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MedeFile International (OTCQB: MDFI) Putting Up Big Volume but Healthcare Information Services Field Remains Difficult Environment to Crack
Posted on April 21, 2011 by Editor
A good idea doesn’t always translate into a profitable business and MedeFile International (OTCQB: MDFI) appears to be a case in point. While MDFI is “designed to gather all of its members’ actual medical records and create a single, comprehensive Electronic Health Record (EHR) that is accessible 24 hours a day, seven days a week by the member and the member’s authorized users on any web-enabled device (PC, cell phone, smartphone, e-reader) and portable MedeDrive unit” the company has found that generating membership and revenue from this endeavor to be problematic at best.
There are a number of issues that have held MDFI back but a quick look at the company’s most recent 10-K, dated April 1, 2011, gives investors a pretty good idea about the future outlook. While MDFI managed to improve revenue for the year ending December 31, 2010 by an impressive 839%, jumping from $14,264 in 2009 to $133,886 in 2010, the company also managed to post a net loss of $2,492,310, a 14% increase from the previous year.
Now revenue was up, attributed to a substantial increase in memberships, yet it came with a serious cost as they listed selling, general and administrative expenses for the year ending 2010 as totaling $1,134,371 which consisted primarily of consultant compensation, marketing costs and professional fees. Add those expenses to an interest expense for the year of $1,229,799, due to the interest from the conversion of a note payable through a stock issuance and you have a net loss significantly higher than revenue and what they had to show for it was 5,100 members.
When MDFI released their year-end figures they noted that membership had increased to more than 7,000. So in the first quarter of 2011 they picked up an addition 1,900 members which is close to an average of 650 members a month. According to the company’s website a premium membership is $249 a year while a their lower-tiered membership is $75, meaning if they are to meet even their selling, general and administrative expenses for the year they will need to significantly ramp up their membership.
On Wednesday MDFI announced that “effective immediately, all members of the National Association of Local Advertisers (NALA™) will receive a customized MedeFile membership as part of NALA’s special benefits program offered to its growing national membership of local business owners.” While that may sound positive it does little to reveal any concrete information for shareholders as there was no mention of how many members NALA currently has nor does it make mention of what kind of fee MDFI charged for their membership.
It’s also hard to see how NALA fits the target audience of MDFI which they listed in their 10-K as “Health Maintenance Organizations, Preferred Provider Organizations, managed care organizations, insurance companies, unions, large groups of individuals such as AARP, large and medium sized corporations, home healthcare agencies, retirement communities, nursing homes, public and private schools, summer camps and internet users.” Maybe “internet users” fits the target but NALA is a business that helps “local businesses bridge old line advertising to the online world of banner ads, email campaigns, video and mobile/text advertising.” NALA does say that they offer members health discounts but it’s still hard to see MDFI as a selling point to a company trying to get help for their online banner advertising.
Perhaps the biggest challenge facing MDFI is trying to compete with companies like Cerner Corporation (NASDAQ: CERN), Allscripts Healthcare Solutions, Inc. (NASDAQ: MDRX), SXC Health Solutions Corporation (TSX: SXC.TO), and Quality Systems Inc. (NASDAQ: QSII); all of which are healthcare information service providers with market caps above $2.4 billion. MDFI is right around $22.4 million and is currently trading around the 0.0065 – 0.0067 range, needless to say they have a long way to go to catch up with the bigger companies and with just two full time employees that may just be impossible.
Despite the obvious roadblocks that are in MDFI’s path the company has put together some staggering days of trading volume. On Tuesday more than 800 million shares traded hands following an announcement that the company had “signed an agreement with Carlisle & Associates, a leading healthcare industry consultancy firm, to collaborate on opportunities to accelerate adoption of MedeFile’s iPHR system by health plans, health systems, large physician practice groups and other healthcare-related service groups.” That activity carried over into Wednesday with trading volume passing the 175 million mark. Tuesday’s activity actually pushed shares to a 52-week high of 0.017 but it eventually came crashing down to close at 0.0057 but it remains ahead of the 50-day moving average of 0.0048 and 200-day moving average of 0.0050
Any product or service that is going to add a degree of safety to the healthcare industry and more specifically to an individual patient obviously has value. What MedeFile is offering is a means of not only protecting an individual’s medical history by gathering and processing records, paper or electronic, X-Rays or MRI’s, essentially everything relating to a member’s health history, and then transforming them into digital images but also providing doctors, caregivers, pharmacists, or anybody who is granted access to a member’s medical information this critical data so that the highest level of care can be provided.
That being said MDFI hasn’t created new technology to do this or own any type of patent on providing EHRs through some advanced platform. Perhaps their best bet is to concentrate on driving membership, regardless of what they charge, and with a large membership they could become attractive to a larger company in the same industry.
AI
