NextPlat Corp

Good morning and welcome to the Next Black Corp 2025 First Quarter Earnings Conference Call. Certain statements made during this conference call constitute forward-looking statements. These statements include the capabilities and success of the company's business and any of its products, services, or solutions. The words believe, forecast, project, intend, expect, plan, should, would, and similar expressions and all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and known risks, uncertainties, and other factors, any of which could cause the company to not achieve some or all of its goals or the company's previously reported actual results, performance, finance, or operating, including those expressed or implied by such forward-looking statements. More detailed information about the company and the risk factors that may affect The realization of forward-looking statements is set forth in the company's filings with the Securities and Exchange Commission, or the SEC, copies of which may be obtained from the SEC's website at www.sec.gov. The company assumes no and hereby disclaims any obligation to update the forward-looking statements made during this conference call. Joining us on the call today are Charles M. Fernandez, Chief Executive Officer and Executive Chairman of the Board, David Pipps, President and CEO of Global Operations, and Cecil Monique, Chief Financial Officer. I'll now turn over the meeting to Charles Fernandez for his opening remarks. Please go ahead.

Good morning and welcome to Nexot's first quarter 2025 call. Thank you for joining us. I will begin our call with a high-level discussion of next-class development in the first quarter. Our CFO, Cecile, will review our financial results and discuss activities in our healthcare segment. Then our President and CEO of Global Operations, David, will discuss developments in our e-commerce business segment. I will then conclude the conference call by responding to questions that were submitted by our shareholders. The first quarter has seen some challenges and some positive progress in each of our businesses. In terms of e-commerce, here are some highlights. Our satellite product business continues to see steady growth and additions to our new domestic and foreign contracts. As noted last month, the tariff situation has created significant challenges, especially for the launch of our Florida Sunshine products in China, which we paused. We believe that certain constructive developments on tariffs have the potential to result in more agreeable terms if achieved. And as such, we will resume our launch plans once the situation becomes clearer. If the situation isn't resolved, it will materially impact the anticipated significant growth and contributions we were expecting late this year and into 2026. While we are hopeful for a resolution between the U.S. and China, in the meantime, we're exploring other markets for Florida sunshine. Our launch of Opco products in China continues to show steady progress. In terms of healthcare, we're making positive progress in the face of challenges faced by independent pharmacies like us from drug pricing and payer reimbursements. I am proud to say we recently received a substantial performance bonus from one of our payers, recognizing our strong execution and unwavering focus to quality. We will continue the progress in our 340B and long-term care business development efforts with new contracts coming online during the quarter. Before I turn the call over to Cecile, let me sum up the business challenges we're addressing. To be clear, as of today, the current tariff situation will make the launch of Florida Sunshine and other products we intend to sell in China economically unattractive. So we are exploring other options here in the U.S. and in foreign markets. The current tariff levels, even with a reset as currently being discussed by the administration, will effectively delay and possibly eliminate the planned growth we had anticipated for our e-commerce development program in late 2025. As a result, this condition will create substantial pressure against achieving our goal of achieving a cash-neutral position from operations by 2026, as we had originally planned. In healthcare, we will continue to work very hard to improve the overall business, and that will require a change in the focus away from our traditional retail model and toward long-term contracts and other new service offerings. To address these critical issues, with the Board's approval, We are working to strategically evaluate how best to generate and protect shareholder value. We are exploring several options at this point, including the possible sale and or merger of certain operations as well as new strategic partnerships and joint ventures. As the biggest shareholder of Nexplat myself, our team and members of our board are committed to maximizing the value of our business to benefit all shareholders. At this point, I will turn it over to Cecile.

Thank you, Charlie. I will now provide a summary of our results of operations for the quarter and our financial and cash position as of March 31st, 2025. Total revenue for the first quarter was approximately $14.5 million compared to $17.5 million in the same period last year. This decline reflects a combination of factors. In our healthcare operations, we experienced some changes in our 340B pharmacy service agreements, where certain relationships transitioned to other pharmacy partners. One covered entity opened an in-house pharmacy, and another covered entity no longer participates in the 340B program. Furthermore, we saw a decline in prescription volume during the first quarter of 2025, and was influenced in part by changes in provider relationships and shifts in patient flow due to insurance network adjustments or provided decisions to align with different pharmacy partners. Our e-commerce operations experienced an increase driven by the growth in recurring airtime revenue and the additional revenue from the outfitter acquisition in 2024. However, these were offset by a decline in hardware sales. During the quarter, we experienced a decrease in our gross profit margin. The decline in our healthcare segment was mainly driven by lower 340B contract revenue. In our e-commerce segment, gross profit was impacted by the expiration of an airtime contract at the end of 2024, which added new costs starting in 2025, along with temporary rate cuts for customers affected by service disruptions. As expected, overall operational costs decreased due to the elimination of several non-recurring expenses, such as an impairment loss from the write-down of a right-of-use asset as a result of taking the leased equipment out of service and not returning to service in the future. Stock-based compensation for grants fully vested and legal and consulting fees as it related to the merger of progressive care. We ended the quarter with approximately $17.7 million in cash. I encourage you to review our financial statements as it contains in our quarterly report on Form 10Q files with the Securities and Exchange Commission. Next, I would like to provide an update on our healthcare operations. While the retail pharmacy industry continues to face headwinds, as I mentioned earlier, we are making meaningful progress on several fronts. During the first quarter, we continue to take proactive steps aimed at improving our expense structure. While it is still early, we are actively working towards achieving cost savings through initiatives such as optimizing our delivery process and renegotiating vendor contracts. We remain committed to ongoing cost reduction efforts and operational efficiency improvements. From a pharmacy standpoint, I am pleased to share that following the close of the quarter, we received a substantial performance bonus payment from one of our payers. This recognition was based on meeting the adherence and quality measures of the enhanced quality improvement program. We also expanded our service base during the quarter by signing several 340B pharmacy service agreements, which are expected to contribute to revenue growth and provide more favorable margins compared to our traditional retail pharmacy business. This will remain a key focus area for our healthcare operations moving forward. Lastly, we continue to evaluate strategic alternatives to further diversify our healthcare operations, including opportunities in additional services, joint ventures, and other collaborative structures. We believe these avenues could deliver operational synergies and help drive top-line growth at attractive margins. I would like to turn over the meeting to David, our President and CEO of Global Operations, who will provide you with the highlights and accomplishments in our e-commerce business segment.