Here’s the transcript.
Progressive Care's (RXMD) CEO Alan J. Weisberg on Q1 2022 Results - Earnings Call Transcript
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Progressive Care Inc. (OTCQB:RXMD)
Q1 2022 Earnings Conference Call
May 17, 2022 4:30 PM ET
Company Participants
Alan J. Weisberg – Chairman and Chief Executive Officer
Birute Norkute – Chief Operating Officer
Cecile Munnik – Chief Financial Officer
Bob Bedwell – Director-Administrative Services
Conference Call Participants
Presentation
Operator
All right, everybody. Thanks so much for holding on the line, and welcome to the Progressive Care First Quarter Financial Results conference call with the management team of Progressive Care ticker symbol RXMD. Today is May 17, 2022.
Before we get the call started, I’m going to read the forward-looking statements for you now. You can find these forward-looking statements at the bottom of every press release and regulatory filings submitted to the Securities and Exchange Commission. The statements contained on this call that are not based upon current or historical fact are forward-looking in nature, and constitute forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements reflect the company’s expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties.
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When used herein, the words anticipate, believe, estimate, upcoming, plan, target, intend and expect and similar expressions as they relate to Progressive Care, and its subsidiaries or its management team are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to the company and are subject to a number of risks, uncertainties, and other factors that could cause results to differ materially from those expressed in or implied by these forward-looking statements.
All right. The fun is over for me, and I’m excited to hand the call off the Chairman and CEO of Progressive Care, Inc., and that is Alan J. Weisberg. Alan, the call is now yours.
Alan J. Weisberg
Hi. Good afternoon, and welcome to the earnings conference call for the quarter ended March 31, 2022. I am Alan J. Weisberg, Chief Executive Officer and Chairman of the Board of Progressive Care, Inc. Today, we would like to discuss the results of the first quarter as well as our plans and initiatives for the year 2022. Helping me today are our Chief Financial Officer, Cecile; Birute, our Chief Operating Officer; and our Director of Administrative Services, Bob.
The first quarter of 2022 was an exciting period for the company as we have begun a number of planned initiatives in line with our vision to become a diversified healthcare company. We have began to realize the benefits of the operating efficiencies implemented and achieved reductions in operating expenses, which resulted in significant improvement in our operating results. We also continued our progress towards uplifting to a national exchange market.
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I’d like to start off by discussing with you some of our efforts to diversify our business in the sectors of healthcare that we will believe will make the company more profitable. Our objective is to expand the outreach of our core business to more patients, thereby increasing a prescription revenue and improving profitability by reducing certain operating deficiencies.
A key differentiator of our business have been a prescription delivery service to our patients. The service adds benefit to our providers by delivering vital medications to the patient’s front door, which improves medication adherence by the patients. As we are all aware of the efforts of inflation, the cost of auto, fuel and maintenance has risen significantly and has negatively effect of delivery cost.
To counter the impacts of inflation, the company has undertaken in aggressive focus on cutting operating expenses relating to delivery costs by synchronizing dispensing of the patient’s medication and dispensing 90-day supply of medications so that we minimize the number of delivery trips. The synchronization of medication necessitates coordination of the refills of patients’ prescriptions to be dispensed at the same time, therefore, delaying some of the refills to be dispensed at the later date.
While it is having a short-term impact on the overall number of prescriptions dispensed, it makes it simpler for the patients to manage multiple medications and provides the company with the opportunity to cut costs associated with gas deliveries as well as providing a more productive workflow for the pharmacy team.
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Our long-term care pharmacy project undertaken during the second half of 2021 has come to successful completion. Our closed store license pharmacy has gained long-term care pharmacy contracts with all the necessary major third-party payers. The company’s long-term care pharmacy service includes a combination of adherence tools, clinical pharmacy services, patients navigation and engagement, real-time collaboration with patients, caregivers, medication reconciliation post-discharge, monthly medication review, 24/7 access to our clinical pharmacy support through the company’s online platform, automated prescription refill management, specialty adherence packaging that enclose a successful Smart-Pack adherence packaging and free same-day delivery.
We believe that long-term care pharmacy business will provide the opportunity – the company with the opportunities to significantly increase our sales and will produce a predictable recurring revenue stream with much better profit margins compared to the margins related to pharmacy retail contracts with the same payers. This is also a business model that historically speaking, carries a much stronger valuation and therefore, should contribute to greater shareholder value. We are very happy to finally be in a position to take advantage of the LTC market and anticipating the benefits in the second half of the year.
We have also recently announced our intention to enter into the rapidly growing Remote Patient Monitoring or RPM market. The global RPM market is projected to reach in excess of $175 billion by 2027, growing at a robust 27% compounded annual growth rate over the next five years. Over 67% of Medicare beneficiaries have two or more chronic conditions, accounting for 94% of Medicare spending. Chronic conditions have a significant impact on healthcare spending as well as hospital readmissions.
Remote patient monitoring has been develop to mitigate Medicare spending by providing clinicians with digital data to implement more informed treatment plans for patients enrolled in this service. We believe that our company’s experience in medication and therapy management and its active participation in data analytics would carry over directly into the RPN marketplace.
The implementation of patient-oriented technology such as wearable 5G-powered home devices to track physiological data will enhance Progressive Care’s capability to provide doctors usable insight into patients overall health. Additionally, it will benefit our existing physician base as well as provide a more complete suite of services for future accounts. CMS approved several CPT code that pay RPM various services and generates on average $120 to $160 per patient per month. We have identified this as another source of recurring revenue for the company as we plan to enter into collaborative agreements with providers and healthcare organizations and build them monthly for RPM device setup and monitoring services provided by our team.
Our team believes the RPM space is set to be one of the most important growth areas within the healthcare industry and the near future. And it is our most logical next step given our broad base of patients who have multiple chronic conditions. Progressive Care has differentiated itself from competitors in terms of commitment to medication therapy management and our reputation among healthcare professionals in the domain is one of our strongest advantages. We expect to be ready for the launch of our RPM solution in the next quarter.
Now, I would like to provide you with the latest update related to the company’s efforts to uplist to NASDAQ. We continue our progress this quarter to a planned capital raise and an uplisting to NASDAQ. We stay focused and determined to complete our goals in the near future. First, I would like to congratulate all of our shareholders with Progressive Care becoming an SEC reporting company. Our Form 10-Q registration statement with the SEC became effective in April, and list was our first quarterly report filed with the SEC on Form 10-Q. From here on, we are obligated to publish reports to our shareholders pursuant to SEC reporting requirements, providing everyone with greater transparency for building stronger investor confidence.
When I stepped up to the CEO position of Progressive Care, I made the goal of becoming an SEC company my priority as I am a strong believer if we want our company to attract capital, we will have to meet the regulatory and transparency standards are expected by institutional and accredited investors. But as we accomplish this mission, we have a few more that we want to achieve immediately.
Therefore, we expect to file an amendment to our Form S-1 with audited financial statements for the year ended December 31, 2021, as well as our first quarter 2022 unaudited financial statements with the SEC. Following this, we anticipate to complete our intended public offering with the assistance of investment advisers and underwriters simultaneously with the uplist on the NASDAQ capital market. Becoming a NASDAQ-listed company opens up the opportunity to raise additional capital to finance the company’s growth through acquisition.
Over the last several years, we have established strong relationships with companies in the healthcare space that we believe are very synergetic with what we do now or would like to get involved with and could complement our growth in the future. We wish we could discuss more about the uplift, but legal restrictions are limiting what we can disclose at this time.
We have executed a standstill agreement with our noteholder, Iliad Research and Trading. As part of the negotiated terms of the note, Iliad has agreed not to redeem any portion of the note or sell any shares through July 15. This was very important to all of us who should help us alleviate the selling pressure on our stock.
And now I would like to turn the call to our COO, Birute.
Birute Norkute
Thank you, Jay. Our first quarter results reflect solid performance from all our business segments. As we continue making progress towards our goals, we are extremely focused on growth and operational excellence while providing wide range [ph] service to our patients and subscribers we serve. As we all know, COVD-19 impacted our lives for the past two years, and we are happy it is becoming an endemic.
At the beginning of the year, we were able to monetize the Omicron outbreak and we’re extremely busy in test department. It has slowed down since, and right now, we are pleased that our long-term relationships, which we were cultivating with the production companies are still keeping us busy with projects that bring us revenue.
Also, as COVID is becoming endemic, we are seeing businesses coming back to normal, pre-COVID patterns. We see that physicians are looking at their patients, maintenance medication compliance with much greater scrutiny and interest. We are seeing patients returning to the office for their checkups on a regular basis versus emergency basis. All of this together gives us a boost in confidence that prescribing patterns are returning to normal, and we will be able to continue focusing on our growth without roadblocks, and we’ll have a much better response from our target clinics and prescribers.
We are employing a combination of standard and unusual strategies to drive the new patient prescription acquisition. This trend is already showing in our data. We see a significant uptick in new patient acquisition numbers more than in previous quarters.
In the last six months, we pent up our efforts to complete the ClearMetrX platform. It will be servicing healthcare organizations and 340B Covered Entities providing valuable data, which will give deep insight into the state of business so they can manage their operations more efficiently. Currently, more and more providers choose to operate on a value-based Medicare model. Value-based programs reward healthcare providers with incentive payments for the quality of care they give to the people with Medicare. However, it pressures the practice to be very agile to meet their [indiscernible] requirement.
Pharmacy performance compiles as much as 50% of the practices core. However, the payers report their data back to providers with one month to three months delay, which can jeopardize their performance and negatively affect performance bonuses.
ClearMetrX is able to provide near real-time actionable data insights, the information, which is displayed in an easy-to-understand format for even the entry-level practice employees and take action to prevent measure failing in the future. Providers will be able to see what is happening in every measurable aspect related to pharmacy, which is evaluated for HEDIS measures, like diabetes, cholesterol, hypertension medication adherence measurement, status therapy compliance and the like.
Practice administrators will be able to see prescribing trends for each of their prescribers and even outsourced specialists. It will bring – help them to see at a glance what these problematic areas are in brand, high-cost, high-risk medication prescribing them. What kind of issues are identified, what, in turn will lead to cost savings and better rating for a practice. And at the same time, our companies will benefit in increased prescription volume as well as from the fees we expect to charge for software usage.
For 340B Entities, we will give an unsurpassed ability to review every single aspect of their business in an easy-to-use portal, which displays all the details of their covered Entities performance including, but not limited to, financial performance, manipulated, qualified claims future collections among others.
All of these features will be delivered in a convenient revenue-generating platform, which comes with a dedicated concierge representative to counsel, drive and lead the individuals using the platform. We will further position our TPA services as all inclusive continued types that provides a full suite of services to the covered entity.
Another initiative we have been working on and what is finally starting to take shape is our focus on providing different medication dispensed options and specifically remote dispensing. We believe this technology will complement our business greatly. The efficiencies derived from it will include reduction of delivery costs while acting as a convenient option, enticing customers to try our pharmacy services and become long-term patients.
As we mentioned, our long-term care pharmacy received all the necessary contracts to operate, and now we’re diligently working to set all operational pieces in order, so we can start marketing and onboarding of long-term care facilities and service their patients. We are expected to finalize our workflow and infrastructure-related part during second and third quarter.
Back to you, Jay.
Alan J. Weisberg
Thank you, Birute. Let’s continue with a summary of our quarterly financial report, which provides you with our financial position as of March 31, 2022. Our results of operations, changes in stockholders equity and cash flows, that the three months ended March 31, 2022. The financial statements and the report will be reviewed by our Independent Public Accounting Firm, Daszkal Bolton. Please be sure to review our financial report, which is available both on SEC and OTC website as well as our website.
Cecile, our CFO, will walk us through the financial results.
Cecile Munnik
Thank you, Jay. Good afternoon, everyone, and thank you for joining our call. As Jay described in his comments, the first quarter was an exciting one for us as reflected in our financial results. For the quarters ended March 31, 2022 and 2021, we recorded overall revenue from operations of approximately $10.1 million and $9.6 million, respectively, a $446,000 period-over-period increase.
While most of the increase in revenue was attributable to the COVID-19 testing of approximately $1.3 million for the first quarter of 2022, which was a $737,000 increase over the same period in 2021. We have recorded record COVID-19 testing revenue in January 2022 as a country is dealing with the Delta and Omicron outbreak during that period.
Since January 2022, the cases of COVID-19 infections and the demand for COVID-19 testing have slowed down. It is difficult to predict where these conditions will continue or recurring, given recent COVID-19 pandemic conditions in Florida. We are well positioned to reactive or another COVID-19 outbreak occurs as we have built a reputation of being a highly reliable partner for COVID-19 testing solutions. We have also those repeatable relationships with well-known production companies, and these relationships provide us with recurring COVID-19 testing revenue.
Our dispensing fee and third-party administration revenue earned on our 340B contracts for the first quarter of 2022 was $388,000 compared to $724,000 for the same period in 2021. The decrease is due to a significant decrease in the reimbursement rate for uninsured patients enrolled in the Gilead PREP program, effective beginning the first quarter of 2022. That had an overall unfavorable impact on our 340B contract revenue in the amount of approximately $200,000.
We believe, though, the decrease in the 340B contract revenue will recover during the second quarter of 2022, as our existing covered entities continue enrolling patients in alternative program and insurance plans that provide greater reimbursement. We have sold approximately 111,000 and 116,000 prescriptions during the first quarters of 2022 and 2021, respectively.
The decrease in the number of prescriptions filled was due to our continued efforts to decrease operating expenses as it relates to delivery costs by synchronizing dispensing of medications to the extent that we minimize the number of trips necessarily to one patient.
The synchronization of the medication necessitates coordination with patient refill to ensure all patient, patient prescription are dispensed at the same time and therefore, cause a delay in some results to be dispensed later. The decrease in the number of prescriptions during the first quarter of 2022 has also been adversely impacted by the recent changes in the Gilead PREP program for uninsured patients and the reenrollment requirements.
Gross profit margins remained consistent at around 24% for the quarter, which is slightly down from the 25% margin from the same period in 2021. Most of this decrease in profitability resulted from the unfavorable variance in the 340B contract reimbursement from changes in the Gilead PREP program.
Our operating expenses decreased by approximately $600,000 or 18% for the first quarter of 2022 when compared to the same period in 2021. The decrease was mainly attributable to the following: decrease in salaries, wages and employee-related expenses due to period-over-period decrease in headcount, less time invested in training on pharmacies software when compared to 2021 and consulting fees of approximately $200,000. Decrease in rent expense due to nonrecurring leasehold improvements related expenses of approximately $200,000. A decrease in amortization expense due to intangible assets being fully amortized and other operating expenses of approximately $200,000.
Our loss from operations improved to just over $135,000 for the quarter as compared to over $643,000 for the same period in 2021. This improvement was mostly attributable to decreases in operating expenses of almost $600,000 in 2022 as compared to the same quarter in 2021. Our cost reduction efforts were largely successful near as employee-related costs, eliminating redundancies and consultant costs, reducing rent expense through negotiating less cost release renewals as well as non-recurring leasehold improvements related expenses.
Our net loss was negatively impacted by non-operating items such as unfavorable changes in the fair value of the derivative liability, attributed to the embedded conversion feature in the Iliad Research convertible note. We believe that this will be a non-recurring item through the remainder of the year. Despite the net loss, we managed to achieve positive EBITDA of over $101,000 for the quarter compared to EBITDA of $66,000 for the same quarter in 2021. Our cash position was over $2.4 million at March 31, 2022, up from the $1.4 million at December 31, 2021, and we expect our cash position will remain around this level throughout 2022.
That completes my remarks on the financial results for the first quarter of 2022. Back to you, Jay.
Alan J. Weisberg
Thank you, Cecile. Our outlook for the remainder of 2022 and beyond is positive. We have continued the momentum from our fourth quarter 2021 results into 2022, and we expect the remainder of 2022 will meet or exceed our expectations.
We continue our progress towards completion of our business plan, which calls for further diversification of our services and revenue stream and the completion of the capital raise and uplift to the NASDAQ market to provide the working capital to improve our debt equity position, complete the development of our data platform and our ClearMetrX subsidiary, and to achieve other strategic goals such as widening our geographic market that we serve.
We will keep you up to date on our progress towards uplisting to NASDAQ. We expect that the completion of the uplift will have an immediate and positive impact on growth for the company, enabling us to pick up our operating pace by having access to institutional capital and to pursue the businesses we think will help us roll out our services nationwide at a faster pace.
Meanwhile, we will do our part by staying on a steady course of growing our business. We have no doubt that optimism around Progressive Care will soon begin to be reflected in the share price of our stock.
On behalf of all of us working at Progressive Care, we are endlessly grateful to our shareholders for the continued confidence and support as we continue on our path for a record-breaking 2022. Today, your loyalty and support is more valuable than ever, and we are dedicated to rewarding your continued loyalty and long-term support.
That concludes the remarks for the earnings call. We would like to turn now to questions that we received in advance of the earnings call. Our Director of Administrative Services, Bob Bedwell, will review the questions that we received prior to our meeting today and provide responses. Bob?
Bob Bedwell
Thank you, Jay. We received these questions prior to Monday’s deadline for submission of questions and we’ll respond to each question as appropriate. First question, the maturity date of the Iliad Chicago Ventures convertible debt was May 15, 2022. Will they start converting the notes after this maturity date?
We have executed another extension agreement with Iliad Research, whereby the maturity date of the note was extended to May 15, 2023. In that same agreement, we also executed a standstill agreement where the lender agreed to forgo redemption requests and stock trading until July 15, 2022.
Question number two, will the company obtain conventional bank loans to pay off the current convertible debt?
We expect that along with the NASDAQ uplist, we also will have a planned public stock offering, which we hope to execute this summer. We expect to pay off the Iliad Research convertible debt from the public offering proceeds.
Question number three. When will the S-1 filing be effective? We became a fully reported company when our Form-10 registration statement was made effective this past April. Now that we’ve completed our first SEC filing on Form 10-Q, we will file an amended Form S-1 with updated financial information for the first quarter 2022 in the coming weeks. That document will go through the SEC review and comment process before final approval.
Question number four, is there a merger plan for post uplift? If so, with whom?
There are no merger plans at the present time. The uplift is necessary to provide us with the proper type of capital to execute our plan. We will explore opportunities like mergers and acquisitions as they arise.
Question number five, how soon will you be able to dispense prescriptions in all 50 states?
We hold nonresident pharmacy licenses that allow us to dispense to patients in 14 states, including Florida. We will continue to add other nonresident licenses as other opportunities arise. Our post uplift strategy also entails broadening our licensing in other states.
The sixth and final question, the company is thinking about uplisting to NASDAQ, but the stock price is too low. Are you going to cancel the reverse spread in order to help the price go up?
Management believes the reverse stock split along with the planned IPO will increase the stock price and provide the necessary capitalization to allow the company to meet the NASDAQ entrance requirements. If and when the reverse stock split is approved by the regulators then we will keep the reverse stock split at the lowest possible ratio.
That’s all the questions we have for today. We thank you for taking the time to join us on this call and for submitting your questions to us. We hope that you have a great remainder of the year, and we look forward to talking with you again in August during our next earnings conference call.
Question-and-Answer Session
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