Trxade Health Inc. (NASDAQ: MEDS) Q1 2024 Research Summary

The Organization

Trxade, which has a strong foothold in the business-to-business retail pharmacy market, performs integrally within international pharmaceutical distribution and healthcare channels. Its proprietary data analytics offer the pharmaceutical supply chain advanced and actionable market intelligence. The company helps bring efficiency to the pharmaceutical buying process and reduce healthcare costs by bringing together all pharmaceutical stakeholders on a common platform.

Products distributed by the company are dispensed and used nationally without production modification. Any deviation in the normal distribution channel does not cause any problem to the system that is designed to meet stringent pharmaceutical licensing and pedigree regulations. The platform has the potential for international expansion, supported by its global shipping, financial and manufacturing partners. Trxade Health operates across all 50 states and is headed by Suen Ajjarapu who has served as its chairman and chief executive officer since the acquisition of Trxade Group in 2014.

The Trxade platform played an important role in making COVID-19 tests and care available to patients remotely during the pandemic. Though it pursues opportunities in non-core areas, serving the pharmaceutical industry remains the main priority for the company.

Subsidiaries (100% owned)

• Trxade, Inc.
• Integra Pharma Solutions, Inc.
• Bonum Health, Inc
• Bonum Health, LLC

Financials

Trxade’s revenues came in at $2.06 million in the third quarter of 2023, which is broadly unchanged from the revenue generated in the year-ago quarter. A 23% growth in the core services business was offset by a 44% fall in product revenues. At $1.70 million, gross profit was up 24% year-over-year. The company reported a net loss of $3.53 million or $0.07 per share for Q3, compared to a loss of $0.53 million or $0.57 per share in the prior year period. The wider net loss reflects a 60% jump in operating expenses.

Recent Developments

In February 2024, the company, together with its wholly owned subsidiary Trxade Inc., entered into an asset purchase agreement with Micro Merchant Systems, Inc. under which the latter will purchase for cash substantially all of the assets of Trxade, Inc. More recently, the company declared a special cash dividend of $8.00 per share, payable to stockholders of record as of March 18, 2024.

In the September 2023 quarter, the platform added about 200 new registered members, taking the total to around 14,900. By expanding its pharmacy/clinic footprint consistently, Trxade positions itself to tap into new opportunities in the global online pharmacy market, which is expected to grow at a compound annual rate of about 11.6% through 2028.

The Stock

Trxade’s stock had a modest start to 2024 but gained momentum as the year progressed and reached a two-year high in mid-March. However, MEDS pulled back from those highs and traded close to its 52-week average in the following weeks. The management’s prudent growth strategy and innovations, focused on exploring new revenue streams, will likely elicit strong investor interest in the long term.

SWOT Analysis

Strengths: Growth initiatives like the merger with Superlatus should boost the company’s revenue performance going forward. The core business continues to gain traction even as the subscriber base keeps growing. The company’s web-based platform, which allows healthcare buyers and pharmaceutical retailers to connect and transact with ease, remains its main strength.

Weaknesses: Trxade is yet to generate profit consistently, which restricts its ability to invest in the business. A lack of coordination among stakeholders in the retail pharmacy market and the absence of price transparency remain a hassle for achieving operational efficiency.

Opportunities: The ongoing digital transformation and shift to technology-enabled healthcare can increase the demand for the services being offered by the company.

Threats: The healthcare industry is undergoing a rapid transformation that includes widespread consolidation, a trend that might require companies like Trxade to revisit their business strategies.