SCNX 8-K
Scienture Holdings, Inc. (SCNX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): March 29, 2021
Trxade Group, Inc.
(Exact name of Registrant as specified in its charter)
| Delaware | 001-39199 | 46-3673928 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
3840 Land O’ Lakes Blvd
Land O’ Lakes, Florida 34639
(Address of principal executive offices)(zip code)
800-261-0281
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Common Stock, $0.00001 Par Value Per Share |
MEDS | The NASDAQ Stock Market LLC (Nasdaq Capital Market) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
| Item 2.02 | Results of Operations and Financial Condition. |
On March 29, 2021, Trxade Group, Inc. (“Trxade” or the “Company”) issued a press release and will hold a conference call and webcast regarding its financial results for the three months and year ended December 31, 2020. A copy of the press release, which includes information on the conference call and webcast and a summary of such financial results is furnished as Exhibit 99.1 to this Form 8-K. Additionally, a copy of a presentation that will be discussed on the earnings call is furnished as Exhibit 99.2 to this Form 8-K.
The information contained in this Current Report (and included as exhibits hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
The press release and presentation furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K, contain forward-looking statements within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995, and, as such, may involve known and unknown risks, uncertainties and assumptions. These forward-looking statements relate to the Company’s current expectations and are subject to the limitations and qualifications set forth in the press release and presentation as well as in the Company’s other filings with the Securities and Exchange Commission, including, without limitation, that actual events and/or results may differ materially from those projected in such forward-looking statements. These statements also involve known and unknown risks, which may cause the results of the Company, its divisions and concepts to be materially different than those expressed or implied in such statements. Accordingly, readers should not place undue reliance on any forward-looking statements. Forward-looking statements may include comments as to the Company’s beliefs and expectations as to future financial performance, events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside the Company’s control. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s periodic and current filings with the SEC, including the Form 10-Qs and Form 10-Ks, filed with the SEC and available at www.sec.gov and in the “NASDAQ:MEDS” — “SEC Filings” section of the Company’s website at https://www.trxadegroup.com/investors, and specifically including the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. Forward-looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date, except as otherwise provided by law.
| Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. |
Description | |
| 99.1 | Press Release of Trxade Group, Inc. dated March 29, 2021 | |
| 99.2 | 2020 Fourth Quarter and Annual Earnings Call Presentation |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TRXADE GROUP, INC. | ||
| Date: March 29, 2021 | By: | /s/ Suren Ajjarapu |
| Name: | Suren Ajjarapu | |
| Title: | Chief Executive Officer | |
Exhibit 99.1
TRxADE Group Reports Annual Revenue Growth of 130% and Year End 2020 Financial Results
Continues Nationwide Expansion of Breakthrough Digital Healthcare Services IT Platform
TAMPA, FL, March 29, 2021 -- Trxade Group, Inc. (NASDAQ: MEDS), a health services IT company focused on digitalizing the retail pharmacy experience by optimizing drug procurement, the prescription journey and patient engagement in the U.S., today announced its financial results for the fourth quarter (Q4) and year ended (FY) December 31, 2020.
Selected Financial Highlights
| Q4 | % Increase | FY | % Increase | |||||||||||||||||||||
| $ in Millions | 2020 | 2019 | (Decrease) | 2020 | 2019 | (Decrease) | ||||||||||||||||||
| Revenues | $ | 2.0 | $ | 1.7 | 17.1 | % | $ | 17.1 | $ | 7.4 | 130.3 | % | ||||||||||||
| Gross Profit | $ | 0.1 | $ | 1.3 | (90.0 | )% | $ | 5.7 | $ | 4.9 | 17.2 | % | ||||||||||||
| Gross Margin Percentage | 6.5 | % | 76.5 | % | (91.5 | )% | 33.3 | % | 65.5 | % | (49.1 | )% | ||||||||||||
| Net Loss | $ | (2.3 | ) | $ | (0.5 | ) | (362.0 | )% | $ | (2.5 | ) | $ | (0.3 | ) | (791.6 | )% | ||||||||
| Adjusted EBITDA* | $ | (1.4 | ) | $ | 0.2 | (929.4 | )% | $ | 0.1 | $ | 0.9 | (89.7 | )% | |||||||||||
*Adjusted EBITDA is a non-GAAP financial measure and is described in relation to its most directly comparable GAAP measure under “Use of Non-GAAP Financial Information” below.
Fourth Quarter 2020 and Subsequent Operational Highlights
| ● | Trxade continued to expand the Trxade drug procurement marketplace nationwide, adding 328 new registered members in Q4 2020, bringing the total registered members to approximately 11,800+. |
| ● | Appointed technology entrepreneur and industry thought leader James Ram, to lead the company’s newly launched MedCheks subsidiary, in its efforts to bring a Digital Health Passport to market, allowing the holder to display vaccination and COVID-19 testing status. |
| ● | Trxade’s telehealth subsidiary Bonum Health signed a strategic partnership to provide affordable telemedicine services to the patients of approximately 100 Kinney Drug retail pharmacies in New York and Vermont, and, the more than two million Rx discount card members of Kinney’s sister company, ProAct, Inc., a fully integrated pharmacy benefits manager. |
| ● | Launched Trxade Prime, a revolutionary service offered by the Company’s wholesale division, allowing the registered members on the Trxade platform to process, consolidate and ship orders that are placed directly with Trxade Suppliers. |
| ● | Announced partnership with SingleCare, a free prescription savings service, to supplement Bonum Health’s enterprise telehealth solutions with prescription discounts offered to national, regional and local pharmacies to promote the benefit to uninsured patients and underserved communities. |
Management Commentary
“2020 was a milestone year for our company as we continued to innovate, grow and expand. Despite the challenges of a global pandemic, we increased revenues by 130% for the year, a testament to our team’s continued innovation and development of our breakthrough digital healthcare services IT platform. As we continue to scale exciting new affiliated services, such as our telehealth platform or our recently announced digital health passport initiative, we anticipate continued top line growth in the coming year.
“I am particularly pleased to announce the launch of our new subsidiary, MedCheks, which is developing a digital health passport to help facilitate the safe reopening of the global economy. To head this new initiative, we brought on James Ram. Under his lead, the Digital Health Passport is planned to leverage both state-of-the-art encryption and blockchain technology to conceal all private health data, allowing for the secure exchange of data between passport holder and verifier. We are evaluating initial roll-out locations for the pay-per-use model.
“Bonum Health, our telehealth subsidiary, made significant strides in the fourth quarter to more rapidly propel adoption nationwide. We signed an exciting partnership with KPH Healthcare services, bringing affordable healthcare to the patients of approximately 100 Kinney Drug retail pharmacies on the East Coast.
“Throughout the year, we have continued to drive our business forward, achieving several key milestones in our internal roadmap with a focus on innovation and development through our various complementary growth opportunities. This is an exciting time for Trxade, and I believe we are better positioned to create sustainable value for our shareholders than at any prior time in the Company’s history,” concluded Mr. Ajjarapu, the Company’s Chairman and Chief Executive Officer.
Fourth Quarter 2020 Financial Summary
| ● | Revenues for the fourth quarter of 2020, increased 17.1% to $2 million, compared to revenue of $1.7 million in the same quarter last year. The increase in revenue was primarily due to revenue generated by the Trxade Platform and Trxade Prime. | |
| ● | Gross profit in the fourth quarter of 2020, decreased 90.0% to $0.1 million, or 6.5% of revenues, compared to gross profit of $1.3 million, or 76.5% of revenues, in the same quarter last year. The decrease in gross profit was primarily attributable to higher costs associated with Trxade Prime transactions and a write down of inventory. | |
| ● | Operating expenses in the fourth quarter of 2020 were $2.4 million, compared to $1.6 million in the same quarter last year. This increase is primarily due to the Loss on Impairment of Goodwill of $726,000 and an increase in employees with our expansion into Business to Consumer (B2C) sales. |
| ● | Net loss in the fourth quarter of 2020 was $2.3 million, or $0.29 per basic and diluted share outstanding, as a result of the Loss on Impairment of Goodwill and a $1,081,000 inventory write down, compared to a net loss of $0.5 million, or $0.04 per basic and diluted share outstanding, in the same quarter last year. | |
| ● | Adjusted EBITDA, a non-GAAP financial measure, decreased to ($1.4) million for the fourth quarter of 2020, compared to $0.2 million in the same quarter last year. |
Fiscal Year Ended December 31, 2020 Summary
| ● | Revenues for the year ended December 31, 2020, increased 130.3% to $17.1 million, compared to revenue of $7.4 million in the previous year. The increase in revenue was due to revenue generated by Trxade Platform, Trxade Prime and Integra Pharma Solutions, our wholly-owned subsidiary, which revenue increase mainly related to Personal Protective Equipment (PPE) sales relating to the COVID-19 pandemic. | |
| ● | Gross profit for 2020 increased 17.2% to $5.7 million, or 33.3% of revenues, compared to gross profit of $4.8 million, or 65.5% of revenues, in the same period last year. The increase in gross profit was attributable to higher costs associated with Trxade Prime and Integra Pharma transactions. | |
| ● | Operating expenses for the full year 2020 were $8.2 million, compared to $4.7 million in the last year. This increase is due to the Loss on Impairment of Goodwill, an increase in employees with our expansion into Business to Consumer (B2C) sales, IT initiatives, and non-cash compensation. | |
| ● | Net loss for the year ended December 31, 2020, was ($2.5) million, or ($0.33) per basic and diluted share outstanding, compared to net loss of ($0.3) million, or ($0.05) per basic and diluted share outstanding, in the last year. | |
| ● | Adjusted EBITDA, a non-GAAP financial measure, was $0.1 million, compared to $0.85 million for the year ended 2020 and 2019, respectively. | |
| ● | Cash and cash equivalents were $5.9 million as of December 31, 2020, compared with $2.9 million as of December 31, 2019. |
Conference Call and Webcast
Management will host a conference call on Monday, March 29, 2021 at 5:00 p.m. Eastern time to discuss Trxade Group’s fourth quarter and fiscal year 2020 financial results. The call will conclude with Q&A from participants. To participate, please use the following information:
Q4 and Fiscal Year 2020 Conference Call and Webcast
Date: Monday, March 29, 2021
Time: 5:00 p.m. Eastern time
U.S. Dial-in: 1-877-425-9470
International Dial-in: 1-201-389-0878
Conference ID: 13716956
Webcast: http://public.viavid.com/index.php?id=143721
Please dial in at least 10 minutes before the start of the call to ensure timely participation.
A playback of the call will be available through April 29, 2021. To listen, call 1-844-512-2921 within the United States or 1-412-317-6671 when calling internationally and enter replay pin number 13716956. A webcast will also be available for 30 days on the IR section of the Trxade Group website or by clicking the webcast link above.
About Trxade Group, Inc.
Trxade Group (NASDAQ: MEDS) is a health services IT company focused on digitalizing the retail pharmacy experience by optimizing drug procurement, the prescription journey and patient engagement in the U.S. The Company operates the TRxADE drug procurement marketplace serving a total of 11,800+ members nationwide, fostering price transparency and under the Bonum Health brand, offering patient centric telehealth services. For more information on Trxade Group, please visit the Company’s IR website at investors.trxadegroup.com.
Use of Non-GAAP Financial Information
This earnings release discusses EBITDA and Adjusted EBITDA. These measurements are not recognized in accordance with generally accepted accounting principles (GAAP) and should not be viewed as an alternative to GAAP measures of performance. EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before stock-based compensation expense and gain (loss) in equity investment. EBITDA and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, future requirements for capital expenditures, or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments. Although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. Additionally, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than Trxade Group, Inc. does, limiting its usefulness as a comparative measure. See also “Reconciliation of Net Income attributable to Trxade Group, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA”, below.
Forward-Looking Statements
This press release may contain forward-looking statements, including information about management’s view of Trxade’s future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the “Act”). In particular, when used in the preceding discussion, the words “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Trxade, its divisions and concepts to be materially different than those expressed or implied in such statements. These risks include risks of our operations not being profitable; claims relating to alleged violations of intellectual property rights of others; technical problems with our websites; risks relating to implementing our acquisition strategies; our ability to manage our growth; negative effects on our operations associated with the opioid pain medication health crisis; regulatory and licensing requirement risks; risks related to changes in the U.S. healthcare environment; the status of our information systems, facilities and distribution networks; risks associated with the operations of our more established competitors; regulatory changes; healthcare fraud; COVID-19, governmental responses thereto, economic downturns and possible recessions caused thereby; changes in laws or regulations relating to our operations; privacy laws; system errors; dependence on current management; our growth strategy; and others that are included from time to time in filings made by Trxade with the Securities and Exchange Commission, including, but not limited to, in the “Risk Factors” sections in its Form 10-Ks and Form 10-Qs and in its Form 8-Ks, which it has filed, and files from time to time, with the U.S. Securities and Exchange Commission. These reports are available at www.sec.gov. Other unknown or unpredictable factors also could have material adverse effects on Trxade’s future results and/or could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. Trxade cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. We undertake no obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
Investor Relations:
Lucas Zimmerman
Senior Vice President
MZ Group - MZ North America
(949) 259-4987
www.mzgroup.us
Trxade Group, Inc.
Consolidated Balance Sheets
December 31, 2020 and 2019
December 31, 2020 | December 31, 2019 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 5,919,578 | $ | 2,871,694 | ||||
| Accounts Receivable, net | 805,043 | 792,050 | ||||||
| Inventory | 1,257,754 | 56,761 | ||||||
| Prepaid Assets | 151,248 | 82,452 | ||||||
| Other Receivables | 1,087,675 | - | ||||||
| Total Current Assets | 9,221,298 | 3,802,957 | ||||||
| Property Plant and Equipment, Net | 162,397 | 174,987 | ||||||
| Other Assets | ||||||||
| Deposits | 21,636 | 21,636 | ||||||
| Deferred offering costs | - | 88,231 | ||||||
| Right of use leased assets | 387,371 | 757,710 | ||||||
| Goodwill | - | 725,973 | ||||||
| Total Assets | $ | 9,792,702 | $ | 5,571,494 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 256,829 | $ | 334,614 | ||||
| Accrued Liabilities | 219,256 | 98,852 | ||||||
| Current Portion – Operating Lease Liabilities | 131,153 | 87,350 | ||||||
| Customer Deposits | 10,000 | - | ||||||
| Notes Payable – Related Party | 225,000 | - | ||||||
| Total Current Liabilities | 842,238 | 520,816 | ||||||
| Long Term Liabilities | ||||||||
| Notes Payable – Related Party | - | 225,000 | ||||||
Operating Lease Liabilities, net of current portion | 271,306 | 685,461 | ||||||
| Total Liabilities | 1,113,544 | 1,431,277 | ||||||
| Stockholders’ Equity | ||||||||
| Series A Preferred Stock, $0.00001 par value; 10,000,000 shares authorized; none issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | - | - | ||||||
| Common Stock, $0.00001 par value; 100,000,000 shares authorized; 8,093,199 and 6,539,415 shares issued and outstanding as of December 31, 2020 and 2019, respectively | 81 | 65 | ||||||
| Additional Paid-in Capital | 19,610,631 | 12,535,655 | ||||||
| Retained Deficit | (10,931,554 | ) | (8,395,503 | ) | ||||
| Total Stockholders’ Equity | 8,679,158 | 4,140,217 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 9,792,702 | $ | 5,571,494 | ||||
Trxade Group, Inc.
Consolidated Statements of Operations
Years Ended December 31, 2020 and 2019
| 2020 | 2019 | |||||||
| Revenues, net | $ | 17,122,520 | $ | 7,436,264 | ||||
| Cost of Sales | 11,415,198 | 2,565,500 | ||||||
| Gross Profit | 5,707,322 | 4,870,764 | ||||||
| Operating Expenses | ||||||||
| Loss on write-off of software asset | - | 368,520 | ||||||
| Loss on Impairment of Goodwill | 725,973 | - | ||||||
| General and Administrative | 7,488,011 | 4,377,020 | ||||||
| Total Operating Expenses | 8,213,984 | 4,745,540 | ||||||
| Operating Income (Loss) | (2,506,662 | ) | 125,224 | |||||
| Other Income | - | 72,075 | ||||||
| Investment Loss | - | (250,000 | ) | |||||
| Loss on Extinguishment of Debt | - | (178,500 | ) | |||||
| Interest Expense | (29,389 | ) | (53,227 | ) | ||||
| Net Loss | $ | (2,536,051 | ) | $ | (284,428 | ) | ||
| Net Loss per Common Share – Basic and Diluted | $ | (0.33 | ) | $ | (0.05 | ) | ||
| Weighted average Common Shares Outstanding Basic and Diluted | 7,705,620 | 5,929,092 | ||||||
Trxade Group, Inc.
Consolidated Statements of Cash Flows
Years ended December 31, 2020 and 2019
| 2020 | 2019 | |||||||
| Operating Activities: | ||||||||
| Net loss | $ | (2,536,051 | ) | $ | (284,428 | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
| Depreciation Expense | 5,500 | 5,000 | ||||||
| Options Expense | 448,404 | 176,376 | ||||||
| Warrant Expense | 56,885 | 105,452 | ||||||
| Common Stock Issued for Services | 1,357,759 | - | ||||||
| Bad Debt Expense | 10,539 | 11,500 | ||||||
| Loss on extinguishment of debt | - | 178,500 | ||||||
| Investment Loss | - | 250,000 | ||||||
| Loss on write off of software asset | - | 277,500 | ||||||
| Loss on Impairment of Goodwill | 725,973 | - | ||||||
| Loss on write-down of Inventory | 1,218,020 | - | ||||||
| Amortization of Right-of-Use Asset | 97,020 | 89,731 | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts Receivable | (23,532 | ) | (369,923 | ) | ||||
| Prepaid Assets and Other Current Assets | (68,796 | ) | 475 | |||||
| Other Assets | - | (89,336 | ) | |||||
| Inventory | (2,419,013 | ) | 23,205 | |||||
| Other Receivables | (1,087,675 | ) | - | |||||
| Lease Liability | (97,033 | ) | (74,630 | ) | ||||
| Accounts Payable | (33,190 | ) | (148,659 | ) | ||||
| Accrued Liabilities and Other Liabilities | 120,404 | (8,988 | ) | |||||
| Customer Deposits | 10,000 | - | ||||||
| Net Cash provided by (used in) operating activities | (2,214,786 | ) | 141,775 | |||||
| Investing Activities: | ||||||||
| Purchase of Fixed Assets | (37,505 | ) | (82,252 | ) | ||||
| Purchase of Equity Method Investment | - | (250,000 | ) | |||||
| Net Cash Used in Investing Activities | (37,505 | ) | (332,252 | ) | ||||
| Financing Activities: | ||||||||
| Repayments of Short-Term Convertible Debt – Related Parties | - | (262,552 | ) | |||||
| Payment of Stock Issuance Costs | (732,356 | ) | - | |||||
| Proceeds from Exercise of Warrants | 37,606 | 166 | ||||||
| Proceeds from Exercise of Stock Options | 501 | - | ||||||
| Proceeds from Issuance of Common Stock | 5,994,424 | 2,455,000 | ||||||
| Net Cash provided by financing activities | 5,300,175 | 2,192,614 | ||||||
| Net increase in Cash | 3,047,884 | 2,002,137 | ||||||
| Cash at Beginning of the Year | 2,871,694 | 869,557 | ||||||
| Cash at End of the Year | $ | 5,919,578 | $ | 2,871,694 | ||||
| Supplemental Cash Flow Information | ||||||||
| Cash Paid for Interest | $ | 29,442 | $ | 98,461 | ||||
| Cash Paid for Income Taxes | $ | - | $ | - | ||||
| Non-Cash Transactions | ||||||||
| Recognition of ROU assets and operating lease obligations | $ | - | $ | 847,441 | ||||
| Purchase of Fixed Assets recorded in Accounts Payable | $ | - | $ | 82,729 | ||||
| Common Stock Issued for Conversion of Note and Accrued Interest | $ | - | $ | 386,983 | ||||
| Remeasurement of ROU Assets and Lease Liability for Nonrenewal of Lease | $ | 273,319 | $ | - | ||||
Reconciliation of Net Income (Loss) attributable to Trxade Group, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA*
| For the three months ended December 31, | Fiscal Year ended December 31, | |||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Net Income (Loss) attributable to Trxade Group, Inc. | $ | (2,312,162 | ) | $ | (495,203 | ) | $ | (2,536,051 | ) | $ | (284,428 | ) | ||||
| Add (deduct): | ||||||||||||||||
| Interest, net | 6,725 | 6,410 | 29,389 | 53,227 | ||||||||||||
| Depreciation and amortization | 1,750 | 1,250 | 5,500 | 5,000 | ||||||||||||
| EBITDA | (2,303,687 | ) | (487,543 | ) | (2,501,162 | ) | (226,201 | ) | ||||||||
| Add (deduct): | ||||||||||||||||
| Share in Equity losses on Investment | - | - | - | 250,000 | ||||||||||||
| Loss on write-off of software asset | - | 368,520 | - | 368,520 | ||||||||||||
| Loss on extinguishment of debt | - | 178,500 | - | 178,500 | ||||||||||||
| Loss on impairment of Goodwill | 725,973 | - | 725,973 | - | ||||||||||||
| Stock-based compensation | 162,877 | 113,871 | 1,863,048 | 281,828 | ||||||||||||
| Adjusted EBITDA * | $ | (1,414,837 | ) | $ | 178,348 | $ | 87,859 | $ | 852,647 | |||||||
* EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.
Exhibit 99-2
Trxade Group (NASDAQ: MEDS) Fourth Quarter 2020 Earnings Call Script
Operator
Good afternoon ladies and gentlemen, thank you for standing by. Welcome to Trxade Group’s Fourth Quarter and Fiscal Year 2020 Earnings Conference Call. During today’s presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. This conference is being recorded today, March 29, 2021, and the earnings press release accompanying this conference call was issued at the close of the market today. The annual report which includes the Company’s results of operations for the fiscal year ended December 31, 2020, was filed with the SEC today. On our call today is Trxade Group’s Founder, Chairman and Chief Executive Officer, Suren Ajjarapu and Howard Doss, its Chief Financial Officer.
The replay of this call and webcast will be available for the next 30 days on the Company’s website under the “Nasdaq MEDS” link. The Company’s website also includes more supporting industry information.
At this time, I would like to turn the call over to Howard Doss, the Company’s Chief Financial Officer. Howard, the floor is yours.
Howard Doss
Thank you, operator, and thank you for joining us today. I would like to welcome you to our Fourth Quarter and Full Year 2020 Financial Results conference call.
Our press release announcing our fourth-quarter and full year financial results was issued after the close of market today and is posted on our website. We have also published a copy of the presentation that accompanies this call and webcast on our website and furnished such press release and presentation to the SEC on Form 8-K.
Statements made on this call and webcast include forward-looking statements. These statements include but are not limited to, our outlook for the Company, and statements that estimate, or project future results of operations, or the performance of the Company, including the potential continued impact of COVID-19 on the Company’s business and results of operations. These statements speak only as of the date hereof and the Company assumes no obligation to revise any forward-looking statements that may be made in today’s press release, call or webcast, except as required by law. These statements do not guarantee future performance and are subject to risks, uncertainties, and assumptions. Please refer to the press release and the risk factors and documents we file with the Securities and Exchange Commission including our most recent annual report on Form 10-K for information on risks uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.
In addition, during today’s call and webcast we will discuss both GAAP financial measures and certain non-GAAP financial measures which we believe are useful as supplemental measures of Trxade’s performance. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from GAAP results. You can find additional disclosures regarding these non-GAAP measures including reconciliations with comparable GAAP results in our earnings press release.
Unless otherwise stated, all financial comparisons in this call will be to our results for the comparable period of fiscal 2019.
At this time, I would like to turn the call over to Suren Ajjarapu, the Company’s Chief Executive Officer. Suren, the floor is yours.
Suren Ajjarapu
Thank you, Howard.
2020 was a milestone year for our health services IT company as we continued to innovate, grow and expand. Despite the challenges of a global pandemic, we increased revenues by 130% for the year, a testament to our team’s continued innovation, and the development of our breakthrough digital healthcare services IT platform.
Before we do a more detailed walkthrough of financial and operational results for the fourth quarter and 2020 year, for those of you new to the Company, I would like to walk you through who we are and how we are digitalizing the retail pharmacy experience through the optimization of drug procurement, the prescription journey and patient engagement.
Prior to the launch of Trxade, obtaining drug quotes as an independent pharmacy was an extremely laborious and time-inefficient process with no insight or transparency into a fair market price, or what others are paying for the same drug. Traditional wholesalers would provide unfavorable payment terms, slow delivery and create a difficult conundrum for the approximately 21,000 independent pharmacies nationwide.
We identified this market inefficiency as well as the incredible potential in these independent pharmacies, which together maintain approximately $73.7 billion in annual purchasing power, and proceeded to launch Trxade.
We designed, own and operate, a business-to-business web-based marketplace platform, bringing together the nation’s independent pharmacies with accredited national pharmaceutical suppliers to provide a uniquely efficient and transparent buying and selling process. Our platform lets independent pharmacies know that they are receiving a fair price from competing suppliers, on fair payment terms and often with next-day delivery.
We believe this radical price transparency, economies of scale and competition amongst suppliers leads up to a 10% reduction in a pharmacy’s total annual drug purchase costs, with drug-level savings of up to 90% on certain pharmaceutical products. Our platform saves pharmacists from having to manually compare prices across distributors, saving hundreds of hours of unnecessary labor annually and eliminating negative reimbursement, or fulfilling a prescription at a loss.
Our revenue model is simple – we are paid an administrative fee of up to 6 percent of the buying price on generic pharmaceuticals and up to 1 percent on brand pharmaceuticals that pass through our pharmaceutical platform – similar to a PayPal or Visa-like model.
To-date, we have seen incredible success in garnering attention from independent pharmacies nationwide, validating our business model. We currently have approximately 11,800+ registered members on our platform, representing over 50% market penetration into the 21,000 independent pharmacies nationwide.
We have leveraged our significant success since the launch of the aforementioned marketplace platform to move into adjacent, complementary businesses where we can leverage our strong retail pharmacy network and core competency in technology. These include Bonum Health, our telehealth subsidiary, as well as a mail-order pharmacy and Rx Distributor which act as an enabling infrastructure for Bonum Health’s business-to-business and business-to-consumer platform, as well as future business lines we currently have in development.
I am particularly pleased to announce the recent launch of our new subsidiary, MedCheks, which is developing a digital health passport to help facilitate the safe reopening of the global economy. To head this new initiative, we brought on James Ram, an accomplished strategist with leadership experience in the travel, tourism and location-based entertainment industries. Under his lead, the Digital Health Passport we plan to launch will leverage both state-of-the-art encryption and blockchain technology, to conceal all the private health data of users, allowing for the secure exchange of data between a passport holder and verifier. We are evaluating initial roll-out locations internationally and given the pay-per-use model, believe this could be a significant revenue driver in 2021.
During the fourth quarter of 2020 we made progress with our Trxade drug procurement marketplace adding 328 new registered members, for a year-end total of approximately 11,800+ registered members. As we continue to scale exciting new affiliated services, such as our telehealth platform and our digital health passport initiative, we anticipate continued top line growth in the coming year.
Bonum Health, our telehealth subsidiary, made significant strides in the fourth quarter to propel adoption nationwide more rapidly. We signed an exciting partnership with KPH Healthcare services, bringing affordable healthcare to the patients of approximately 100 Kinney Drug retail pharmacies on the East Coast, as well as the more than two million Rx discount card members of Kinney’s sister company, ProAct, Inc., a fully integrated pharmacy benefits manager.
Trxade has multiple subsidiaries that are well positioned within the Business to Business (B2B) and Business to Consumer (B2C) space, to synergistically help realize our vision and work to bridge this gap in healthcare.
Trxade will focus on 3 main deliverables –
The first is Drug Procurement Optimization, so that we can help reduce the cost of medications further. This expands our current offering to include primary vendor contracts and better use of cost minimizing algorithms, with the goal of prompting pharmacies to significantly increase their spend on our platform.
Secondly, Digitalization of Patient Health Services as it relates to prescription journey optimization. Customers via our app are expected to be more involved and better informed on their medications, resulting in enhanced medication adherence.
We intend to create a “smart” prescription much like we created a smarter drug supply chain. This would allow customers to get the right medication, at the right time, at a reduced cost, something that the industry has been struggling to solve effectively.
Thirdly, key to customer care is engagement, and the ability to also offer customers convenient access to providers at all times. Our e-health passport app will house vaccination certificates, and we believe our telehealth and Pharmacy services programs will make us a one stop solution for consumers looking to simplify their healthcare needs.
On the capital markets front, we were proactive throughout the fourth quarter attending two investor conferences, the Virtual Investor Summit and the Diamond Equity Research Emerging Growth Invitational – all with the goal of enhancing broader investor awareness of our company.
To simplify, we intend to bring the doctor and pharmacy into a customer’s home for their non-urgent care inexpensively and instantaneously, an almost end to end solution the industry desperately lacks.
Also, while COVID-19 has made 2020 a challenging year for many, both on a personal and business level, we were lucky in 2020 that the pandemic had only a limited effect on our operations, causing minimal delays in our supply chain, but otherwise not materially negatively affecting any of our operating results, a pattern we currently see continuing into 2021.
I would like to now turn the call over to our Chief Financial Officer, Howard Doss, to walk through some key financial highlights from the fourth quarter of 2020.
Howard Doss – Financial Results
Thank you, Suren.
Let us discuss fourth quarter 2020 results.
Revenues for the fourth quarter of 2020 increased 17.1% to $2 million, compared to revenue of $1.7 million in the same quarter last year. The increase in revenue was primarily due to revenue generated by the Trxade Platform and Trxade Prime.
Gross profit in the fourth quarter of 2020 decreased 90.0% to $0.1 million, or 6.5% of revenues, compared to gross profit of $1.3 million, or 76.5% of revenues, in the same quarter last year. The decrease in gross profit was primarily attributable to higher costs associated with Trxade Prime transactions and inventory write down.
Operating expenses in the fourth quarter of 2020 were $2.4 million, compared to $1.6 million in the same quarter last year. This increase is primarily due to the Loss on Impairment of Goodwill and an increase in employees with our expansion into Business to Consumer (B2C) sales.
Net Loss in the fourth quarter of 2020 was ($2.3) million, or ($0.29) per basic and diluted share outstanding, as a result of a $726,000 Loss on Impairment of Goodwill and a $1,081,000 inventory write down, compared to net loss of ($0.5) million, or ($0.04) per basic and diluted share outstanding, in the same quarter last year.
Adjusted EBITDA, a non-GAAP financial measure, decreased to negative $1.4 million, compared to positive $0.2 million in the same quarter last year.
Let us now discuss fiscal 2020 results.
Revenues for the 2020 year increased 130.3% to $17.1 million, compared to revenue of $7.4 million in 2019. The increase in revenue was due to revenue generated by Trxade Platform, Trxade Prime and Integra Pharma Solutions, our wholly-owned subsidiary, which revenue increased from Personal Protective Equipment (PPE) sales relating to the COVID-19 pandemic.
Gross profit in fiscal 2020 increased 17.2% to $5.7 million, or 33.0% of revenues, compared to gross profit of $4.9 million, or 65.5% of revenues for last year. The decrease in gross profit percentage was primarily attributable to higher costs associated with Trxade Prime and Integra Pharma transactions.
Operating expenses in 2020 were $8.2 million, compared to $4.7 million last year. This increase is primarily due to the Loss on Impairment of Goodwill, an increase in employees with our expansion into business to consumer (B2C) sales, IT initiatives, and non-cash compensation.
Net Loss in 2020 was ($2.5) million, or ($0.33) per basic and diluted share outstanding, compared to net loss of ($0.3) million, or ($0.05) per basic and diluted share outstanding, last year.
Adjusted EBITDA for the year ended 2020 was $0.1 million compared to $0.85 million for the year ended 2019.
Looking at our balance sheet, cash and cash equivalents were $5.9 million as of December 31, 2020, compared with $2.9 million as of December 31, 2019. The increase in cash was due to our fully underwritten offering of equity which closed in February 2020.
We do not currently foresee a need for further capital to support our business. With that, I will turn the call back to Suren for closing remarks.
Suren Ajjarapu – Closing Remarks
Thank you, Howard.
Throughout the year, we continued to drive our business forward, achieving several key milestones in our internal roadmap with a focus on innovation and development, through our various complementary growth opportunities. This is an exciting time for Trxade, and I believe we are better positioned to create sustainable value for our stockholders than at any prior time in the Company’s history.
With that, I will turn it over to the operator to begin the question-and-answer session. Operator?
Operator:
Thank you, sir. We will now begin the question-and-answer session. As a reminder, if you have a question, please press the star followed by the one on your touch tone phone. If you would like to withdraw your question press the star followed by the two and if you are using speaker equipment you will need to lift the handset before making your selection.
Suren Ajjarapu Conclusion after Q&A:
Thank you, Operator. I would also like to thank all of you for joining our earnings conference call. We look forward to continuing to update you on our ongoing progress and growth and speaking with you again on our first quarter 2021 call. If we were unable to answer any of your questions, please reach out to our IR firm, MZ Group, who would be more than happy to assist.
For any of you who may have joined the call-in progress, remember that the replay of this call and webcast will be available for the next 30 days on the Company’s website under the “NASDAQ:MEDS” link and that more information regarding the financial information disclosed on this call and webcast (including a reconciliation of non-GAAP financial information) can be found in our press release which we filed after the close of the market today.