Progressive Care Inc

Thank you for joining us for the Progressive Care 2021 Auditive Financial Report and Conference Call and Investor Update. We will be joined by members of the team from Progressive Care in just a moment. But before this call gets started, please allow me to read the forward looking statements. can be found within every press release and every filing with the Securities Exchange Commission. So you need that ticker symbol to find it, RXMD. And statements made on this call that are not based on current or historical fact are forward-looking in nature and constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933. and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements reflect the company's expectations about its future operating results, performance, and opportunities. That involves substantial risks and uncertainties when used herein on this call. The words anticipate. Believe, estimate, upcoming, plan, target, intend, and expect, and similar expressions as they relate to Progressive Care, Inc., its subsidiaries, or its management are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to the company at the time of this call and are subject to a number of risks, uncertainties, and other factors that could cause companies' actual results and performance problems. prospects, and opportunities to differ materially from those expressed or implied by these forward-looking statements. Joining me on the call right now is the CEO and chairman of the company, Alan J. Weisberg. Alan, the call is now yours. Go ahead.

Hi, good afternoon, and welcome to the earnings conference call for the year ended December 31st, 2021. I am Allen J. Weisberg, Chief Executive Officer and Chairman of the Board of Progressive Care, Inc. Joining me today are our Chief Financial Officer, Cecile Bruta, our Chief Operating Officer, and our Director of Administrative Services, Bob. 2021 was the most challenging and interesting year for Progressive Care. Our team dealt with constant COVID outbreaks, which left the company short staffed pretty much throughout the year. Due to the extremely difficult labor markets here in Florida, We had limited opportunities to hire new talent and to fill positions such as pharmacy technicians, drivers, customer service reps. We also encountered COVID impacted supply chain delays. The pandemic kept patients from visiting their doctors as often as in the past, which led to doctors prescribing less new therapies and authorizing less refills. This introduced the delay in patient medication adherence, or in extreme cases, patients forgoing their medications entirely. And on top of it all, the switch to a new software platform did not go well, as it did not deliver as expected. The software could not handle the large volume of prescriptions that we fill every day. This led to continuous service disruptions that ultimately caused the loss of prescriptions. Our patients and physicians who had previously received exceptional service from us very quickly began to get disappointed and transfer their business elsewhere. We also lost business from new healthcare organizations that were in the process of onboarding and decided to hold off on sending their business. We also had to delay marketing for new business as a result of the software difficulties. As a result of all the performance issues we have experienced with the new software during the second quarter of 2021, we made the decision to reimplement our previously pharmacy software during the third quarter of 2021. As the continuous lack of performance with the new software had a severe impact on our pharmacy operations and results that were not sustainable. Since reimplementing of our previous pharmacy software, we have experienced a drastic improvement and quality of our service to patients. We now have more efficient workflow and quicker turnaround on deliveries, which provided us the ability to rebuild our reputation with providers. We have experienced a 10% increase in prescription revenue from Q3 2021, 8.1 million to Q4 2021, 8.9 million. We have also experienced an 8% increase in prescriptions filled from Q3 2021, 106,000 to Q4 2021, 114,000. I am grateful and proud of every single member of our team as they have shown a level of courage dedication, and determination despite the challenges that 2021 brought us. They made 2021 a record year by expanding our COVID-19 business and generating millions of dollars in revenue while also continuing to build a strong reputation in the 340B sector. We were also able to position progressive care to become an SEC reporting company. This is a very important step towards uplisting the NASDAQ, which would lead to a number of advantages, both to the company, such as access to better capital markets and capital resources, and also to its shareholders in the form of better liquidity and enhanced value. We have filed a registration statement with the SEC on form 10-12G and expect that our new registration statement will become effective in April 2022. We then expect to file an amendment to form S-1 with audited financial statements for the year ended December 31st, 2021. Upon satisfactory completion of the SEC staff review of the Amendment Form S-1, if declared effective, we will be in a position to become listed on the NASDAQ capital market, if approved by NASDAQ, and complete our intended public offering with the assistance of investment advisors and underwriters. The price and net proceeds of our intended offering has not yet been determined. However, any proceeds would be used for working capital purposes, further enhancement of the various digital platforms and our Claremetrics subsidiary and possible acquisitions at other geographic markets that we seek to serve. And now I'd like to turn the call to our COO, Bruta. She will discuss the company's operational issues and successes in more detail.

Hello, everyone. As with other healthcare companies, 2021 was a tough year for progressive care. We were challenged by the unforeseeable events associated with COVID-19 variant outbreaks throughout the end of the year. We suffered many of the same problems that other businesses experienced during the year, such as extended labor shortages due to either illness or family leave, hiring difficulties due to a shortage of qualified workers in the labor market, and logistical problems related to prescription drug delivery. And as Jay previously mentioned, the switch to the new pharmacy software had an unexpected negative impact on our ability to provide level of service our company is known for. These conditions, for the first time in many years, led to a decrease in the volume of prescriptions filled during the year, as well as corresponding decrease in pharmacy revenue as compared to 2020. The losses in pharmacy revenue were offset by increased revenue year over year from COVID-19 testing. So by year end, our total net revenue for the year was about $39 million, virtually unchanged from 2020. We also experienced significant cost pressures, such as increases in drug costs from our major suppliers. higher delivery costs due to fuel price increases, and other cost increases introduced by inflationary conditions in the later half of 2021. The labor problem led to salary increases to existing employees and a higher pay rate to the new employees to remain competitive with other companies in the geographic locations that we serve. PDM fees increased to over $2 million in 2021, a $700,000 increase year over year. These fees are withheld from our third-party payer remittances. We received higher reimbursements from third-party payers during the year, but the increases were insufficient to keep pace with the cost increases. Despite the challenges, we would like to share some highlights. such as our increased presence as a leading COVID-19 testing center in South and Central Florida. We earned over $4.3 million in testing revenues during 2021, a $3.7 million increase year over year. The company's management team successfully executed on establishing itself as a trusted and reliable provider of COVID-19 testing services for international travelers, as well as major entertainment production companies, some of the most recognized names in the entertainment industry. It is difficult to predict whether COVID-19 testing will recur at a level experienced in 2021, but we will continue to build ourselves as a dependable destination for rapid testing solutions with plans for future expansion into other diseases such as drugs, and sexually transmitted diseases, testing for various allergies, woman health, and more. 340B revenue includes both dispensing revenue from our pharmacy operations and third-party administration fees from our ClearMetrics subsidiary. Total 340B revenue remains strong, earning over $2.8 million in 2021. Total billing on behalf of covered entities was approximately 19 million in 2020 work. ClearMetrics provides data management and third-party administration, or TPA, services for 340B covered entities, pharmacy analysis, and programs to manage measures such as medication adherence. These offerings cater to the glaring need for the frontline providers to understand best practices, patient behaviors, care management process, and the financial mechanism behind these decisions. We provide data access and also deliver actionable insights that providers and support organizations can use to improve their practice and patient care. The company, TPA Services, includes management of wholesale accounts and contract pharmacies, patient eligibility with regard to the 340 drug program, development and review of 340 policies and procedures, and management of receivables. We continue to excel in our 340 pharmacy services and third-party administration services, as well as COVID-19 testing services. Our 340B business has been strong as we added eight new contracts for PharmCorps S340B pharmacy services and six new contracts for third-party administrative services performed for 340B covered entities by our subsidiary, ClearMetrics. Our core pharmacy business continued to recover through the fourth quarter. Our pharmacy counts have gradually increased in all of the regions that we operate. We are confident we will continue to see a turnaround in our script number, and we project significantly higher script counts during the remainder of 2022. Our company's business plan remains the same, to continue our transition to a model centered on prescription delivery, a continuous development of digital solutions, medication therapy, medication adherence management, and an improvement in overall experience for providers and customers that meet the needs of the surrounding communities in a value-based healthcare environment. Patient medication management remains a glaring hole in our nation's healthcare system, as patients' adherence to medication therapy remains a big problem. Year after year, certain studies conclude that patients receive suboptimal medication management. Patients non-adhering has a direct impact on our provider and pharmacy performance ratings, which also have a significant effect on revenue earned. Certain studies have shown that patients better adhere to their medication therapy when they receive more information about their treatment. Digital access to that information remains one of the best means of information delivery to patients. So we believe in our digital solutions. Our push towards the use of chat and text messaging tools to communicate with our patients as well as their providers. And our current partnership with Podio will better meet the needs for delivery of that information. are having amazing progress in communicating with doctors offices, utilizing certain communication tools. It is absolutely outstanding to see how the platforms we're using make the two-way communication with offices, physicians, and their staff seamless and productive, allowing the pharmacy staff or the physician staff to use their time providing better patient care that would have been otherwise spent on a traditional phone call process that takes sometimes a lot more time. So imagine calling any chain pharmacy. And if you need to speak to their staff or pharmacist, you might be waiting 10, 20 minutes on hold until you can be helped. With PharmCon, doctor or staff can send a message. and get their answer or have problems solved almost immediately by one of our many available team members. I am confident that we are one of the few medication management providers that provide such communication tools that allow physicians, offices, the ability to have a direct line of communication to all of our pharmacy departments, including logistics, and senior management at all times. For us, it is another tool that makes the relationship between pharmacy and providers very sticky. Carlos Arangel, the company's head of digital transformation, is spearheading this project with me and doing an outstanding job. Thank you, Carlos. We will continue to expand the use of digital communication tools and expect to have many more providers convert to this new and productive way of taking care of business better. The COVID-19-related crisis in labor markets have affected everyone, including organizations that we work with. Doctors' offices are short of medical staff, which makes it more difficult for them to focus on anything besides seeing patients. Not having enough time in a day sometimes means failing to stay on top of a patient's medication adherence measures. But with our pharmacy services, we consistently go above and beyond any other healthcare organization. And this gives us an opportunity to earn the level of trust and confidence from providers and decision makers that is very aware within this industry. Seeing this as an opportunity, We began offering to providers and NIH care organizations a service that allows them to rely on our staff to contact their patients for the purpose of introducing our pharmacy services. We began providing the service very recently and we like the results. We believe the service will enable us to have stronger conversion numbers of new patients and therefore will result in more prescriptions dispensed and stronger prescription revenue. We follow innovations in healthcare very closely, and we are always looking for ways to implement new technologies so we can provide a faster, better service to patients and be as cost-effective as possible. Some of the solutions we look for are in robotics, which can be an expensive investment in the long run, but will provide a good return on our investment. In our past conversations, we have talked about using prescription medication kiosks that allow the pharmacy to dispense prescriptions remotely. The idea is for physicians, while seeing a patient, to send a prescription to the pharmacy. And while patients check out for appointments, Pharmacy staff would process a script and it would be ready for pickup at a robot kiosk, which is located right in a doctor's office. We've been looking and we're involving conversations with a potential partner. But after completing our due diligence, we have decided to continue looking for a stronger partner. I believe today we have found that type of partner. While we are still in the early stages of our talks, and they're not in a position to disclose much more information, we believe this could be the right partnership. We have very good ideas as to how this technology can create more value and very excited about the potential impact this robotic system may have on our growth, increasing our margins and market share. As we said previously, we continue to experience cost pressures from our other operating costs. as our same and next-day prescription deliveries continue to be one of our key differentiators from our competitors. We are incurring increasing costs in delivery costs, notably fuel. A 38% increase in fiscal year 2021 over 2020 and nearly 80% increase since the beginning of 2021. We are evaluating alternatives to regular gas-based delivery vehicles, such as hybrid or fully electrical vehicles, and hope to see an improvement in a car manufacturer's production and pricing as chief manufacturers and the world coming back to business as usual. Electrical vehicles should provide us with material savings in delivery costs and enable the company to have a positive impact on the environment. We continue to provide rapid detection testing for patients at our locations. Our testing sites are equipped with analyzers capable of detecting positive or negative COVID-19 results within minutes. Each site is operated by clinically trained pharmacy staff and administering tests on and off site. The company has established a reputation as a reliable testing partner and currently provide testing services to international travelers and international airlines, chain restaurants, U.S. and international production and entertainment companies, and local healthcare communities. Our testing system allows a patient, employer, or coordinator in charge to schedule a test, pay for a test, and access test results with minimal effort. We are a recognized leader for these testing systems in Florida, and we have maintained this competitive edge as the country continues to deal with the virus. We believe the need for testing will continue throughout 2022 as new variants of the COVID-19 virus emerge and travel restrictions requiring vaccinations and COVID-19 testing remain in force. Luckily, While the numbers of COVID positive cases have dropped significantly, our reputation of a reliable COVID testing and compliance solutions provider to many organizations is still working well. We are being engaged in many productions and continue to be a preferred testing destination for international travelers. I am excited and I am confident we are on our way to achieving record performance in 2022 again. Thank you, Beth, Eugene.

Thank you, Virupta. Let's continue with a summary of our annual financial report, which provides you with our financial position as of December 31st, 2021. Our results of operation and changes in stockholders' equity for the year ended December 31, 2021, and our cash flows for the year then ended. The financial statements in the report were audited by our independent public accounting firm, Daskal Bolton, who issued an unqualified opinion. Please be sure to review our financial report, which is available both on the OTC Markets website, as well as our website. Cecile, our CFO, will walk us through the financial results.

Thank you, Jay. Good afternoon, everyone. We are proud to report that despite the challenges we have experienced, we ended the year strong and have profitable annual earnings for 2021. For the years ended December 31st, 2021 and 2020, we recognized overall revenue from operations of approximately $38.9 million in both years. This included revenue from COVID-19 testing of approximately $4.3 million and $600,000 in 2021 and 2020 respectively. We have sold approximately $443,530,000 during the 12 months ended December 31st, 2021 and 2020, respectively. A 16% year-over-year decrease in the number of prescriptions filled. Garuda has outlined some of the reasons for the downturn in prescription revenue, most notably from causes related to the COVID-19 pandemic, as well as some operational issues we have encountered which we believe has been remedied. Since we have experienced a 10% increase in prescription revenue from $8.1 million in the third quarter of 2021 to $8.9 million in the fourth quarter of 2021. In addition to the increased revenue, we have also experienced an 8% in prescription sales from approximately 106,000 in the third quarter of 2021 to 114,000 in the fourth quarter of 2021. Growth profit margins increased from 23% for the year ended December 31st, 2020 to 26% for the year ended December 31st, 2021. COVID-19 testing and 340B revenue continue to be the leading contributors to the increased growth profit margins during 2021. Our operating expenses increased by approximately $1.3 million, or 13%, for the year ended December 31, 2021, as compared to 2020. The increase was mainly attributable to the following. Increase in salaries, wages, and employee-related expenses due to year-over-year salary increases, performance bonuses, employee turnover, and time invested in training on pharmacy software of $700,000. Increase in board of director fees of $200,000. Increase in delivery costs due to increases in fuel prices and vehicle maintenance of $100,000. Increase in consulting fees of $100,000. Increase in the data conversion expenses due to pharmacy system implementation of $100,000. and an increase in other operating expenses of $100,000. The loss from operations increased by approximately $100,000 for the year ended December 31, 2021, when compared to 2020, as a result of the increased operating expenses. Despite the challenges we encountered during 2021, the company managed to achieve positive EBITDA of over $167,000 for the year, compared to EBITDA of $7,000 for the year ended December 31, 2020. Our cash position was over $1.4 million on December 31, 2021, and we expect our cash position will remain around this level for 2022. That completes my remarks on the financial results for fiscal year 2021. Back to you, Jay.

Thank you, Cecile. Our outlook for 2022 and beyond is positive. We regained some of the lost pharmacy counts during the fourth quarter of 2021 and the first quarter of 2022. We added new 340B TPA contracts that will continue growth in our clear metric subsidiary. We continue development of our digital platforms. The company expects that growth and these revenue components will continue at a level at or above the growth experience in the latter part of 2021. We believe that our fourth quarter 2021 performance and activities have provided us with good momentum and we expect first quarter 2022 performance to reflect that. Again, I find it important to communicate Our company's vision. Here is our company's mission. The healthier we make our patients, the more successful our business will be. And we will not lose sight of that vision with the goal of enhancing and creating more value for our shareholders. Progressive Care believes that investment in technology and talent will provide the type of value the company and its shareholders deserve. This is why it is so important for us to realize our planned uplisting to NASDAQ within the next couple of months. We will keep you up to date every step of the way. We expect that the completion of the uplist to NASDAQ will have an immediate and positive impact on growth of the company, enabling us to pick up our operational pace by having access to institutional capital and to pursue the businesses we think will help us roll out our services nationwide at a faster pace. Meanwhile, we will do our part by staying on a steady course of growing our business. We have no doubt that optimism around progressive care will soon begin to be reflected in the share price of our stock. We also continue to keep you up to date on our continued operating performance. Soon you will see our 2022 first quarter report, and now it is expected to be filed with the SEC on form 10Q under a fully reporting status. On behalf of all of us working at Progressive Care, we are endlessly grateful to our shareholders for the continued confidence and support as we continue on our path for a record-breaking 2022. Today, your loyalty and support is more valuable than ever, and we are all dedicated to rewarding your continued loyalty and long-term support immensely. I remain confident that our continued march towards NASDAQ, ongoing operational progress, and the upcoming following of our 2022 first quarter financial performance will support and encourage Gannick increase in our share price, bringing us closer to our NASDAQ uplifting objective. May God bless us all and keep us and our families safe and healthy. This concludes the remarks for our earnings call. We would like to turn now to questions that we received in advance of the earnings call. Our Director of Administrative Services, Bob, We'll review the questions that were received prior to our meeting today and provide responses.

Thank you, Jay. We received these questions prior to Friday's deadline for submission of questions. We will respond to each question as appropriate. We have five questions here from our shareholders, the first of which is, when will the S-1 filing be effective? The registration statement on Form 10 is expected to automatically become effective in the first half of April 2022. This will then make us a fully reporting company with the SEC and will greatly expedite the process of uplisting to NASDAQ. We expect to file an amendment to Form S-1 in March, which will include the annual financial statements for 2021. Very nice. The second question is, what's the company's strategy to raise the stock price before uplisting? Will the company be able to uplist in April of 2022? We expect that our performance during the first quarter of 2022 will generate more shareholder interest in our stock and will lead to more purchases. We have also hired an investor relation firm that specializes in companies that uplist the NASDAQ as well as current NASDAQ reporting companies. And we expect that their efforts will generate more interest in our stock. Also, our officers have also made recent purchases of our stock. We believe that all of these efforts will ultimately lead to an increase in our stock price that will enable us to meet the NASDAQ up listing requirements. Here's our third question. Is the company considering any merge or acquisition opportunities right after the up list? The company is constantly looking at potential acquisitions that have the proper synergies as well as locations in strategic areas in which we would like to expand. We can accelerate those discussions with those potential acquisitions once we are a listed company, at which time we expect that we will have more access to institutional capital. Our fourth question, when will the company launch the telemedicine platform? Through the MyVax patient portal on our website, providers currently have the ability to schedule telehealth appointments with patients. We're also looking to use the portal for proctoring at-home testing for PCR and antigen testing. We have those capabilities currently and we're currently testing them. Our fifth and final question is the company planning to go nationwide in 2022. Our goal is to become a nationwide company and the execution of the capital raise is important for this goal. We have licensing in place in states that we have identified as strategic markets that we wish to expand to. The proceeds from a capital raise will allow us to build out the infrastructure needed for this expansion. That's all the questions we have for today. We again thank you for taking the time to join us on this call and for submitting your operations to us. We hope that you have a great remainder of the year, and we look forward to talking with you again in May during our next earnings conference call.