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Trxade Health Inc. (NASDAQ: MEDS) Q4 2023 Research Summary

Trxade Health, Inc. (NASDAQ: MEDS) operates as an integrated drug procurement and delivery platform, focused on digitalizing the retail pharmacy experience. Having strengthened its foothold in the business-to-business market, the company is expanding its network through partnerships with independent group purchasing organizations. Last year, it acquired food technology firm Superlatus, Inc. to create a global food consolidation platform.

The Business

Headquartered in Lutz, Florida, Trxade is led by founder and chief executive officer Suren Ajjarapu. The company was uplisted to Nasdaq in February 2020 and the stock trades under the ticker symbol MEDS. The online platform brings together pharmacies and suppliers of pharmaceuticals and helps customers compare prices.

Trxade’s digital healthcare platform played a key role in making COVID-19 tests and care available to patients remotely during the pandemic. While the coronavirus health emergency is almost over, the company continues to be an important player in the retail pharmacy space. Though it pursues opportunities in non-core areas, Trxade remains committed to serving the pharmaceutical industry.

In the most recent quarter, the business added about 200 new members to its marketplace, 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 20% through 2030.

Segments

The company operates mainly through the following subsidiaries, with Superlatus and The Urgent Company being the latest to join its fold. After merging with Trxade last year, Superlatus acquired The Urgent Company and its consumer brands from Perfect Day for $1.25 million.

● Trxade, Inc.

● Integra Pharma Solutions, Inc.

● Community Specialty Pharmacy

● Alliance Pharma Solutions, LLC

● Bonum Health, LLC

● SOSRx LLC

● Superlatus, Inc.

● The Urgent Company, Inc.

Updates

In January 2024, Trxade announced results for its latest quarter, reporting revenues that remained unchanged from the prior year period and a double-digit increase in gross profit. The management said it expects future available cash resources will consist mainly of cash generated from operations, remaining cash balances, borrowings, and funds raised through sales of debt and equity securities.

Financials

For the third quarter, Trxade reported revenues of $2.06 million, which is broadly unchanged from the corresponding quarter of 2022. 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 incurred a net loss of $3.53 million or $0.07 per share in the three months, compared to a loss of $0.53 million or $0.57 per share in the prior year period. The bottom line was impacted by a 60% surge in operating expenses. At the end of the quarter, Trxade had a total of 14,900+ pharmacy members.

The Stock

After retreating from the highs of September 2023, Trxade’s stock has traded mostly sideways. It had a modest start to 2024 and has remained stable so far. In the long term, the management’s effective growth strategy, with a focus on expanding the business to new areas, will likely elicit strong investor interest. The stock is down around 20% since the beginning of 2023 (based on the closing price on 02/09/2024).

Good & Bad

Strengths: The growth initiatives, such as the recent 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. There is a growing interest among vendors in tying up with Trxade to provide value to independent pharmacies.

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.

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