MedAvail Holdings, Inc.

ladies and gentlemen welcome to the medivale's 2021 first quarter earnings conference call my name is bethany and i'll be coordinating your call for you today if you would like to register to ask a question during the q a session at the end of the presentation please press star followed by one on your telephone keypad i will now hand over to your host caroline paul of investor relations to begin caroline over to you when you're ready

Thank you, and thank you all for participating in today's call. Joining me are Ed Kilroy, Chief Executive Officer, and Ryan Ferguson, Chief Financial Officer. Earlier today, Medivale Holdings released financial results for the first quarter ended March 31st, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance or similar statements are forward-looking statements. All forward-looking statements, including without limitation, those relating to our operating trends and future financial performance, the impact of COVID-19 on our business and prospects for recovery, expense management, expectations for hiring, growth in our organization and reimbursement, market opportunity and expansion, and guidance for revenue gross margin and operating expenses in 2021 are based upon our current estimates and various assumptions. Also, management may make additional forward-looking statements in response to your questions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements and do not guarantee future performance. Accordingly, you should not place undue reliance on these statements and should not rely on them in making an investment decision without considering the risks associated with such statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section in our annual report on Form 10-K, filed with the Securities and Exchange Commission, SEC, on March 31, 2021. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 12, 2021. Medavail Holdings disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. And with that, I will turn the call over to Ed.

Thank you, Caroline, and good afternoon, everyone, and thank you for joining us. We have started 2021 with a solid first quarter of 30% sequential revenue growth from fourth quarter 2020. As a reminder, our business model has two business segments, the operation of our technology-enabled high-touch retail pharmacy using our proprietary technology and processes, known as our retail pharmacy services segments. and the sale or provision of these technologies to large customers to support their own pharmacy operations known as our pharmacy technology segment. During the first quarter, we again had meaningful contribution from both our retail pharmacy services and pharmacy technology segments. And as we discussed in our last call, remain on track to open operations in Florida in July. Our double-digit sequential revenue growth was driven by the continued strong demand for pharmacy solutions that improve medication adherence and patient satisfaction, as well as growth in our pharmacy technology business. As we have discussed on previous calls, our value proposition is fueled by our embedded on-site pharmacy model in which we are viewed as a true partner to clinics and care providers. Our on-site model consists of our proprietary robotic dispensing platform called the MedCentre, a full-time clinic account manager, or CAM for short, all backed by tech-enabled telepharmacy platform, including a central pharmacy. Let me give you a real-life example of the value of our onsite service in action. In one of our clinics, our onsite clinic account manager was reviewing the day's list of patients prior to the clinic opening. Many of these patients were customers of our pharmacy. So our clinic account manager, through the tailored CRM platform we have deployed to them in-clinic, was able to review the pharmacy status and history of the patients. They identified that a patient had not filled one of their medications and had not responded to our pharmacy outreach. We notified the doctor who spoke with the patient during their visit and confirmed the criticality of continuing to take the medication. While in the exam room, our team confirmed the medication was available in the med center in the clinic. and we were able to fill the medication for the patient prior to leaving the site. This is a great example of real-time collaboration due to the embedded nature and technology platform that traditional pharmacies, mail order, or home delivery organizations simply cannot replicate. This type of value creation is what allows us to continue to expand within the clinic networks of our current clients, as well as continue to recruit new patients within our installed clinic sites. When you combine this with our ongoing investments in innovation and the expansion of our footprint in new geographies, it gives us confidence that we are well positioned for continued growth. Now let's turn to our financial results for the quarter our retail pharmacy services revenue was $3.4 million for the first quarter of 2021 representing a 164% year over year increase and a 35% increase from fourth quarter of 2020. We opened one new site in the quarter with a number of our clinics postponing installations while they focused on COVID-19 vaccination programs. Our pharmacy technology revenues increased 430% year over year in the first quarter of 2021 to $609,000. This business segment has also experienced some delays in expected sales as some customers postponed orders while focusing on their COVID-19 response initiatives. Regarding our 2021 outlook, we now expect to reschedule a number of our SpotRx MedCenter installations towards the back half of the second quarter, as we see clinics return to normal operations once the main COVID vaccination drive has concluded. and the sites begin to ramp back up to pre-COVID operations. Given that our revenue growth is dependent on our MedCenter implementation rate, we are revising our full-year revenue guidance. We are now projecting full-year net revenue of $27 to $31 million. That said, we do expect to deploy a minimum of 45 new clinics every with SpotRx in 2021. This is the same number of minimum installs as we had previously expected for 2021. So the only thing that has changed is the install timing. We do not expect the impact of the implementation delays on revenue to persist as we return to a normalized healthcare environment and we continue to expect strong sequential revenue growth throughout the year. Despite the difficulties presented by the pandemic, as you can see, the business has continued to grow robustly, and we continue to be very excited about our opportunity to approximately double our revenue this year. Demand for our solution remains strong in the states where we currently are operating, including Arizona, California, Michigan, and very soon Florida. Turning to gross margin outlook, we project improving gross margins throughout the balance of 2021, driven by a number of specific initiatives, such as reducing the cost of delivery and improved procurement terms. Our model is highly scalable and repeatable. Continuing our growth requires us to expand to additional markets within regions and new regions. As we enter a new region, we bear the cost of building out and resourcing the central pharmacy ahead of deploying med centers to generate revenue in that region. Gross margins then expand as we recruit customers and work to acquire their full medicine cabinet, add new sites to the market, and begin to enjoy the economies of scale this brings. This trend repeats itself for every new region we enter. This geographical expansion of our network is an essential strategy to facilitate our continued growth and is expected to continue for the foreseeable future. At scale, our cost structure works to our advantage as we do not have to carry the overhead cost of the large retail store footprint that traditional pharmacy operations have. We are very excited to be entering the important Florida region in the second half of 2021 and believe this further demonstrates the highly scalable and repeatable nature of our business models. and the potential for the future growth in target markets across the US. During our last earnings call, we had stated that we were planning to open our first central pharmacy in the state of Florida by mid 2021. Today, we are pleased to announce this facility is expected to open in the Orlando area in July. This central pharmacy should allow us to service both the Orlando and Tampa areas. We are thrilled to be bringing our SpotRx technology and concierge service to the Medicare population in Florida, our fourth target state. We are also pleased to announce we have signed two significant retail pharmacy services customer agreements to deploy our pharmacy solutions in clinics with high volumes of Medicare patients. Tano Health, a leading provider of value-based care, has agreed to deploy our SpotRx solution in their four sites in the Orlando area. Second, we have signed an agreement with Access Healthcare Physicians. another leading primary care network in Florida to install our SpotRx solution in an initial four sites in the Tampa area. Access Healthcare is a multi-level service practice with more than 110 locations in Florida. We look forward to very strong and lengthy partnerships with both Kano and Access Healthcare. Overall, the Florida market remains extremely compelling to Medivale. In total, we have an annual market opportunity of $3.7 billion in Florida with hundreds of potential clinics for our SpotRx solution. Recent analysis conducted by LEK indicates that over 80% of physician groups with value-based care contracts do not have dispensing capabilities and most are assuming Part D risk. Our business development team in Florida continues to be extremely active in working to build a strong pipeline of value-based care clinics who operate within that market. I'll now touch briefly upon a key product initiative we are working on to position us for further sustainable long-term growth. Our team has procured technology to enable us to offer compliance packaging expanding our full suite of pharmacy solutions. As many of you know compliance packaging solutions bundle together different prescriptions into separate pouches labeled for each day or dose within the day. This way the patient opens one pouch per dose containing all of their required medications instead of having to remember which pill to take, when, and having to manage many different bottles at once. With some patients on 10 or more medications with varied times and frequencies of dose, you can see how this could become confusing for many patients and therefore impact adherence. A number of our current clients, especially those who provide home health services, have asked us to begin to offer compliance packaging, which is proven to help patients remain adherent to their medications. Since many of these patients are on multiple chronic medications, our new technology should enable us to bundle and clearly label their medications instead of providing them individually. We view this as an important opportunity for expansion within our enterprise customers. We expect our compliance packaging solution to go live in May. In summary, we are extremely encouraged by our progress during the first quarter and strong performance in the difficult environment presented by the pandemic. As mentioned, we expect revenue to approximately double over 2020 as a result of expansion into new geographies and customer expansions. supported by the tailwinds of value-based care initiatives and a large and rapidly growing Medicare population. With that, I'll now turn the call over to Ryan to provide a review of our first quarter financial results.