Trxade Group, Inc. (NASDAQ: MEDS), an integrated drug procurement,
delivery and healthcare platform, has provided its financial
results for the third quarter ended September 30, 2020.
Selected Financial
Highlights
$ in millions |
|
Q32020 |
|
|
Q32019 |
|
|
% Increase (Decrease) |
|
Revenues |
|
$ |
6.3 |
|
|
$ |
2.3 |
|
|
|
174 |
% |
Gross
Profit |
|
$ |
1.9 |
|
|
$ |
1.3 |
|
|
|
47 |
% |
Gross
Margin |
|
|
30.5 |
% |
|
|
56.7 |
% |
|
|
(26.2 |
)% |
Net
Income |
|
$ |
0.14 |
|
|
$ |
0.03 |
|
|
|
402 |
% |
Adjusted
EBITDA* |
|
$ |
0.67 |
|
|
$ |
0.27 |
|
|
|
150 |
% |
* |
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. |
Third Quarter 2020 and Subsequent
Operational Highlights
|
● |
Trxade
continued to expand its platform nationwide, adding 144 new
independent pharmacies in Q3 2020, bringing the total registered
pharmacy members to around 11,800. |
|
|
|
|
● |
Launched
Bonum+, a B2B platform under the Company’s telehealth subsidiary
Bonum Health, which bundles telehealth, a COVID-19 risk assessment
tool and a Personal Protective Equipment (PPE) purchasing tool
through a secure mobile dashboard for corporate clients. |
|
|
|
|
● |
Announced
prescription savings partnership with SingleCare, a free
prescription savings service, to supplement Bonum Health’s
enterprise telehealth solutions with prescription discounts offered
to national, regional and local pharmacies to promote the benefit
to uninsured patients and underserved communities. |
Management Commentary
“The third quarter was highlighted by our
impressive financial results, growing revenues 174% year-over-year,
due to both robust PPE sales and ever more pharmacies joining the
Trxade marketplace platform,” said Suren Ajjarapu, Chairman and
Chief Executive Officer. “The COVID-19 pandemic has only
underscored the importance of an integrated platform like ours,
which enables independent pharmacies to remain competitive and
profitable in a changing drug procurement marketplace.”
“The Trxade marketplace platform at the core of
our business has continued to grow, with 144 new pharmacies added
in the quarter – bringing our total to around 11,800,” added Mr.
Ajjarapu.
“Our telehealth subsidiary, Bonum Health,
continues to expand the breadth of its service offerings, providing
not only telehealth solutions, allowing individuals to speak with a
doctor and obtain prescriptions remotely – but further allowing
them to purchase prescriptions at a discount through partnerships
with companies like SingleCare, and identify a pharmacy near them
for pickup. We have concurrently expanded our offerings to
employers, who can use our Bonum+ platform to manage COVID-19 risk
through a comprehensive interface, helping enable employees to
safely return to work.”
“We are a nimble organization and remain
well-positioned to address emerging opportunities in the industry
through our various business units, having created an unrivaled
drug procurement marketplace platform for independent pharmacies,
as well as a comprehensive healthcare solution for consumers
centered around the independent pharmacy ecosystem. I look forward
to our continued progress in the months ahead – creating
sustainable, long-term value for our stockholders,” concluded Mr.
Ajjarapu.
Third Quarter 2020 Financial
Summary
|
● |
Revenues
for the third quarter of 2020 increased 174% to $6.3 million,
compared to revenue of $2.3 million in the same quarter last year.
The increase in revenue was primarily due to strong Personal
Protective Equipment sales in the third quarter, driven by the
COVID-19 pandemic. |
|
|
|
|
● |
Gross
profit in the third quarter of 2020 increased 47% to $1.9 million,
or 30.5% of revenues, compared to gross profit of $1.3 million, or
56.7% of revenues, in the same quarter last year. The increase in
gross profit was primarily attributable to high-volume,
lower-margin sales of Personal Protective Equipment in our Integra
Pharma unit. |
|
|
|
|
● |
Operating
expenses in the third quarter of 2020 were $1.8 million, compared
to $1.1 million in the same quarter last year. This increase is
primarily due to non-cash stock-based compensation expenses, IT
Expenditures and marketing expenses. |
|
|
|
|
● |
Net
income in the third quarter of 2020 was $0.14 million, or $0.02 per
basic and diluted share outstanding, compared to net income of
$0.03 million, or $0.00 per basic and diluted share outstanding, in
the same quarter last year. |
|
|
|
|
● |
Adjusted
EBITDA*, a non-GAAP financial measure, increased 150% to $0.67
million, compared to $0.27 million in the same quarter last
year. |
|
|
|
|
● |
Cash and
cash equivalents were $6.6 million as of September 30, 2020,
compared with $4.2 million as of June 30, 2020. |
More information regarding the Company’s Q3 2020
results of operations can be found in the Quarterly Report on Form
10-Q, which the Company plans to file on October 26, 2020 with the
Securities and Exchange Commission.
Conference Call and Webcast
Management will host a conference call today,
October 26, 2020 at 5:00 p.m. EDT to discuss Trxade Group’s 2020
third quarter financial results. The call will conclude with a
Q&A from participants. To participate, please use the following
information:
Q3 2020 Conference Call and Webcast
Date: Monday, October 26, 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: 13711397 Webcast:
http://public.viavid.com/index.php?id=141748
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
November 26, 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 13711397. A webcast will also be available
for 30 days on the IR section of the Trxade Group website (at
www.trxadegroup.com, under “NASDAQ:MEDS”) 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 three
synergistic operating platforms; (1) the Trxade B2B trading
platform with around 11,800 registered pharmacies, (2) Integra
Pharma Solutions, Trxade Group’s virtual wholesale division and (3)
the Bonum Health platform offering affordable telehealth services.
For additional information, please visit us at www.trxade.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: Lucas A. Zimmerman
Senior Vice President MZ Group - MZ North America (949) 259-4987
MEDS@mzgroup.us www.mzgroup.us
Trxade Group,
Inc.Consolidated Balance
SheetsSeptember 30, 2020 and December 31,
2019(unaudited)
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
Assets |
|
|
|
|
|
|
Current
Assets |
|
|
|
|
|
|
|
|
Cash |
|
$ |
6,647,763 |
|
|
$ |
2,871,694 |
|
Accounts Receivable, net |
|
|
1,034,482 |
|
|
|
792,050 |
|
Inventory |
|
|
1,647,088 |
|
|
|
56,761 |
|
Prepaid Assets |
|
|
232,671 |
|
|
|
82,452 |
|
Deposits for Inventory purchases |
|
|
1,081,250 |
|
|
|
- |
|
Total Current Assets |
|
|
10,643,254 |
|
|
|
3,802,957 |
|
|
|
|
|
|
|
|
|
|
Property Plant and
Equipment, Net |
|
|
150,147 |
|
|
|
174,987 |
|
|
|
|
|
|
|
|
|
|
Other
Assets |
|
|
|
|
|
|
|
|
Deposits |
|
|
21,636 |
|
|
|
21,636 |
|
Deferred Offering Costs |
|
|
- |
|
|
|
88,231 |
|
Right-of-use leased assets |
|
|
313,000 |
|
|
|
757,710 |
|
Goodwill |
|
|
725,973 |
|
|
|
725,973 |
|
|
|
|
|
|
|
|
|
|
Total
Assets |
|
$ |
11,854,010 |
|
|
$ |
5,571,494 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
|
Accounts Payable |
|
$ |
191,597 |
|
|
$ |
334,614 |
|
Accrued Liabilities |
|
|
286,145 |
|
|
|
98,852 |
|
Current Portion Lease Liabilities |
|
|
57,155 |
|
|
|
87,350 |
|
Total Current Liabilities |
|
|
534,897 |
|
|
|
520,816 |
|
|
|
|
|
|
|
|
|
|
Long Term
Liabilities |
|
|
|
|
|
|
|
|
Notes Payable – Related Parties |
|
|
225,000 |
|
|
|
225,000 |
|
Other Long-term Liabilities – Leases |
|
|
267,024 |
|
|
|
685,461 |
|
Total
Liabilities |
|
|
1,026,921 |
|
|
|
1,431,277 |
|
|
|
|
|
|
|
|
|
|
Shareholders’
Equity |
|
|
|
|
|
|
|
|
Series A Preferred Stock, $0.00001 par value; 10,000,000 shares
authorized; none issued and outstanding as of September 30, 2020
and December 31, 2019, respectfully |
|
|
- |
|
|
|
- |
|
Common Stock, $0.00001 par value; 100,000,000 shares authorized;
8,070,671 and 6,539,415 shares issued and outstanding, as of
September 30, 2020 and December 31, 2019, respectively |
|
|
81 |
|
|
|
65 |
|
Additional Paid-in Capital |
|
|
19,446,404 |
|
|
|
12,535,655 |
|
Retained Deficit |
|
|
(8,619,396 |
) |
|
|
(8,395,503 |
) |
Total Shareholders’ Equity |
|
|
10,827,089 |
|
|
|
4,140,217 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and
Shareholders’ Equity |
|
$ |
11,854,010 |
|
|
$ |
5,571,494 |
|
Trxade Group,
Inc.Consolidated Statements of
OperationsFor the Three and Nine Months Ended
September 30, 2020 and
2019(unaudited)
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
6,332,269 |
|
|
$ |
2,311,426 |
|
|
$ |
15,128,226 |
|
|
$ |
5,740,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
Sales |
|
|
4,402,967 |
|
|
|
1,000,917 |
|
|
|
9,554,016 |
|
|
|
2,119,894 |
|
Gross
Profit |
|
|
1,929,302 |
|
|
|
1,310,509 |
|
|
|
5,574,210 |
|
|
|
3,620,467 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and Administrative |
|
|
1,783,481 |
|
|
|
1,132,656 |
|
|
|
5,775,439 |
|
|
|
3,138,150 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
(Loss) |
|
|
145,821 |
|
|
|
177,853 |
|
|
|
(201,229 |
) |
|
|
482,317 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Income |
|
|
- |
|
|
|
25,275 |
|
|
|
- |
|
|
|
25,275 |
|
Investment Loss |
|
|
- |
|
|
|
(162,178 |
) |
|
|
- |
|
|
|
(250,000 |
) |
Interest Expense |
|
|
(7,430 |
) |
|
|
(13,385 |
) |
|
|
(22,664 |
) |
|
|
(46,817 |
) |
Net Income
(Loss) |
|
$ |
138,391 |
|
|
$ |
27,565 |
|
|
$ |
(223,893 |
) |
|
$ |
210,775 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) per Common
Share – Basic: |
|
$ |
0.02 |
|
|
$ |
0.00 |
|
|
$ |
(0.03 |
) |
|
$ |
0.04 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (Loss) per Common
Share – Diluted: |
|
$ |
0.02 |
|
|
$ |
0.00 |
|
|
$ |
(0.03 |
) |
|
$ |
0.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average Common Shares
Outstanding – Basic |
|
|
8,063,043 |
|
|
|
5,748,329 |
|
|
|
7,572,954 |
|
|
|
5,728,421 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average Common Shares
Outstanding - Diluted |
|
|
8,215,418 |
|
|
|
6,047,748 |
|
|
|
7,725,329 |
|
|
|
6,027,840 |
|
Trxade Group,
Inc.Consolidated Statements of Cash
FlowsFor the Nine months ended September 30, 2020
and 2019(unaudited)
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
Operating
Activities: |
|
|
|
|
|
|
|
|
Net Income (Loss) |
|
$ |
(223,893 |
) |
|
$ |
210,775 |
|
|
|
|
|
|
|
|
|
|
Adjustments to reconcile net (loss) income to net cash used in
operating activities: |
|
|
|
|
|
|
|
|
Depreciation Expense |
|
|
3,750 |
|
|
|
3,750 |
|
Options Expense |
|
|
372,900 |
|
|
|
141,594 |
|
Warrant Expense |
|
|
149,158 |
|
|
|
26,363 |
|
Common Stock Issued for Services |
|
|
1,178,113 |
|
|
|
- |
|
Bad Debt Expense |
|
|
35,539 |
|
|
|
6,084 |
|
Investment Loss |
|
|
- |
|
|
|
250,000 |
|
Inventory Write Down |
|
|
137,155 |
|
|
|
- |
|
Amortization of Right-of-Use Asset |
|
|
60,600 |
|
|
|
66,598 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts Receivable |
|
|
(277,971 |
) |
|
|
(282,746 |
) |
Prepaid Assets and Other Current Assets |
|
|
(150,219 |
) |
|
|
(100,100 |
) |
Inventory |
|
|
(1,727,482 |
) |
|
|
16,650 |
|
Deposits for Inventory Purchases |
|
|
(1,081,250 |
) |
|
|
- |
|
Lease Liability |
|
|
(64,522 |
) |
|
|
(55,102 |
) |
Accounts Payable |
|
|
(98,422 |
) |
|
|
(2,557 |
) |
Accrued Liabilities and Other Liabilities |
|
|
187,293 |
|
|
|
43,256 |
|
Net Cash (used in)
provided by operating activities |
|
|
(1,499,251 |
) |
|
|
324,565 |
|
|
|
|
|
|
|
|
|
|
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: |
|
|
|
|
|
|
|
|
Repayments of Short-Term Convertible Debt - Related Parties |
|
|
- |
|
|
|
(40,000 |
) |
Payment of Stock Issuance Costs |
|
|
(732,355 |
) |
|
|
- |
|
Proceeds from Exercise of Warrants |
|
|
36,255 |
|
|
|
166 |
|
Proceeds from Exercise of Stock Options |
|
|
501 |
|
|
|
- |
|
Proceeds from Issuance of Common Stock |
|
|
5,994,424 |
|
|
|
2,455,000 |
|
Net Cash provided by
financing activities |
|
|
5,298,825 |
|
|
|
2,415,166 |
|
|
|
|
|
|
|
|
|
|
Net increase in Cash |
|
|
3,776,069 |
|
|
|
2,489,731 |
|
Cash at Beginning of the
Period |
|
|
2,871,694 |
|
|
|
869,557 |
|
Cash at End of the Period |
|
$ |
6,647,763 |
|
|
$ |
3,359,288 |
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow
Information |
|
|
|
|
|
|
|
|
Cash Paid for Interest |
|
$ |
5,789 |
|
|
$ |
40,705 |
|
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 |
|
Remeasurement of ROU Assets
and Lease Liability for Nonrenewal of Lease |
|
$ |
384,110 |
|
|
$ |
- |
|
Reconciliation of Net Income (Loss)
attributable to Trxade Group, Inc., to Earnings before Interest,
Taxes, Depreciation and Amortization (EBITDA) and Adjusted
EBITDA*
|
|
For the three months ended September 30, |
|
|
For the nine months ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Net Income (loss) attributable
to Trxade Group, Inc. |
|
$ |
138,391 |
|
|
$ |
27,565 |
|
|
$ |
(223,893 |
) |
|
$ |
210,775 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest, net |
|
|
7,430 |
|
|
|
13,385 |
|
|
|
22,664 |
|
|
|
46,817 |
|
Depreciation and
amortization |
|
|
1,250 |
|
|
|
1,250 |
|
|
|
3,750 |
|
|
|
3,750 |
|
EBITDA |
|
|
147,071 |
|
|
|
42,200 |
|
|
|
(197,479 |
) |
|
|
261,342 |
|
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share in Equity losses on
Investment |
|
|
- |
|
|
|
162,178 |
|
|
|
- |
|
|
|
250,000 |
|
Stock-based compensation |
|
|
524,018 |
|
|
|
64,011 |
|
|
|
1,700,170 |
|
|
|
167,957 |
|
Adjusted EBITDA
* |
|
$ |
671,089 |
|
|
$ |
268,389 |
|
|
$ |
1,502,691 |
|
|
$ |
679,299 |
|
* 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.
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