Trxade Health (MEDS) Q2 2024 Research Summary

Trxade Health, Inc. (NASDAQ: MEDS) is a drug procurement and delivery platform with a mission to revolutionize the healthcare industry by offering advanced solutions that enhance accessibility, transparency, and efficiency for buyers and sellers of pharmaceuticals.

With a focus on ensuring price transparency, the company offers a wide range of healthcare products on its platform, supported by the latest technologies like artificial intelligence. It has a strong network of suppliers as well as partners comprising independent group purchasing organizations. Recently, Trxade entered into a business combination with New York-based pharmaceutical company Scienture, Inc.

Wholly Owned Subsidiaries

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

The Business

Trxade works to make the pharmaceutical buying process efficient and reduce healthcare costs by bringing together all pharmaceutical stakeholders on a common platform. It has a strong presence in the business-to-business retail pharmacy market. The company’s proprietary data analytics provides the pharmaceutical supply chain with valuable and actionable market intelligence.

Under the unique business model, products distributed by Trxade 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 serves as chairman and chief executive officer.

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

Key Metrics

For the quarter ended in June 2024, Trxade reported a narrower net loss and lower revenues. Second-quarter net loss was $1.83 million or $1.30 per share, compared to a loss of $1.97 million or $2.90 per share in the corresponding quarter a year earlier. Meanwhile, Q2 revenues nearly halved to $18,699. Operating loss was $1.50 million during the three months, compared to a loss of $0.60 million in the second quarter of 2023. The company ended the quarter with a cash balance of $7.72 million.

Updates

In late July, Trxade completed its business combination with Scienture, Inc. a private branded and specialty pharmaceutical company, in a $103-million deal. Under the all-stock transaction, the company acquired all of Scienture’s assets in exchange for shares of Trxade’s stock. Trxade will change its name to Scienture Holdings, Inc. subsequent to the future conversion of the non-voting convertible preferred stock, and the combined company is intended to continue as a Nasdaq-listed company. The boards of both Trxade and Scienture have unanimously approved the deal, and Suren Ajjarapu will continue to serve as chairman and CEO of the combined entity.

In August, Narasimhan Mani was appointed as Scienture’s president. Shankar Hariharan was serving as president and chief executive officer of Scienture. Shankar will continue as the CEO. Also, Rahul Surana has been promoted to executive vice president and chief operating officer of Scienture.

At the Bourses

In mid-July, shares of Trxade climbed to a four-month high, continuing the uptrend seen in recent months. The stock, which had a rather weak start to the year, later withdrew from the high and traded in the single-digit territory. However, its long-term prospects look good, thanks to the company’s continued growth initiatives focused on exploring new revenue streams.

Analysis

Strengths: Business combinations, like the Superlatus and Scienture mergers, should boost the company’s revenue performance in the future. The core business keeps gaining traction even as the subscriber base expands. The company’s web-based platform continues to be its main strength.

Weaknesses: Despite the strategic initiatives to grow its business, Trxade is yet to generate profit consistently and that restricts its ability to invest in the business.

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

Threats: The healthcare industry is undergoing a rapid transformation led by widespread consolidation. A lack of coordination among stakeholders in the retail pharmacy market and the absence of price transparency remain a hassle for achieving operational efficiency.