quickly read a statement here and then we will get into the bulk of the financial statements that we issued today.

Forward-looking statements except for historical information contained herein, the statements in this conference call are forward-looking and made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently unreliable and actual results may differ materially.

Examples of forward-looking statements in this conference call include statements regarding the payment of dividends, marketing and distribution plans, development activities, and anticipated operating results.

Factors which could cause actual results to differ materially from these forward-looking statements include such factors as the company's ability to accomplish a business initiative, significant fluctuations in marketing expenses, and the ability to achieve and expand significant levels of revenues or recognized and income from the sale of its product and services, as well as the introduction of competing products or management’s ability to attract and maintain qualified personnel necessary for the development and commercialization of its planned products and other information that may be detailed from time to time in the company's filings with OTC Markets.

The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

So I hope everybody has had a chance to proof the quarterly report today. As you can see sales are up about 23% over the same quarter last year and a lot of that has to do with just a reinvigorated effort to promote our core business which is the pharmacy business and we're talking about refill, we're talking maintenance drive, we're talking speciality, limited aspect compound. We are trying to promote ourselves to doctors' offices and clinics as a five star rated pharmacy and what does that mean we have well we're get gaps and therapies, we have medication therapy management cases that we respond to, we have real amounts of high risk patients.
We do a lot of that data analysis and revision work that a lot of pharmacies don't do to achieve a five star rating in performance and we're very proud of that. By doing what we have been doing and staying focus on achieving the highest levels of service, we've gone to our doctors' offices and our clinics and even new ones and said that our performance will enhance their performance, new ratios and ratings are closely tied together and we have [indiscernible], we have macro, we have [indiscernible] we have a lot of things coming through Medicare and the PBMs that are affecting doctors' offices and physician practices that the pharmacy can help with.

So by going through and showing the reports and showing the data and showing how we can and improve a physician's office practice and deliver better health outcomes to their patients we are attracting more and more business and it's been an interesting role for this first quarter as we've got a new regulation, we've got new rules, new stipulations on what we can and cannot dispense what we can and cannot provide to a doctor's office, where we can and cannot market even. I mean these rules have gotten extremely strict but one thing that's good about PharmCo and we've always been very good about it, is seeing what's coming down the pipeline, seeing that the industry is changing and adapting very quickly to achieve compliance in advance.

So we know that 90 day supply is nearly universal between all the PBMs, they would prefer everybody be on 90 day supplies and we make a quick switch to that. We know that certain compounds are disfavoured by certain PBMs, we make a quick switch with that. We always want to make sure that we are staying compliant while also delivering best practices and best health outcomes to the doctors and the patients that rely on us. So we've been a group pretty nimble and we've been pretty quick with making sure we're meeting all of our goal and keeping our baseline revenues, and our baseline profits and meeting all the requirements that are expected of us, Medicare, Medicaid and the PBMs.
So as you can see our total revenues are up 23% to about 4.8 million, this is the highest we've ever been in a first quarter and we're excited and. In the first quarter also has another pitfall of being deductible, I think I have explained this a little bit in my press releases, what deductible season means is that before the PBM, before insurance carriers will cover things like drugs and other health benefits, a patient must meet their deductible first and that causes a lot of delays, a lot of gaps, a lot of waiting till the patient meets their deductible before they want to engage in new therapies, and before a doctor wants to prescribe saying also has to make sure to see how the insurance company is in a flush out after deductibles are met, what things will cover and what things they won't and whether the patient will stay on that insurance, a lot of times insurances change at the beginning of year. So it’s a lot that you've to adapt to in the first quarter.

So we're really proud of our results. We had net income of $163,000 I believe that is more than the entire year or close to the entire year of last year, so we're on solid ground, stable footing as we move into the next quarter. We anticipate ramp-up throughout the rest of the year as we look to doing more long term care, as we look to taking advantage of our 340B business and more MTM cases obviously and also seeing promising developments in Smart Medical alliance which I'll get to shortly.

Well pharmacy continues to be 99% of our business. We have small amounts of MTM, small amounts of 340B revenue which we see as increasing over the coming quarters and a lot of that has to do again with directed marketing specific to doctors, specific to ambulatory surgical centers or [indiscernible] specialist and alike and we're encouraged by the growth that we're seeing. As we look into our cash flow, our cash balance has decreased modestly and that's a result of having increased accounts receivable and that usually comes with the territory in the first quarter of the year as new patients come on board with their new insurances and insurances will delay payment from 15 days to upwards of 30. So we saw a little increase in our accounts receivable. Not concerned about it at all and as of now we have collected all about 8000 of it. We have also a decrease in accounts payable, we're trying to make sure that we keep our accounts payable low and to a sustainable level overtime so we have been keep it at about 15 days, 80 outstanding which is great and keeping all of our bills paid early or on time.

If we look at little bit further our income from financing is not that material and neither is income from investing, we didn’t purchase any new property or equipment and we didn’t do - we didn’t take on any new debt or any other financing in the first quarter. So much of our cash flow is coming from operations and dictated by our operations and we're really excited that we have almost three quarters of a million dollars in cash on hand.

So to go into a little bit of what our accomplishments were in the first quarter, a lot of you are really happy that we did our audited financials for 2016, we attended a conference. Obviously we're increasing year-over-year revenues, we're increasing our prescriptions accounts, we're increasing our earnings and we're trying to our best to deliver on all of the things we expect in this year and all of the things our shareholders expect of us.

As we look into the coming quarter, we're looking at expanding our reach into our nursing homes. What we did in the first quarter is lay the ground works for all of that nursing home business to come in, making sure all of the standard operating procedures as positioned as possible, we are making sure we have the workflow space, making sure we have the personnel and all of the logistics are available for what our nursing home clients will expect of us. We also are looking at accountable care organisations and what we found out that it comes 2019 Accountable care organizations will become full risk. What does that mean? Accountable care organizations right now ACOs are right now fee for service. So every time they have an encounter with a patient they will build the appropriate insurance company or receive a standard fee, now if they go for risk that’s a lot like the HMO model so they will be held accountable for cost and savings and how is the outcomes just like any other HMO primary care practice, what does that mean for us? That expands now the market for our services.

As you know and as I've stated previously in this call we pride ourselves and we market ourselves based on our performance and our ability to deliver performance improvements to the physicians that choose to recommend us. So now with a whole new group of physicians coming into our market we can go to each of them and present our services where otherwise they had little need for us and now we're very excited and we believe that will have benefits for the pharmacy, that’s going to have benefits for Smart Medical alliance as they go and try to get their MSO contract and go and market themselves, and their data analysis and their billing and coding, build whole new group of potential clients. We're also looking at promoting ourselves and putting ourselves in front of large MSOs.

The biggest problem the MSOs face is the pharmacy and they know that. A lot of them feel bound to the pharmacies that are directly the direct subsidiary of their PBM, of their contracted insurance carrier. However what that’s causing is gaps and therapies, that’s causing losses to the primary care physician and they are now been able to realize benefits of the bonus structures and all of that because they feel tied to the pharmacy. Now we're educating our MSOs, we're educating our doctors that the laws in the State of Florida state that no pharmacy can be contracted with a physician. So the physician is not exclusively tied to a pharmacy and when we come in and we show them how we deliver for doctors after doctor they are more encouraged and more likely to start referring their patients to us and we tell them, just tell the patient that they will get their medication in the morning if that’s what they would prefer and they would like to get their maintenance meds early and on-time and have that reliable delivery of service then we're the perfect fit for them. So we're really excited and encouraged by the feedback we're getting from the MSOs and we think that we can ramp up a lot of that business over the next coming quarters and in the last week we're now moving more aggressively in the Palm Beach County.

We have a strong foothold in Miami Bay, we have a growing foothold in [indiscernible] which is just north of us, we're in Ft. Lauderdale area for those of you who aren’t familiar and that Palm Beach and that’s where your bulk of [indiscernible] we really feel like that we can expand in those markets, we know that there are lot of underserved patients in those markets and we know a lot of physicians who are looking for our kinds of service that don’t have anything like us where they are and because we are relatively local we are always 30 mins, 45, mins away. We don’t run into the rebuttals, hesitant of not having a local pharmacy because we're really - anybody who can need medication can receive medication from PharmCo within the hour. So we're moving very aggressively into these other areas and these other counties and we think we're going to see a lot of growth come summer and especially in the fall and winter which is always our busy season starting with [indiscernible] August, September. So we are setting a lot of foundation now for the growth that is still to come in our busier months starting August through December.

So all of that is what we're expecting this year and then as you probably have read recently OTC markets has changed its listing standards for OTCQB. We could not have welcomed that news with any greater enthusiasm. We know that it is a high priority for a lot of our shareholders and all of the investment community that Progressive Care that come off of pink sheet and so now we're taking it very seriously and working very diligently to meet those requirements and up with it as soon as possible. We're looking at our independent board members, we're establishing our audit committee which must be majority independent and we already meet the other standards. We already have a year of audited financials, we already have minimum bid price of a penny and so we think that now if we just get the right personnel in place, the right people on our Board we can submit our application and have a quick approval because we have done everything we need to do. We already know we are in the upper echelon of pink and we want to provide that reliability that comes with being a higher tier listed company.

So we're excited for that. We're excited for the investment community to now put new fresh eyes on Progressive Care otherwise we would have been ignored. We're really excited, we're thinking that this is all going to be taking place this year and so we hope you guys are going to stick with us through the rest of this year and so what's going to come out. I'm going to turn it over now for questions. Give you a little time to pop you way up.

Question-and-Answer Session

Operator

[Operator Instructions]. Our first question comes from [indiscernible].

Unidentified Analyst

So the question is how is the [indiscernible] how is it adding value to the overall company?

Shital Mars

I apologize I actually couldn’t hear some of that question. Can you repeat?

Unidentified Analyst

Yes, the robotic dispenser that you purchased. How is it working and like how is it adding value to the company? Do you have any numbers to share on that?

Shital Mars

I don’t have any numbers specifically. I know that our accuracy has gone up to 99.7% which is unheard of in the industry when you're talking about prescription filings. We do know that our capacity has dramatically increased. We're filing prescriptions significantly faster than where we were before. Now because of the robotic dispensing system we have an entire phase ready for long term care which we didn’t have before. We're having - we always on-time delivery but now we the ability to fill prescriptions, fill to think prescriptions to fill them within an hour and get - I actually put it this way, we have gone down from having an average of three days in between the time the prescription comes in to the time the patient comes - the patient has the prescription in their hands. We are now at two or under and a lot of that has to do with the robotic dispensing system, having whole 200 medications, having just so much more space opened up for our abilities to do what we do best. It's just been amazing and so now we know - the good thing is it's for growth. So we know - we can fill 25,000 prescriptions, we can fill 30,000 prescriptions without needing to increase our square footage, without needing to increase dramatically our personnel which before we couldn’t do, so that’s really where the value is on the robotic dispensing systems.

Unidentified Analyst

Just if you have like time for one more question from me, I just want to like check with you any updates on mergers and acquisitions that there has been talks about for quite some time now, but do you've any updates to share?

Shital Mars

So we have had some - I very much wish I could be a lot more open with all of my shareholders about what we have been talking about and who we have been talking with. The only thing I can say is we have some very exciting opportunities in front of us and that’s what we will be working on, a lot over the next few months to actually deliver on that but unfortunately I kind of got my hands down to be able to say a lot of what I want to say about this. Again we have some very exciting opportunities, we have been having communications with a number of individuals and those conversations are progressing in a manner that we see as promising. Again as I said before we're not looking to sell our company for pennies, we're not looking to sell our database, so if you're looking for a Walgreens or CBS buyout of our computers that’s not happening. We're looking for a next level type of M&A where we can become part of something bigger or we can acquire others and be something bigger to deliver on that holistic view of healthcare where we are not just the pharmacy, where we can bring other - these other healthcare pieces and so that’s the direction we're going if I'm going to give any more clarification than I've before. That’s the direction we're progressing it.

Operator

Our next question comes from Robert Alexander, an individual investor. Please go ahead.

Robert Alexander

I've two questions if I may, one when will you go back to being an SEC reporting company?

Shital Mars

So right now I don’t want to give any timelines on SEC reporting. Our number one priority was uplist. Now we have the opportunity to uplist as a QB and also pink without being an SEC reporting company we can be an alternative filer. As I said in previous calls becoming an SEC reporting company is very capital intensive, not that it is something we don’t want to do, it's something we want to do correctly and we want to make sure that we don’t risk the underlying business just to be an SEC reporter. So that being said as I've answered previous callers question, Pradeep's question. As we move forward in these conversations and as we move forward in the direction of our M&A direction and those start to yield beneficial results where things start to become more concrete, it will become necessary to become SEC reporting. But that SEC reporting will come with undertaking a financing, becoming a much larger entity where it makes a lot more sense and so I don’t want to just jump into being full reporting and then all of a sudden I use up all of my capital to do that and now I can't grow. So that’s how I'm going to answer that question, but it is something that’s necessary it's just not right now.

Robert Alexander

My second question, will you be doing any promotion in the near future.

Shital Mars

Promotion how do you mean?

Robert Alexander

Hiring a firm to promote the company give it--

Shital Mars

So during our IR, PR is that what you're looking for?

Robert Alexander

Yes.

Shital Mars

So we're looking for the right partner, as you know we have difficult situation assuming so we - maybe that’s to our detrimental we're a little gun shy. We want to make sure that whoever is promoting our company, whoever is doing investor relations to our company is in it for the long term, is in it for the long term, is in it for the good of our company and the good of the shareholders that we represent and so when having our meeting with potential IR, PR firm we want to assess that, we also want to make sure their fees make sense and they are not astronomical in proportion to the kind of work that they are doing. We're not a Fortune 500 company, we're not SEC reported, we're not on the NASDAQ. So we don’t want to be paying NASDAQ money for an IR money when really what we need is someone who is going to do targeted marketing, targeted promotion and promotion that makes sense for the kind of investors who looking at a growth opportunity. We're not blue chips and so we want to make sure we want our PR firm to understand who we're, what we're, what we're capable of and make sure they are targeting the right investors. So yes, we're looking into, we just have not found the right group yet.

Shital Mars

I don’t see any other questions, but I do want you to know unlike last time I do have access to the web portal so if you're listening online and want to submit a web question you can do so.

Operator

Ms. Mars we actually do have a few more questions if you would like to take a few more live callers.

Shital Mars

Sure.

Operator

Okay. Our next question comes from [indiscernible]. Please go ahead.

Unidentified Analyst

I want to refer back to something you said much earlier about showing doctors and clinics data on how they can improve service to their patients besides helping them improve service to patients, are you saving them costs and how does that add up for you in terms of bottom-line?

Shital Mars

So we're saving them cost significantly so and that’s really where the bonuses come from. Its decreasing the amount of healthcare usage their patients are achieving out in the marketplace and what do we do? Well the data we provide is things like brands and generic, there are lot things [indiscernible] went generic and a lot doctors they don’t know that, so we have to go to them and we have to show them look, there are the options. You got to limit the amount of brands you prescribe, you got to limit putting your patients on high risk medications and what does that, that’s an older patient on something like [indiscernible]. We are also going to our speciality doctors and showing them where they can have cost savings, obviously certain things like HIV, they are all alternatives to medications they are used to and so a lot of those medications, while they may not have come to generic, some medications even though the new one is out, the old one that are still just as effective are costing much less.
And so when they go and look at their data, when they get their reports from Humana or Aetna or United Healthcare whoever they are contracted with all of that is reductions and costs, and they even see itemized by pharmacy, they see where their costs are coming from. How often their patients are going to the ER, how often their patients are going to see specialist without coming to them first. They see all of that and so they are going to see another section that says pharmacy losses and we help mitigate a lot of that, what does that do for our bottom-line? It brings that business to us. We go to doctors, over and over and over again, we tell them. The more they can consolidate their patients to a single pharmacy as best as they can under the rules of the State of Florida and Medicare, Medicaid as best they can to refer those patients to a single pharmacy and have them continued to get all their medications from one place, we can control, we can communicate with the patients and caregiver about their medications, about their gaps and therapies, make sure that they are always taking their medication on time and as prescribed and so as we deliver the physicians will benefit and then the physicians will benefit and so they want to continue to deliver more business to us. It works out very well and the patient gets the best service, they always know that their medication will be in their hands, always on time, they are never going to be out so that’s how we're working together and we can go to new doctors with that information.

Unidentified Analyst

That’s great. And expanding into Palm Beach County, can you guesstimate based on having being embowered and was it Miami County, the other one that you mentioned that--?

Shital Mars

Yes, Miami.

Unidentified Analyst

Miami in Penn State. Just going into Palm Beach County, are those estimates of potential growth already in your 2017 bottom line?

Shital Mars

I don’t think they have been put into our estimates going forward, it is a new strategy we're implementing that we see - that we actually have seen and explored in April. So they probably aren’t in my annual report from last year. So we're actually seeing promising areas of opportunity in Palm Beach County, but no I can't anticipate yet. We just found out about some opportunities there and so we're evaluating that and hopefully by the next quarter we can give more concrete information on the growth we expect out of that county.

Unidentified Analyst

In terms of getting a PR, IR, I saw in your report I believe somewhere around 937,000 plus shares already issued out for website and IR, PR, out of a value of $32,500. Would you consider hiring if when you do and if you do any kind of promotions company with cash payment as opposed to share?

Shital Mars

Yes, we have considered and actually we're probably the preferable. The shares you see issued there that was for web design accrued and owed as of last year for the websites that we have done. So that was not necessarily for PR, that was more for the web development and the web development company that we hired to do all of our new web design.

Unidentified Analyst

Thanks for clarification, because IR, PR was also included in that.

Shital Mars

Yes I believe it might have been 500 - we had a million shares that we owed to the investment banking firm that’s helping us find our mergers and acquisitions deal. 500,000 was issued last year, another 500,000 was issued this year. Again all part of owed shares from last year's work.

Unidentified Analyst

All right. And just one last question, any kind of update on minimal litigious situation with venture capital was it?

Shital Mars

With [indiscernible] venture any updates on that? So far none. We are looking into our legal options. We haven’t had any more communications with their attorneys and so we really don’t have any updates now.

Operator

Our next question comes from Richard Parmer, Private Investor. Please go ahead.

Richard Parmer

My question is on stock value, it seems to me the stock value is underperforming, a type of revenue that you're producing. Is there any consideration of increased stock values such as even buying back some shares of the company just to see the true value of your company show in price of the stock?

Shital Mars

First thing I'm going to say is, I understand your disappointment in the performance of the stock. I share that disappointment vehemently. It is beyond me why we're where we're after only delivering improvements and benefits to our shareholders over the past at least past two years. I share your frustration, I share your disappointment. However as you can see even though we have earnings now I meant less than a percent of earnings to revenue here. I do not want at this time to use the cash flow that I've to buyback stocks at this time. Maybe in the future it can become an option so I don’t want to close the door on it, but right now I've a lot of priorities and demands on that cash for the expansion initiatives I've going forward but I can't really afford to use it to buyback the stock.

Richard Parmer

Well that makes perfect sense. It's just been disappointing and I know you all are working as hard as possible and my wishes are for continued success.

Shital Mars

I understand deeply how disappointed you're. However, this is the encouragement that I give to anybody who calls me who is frustrated and upset. We believe that if we do the right thing and we're doing the right thing, and we uplist and we fulfil the potential of this company, the price will catch up with it and it will begin to better reflect the value of this underlying company. And so all I can ever ask of a shareholder's patience and I hope that you will stick with us because I think over the next year or the next nine months year we can really deliver some exciting things to you guys.

Operator

Our next question comes from [indiscernible] with AFC. Please go ahead.

Unidentified Analyst

So first of off let me just congratulate you all the devotions and enthusiasm you're management group has been showing investors in the past 2.5 years that period of the time a lot of the majority new investors are investing in this stock. I would think that just by following the path you've been doing I have no doubt anywhere in my mind that actually the company is going to be 10 times even more successful than today because I really don’t think the management group has been doing, fulfilling the promises it made to the investors including the one that absolutely just promising to us that is either a merger or acquisition or uplisting to a higher exchange. So actually at this point my only question here is, on July 27, 2016 you enter the securities purchase agreement with the Chicago Ventures and I actually on the same day you were the first to try out 280,000 to the company, I think it's going to mature sometime in July this year. So my question is how are you going to pay back this amount of money? Are you going to pay back with your cash or keep them - Chicago Ventures dilute the shares to pay off the debt?

Shital Mars

So I can't give a definite answer about which way we're going to go. As I said before we're having some interesting conversations about M&A opportunities and so we have the opportunity and we have the option and it is our option to pay cash or stock or combination of both. As we get closer as of get summer kind of flushes out and we see where our conversations are heading, where the trajectory of the company is going then we will choose the best options that both fulfills our ability to execute on our expansion and limits the amount of negative - limits the negative impact on our shareholders. I know nobody here is all that filed with dilution and so we are always mindful of that. And so we're just going to see where these conversations are taking us and make the best decision probably towards the beginning of July.

Unidentified Analyst

Okay. Yes, so my point is just to clear this situation, and clarify this situation whether you also just be a considerate and all of our investors relying on your management group right decisions and that what do we want. Thank you and congratulations. Bye.

Shital Mars

Your welcome. Thank you.

Operator

And there are no further live questions at this time. So I will turn it back to you Ms. Mars.

Shital Mars

So I'm going to deliver a very brief closing remarks. I want to thank everybody who - as I always do I want to thank all the people who work at this company. They are second to none in their skill, in their compassion, in their ability, in their knowledge and without them we don’t succeed and so every time I have one of these calls I have to take a moment to give credit where credit is ultimately due and that is our employee. And all the patients who have stood by us and all the shareholders who have stood by us and all the doctors who have stood by us through thick and through thin. I will add a little remark on upcoming even that we're kind of overwhelmed by and that the time has passed so quickly.
Our 10 year anniversary is coming up on July 11, 2017. Now I know that we opened the company before that and it was established before that but our first sale took place at 2 o'clock on July 11, 2017. It has been 10 years that PharmCo has been open and serving this South Florida community and so I want to take a moment to commemorate that with all of you who have helped support a growing community organization and growing corporate organization and delivering excellent service to patients both in need and not in need in the South Florida community. So I want to say a quick congratulations to us and quick congratulations to my employees and our founders and our shareholders who has made it this far. Hopefully we have another 10 years of good luck to build up. Thank you all. Thank you for listening.

Operator

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.