Trxade Group, Inc. (NASDAQ: MEDS), an integrated drug
procurement, delivery and healthcare platform, has provided its
financial results for the second quarter ended June 30, 2020.
Selected Financial
Highlights
$ in millions |
Q22020 |
Q22019 |
% Increase (Decrease) |
Revenues |
$6.6 |
$1.9 |
244% |
Gross Profit |
$2.0 |
$1.2 |
72% |
Gross Margin |
30.4% |
60.7% |
(50%) |
Net Income (Loss) |
$(0.5) |
$0.1 |
(1,036%) |
Adjusted EBITDA1 |
$0.5 |
$0.08 |
525% |
1) Adjusted EBITDA is a non-GAAP financial
measure and is described in relation to its most directly
comparable GAAP measure under "Use of Non-GAAP Financial
Information" below.
Second Quarter 2020 Financial
Summary
- Revenues for the second quarter of
2020 increased 244% to a record $6.6 million, compared to revenue
of $1.9 million in the same quarter last year. Sequentially, this
represents an increase of 199% when compared to revenues of $2.2
million in the first quarter of 2020. The increase in revenue was
primarily due to a significant increase in personal protective
equipment (PPE) sales by the Company’s Integra Pharma segment as a
response to the COVID-19 pandemic.
- Gross profit in the second quarter
of 2020 increased 72% to $2.0 million, or 30.4% of revenues,
compared to gross profit of $1.2 million, or 60.7% of revenues, in
the same quarter last year. The increase in gross profit was at
lower margins, which was primarily due to lower-margin sales of
PPE, such as N95 masks and sanitizers.
- Operating expenses in the second
quarter of 2020 were $2.5 million compared to $1.0 million in the
same quarter last year. This increase is primarily due to non-cash
stock-based compensation expenses.
- Net loss in the second quarter of
2020 was $(0.5) million, or $(0.07) per basic and diluted share
outstanding, compared to net income of $0.1 million, or $0.01 per
basic and diluted share outstanding, in the same quarter last
year.
- Adjusted EBITDA, a non-GAAP financial measure, increased 525%
to $0.5 million, compared to $0.08 million in the same quarter last
year.
- Cash and cash equivalents were $4.2 million as of June 30,
2020, compared with $7.7 million as of March 31, 2020.
More information regarding the Company’s Q2 2020
results of operations can be found in the Quarterly Report on Form
10-Q which the Company plans to file July 27, 2020 with the
Securities and Exchange Commission.
Management Commentary
“The second quarter financial results, which
showcased a 244% increase in revenues to a record $6.6 million and
72% increase in gross profit to $2.0 million,” said Suren Ajjarapu,
Chairman and Chief Executive Officer, who continued, “This growth
was driven by Personal Protective Equipment sales, such as N95
masks and sanitizer products through our Integra Pharma unit.”
“Our affiliated service offerings also continue
to expand, with Bonum Health proving to be a critical healthcare
service to thousands of customers throughout the United States. To
accelerate the growth of this telemedicine division, which we see a
significant opportunity as more consumers look for innovative
healthcare solutions, we recently appointed senior healthcare
executive Ashton Maaraba as President of Bonum Health. As a
seasoned leader, we look forward to leveraging his decades of
relevant expertise to grow this segment.”
“As we move through the second half of 2020, we
are better positioned than ever to execute upon our vision of
continued growth of the platform, driven by new independent
pharmacies, new suppliers and distributors,” concluded Mr.
Ajjarapu.
Second Quarter 2020 and Subsequent
Operational Highlights
- Trxade continued to expand its
platform nationwide, adding 325 new independent pharmacies in Q2
2020, bringing the total registered pharmacy members to over
11,725.
- Appointed senior healthcare executive Ashton Maaraba as
President of Bonum Health, the Company’s telemedicine
subsidiary.
- Supplied multiple employers with COVID-19 rapid test kits for
employees and families, providing a diagnosis within 15 minutes at
the point of care.
- Engaged international investor
relations specialists MZ Group to expand the Company’s
comprehensive strategic investor relations and financial
communications program across all key markets.
Conference Call and Webcast
Management will host a conference call today,
July 27, 2020 at 5:00 p.m. EDT to discuss Trxade Group’s 2020
second quarter financial results. The call will conclude with a
Q&A from participants. To participate, please use the following
information:
Q2 2020 Conference Call and Webcast Date:
Monday, July 27, 2020 Time: 5:00 p.m. Eastern Daylight time U.S.
Dial-in: 1-877-425-9470 International Dial-in: 1-201-389-0878
Conference ID: 13707025 Webcast:
http://public.viavid.com/index.php?id=140780
Please dial in at least 10 minutes before the
start of the call to ensure timely participation.
A playback of the call will be available through
August 27, 2020. To listen, call 1-844-512-2921 within the United
States or 1-412-317-6671 when calling internationally. Please use
the replay pin number 13707025. A webcast will also be available
for 30 days on the IR section of the Trxade Group website or by
clicking the webcast link above.
About Trxade Group,
Inc.
Headquartered in Tampa,
Florida, Trxade Group, Inc. (Nasdaq: MEDS) is an
integrated drug procurement, delivery and healthcare platform that
fosters price transparency, thereby improving profit margins for
both buyers and sellers of pharmaceuticals. Trxade
Group operates across all 50 states with the central mission
of making healthcare services affordable and accessible. Founded in
2010, Trxade Group is comprised of four synergistic
operating platforms; (1) the Trxade B2B trading platform with
11,725 registered pharmacies, (2) Integra Pharma Solutions,
Trxade Group’s virtual wholesale division, (3) the Bonum
Health platform offering affordable telehealth services; and
(4) the DelivMeds app, which coordinates a nationwide distribution
network through independent pharmacies or mail order delivery. For
additional information, please visit us at www.trxade.com,
www.delivmeds.com, and www.bonumhealth.com.
Use of Non-GAAP Financial
Information
This earnings release discusses EBITDA and
Adjusted EBITDA. These measurements are not recognized in
accordance with generally accepted accounting principles (GAAP) and
should not be viewed as an alternative to GAAP measures of
performance. EBITDA represents net income before interest, taxes,
depreciation and amortization. Adjusted EBITDA is defined as EBITDA
before stock-based compensation expense and gain (loss) in equity
investment. EBITDA and Adjusted EBITDA are presented because we
believe they provide additional useful information to investors due
to the various noncash items during the period. EBITDA and Adjusted
EBITDA have limitations as analytical tools, and you should not
consider them in isolation, or as a substitute for analysis of our
operating results as reported under GAAP. Some of these limitations
are: EBITDA and Adjusted EBITDA do not reflect cash expenditures,
future requirements for capital expenditures, or contractual
commitments; EBITDA and Adjusted EBITDA do not reflect changes in,
or cash requirements for, working capital needs; and EBITDA and
Adjusted EBITDA do not reflect the significant interest expense, or
the cash requirements necessary to service interest or principal
payments, on debt or cash income tax payments. Although
depreciation and amortization are noncash charges, the assets being
depreciated and amortized will often have to be replaced in the
future, and EBITDA and Adjusted EBITDA do not reflect any cash
requirements for such replacements. Additionally, other companies
in our industry may calculate EBITDA and Adjusted EBITDA
differently than Trxade Group, Inc. does, limiting its usefulness
as a comparative measure. See also “Reconciliation of Net Income
attributable to Trxade Group, Inc., to Earnings before Interest,
Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA”,
below.
Forward-Looking Statements
This press release may contain forward-looking
statements, including information about management’s view of
Trxade’s future expectations, plans and prospects, within the safe
harbor provisions under The Private Securities Litigation Reform
Act of 1995 (the “Act”). In particular, when used in the preceding
discussion, the words “may,” “could,” “expect,” “intend,” “plan,”
“seek,” “anticipate,” “believe,” “estimate,” “predict,”
“potential,” “continue,” “likely,” “would” and variations of these
terms and similar expressions, or the negative of these terms or
similar expressions are intended to identify forward-looking
statements within the meaning of the Act, and are subject to the
safe harbor created by the Act. Any statements made in this news
release other than those of historical fact, about an action, event
or development, are forward-looking statements. These statements
involve known and unknown risks, uncertainties and other factors,
which may cause the results of Trxade, its divisions and concepts
to be materially different than those expressed or implied in such
statements. These risk factors and others are included from time to
time in filings made by Trxade with the Securities and Exchange
Commission, including, but not limited to, in the “Risk Factors”
sections in its Form 10-Ks and Form 10-Qs and in its Form 8-Ks,
which we have filed, and file from time to time, with the U.S.
Securities and Exchange Commission. These reports are available
at www.sec.gov. Other unknown or unpredictable factors also
could have material adverse effects on Trxade’s future results
and/or could cause our actual results and financial condition to
differ materially from those indicated in the forward-looking
statements. The forward-looking statements included in this press
release are made only as of the date hereof. Trxade cannot
guarantee future results, levels of activity, performance or
achievements. Accordingly, you should not place undue reliance on
these forward-looking statements. We undertake no obligation to
update publicly any of these forward-looking statements to reflect
actual results, new information or future events, changes in
assumptions or changes in other factors affecting forward-looking
statements, except to the extent required by applicable laws. If we
update one or more forward-looking statements, no inference should
be drawn that we will make additional updates with respect to those
or other forward-looking statements.
Investor Relations: Luke Zimmerman Senior Vice
President MZ Group - MZ North America (949) 259-4987
MEDS@mzgroup.us www.mzgroup.us
Trxade Group,
Inc.Consolidated Balance
SheetsJune 30, 2020 and December 31,
2019(unaudited)
|
|
June 30, 2020 |
|
|
December 31, 2019 |
|
Assets |
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
4,151,044 |
|
|
$ |
2,871,694 |
|
Accounts Receivable, net |
|
|
3,544,381 |
|
|
|
792,050 |
|
Inventory |
|
|
1,818,874 |
|
|
|
56,761 |
|
Prepaid Assets |
|
|
300,067 |
|
|
|
82,452 |
|
Deposits for Inventory purchases |
|
|
309,000 |
|
|
|
- |
|
Total Current Assets |
|
|
10,123,366 |
|
|
|
3,802,957 |
|
|
|
|
|
|
|
|
|
|
Property Plant and
Equipment, Net |
|
|
151,397 |
|
|
|
174,987 |
|
|
|
|
|
|
|
|
|
|
Other
Assets |
|
|
|
|
|
|
|
|
Deposits |
|
|
21,636 |
|
|
|
21,636 |
|
Deferred Offering Costs |
|
|
- |
|
|
|
88,231 |
|
Right of use leased assets |
|
|
709,911 |
|
|
|
757,710 |
|
Goodwill |
|
|
725,973 |
|
|
|
725,973 |
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
11,732,283 |
|
|
$ |
5,571,494 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
Accounts Payable |
|
$ |
272,148 |
|
|
$ |
334,614 |
|
Accrued Liabilities |
|
|
349,850 |
|
|
|
98,852 |
|
Current Portion Lease Liabilities |
|
|
94,253 |
|
|
|
87,350 |
|
Customer Deposits |
|
|
3,574 |
|
|
|
- |
|
Total Current Liabilities |
|
|
719,825 |
|
|
|
520,816 |
|
|
|
|
|
|
|
|
|
|
Long Term
Liabilities |
|
|
|
|
|
|
|
|
Notes Payable – Related Parties |
|
|
225,000 |
|
|
|
225,000 |
|
Other Long-term Liabilities – Leases |
|
|
636,081 |
|
|
|
685,461 |
|
Total
Liabilities |
|
|
1,580,906 |
|
|
|
1,431,277 |
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity |
|
|
|
|
|
|
|
|
Series A Preferred Stock, $0.00001 par value; 10,000,000 shares
authorized; none issued and outstanding as of June 30, 2020 and
December 31, 2019, respectfully |
|
|
- |
|
|
|
- |
|
Common Stock, $0.00001 par value; 100,000,000 shares authorized;
8,062,337 and 6,539,415 shares issued and outstanding, as of June
30, 2020 and December 31, 2019, respectively |
|
|
81 |
|
|
|
65 |
|
Additional Paid-in Capital |
|
|
18,909,083 |
|
|
|
12,535,655 |
|
Retained Deficit |
|
|
(8,757,787 |
) |
|
|
(8,395,503 |
) |
Total Shareholders’ Equity |
|
|
10,151,377 |
|
|
|
4,140,217 |
|
Trxade Group, Inc. Consolidated
Statements of Operations For the Three and Six Months Ended June
30, 2020 and 2019(unaudited)
|
|
Three months ended |
|
|
Six months ended |
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
6,592,637 |
|
$ |
1,916,414 |
|
|
$ |
8,795,957 |
|
$ |
3,428,935 |
|
|
|
|
|
|
|
|
|
|
|
Cost of
Sales |
|
4,587,865 |
|
|
753,138 |
|
|
|
5,151,049 |
|
|
1,118,977 |
|
Gross
Profit |
|
2,004,772 |
|
|
1,163,276 |
|
|
|
3,644,908 |
|
|
2,309,958 |
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
General and Administrative |
|
2,540,049 |
|
|
1,030,571 |
|
|
|
3,991,958 |
|
|
2,005,494 |
|
|
|
|
|
|
|
|
|
|
|
Operating (Loss)
Income |
|
(535,277 |
) |
|
132,705 |
|
|
|
(347,050 |
) |
|
304,464 |
|
|
|
|
|
|
|
|
|
|
|
Investment Loss |
|
- |
|
|
(58,850 |
) |
|
|
- |
|
|
(87,822 |
) |
Interest Expense |
|
(7,310 |
) |
|
(15,874 |
) |
|
|
(15,234 |
) |
|
(33,432 |
) |
Net (Loss)
Income |
$ |
(542,587 |
) |
$ |
57,981 |
|
|
$ |
(362,284 |
) |
$ |
183,210 |
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income per Common
Share – Basic: |
$ |
(0.07 |
) |
$ |
0.01 |
|
|
$ |
(0.05 |
) |
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income per Common
Share – Diluted: |
$ |
(0.07 |
) |
$ |
0.01 |
|
|
$ |
(0.05 |
) |
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average Common Shares
Outstanding - Basic |
|
7,580,977 |
|
|
5,621,082 |
|
|
|
7,324,512 |
|
|
5,591,055 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average Common Shares
Outstanding - Diluted |
|
7,580,977 |
|
|
6,058,977 |
|
|
|
7,324,512 |
|
|
6,058,959 |
|
|
|
|
|
|
|
|
|
|
|
Trxade Group,
Inc.Consolidated Statements of Cash
FlowsFor the Six months ended June 30, 2020 and
2019(unaudited)
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Operating
Activities: |
|
|
|
|
|
|
|
|
Net (Loss) Income |
|
$ |
(362,284 |
) |
|
$ |
183,210 |
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net income to net cash used in operating
activities: |
|
|
|
|
|
|
|
|
Depreciation Expense |
|
|
2,500 |
|
|
|
2,500 |
|
Options expense |
|
|
245,903 |
|
|
|
99,990 |
|
Warrant Expense |
|
|
100,383 |
|
|
|
- |
|
Stock Grants |
|
|
829,867 |
|
|
|
- |
|
Bad Debt Expense |
|
|
9,000 |
|
|
|
- |
|
Share in Equity Losses in Investment |
|
|
- |
|
|
|
87,822 |
|
Amortization of right to use asset |
|
|
47,799 |
|
|
|
43,939 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts Receivable |
|
|
(2,761,331 |
) |
|
|
(279,852 |
) |
Prepaid Assets and other Current Assets |
|
|
(217,615 |
) |
|
|
(70,119 |
) |
Inventory |
|
|
(1,762,113 |
) |
|
|
(466,850 |
) |
Deposits for Inventory purchases |
|
|
(309,000 |
) |
|
|
- |
|
Lease Liability |
|
|
(42,477 |
) |
|
|
(36,276 |
) |
Accounts Payable |
|
|
(17,871 |
) |
|
|
362,599 |
|
Customer Deposits |
|
|
3,574 |
|
|
|
- |
|
Accrued Liabilities and Other Liabilities |
|
|
250,988 |
|
|
|
(6,652 |
) |
Net Cash (used in)
operating activities |
|
|
(3,982,667 |
) |
|
|
(79,689 |
) |
|
|
|
|
|
|
|
|
|
Investing
Activities: |
|
|
|
|
|
|
|
|
Purchase of Fixed Assets |
|
|
(23,505 |
) |
|
|
- |
|
Purchase of equity method investment |
|
|
- |
|
|
|
(250,000 |
) |
Net Cash (used in)
investing activities |
|
|
(23,505 |
) |
|
|
(250,000 |
) |
|
|
|
|
|
|
|
|
|
Financing
Activities: |
|
|
|
|
|
|
|
|
Payment of Stock Issuance Costs |
|
|
(732,355 |
) |
|
|
- |
|
Proceeds from exercise of Warrants |
|
|
22,952 |
|
|
|
166 |
|
Proceeds from exercise of Stock Options |
|
|
501 |
|
|
|
- |
|
Proceeds from Issuance of Common Stock |
|
|
5,994,424 |
|
|
|
- |
|
Net Cash provided by
financing activities |
|
|
5,285,522 |
|
|
|
166 |
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in
Cash |
|
|
1,279,350 |
|
|
|
(335,628 |
) |
Cash at Beginning of the
Year |
|
|
2,871,694 |
|
|
|
869,557 |
|
Cash at June 30, 2020 and
2019 |
|
$ |
4,151,044 |
|
|
$ |
533,929 |
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow
Information |
|
|
|
|
|
|
|
|
Cash Paid for Interest |
|
$ |
3,984 |
|
|
$ |
2,997 |
|
Cash Paid for Income
Taxes |
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Non-Cash
Transactions |
|
|
|
|
|
|
|
|
Common Stock Issued for
Conversion of Note and Accrued Interest |
|
$ |
- |
|
|
$ |
211,983 |
|
ROU assets and operating lease
obligations recognized |
|
$ |
- |
|
|
$ |
847,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net (Loss) Income
attributable to Trxade Group, Inc., to Earnings before Interest,
Taxes, Depreciation and Amortization (EBITDA) and Adjusted
EBITDA*
|
|
Three months ended |
|
|
Six months ended |
|
|
2020 |
|
|
2019 |
|
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
Net (Loss) Income
attributable to Trxade Group, Inc. |
$ |
(542,587 |
) |
$ |
57,981 |
|
|
$ |
(362,284 |
) |
$ |
183,210 |
|
|
|
|
|
|
|
|
|
|
|
Add
(Deduct): |
|
|
|
|
|
|
|
|
|
Interest (net) |
|
7,310 |
|
|
15,874 |
|
|
|
15,234 |
|
|
33,432 |
|
Depreciation and Amortization |
|
1,250 |
|
|
1,250 |
|
|
|
2,500 |
|
|
2,500 |
|
EBITDA |
|
(534,027 |
) |
|
75,105 |
|
|
|
(375,018 |
) |
|
152,278 |
|
|
|
|
|
|
|
|
|
|
|
Add
(Deduct): |
|
|
|
|
|
|
|
|
|
Investment Loss |
|
- |
|
|
(58,850 |
) |
|
|
- |
|
|
(87,822 |
) |
Stock-based Compensation |
|
1,035,373 |
|
|
64,011 |
|
|
|
1,176,153 |
|
|
99,990 |
|
Adjusted
EBITDA |
$ |
501,346 |
|
$ |
80,266 |
|
|
$ |
801,135 |
|
$ |
164,446 |
|
|
|
|
|
|
|
|
|
|
|
* EBITDA and Adjusted EBITDA are non-GAAP
financial measures. These measurements are not recognized in
accordance with GAAP and should not be viewed as an alternative to
GAAP measures of performance. See also “Use of Non-GAAP Financial
Information”, above.
TRxADE HEALTH (NASDAQ:MEDS)
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