Trxade Health Inc. (NASDAQ: MEDS) Q2 2021 Research Summary

Trxade Health Inc. (NASDAQ: MEDS), a health services IT company, plays a key role in ensuring the availability of healthcare services at affordable prices, mainly serving the secondary pharmaceutical supply chain. The company’s online platform and mobile applications have witnessed steady adoption among pharmacies and drug manufacturers since it started operations about eight years ago.

The Company

The main areas of operation of the Florida-based firm are telemedicine, pharmacy, drug delivery, and wholesale sales. The portfolio consists of:

Bonum Health (telemedicine app)
Community Speciality Rx (pharmacy)
DelivMeds (drug delivery app)
Integra Pharma Solutions (virtual wholesaler)
Trxade Marketplace (pharmaceutical marketplace)

Financial Performance

In the trailing twelve months, revenues more than doubled amid stable demand from the 12,100-odd registered members across markets. The company entered fiscal 2021 on a mixed note, reporting a net loss for the first three months of the year despite strong revenue growth. The loss was $0.08 per share, compared to earnings of $0.03 per share in the first quarter of 2020. Revenues from the Integra Pharma business spiked, more than offsetting the contraction in the other two segments. Total revenues grew 39% to $3.05 million and topped expectations. However, Trxade was the only operating segment that generated profit.

Competitors

Despite its unique business model, Trxade continues to face competition from both traditional and online healthcare service providers, including relatively smaller players like Benzer Pharmacy and Script Health as well as market leaders like Amazon (NASDAQ: AMZN), which strengthened its foothold in the market after the acquisition of PillPack a few years ago. The other rivals include UnitedHealth Group (NYSE: UNH), Rite Aid Corporation (NYSE: RAD), and Walgreens Boots Alliance (NASDAQ: WBA).

Latest Updates

Last month, the company assumed a new identity by changing its name from Trxade Group Inc. to Trxade Health, Inc., which the management believes would better reflect its mission. Recently, the board authorized the buyback of up to $1 million of common shares, in an effort to raise shareholder value. The Bonum Health business – currently a focus area – got a facelift with the integration of additional features like the direct-to-patient prescription drug coupon platform. 

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Read management/analysts’ comments on Trxade’s Q earnings

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Meanwhile, Trxade’s MedCheks subsidiary launched a health passport app for mobile phones in June 2021, which allows the evaluation of health records like COVID- related reports in a secure manner. The service complements the company’s tech-supported portfolio of cost-effective digital healthcare applications. The app has the potential to function as a tool that would allow patients to track their health records, making it easier to shift from one doctor to another. It is expected to play an important role in the post-COVID market reopening.

What Future Holds

The combined annual growth rate of the North American e-pharmacy market is estimated at 14.8% between 2014 and 2025. The Trxade management is planning to expand primary wholesaler group purchasing contracts and data analytics. It expects the telehealth solutions business to maintain the strong growth momentum going forward, leveraging strategic partnerships. Trxade’s online platform Bonum Health operates more than 500 stores in 50 states.

Concerns

The main challenges facing the prescription drug market are a lack of transparency in pricing and the absence of innovation, which makes it inefficient. Also, the retail pharmacy space is ruled by large store chains and pharmacy benefit managers who enjoy significant clout in terms of price negotiation and insurance contracts, which makes it difficult for smaller players to operate. Also, huge resources and cash balance give market leaders like Walmart (NYSE: WMT) an edge over smaller rivals when it comes to market share.  

The Stock

Shares of Trxade hit an all-time high in July 2020 but lost momentum since then. The stock traded at $4.525 on June 17, 2021, after gaining about 2% since the beginning of the year. That translated into a market capitalization of $36.56 million. Meanwhile, market watchers are bullish on the stock’s future prospects and see the value more than doubling in the next twelve months.

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