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Trxade Health Inc. (NASDAQ: MEDS) Q1 2023 Research Summary

Trxade Health Inc. (NASDAQ: MEDS) is a healthcare IT company that operates as an integrated drug procurement and delivery platform. It is focused on digitalizing the retail pharmacy experience by optimizing drug procurement and patient engagement. Headquartered in Lutz, Florida, the company is growing its network through partnerships with independent group purchasing organizations, after gaining a foothold in the business-to-business market.

The Company

Trxade became a public company in 2020 and operates through multiple business segments. The company is led by chief executive officer Suren Ajjarapu who has been holding that position since its inception. During the pandemic, Trxade helped patients avail remote healthcare delivery through its digital healthcare arm Bonum Health, which joined the Trxade fold in 2019. The company’s strong contributions to facilitating COVID care indicate the business is well-aligned with the changing healthcare environment.

Trxade Annual Revenue Trend

Main Products/Services

Trxade.com: The core business which is a web-based pharmaceutical marketplace engaged in promoting and enabling commerce among independent pharmacies, small chains, hospitals, clinics, and alternate dispensing sites with large pharmaceutical suppliers nationally.

Community Specialty Pharmacy, LLC. — This is an accredited pharmacy focused on specialty medications and operates with an innovative pharmacy model that offers home delivery services to patients.

Trxade Prime – This division allows pharmacy members on the Trxade platform to process, consolidate and ship purchase orders that are placed directly with Trxade suppliers via Trxade Prime.

Competition

PharmSaver, PharmaBid, and Theravance Biopharma are some of Trxade’s competitors. The company enjoys an edge over others through its unique business model of providing both brand and generic products to pharmacy partners. Meanwhile, the monopolist wholesales who control most of the pharma industry – which is estimated to grow at an accelerated pace in the coming years — pose a challenge to the efforts to bring transparency in drug pricing.

Key Metrics

Trxade ended fiscal 2022 on a positive note, reporting double-digit revenue growth and a narrower net loss for the year. The business continued to add new members, bringing total memberships to about 14,400 at the end of the year.

Total revenues increased 16% from last year to $11.4 million in 2022, reflecting strong performance by the core Trxade division and the Trxade Prime business. The strong top-line performance translated into a decline in full-year net loss to $3.47 million or $0.41 per share from $5.32 million or $0.65 per share last year.  

The bottom line benefited from a decline in operating expenses. At the end of December 31, total inventory stood at $119.582. Trxade is scheduled to report first-quarter 2023 financial results on May 8, after the market closes.

Trxade Fiscal 2022 earnings infographic

Updates

In January, the management intended to agreements to sell 100% of the outstanding membership interest in subsidiary companies like Community Specialty Pharmacy and Alliance Pharma Solutions. The company will receive $245,000 in consideration for both companies. The reorganization would allow it to focus on constantly innovating and forging partnerships, to drive forward the core business-to-business strategy while diversifying the revenue base.

At the Bourses

Trxade’s shares have remained almost stagnant since the beginning of 2023, after starting the year on a positive note. The company’s market capitalization more than halved during that period. The stock has been experiencing weakness for quite some time, reflecting the company’s not-so-impressive earnings performance and muted investor sentiment. However, it looks poised to bounce back this year and regain most of the losses.

SWOT Analysis

Strengths

  • The primary strength of Trxade is the innovative business model with a focus on its unique web-based platform that enables trading among healthcare buyers and sellers of pharmaceuticals.
  • The response to Trxade’s services has been encouraging as it helps increase foot traffic and prescriptions for partner pharmacies

Weaknesses

  • The company is yet to generate profit consistently, which is a hassle when it comes to investing in the business.  
  • Despite the efforts to bring price transparency, there is a dearth of coordination among the stakeholders and a lack of pricing regulation in the healthcare industry.

Opportunities

  • The ongoing digital transformation and shift to technology-enabled healthcare can increase the demand for the services being offered by the company.
  • There is a growing interest among vendors to tie up with Trxade for providing value to independent pharmacies with competitive pricing.

Threats

  • The healthcare industry is undergoing a transformation, including widespread consolidation, so Trxade would be required to realign the business according to the changing trends.
  • Pandemic-related supply chain issues and macroeconomic uncertainties continue to be a major challenge for pharmacy retailers.

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