MedAvail Holdings, Inc. (NASDAQ: MDVL) Q4 2021 Earnings

MedAvail Holdings, Inc. (NASDAQ: MDVL) Q4 2021 Earnings

CEO Mark Doerr”

“…Most recently, I was CEO of eRx Network until its acquisition by Change Healthcare in 2020. Under my three-year tenure, the company’s revenue and EBITDA increased in each year before the acquisition. I believe that pharmacy is a big business with a significant opportunity for novel models to improve efficiency and patient outcomes while achieving discipline with respect to cost and quality. And I strongly believe that our new team at MedAvail is uniquely poised to address this opportunity.

“…I’m very pleased to be participating in my first earnings call as CEO of MedAvail. It is a privilege to be leading this company. And I thank the Board for this opportunity. By way of background, I’ve spent my entire career in pharmacy, starting as a pharmacist and working across this industry in various other capacities, including leading national and regional retail pharmacy chains.

I was attracted to MedAvail for two reasons. First, I was impressed by MedAvail’s differentiated technology platform, our MedCenter and its supporting system that enables our on-site pharmacy at the point of care in a cost-effective way. Second, I believe in the opportunities that our solutions provide given how strongly positioned we are to solve a multifaceted problem that challenges pharmacy services today. There’s a clear need for solutions to address the gaps faced by both retail pharmacies and at-risk value-based medical providers.

Retail pharmacies struggle with labor shortages and higher costs, resulting in reduced operating hours and compromised service levels, which effectively limit patient access to their medications. These factors contribute to reduced patient satisfaction and lower medication adherence. Poor Medicaid adherence tends to result in suboptimal patient outcomes and impact the Star Ratings for at-risk providers, which in turn, affects the reimbursement levels provided by TMS.

Moreover, many medical providers don’t have adequate connectivity to the many pharmacists that their patients utilize, constraining their ability to gain insights on medication adherence for their patients, which limits their ability to impact patient outcomes.

To address these challenges head on, we deliver flexible and comprehensive solutions to our partners with a model that I believe is increasingly essential for value based care delivery. At the core of our offering is our proprietary MedCenter platform through which we deliver cost effective pharmacy prescription dispensing and advice at the point of care to provide better and more convenient patient access and drive improved outcomes and provider satisfaction and reimbursement.

Since joining MedAvail, my confidence in our business and the opportunities for it has grown. There is a tremendous market opportunity to be realized with our solutions, and we have a definitive road map intended to meet this rising demand. I also believe that we have a clear pathway to deliver profitable growth in the business.

To that end, as some of you already know, our business model has two segments: Pharmacy Technology and Retail Pharmacy Services. And I would like to walk you through what we are doing with each segment.

Starting with the Pharmacy Technology. This area of our business represents the most significant opportunity for MedAvail and is a large part of our path towards profitability. We sell our hardware and importantly, license our software and systems to support it and provide maintenance for the platform, which is intended to create a highly profitable recurring revenue stream. Our MedCenters are currently being operated by large scalable partners such as Sam’s Club, HCA and Texas Health Resources, a mix of retail and health system pharmacies, which we believe are both very viable channels for our expansion.

We are also pleased to have recently partnered with the University of Florida. We will provide an initial three MedCenters to be deployed in their various campus facilities and have the opportunity to expand this relationship to include a variety of additional sites.

A critical component to Pharmacy Technology segment is the MedCenter interface with the pharmacy management system. As part of our focus to drive growth in this business, we have received approval for our app to be in the Epic App Orchard, which will allow us to integrate into the Epic platform through Epic Willow, its outpatient pharmacy management system. This capability is intended to allow us to add site deployments with the many health system customers who use Epic and will significantly reduce the time from signing a deal with MedAvail to deployment of our platform.

Importantly, we anticipate that this integration work will open the market of installed Epic users to MedAvail as prospects for our Pharmacy Technology. Currently, there are approximately 350 integrated delivery networks using the Epic pharmacy software in the United States, representing thousands of potential sites for our MedCenter. We expect this integration through Epic Willow to be completed in the second quarter of 2022.

To support the growth opportunity that we see with the Pharmacy Technology, we are making investments and strengthening our team. We recently added new sales leadership and support in this segment and are continuing to develop our team to drive product innovation and sales.

Turning to Retail Pharmacy Services and SpotRx, our highly scalable hub-and-spoke pharmacy model. We deliver a unique value proposition to our clinic partners with our embedded SpotRx Pharmacy. And we are focused on clinic operators that service the Medicare market with large and growing networks to maximize the potential of our land and expand strategy. Our clinic partners primarily operate in a value-based care model and are looking for a pharmacy partner that can fully complement their patient care and reimbursement models.

We leverage data to drive patient adoption, monitor performance to adapt and optimize our offering to each clinic location, helping to identify and focus on high value patients for our partners. Each of our SpotRx service areas operate a centralized pharmacy hub designed for easy and rapid scaling. Once we establish a hub pharmacy in a market, we have historically been able to quickly deploy additional MedCenters to surrounding clinic providers.

To date, we have seven hub pharmacies across our key target states. Our most recent hub pharmacy opened in Orlando, Florida in June of 2021 and notably, now services over 30 dispensing units across this market.

A number of these SpotRx locations are associated with our partnership with IMA and is a great example of the land and expand strategy at work. Through our partnership with IMA, we opened 4 initial SpotRx locations at IMA sites in late 2020. And recently, we announced the expansion of our partnership to include all IMA medical centers across Central Florida. We opened five additional SpotRx locations at IMA sites late in 2021 and have deployed or began installation for an additional 11 SpotRx locations this year.

This rapid growth and expansion of the IMA network demonstrate how quickly we become an integral part of a medical center through our strong value proposition with SpotRx….”


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