MedAdvisor Limited

So the format for today is for Rick to walk you through the results released this morning, which should take about 20 minutes. This will be followed by a 10 to 15 minute question and answer session. And we aim to finish around 11.15 today. Again, if you'd like to ask a question, please click on the Q&A ribbon below and type your question in the box. Alternatively, click on the raise hand icon and I'll open the mic at the appropriate time. We'll endeavor to get through as many questions as we can. I'd now like to hand the floor over to Rick, who'll get us started. Thanks, Rick.

All right. Thanks, George. And good morning, everyone. I want to thank you for joining us today for our fourth quarter FY25 update. And before I get started, I want to reiterate the welcome to Sean Slattery, our incoming CFO, and welcome him to the MedAdvisor team. So with that said, if we can turn to, well, we're on slide three. That'll work. So this morning, I'm going to provide a quick business summary, and then I'm going to walk through the ANZ and U.S. business results details. Unfortunately, we have downgraded our FY25 guidance and so I'm going to walk through some of the details associated with that as well. I'll provide a quick update on our strategic options review process and what to expect from here and then spend some time providing a little color on the U.S. landscape at present and our strategy for best navigating as we move forward. And then we'll finish with a discussion on our FY26 priorities and the outlook for the year. So if we can move to the next slide. As the subtitle indicates, we've continued to experience headwinds through the fourth quarter largely associated with the U.S. business. With that said, we've been working diligently in the background, positioning the business to take advantage of some of the tailwinds that I'll spend some time talking about later in my comments. So let's review first key highlights from the quarter and starting with the U.S. business. Although we saw marked improvement in vaccine-related revenue over the prior corresponding period, continued short-term headwinds, due to delays in program launches across categories resulted in a notable decline in our U.S. results. And we'll go into more detail on that in a few minutes. Looking ahead, as we look at FY26, we do have a solid pipeline, which gives us some confidence in the outlook in the year ahead. And again, we'll talk more about that in a few minutes. In Australia, the business continued to perform strongly in the fourth quarter, and the big news there being the sale of the ANZ business. So if we look at the group level very quickly, following the ANZ sale, the receipt of the initial $27 million in proceeds were utilized to discharge all of the outstanding debt. And as of the 7th of July, we were just over $16 million in cash on hand in the bank. The strategic options review, as is now turned to focus on the US business, in addition to the substantial improvement and programs that we have underway, there is a possible divestment of this business as the board is considering various options. Further update on this will come along in the quarter, and we'll talk a little bit more about this in a few minutes as well. As announced in April, Linda Jenkinson, our former chair, decided to step down from the board. She's been replaced by Kate Hill, who is the interim chair. And more recently, we announced the departure of our Chief Financial Officer, Ansela Desai. And as many of you know, Ansela has been instrumental over the past three years in working with myself and the rest of the team for MedAdvisor through a significant amount of change and transformation. And we're very grateful for all of the leadership and the support that she's provided during that period of time. As mentioned a minute ago, Sean Slattery has taken over the CFO and company secretary role as of July 21st. And then again, we're going to talk about the FY26, I'm sorry, the FY25 guidance here in a moment. So if we'll move to slide 25 very quickly, the Australian business has now been divested, as I mentioned. So this slide's really provided for completeness as the ANZ business did contribute to the fourth quarter results. But it's suffice it to say that the business experienced a strong quarter, benefiting from initiatives over the past few years. I do want to acknowledge that I'm very pleased the business has moved to a good home. And Wayne Marinoff, our former general manager of the A&Z business, is going to continue to lead the business going forward as the CEO. So if we'll turn to the next slide, we'll go to the U.S. business. Revenue for the quarter was $10.1 million AUD, which represents a 34% decline compared to the prior corresponding period. This result reflects a softer operating environment and the impact of approximately $4.8 million in deferred health program revenue. So this is contracted revenue that was to run in the quarter and late in the quarter was determined that it would move into the first quarter of FY26. On a more positive note, vaccine revenue actually rose 52 percent year over year with growth driven by pneumococcal growth. vaccine programs primarily in a couple of other categories. In this category, there were several vaccine programs actually that were also subject to late quarter delays that affected the full revenue potential in the quarter. Both general and specialty medication revenue declined compared to last year. These declines were largely due to broader industry challenges that led to program deferrals in the quarter, and we'll see the results of that as we look into FY26. There was a case with one specialty program, budget pressure from that brand moved that program out as well. And then there were a number of programs that we have been working on through the year that we're expecting to not only see run in the second half, but restart for some programs. Thrive programs contributed to about 40% of quarterly revenue, slightly below the prior year. This was really the result of some adjustments in our program mix, partially due to some planning in relation to the transition to our new platform. Gross profit and gross margin were both lower year on year, reflecting the overall revenue decline, but also reflecting allocation of platform costs that started at the beginning of the financial year and have carried on through the first quarter, and in an unfavorable mix on the product side during the quarter. So lastly, I highlight the pipeline I mentioned a moment ago. It is currently valued at around $125 million. unweighted, which gives us a high level of confidence as we look into FY26, and we'll comment towards the end of the presentation. So turning to the guidance, despite a solid pipeline actually going into the fourth quarter, Market conditions continue to be challenging, and there were some continued budget pressures, but more so there were delays in health program activations that were affecting the overall revenue. And I've mentioned this a couple of times. Following the recent finalization of our accounts, but still prior to audit adjustments, we are revising the guidance for FY24 down. Revenue for FY20, I'm sorry, FY25. Revenue for FY25 is now expected to be around $88 million AUD, primarily reflecting the shift in programs that I mentioned earlier. Due to the later than anticipated program starts in the fourth quarter and some updated government guidance on vaccines, as I mentioned a minute ago, approximately $4.8 million of revenue that was originally expected to drop in the fourth quarter has now been deferred in the first half of FY26. Despite the headwinds, our overall gross margin is expected to remain stable at around 60.8% for FY25, consistent with FY24 levels. Finally, the EBITDA guidance is now expected to decline to a loss of around $6.5 million to $7.3 million. So if we'll move to slide A on the strategic options, I've already covered much of this content, so I won't dwell on the slide except to say that the ANZ business or the ANC sale has put the company in a stronger capital position and the awards focus has now moved, as I mentioned earlier, to reviewing the path forward for the U.S. business. One option being considered by the board is the possible divestment of this business, and discussions are underway with a number of interested parties. As part of this review, the board is considering capital management options, including a possible capital return, and we plan to provide further updates during this quarter and wrap up the review by the end of the year. So now if we spend a few minutes on the U.S. business, if we'll go to the next slide, spend a few minutes talking through these different categories. As I mentioned previously, we're seeing trends in the United States that are significantly reshaping the pharmacy and pharmaceutical landscape. Starting with the pharmacy industry in the upper left-hand corner, There is a shift toward what we call direct-to-consumer models, which is reshaping patient engagement type programs. It is lengthening cell cycles in some situations. Investment from the pharmaceutical manufacturers is focused on specialty medications and disease management. And the fragmented channels across spend in the pharmaceutical organizations is driving a more significant demand and more focus on clear return on investment. And while we are seeing vaccine programs or vaccine funding remaining important with these organizations, because of public policy changes, we are seeing some level of market uncertainty, but there definitely will be spend in these categories. in the pharmacy sector major u.s pharmacy chains like cvs and walgreens are under significant financial pressure closing stores and shifting to new digital first strategies which play to our advantage but there are experiencing significant pressures on their margins And we've seen some of this most recently with the privatization of Walgreens through a private equity transaction and Rite Aid's recent bankruptcy. There's also the challenge with digital disruptors in the market, such as Amazon. who are raising consumer expectations. But at the same time, we're seeing vaccine administration be a key driver for pharmacy store traffic and profitability across different categories of vaccinations, such as flu, RSV, COVID, shingles, and in particular pneumococcal vaccines. The competitive environment has become more fragmented with the rise of the number of niche digital vendors, which is challenging our ability as we're working with the DTC brand groups in maximizing brand budget allocation to the Medivisor programs. We're also seeing agencies who are representing the brands are becoming much more cautious. The planning cycles are getting somewhat longer. And as I mentioned a minute ago, the focus on return on investment is increasing significantly. And in addition to all of this, we have reduced our sales team significantly, and so our in-field presence is much lower than it has been in the past, which is affecting our brand and agency engagement, and I'll talk about that more in a minute. So finally, on the government side, regulatory pressure around drug pricing and direct-to-consumer oversight is increasing brand caution, pharmaceutical brand caution, and market uncertainty. Changes to vaccine coverage and funding combined with the recent vaccine advisory committee upheaval from RFK Jr., have impacted confidence and trust across the industry. So this uncertainty is impacting not only pharmacy readiness, but timing of brand investments. So in summary, it's a very dynamic and somewhat disruptive environment but with the right strategy we believe that there's still significant opportunity even in the face of these challenges so if we'll turn to the next slide so in the face of this market disruption we're actively resetting our commercial strategy to unlock growth going into fy26 our business development team is is being rebuilt to strengthen brand engagement expand our account penetration and establish new agency relationships. So there is a renewed focus on agencies and the expected increase in business development capacity going into FY26, particularly in the first half, we believe will help support faster pipeline conversion as well as position as well for a very strong second half. So we're also tightening our sales qualification criteria to prioritize high conversion brand funded opportunities. So in relation, we're expanding engagement with some of our top pharmaceutical sponsors we've been working with for a number of years, including Pfizer, GSK, Merck, Novo Nordisk, Dexcom and others. So the intent here is really to strengthen our position and gain a higher share of wallet as as we build out our sales team as well as our account management group. So operationally, we've restructured our account management team under our customer success leadership. to improve execution and retention. A dedicated team is now in place and focused on program delivery. So there's an operational aspect to our account management function. And there's also a coordinated effort with our business development team on client-facing related activities around relationship development, program renewals, and upsell of other services and opportunities. So we're also taking our insights from the fourth quarter to better anticipate client delays and bolster program readiness. We did experience a number of delays that were not expected, moving revenue from fourth quarter into the first half of FY26. And the efficiency of getting these programs through their process and launched is a challenge there. in managing that not only with the pharmaceutical manufacturers, but ensure we're as efficient as possible within our own operations. So we're also looking very closely at aligning our channel delivery and program design so that we're matching our retail customers and pharmaceutical partners' expectations. Getting the right alignment helps us to ensure programs get into production faster, and it also streamlines the sales cycle. In addition to that, we're continuing to focus on our in-pharmacy print solution. It continues to be the foundation. We have a much stronger moat around that particular offering and it provides the most reach for our market. And then we can provide surround sound type capabilities with our digital function as we expand our pharmacy network capabilities. And then lastly, we're very excited to launch our next generation engagement platform that's going to empower pharma and pharmacy partners to more easily build tailored, data-driven patient engagement programs faster and at a lower cost. So if we'll move to slide 11, we can now look at our FY26 priorities in the Outlook. So key priority, as I've already mentioned a couple of times, is for us to complete the US commercial team restructure alongside with scaling our customer success operations. These changes are critical to improving execution and ensuring that we can better serve our clients across the US market. In Q2 FY26, we're set to launch the next generation of our patient engagement platform that we've talked about quite a bit up to this point. This is a significant milestone for us and is going to be a key driver for expansion of our digital capabilities with our pharma and pharmacy partners. We're also strengthening and expanding our U.S. pharmacy network relationships to reduce execution risk and build greater resilience into our program delivery model. This will support more consistent performance and better program outcomes across the board. It's extremely important to the future growth of the business. Transformation 360 will remain a core focus throughout the year as we continue to streamline operations, redesign business processes, and manage organizational change much more effectively. And then another important milestone again will be the completion of our strategic options review process, which we will provide more updates on that here in the near future. So turning to the outlook on the right side, from a market perspective, we're entering FY26 with a strong pipeline, as I've mentioned a couple of times. Based on this, we're confident in delivering a 15% revenue growth over FY25 in FY26. While we expect vaccine-related revenue to be below prior year levels, we do anticipate the restart of a number of delayed general medication programs in the first half of the year. And in addition, we have good visibility to expansion of our specialty medication revenue, and we expect that to grow meaningfully through the year. So, importantly, we've been focused on reducing our cost base, particularly through the second half of FY25, and we'll continue to focus on that, as I've mentioned, in launching our new platform. But in relation to all of this and the cost reductions that we've done in February and April timeframe of this year, we do expect that FY26 operating expense to be in the United States. to be down around 10% from FY25, and it'll be down around close to 30% from FY24. So with that, I think that concludes my statements for the presentation, at least. I appreciate everyone's time, and I will hand it back to George to see if there might be any questions.

Thanks for that, Rick. Yep, there are a few questions. Just as a reminder, if you would like to ask a question, please click on the Q&A box in the ribbon below and type your question into the box. Alternatively, you can click on the raise hand and I can open your mic at the appropriate time. Rick, first question says, are you going to spend the, he says our cash, but I guess the proceeds of the sale in the United States

No. The net proceeds from the sale after discharging the debt have been set aside, and the intent at this point is not to use those proceeds in the United States. This would include the expectation of the holdback that is yet to come. That's the additional $8 million AUD that we would expect to come in before the end of the calendar year 2025. Thanks, Rick.

Next question. If you divest the U.S. business, what is left? And does the company become an ASX shell company?

That's a good question. If there's a divestiture of the U.S. business, there are several different options that are being reviewed with our advisors in Australia. And Sean is involved in that as we speak to determine what that structure might look like. But there's no specific answers to that question at this point in time. And it's not a given that, by the way, that there will be a divestiture. That is an option that's being reviewed.

Thank you. Next question. I calculate the US revenues to be around AUD 63 million for FY25 and gross margin at around 33 mil, based on a margin of 53%. What is the cost base of the US business now? And is that margin expected to improve in FY26?

So the revenue sounds correct. I'd have to, Sean, I'd have to come to you for some help on this if you have the data. If you don't, we may have to come back.

No, I'll have to come back to the person asking the question. I'll take this question on notice just because I don't have it readily available.

All right, that's fine. Thank you. We'll come back to you on that one. Yeah. With all the changes impacting the US business, are you still expecting revenues to be skewed to the first half 26? Or is that or has that changed?

Because there is still some emphasis on. vaccine-related programs and an expectation that vaccines will continue to be a part of the business, maybe not at the same scale. There will be some skewing towards the first half, but probably not to the same scale as what we've seen in the past.

All right, great. Next question. Do you think that your management team has lost their focus on how pharmacy retail wants to interact with pharma based on your pricing model and objectives?

Could you repeat that question? Yeah, sure.

Do you think that your management team has lost their focus on how pharmacy retail wants to interact with pharma based on your pricing model and objectives?

So, There's probably several different elements to that question. First of all, the management team is continually assessing the environment and the nature of how a pharmacy, that's part of the question, would like to engage with pharma is definitely something we're continuing to evaluate. Now, keep in mind, that whether you're a pharmacy in the U.S. or you're a pharmacy in Australia, the pharmacies are always interacting with pharma in various ways, sometimes through a wholesaler because they're working on distribution, sometimes with the media side of a – of a manufacturer because they do in-store advertising, as an example. This is more physical advertising in the store. So this could be, you know, this is not digital, this is not technology. So we are continually working with the retail pharmacies to determine the best way to be their partner to help engage their customers with pharma-sponsored kinds of communications and drive awareness and adherence of different kinds of products. So that's the key. Now, the pricing issue is different. So the question might be in relation to vaccines as an example, which is an area that we're taking a look at. Vaccines has been about 30 to 40% of our revenue, and I would expect it to continue to be in the 30% range even going forward. However, the way that we run those programs and the pharmacies on behalf of pharma, that model could change over time. Now, that's for a variety of reasons. That's not just because of the pharmacy. That's also because of the government and regulatory issues. So we have to balance what the pharmacies are looking for with pharma and the pricing models and structure for these programs that are compliant with regulations. So the answer to the question is not easy, assuming I'm understanding it correctly, but it is something that is core to our business and we have to continue to evaluate.

Thanks, Rick. Next question. Given the uncertainty in the U.S. business, does it make sense at this stage to consider a capital return especially if the US business has not been cash flow positive for many quarters. And the $16 million in cash provides the business with some flexibility.

That's a part of the analysis that's being done relative to the capital management strategy. And I would say, you know, at this point, given the, you know, where the businesses come from, our strategic options evaluation process in combination with capital, um the process is to look at opportunities in the u.s and australia while we're also running the business uh we've got to you know continue to look at you know all of those components and um that particular point is a valid point and kind of plays to the question on the appropriate utilization of available funds. And does that make sense for the business, but does it also in alignment with shareholder expectations? So we've got to work through that, particularly in the next 30 to 60 days.

Great, thank you. Next question says, you say 15% revenue growth. How much is that in dollars? I think the question is probably around when you refer to 50% up on FY25, is that the reported FY25 number or the U.S. portion of the revenue?

The 15% growth would be off of the U.S. revenue base. So take that number times 1.15 and you got to, or times 0.15 if you just want the net.

Yeah. Great. Thanks. Next question. Can you clarify the senior exec KPIs for FY26? Is there a reference to the sale of the US business?

There, the, we're in the, because of, Because of the process we're going through, we're in the early stages of finalizing the KPIs in FY26. The KPIs are focused on revenue growth, margin protection, product expansion, deployment of our new platform, et cetera. Those are kind of the categories. the transaction, if there is a transaction to be had in the United States, that's somewhat of a separate conversation, a separate set of objectives.

Thank you. I'm not sure you're going to be able to answer this one, but what's the expected EBITDA in FY26?

I would say at this point, we've got, we're working through, you've got an idea of what our focus is on revenue. And there's a good indication of where we're at relative to OpEx. So I'll probably just leave it at that. I think we've provided, I think we've provided the metrics to be able to to make some determinations there.

Next question, it says, is the business cash break even?

The business, it varies by time, you know, over time. At this point, given the level of revenue, as we brought down the cost basis, we're very close. But it's... It's dependent upon the revenue growth.

Okay, thanks. Back to this growth, it says, looking at the guidance, is revenue growth including the 4.8 million deferral? And then it goes on to ask, is it 15% based on the group number or the US number, which you answered earlier? But I guess back to the first part of the question, does the revenue guidance include the 4.8 million deferral?

Yes, that's deferred revenue we've recognised across FY26.

Right, thank you. You're talking about the FY25 guidance.

What are you talking about? Or your 26 guidance? It says looking at the guidance, is revenue growth, no, it's talking about the 15% revenue growth, including the $4.8 million deferral.

Yes, it's in the, it's, yes. Yes.

That will form part of FY26 revenue.

Yeah. Correct. Thank you. Next question. How much of the 8 million holdback are you expecting to realize?

At this point, we're working towards realizing the entire amount, unless told otherwise.

Given the stated outlook in the presentation for FY26, you should be able to state the outlook. Sorry, you should be able to state the outlook. Okay, I think he's just saying, given your outlook statement, you should be able to provide revenue profit and EBITDA guidance. It's not really a question, it's more of a statement.

If not, we've given the guidance that we're planning to give at this point.

That looks like to all the questions at this point in time. So what I might do is I might just hand it back to you, Rick, for any closing remarks you might want to make.

Okay. Yeah. No, thanks, George. And I appreciate everyone taking the time to spend with us this morning. We have been on quite a journey over FY25. And we've experienced a number of challenges. With that said, we are very focused on transforming the overall business. And going into FY26, we remain very confident that the best opportunity to engage patients in managing their medications continues to be through the pharmacist interaction with that patient. So we believe we're in the right space. We believe we're making the right investments relative to our new platform. We're bringing down the cost basis. We're restructuring our commercial team. We're building for success and for turning this business around in FY26. So I appreciate everybody's time today. I appreciate everybody's patience with with all of the change that's been going on through this business. It's been been a significant challenge. There's no question. We do believe in the base fundamentals. of the business in the direction and we're in the right place we have got to execute at this point and we've got to convert our pipeline and bring value to our customers and that'll turn into value to our shareholders so i appreciate again the time and george i will turn it back to you and to wrap things up and thanks sean for joining us yeah yeah thanks rick and thanks sean um

I'll also add my thanks to everyone for joining us today. That wraps up the proceedings and I'll invite you all to now disconnect. Have a nice day.