MedAvail Holdings, Inc.

Hello everyone and thank you for joining the Medavail's 2022 Third Quarter Earnings Conference Call. My name is Darius and I'll be the operator for today. Before I hand you over to your host, Zhiyun Yi, I would like to remind you that if you would like to ask a question during the Q&A session at the end of the call, please press star 4 by 1 on your telephone keypad. I now have the pleasure of handing you over to your host, Zhiyun Yi, Investor Relations. Please go ahead.

Thank you, and thank you all for participating in today's call. Joining me are Mark Dorr, Chief Executive Officer, and Ramona Sebov, Chief Financial Officer. Earlier today, Medivale Holdings, Inc., referred to as Medivale or the company, released financial results for the third quarter ended September 30, 2022. 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, including statements or responses in addressing your questions. 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 or in response to your questions 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, The ongoing military action launched by Russian forces in Ukraine, the impact of other global economic conditions, including any economic effects stemming from adverse geopolitical events and economic downturn and inflation or interest rates 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 2022 are based upon our current estimates and various assumptions. Any forward-looking 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 most recent periodic reports including our annual report on Form 10-K and our quarterly report on Form 10-Q filed with the Securities and Exchange Commission. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 10, 2022. MedEvail 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 Mark.

Thank you, Jian, and good afternoon, everyone. We continue to make meaningful progress in the third quarter on our growth strategy and pathway to profitability. Net revenue in the third quarter was $11.5 million, increasing 98% over the same period in 2021. Retail pharmacy services generated $11.2 million in revenue for the third quarter of 2022. representing 105% growth over the same period in 2021. Year over year, pharmacy technology revenues were essentially flat at approximately $300,000. While our overall revenue growth was strong and in line with our expectations, we experienced two events which negatively affected revenue in the quarter, which we expect to be largely transient. Ramona will walk through them in more detail. However, we believe we remain firmly on track to deliver our net revenue guidance of at least $42 million for the full year 2022. We are also raising our projections of 30 to 35 net new dispensing med centers to at least 40 net new dispensing med centers for this year. Importantly, we remain confident that we are well poised to deliver on our strategic objectives of one, Increasing net new dispensing med centers and prescription dispensing across our entire med center network. Two, driving operational efficiencies to reduce costs across our enterprise. Three, expanding our gross margins. And four, growing our pharmacy technology business. Starting with an update on the momentum we are seeing with our retail pharmacy services business and SpotRx. we ended the third quarter with 103 dispensing units, notably exceeding our key target for this year of 100 dispensing med centers in existing markets. This total represents a 13% increase from 91 dispensing units as of June 30th, 2022, and a year-to-date increase of 51%. Net cumulative deployments at the end of Q3 2022 or 104 units. We are excited to have already achieved our 2022 milestone target of 100 dispensing med centers in the third quarter. It is a testament to our team's commitment to our growth strategy to drive profitability through organic growth by broadening our footprint with current clinic partners as they build their networks. We continue to land and expand with the networks of our strong partners such as Kano Health and Oak Street Health. We continue to work deliberately with our partners to select sites that we believe are highly productive and leverage our existing hub and spoke pharmacy model. We expanded our relationship with our key clinic partner, Kano Health, and we expect SpotRx to be available to patients at nine additional Kano Health clinic locations in early 2023. which will support Kano's integration of healthy partners. This will expand our SpotRx services to South Florida from Orlando. We are pleased to continue to grow alongside Kano Health, a high touch technology powered organization with over 141 primary care medical centers, delivering value based care to more than 280,000 members. Additionally, We are pleased to announce a new partnership with Aegis Medical Group in Florida, beginning with one clinic in Orlando. Our partnership came from an interest by a physician at Aegis who understands our value proposition of driving patient and provider satisfaction and positively impacting medication adherence. We are excited for the opportunity to demonstrate the value of SpotRx across Aegis' network and expand with our new partners. Aegis has an integrated network of 25 locations and 60 affiliates across Florida. Importantly, both Kano and Aegis represent substantial expansion opportunities in Florida and will leverage our existing hub pharmacy in Orlando, reflecting strong execution on our strategy to pursue profitable growth. One of our strategic pillars is centered on driving initiatives to expand gross margin with an eye toward our target of mid-teens, while decreasing costs across our organization. During the third quarter, we achieved an 11.3% gross margin, an improvement from 8.2% during the second quarter, and continued the quarter-over-quarter expansion on margin delivered in the second quarter. Our team's focus on streamlining prescription delivery was a core contributor to margin expansion. As part of this focus, we continue to identify opportunities and implement specific measures to optimize hub pharmacy utilization, improve patient engagement, and decrease inefficiencies within our workflow. One of the measures we are putting in place to expand our gross margins is to increase our rate of dispensing generic prescriptions to provide the most cost-effective product for our patients and spot Rx, driving down medication costs and to improve medication adherence. This measure may reduce our average sale price in the near term, but importantly will result in reducing DIR fees or specifically fees charged to us by our payer plans, which in turn we anticipate will contribute to overall margin expansion. We believe that this is a key driver to improving patient medication adherence and increased utilization of our technology. In the third quarter, we reduced cash burn by 26% compared to Q4 2021, exceeding another one of our key targeted milestones for the year early. We expect to show these savings over 20% as compared to our fiscal year 2021 Q4 cash burn rate in the fourth quarter of this year. Further, pharmacy operating costs in the third quarter, excluding accelerated amortization came in 10% lower than the same quarter of the prior year. These highlights simply further demonstrate our team's focus on reducing costs. Ramona will shortly walk through some of the additional measures we implemented to drive cost savings and on our goal to achieve long-term profitable growth over time. Turning to pharmacy technology in more detail, one of our major priorities is to build this segment and broaden the reach of our MedCenter technology, which we believe is a key component to our profitable growth. We recently announced a partnership agreement with PharmtoRx Pharmacy to deploy five MedEvil MedCenters in Florida. As a reminder, within our pharmacy technology segment, we sell our hardware and importantly, license our software and systems, and provide maintenance to our platform, which is intended to create highly predictable and profitable recurring revenue for our business. We are pleased to partner with PharmPelRx and provide patients visiting these sites with the ability to consult virtually with a PharmPelRx pharmacist and fill their new prescriptions or pick up their refills at the point of care through the MedCenter, eliminating the need to make a separate trip to a pharmacy. In closing, we are focused on executing across our growth strategy and prioritizing our objectives to reduce costs and to expand gross margin. As we look ahead to the remainder of this year and beyond, our future is bright. I am confident that we are strongly positioned on our pathway to deliver long-term profitable growth and durable value for our shareholders. With that, I'll now turn over the call to Ramona to provide a review of our third quarter financial results.