Q1 2020 Revenues Increase 46% to $2.2 Million; Drives Net Income Increase of 44% to $0.2 Million
TAMPA, FL, May 04, 2020 (GLOBE NEWSWIRE) -- Trxade Group, Inc., (NASDAQ: MEDS) (“Trxade” or the “Company”), an integrated telehealth, drug procurement, delivery and online healthcare marketplace, today reported its financial results for the first quarter ended March 31, 2020.
Select Financial Highlights:
| Three Months Ended March 31, | Year-over-Year | |||||||||
| 2020 | 2019 | % Change | ||||||||
| Revenues | $2.2 million | $1.5 million | 46 | % | ||||||
| Gross Profit | $1.6 million | $1.1 million | 43 | % | ||||||
| Gross Margin | 74.4 | % | 75.8 | % | (1.4 | )% | ||||
| Net Income (Loss) | $0.2 million | $0.1 million | 44 | % | ||||||
| Adj. EBITDA (non-GAAP)1 | $0.3 million | $0.2 million | 58 | % | ||||||
| 1) Adjusted EBITDA is a non-GAAP financial measure and is described in relation to its most directly comparable GAAP measure under “Use of Non-GAAP Financial Information” below. | ||||||||||
Recent Highlights:
| ● | The Company continued to expand its trading platform organically, with 305 new independent pharmacies registered in Q1 2020 | |
| ● | Average purchases per pharmacy increased on the Trxade platform by 13.7% in the first quarter of 2020, when compared to the same year ago quarter | |
| ● | The Company secured first contract with an employer to supply COVID-19 rapid test kits for its employees and families, which provides a diagnosis within 15 minutes at point of care (POCT) with no additional instrumentation needed | |
| ● | Filed for an Emergency Use Authorization (EUA) with the U.S. Food and Drug Administration (FDA) in collaboration with its partner’s manufacture of the SARS-CoV-2 IgM/IgG Antibody Rapid Test Kits | |
| ● | Uplisted to Nasdaq Capital Market under the new trading symbol “MEDS” in February 2020 | |
| ● | Received gross proceeds of approximately $5.99 million through an underwritten public stock offering with institutional and accredited investors | |
| ● | Engaged MZ Group to lead investor relations and shareholder communication program |
Management Commentary
“We demonstrated outstanding performance in the first quarter as we reported 46% growth in revenues and exceeded expectations on metrics despite COVID-19,” said Suren Ajjarapu, Chairman and CEO of Trxade Group. “Our diversified growth strategies are driving strong growth across all subsidiaries, including new services and products that directly address the coronavirus pandemic,” further stated Mr. Ajjarapu.
“We have now secured our first employer, a midsized Tampa law firm, to supply COVID-19 rapid test kits to their employees, which will promote a safer working environment and increase awareness of exposure risk. One of our subsidiaries has also begun offering a new monthly subscription bundle at a rate of $19.95 per month, which includes an option of three (3) teleconferencing premium visits per month, as well as free prescription delivery service. We are excited to be taking part in the effort to address COVID-19 and believe we can make a difference in decreasing its spread through testing,” stated Mr. Ajjarapu.
“During the first quarter we took strategic measures to enhance our corporate position, uplisting our common stock to the Nasdaq Capital Market and engaging an investor relations firm to implement a comprehensive capital markets strategy. We also completed an underwritten public stock offering that improved and reinforced our strong balance sheet. Looking forward, we are well positioned with significant momentum to continue growing revenues and income and to meet the increasing demand for our comprehensive service offerings,” concluded Mr. Ajjarapu.
First Quarter 2020 Financial Results
Revenues for the first quarter of 2020 increased 46% to $2.2 million, compared to revenue of $1.5 million in the same quarter last year. Sequentially, this represents an increase of 30% when compared to revenues of $1.7 million in the fourth quarter of 2019. The increase in revenue was primarily due to platform sales.
Gross profit in the first quarter of 2020 increased 43% to $1.6 million, or 74.4% of revenues, compared to gross profit of $1.1 million, or 75.8% of revenues, in the same quarter last year. The increase in gross profit was primarily due to platform sales and reduced cost of goods sold.
Operating expenses in the first quarter of 2020 were $1.5 million compared to $1.0 million in the same quarter last year. This increase is primarily due to legal, filing fees and marketing expenses associated with our public offering and uplisting.
Net income in the first quarter of 2020 increased 44% to $0.2 million, or $0.03 per basic share, compared to net income of $0.1 million, or $0.02 per basic share, in the same quarter last year. The increase in net income was primarily due to increased revenue.
Adjusted EBITDA, a non-GAAP financial measure, increased 33% to $0.3 million, compared to $0.2 million in the same quarter last year.
Cash and cash equivalents were $7.7 million as of March 31, 2020, compared with $2.9 million as of December 31, 2019. During the first quarter of 2020, the Company raised gross proceeds of approximately $5.99 million through an underwritten public offering with institutional and accredited investors.
About Trxade Group, Inc.
Headquartered in Tampa, Florida, Trxade Group, Inc. (NASDAQ: MEDS) is an integrated drug procurement, delivery and healthcare platform that enables price transparency and increased profit margins to buyers and sellers of pharmaceuticals, makes Healthcare services affordable and accessible across all 50 states, and steps in to meet today’s immediate demands. Founded in 2010, Trxade Group is comprised of four synergistic operating platforms; 1) the Trxade B2B trading platform with 11,400 registered pharmacies; 2) a licensed virtual Wholesaler; 3) affordable healthcare via its Bonum Health app and web-based telehealth services; and 4) Same Day or Mail Order Pharmacy delivery capabilities via its DelivMeds app featuring Trxade’s extensive nationwide distribution network. For additional information, please visit us at www.trxade.com, www.delivmeds.com, and www.bonumhealth.com.
Supplemental Financial Data
The Attached Selected Supplemental Financial Data tables disclose amounts reflected in our historical financial results and include the balance sheet and results of operations for a comparable period. Trxade utilizes certain financial measures that are not calculated in accordance with generally accepted accounting principles (GAAP) to access its financial performance such as working capital. This presentation should be viewed as a supplement to, and not a substitute for, the results of operations presented on a GAAP basis. Stockholders are encouraged to review the Company’s filings with the Securities and Exchange Commission.
Use of Non-GAAP Financial Information
This earnings release discusses EBITDA and Adjusted EBITDA. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. EBITDA represents net income before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before stock-based compensation expense and gain (loss) in equity investment. EBITDA and Adjusted EBITDA are presented because we believe they provide additional useful information to investors due to the various noncash items during the period. EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our operating results as reported under GAAP. Some of these limitations are: EBITDA and Adjusted EBITDA do not reflect cash expenditures, future requirements for capital expenditures, or contractual commitments; EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, working capital needs; and EBITDA and Adjusted EBITDA do not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on debt or cash income tax payments. Although depreciation and amortization are noncash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect any cash requirements for such replacements. Additionally, other companies in our industry may calculate EBITDA and Adjusted EBITDA differently than Trxade Group, Inc. does, limiting its usefulness as a comparative measure. See also “Reconciliation of Net Income attributable to Trxade Group, Inc., to Earnings before Interest, Taxes, Depreciation and Amortization (EBITDA) and Adjusted EBITDA”, below.
Forward-Looking Statements
This press release may contain forward-looking statements, including information about management’s view of Trxade’s future expectations, plans and prospects, within the safe harbor provisions under The Private Securities Litigation Reform Act of 1995 (the “Act”). In particular, when used in the preceding discussion, the words “may,” “could,” “expect,” “intend,” “plan,” “seek,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” “likely,” “will,” “would” and variations of these terms and similar expressions, or the negative of these terms or similar expressions are intended to identify forward-looking statements within the meaning of the Act, and are subject to the safe harbor created by the Act. Any statements made in this news release other than those of historical fact, about an action, event or development, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors, which may cause the results of Trxade, its divisions and concepts to be materially different than those expressed or implied in such statements. These risk factors and others are included from time to time in filings made by Trxade with the Securities and Exchange Commission, including, but not limited to, in the “Risk Factors” sections in its Form 10-Ks and Form 10-Qs and in its Form 8-Ks, which we have filed, and file from time to time, with the U.S. Securities and Exchange Commission. These reports are available at www.sec.gov. Other unknown or unpredictable factors also could have material adverse effects on Trxade’s future results and/or could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements. The forward-looking statements included in this press release are made only as of the date hereof. Trxade cannot guarantee future results, levels of activity, performance or achievements. Accordingly, you should not place undue reliance on these forward-looking statements. We undertake no obligation to update publicly any of these forward-looking statements to reflect actual results, new information or future events, changes in assumptions or changes in other factors affecting forward-looking statements, except to the extent required by applicable laws. If we update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.
Investor Relations:
Greg Falesnik
Managing Director
MZ Group - MZ North America
(949) 385-6449
MEDS@mzgroup.us
Trxade Group, Inc.
Consolidated Balance Sheets
Three Months Ended March 31, 2020 and December 31, 2019
| March 31, 2020 | December 31, 2019 | |||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 7,701,305 | $ | 2,871,694 | ||||
| Accounts Receivable, net | 877,097 | 792,050 | ||||||
| Inventory | 368,401 | 56,761 | ||||||
| Prepaid Assets | 267,375 | 82,452 | ||||||
| Deposits for Inventory purchases | 580,800 | - | ||||||
| Total Current Assets | 9,794,978 | 3,802,957 | ||||||
| Property Plant and Equipment, Net | 197,242 | 174,987 | ||||||
| Other Assets | ||||||||
| Deposits | 21,636 | 21,636 | ||||||
| Deferred Offering Costs | - | 88,231 | ||||||
| Right of use leased assets | 734,075 | 757,710 | ||||||
| Goodwill | 725,973 | 725,973 | ||||||
| Total Assets | $ | 11,473,904 | $ | 5,571,494 | ||||
| Liabilities and Shareholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts Payable | $ | 320,238 | $ | 334,614 | ||||
| Accrued Liabilities | 233,560 | 98,852 | ||||||
| Current Portion Lease Liabilities | 90,759 | 87,350 | ||||||
| Customer Deposits | 305,972 | - | ||||||
| Total Current Liabilities | 950,529 | 520,816 | ||||||
| Long Term Liabilities | ||||||||
| Notes Payable – Related Parties | 225,000 | 225,000 | ||||||
| Other Long-term Liabilities – Leases | 661,078 | 685,461 | ||||||
| Total Liabilities | 1,836,607 | 1,431,277 | ||||||
| Shareholders’ Equity | ||||||||
| Series A Preferred Stock, $0.00001 par value; 10,000,000 shares authorized; none issued and outstanding as of March 31, 2020 and December 31, 2019, respectfully | - | - | ||||||
| Common Stock, $0.00001 par value; 100,000,000 shares authorized; 7,484,370 and 6,539,415 shares issued and outstanding, as of March 31, 2020 and December 31, 2019, respectively | 75 | 65 | ||||||
| Additional Paid-in Capital | 17,852,422 | 12,535,655 | ||||||
| Retained Deficit | (8,215,200 | ) | (8,395,503 | ) | ||||
| Total Shareholders’ Equity | 9,637,297 | 4,140,217 | ||||||
| Total Liabilities and Shareholders’ Equity | $ | 11,473,904 | $ | 5,571,494 | ||||
Summary of Certain Comparative Financial Information
| Balance Sheet Data | March 31, 2020 | December 31, 2019 | ||||||
| Working Capital (1) | $ | 8,844,449 | $ | 3,282,141 | ||||
| Total Assets | $ | 11,473,904 | $ | 5,571,494 | ||||
| Long-Term Debt (2) | $ | 225,000 | $ | 225,000 | ||||
| Shareholders’ Equity | $ | 9,637,297 | $ | 4,140,217 | ||||
(1) Total current assets for each period minus total current liabilities for each period.
(2) Notes payable, related parties.
Trxade Group, Inc.
Consolidated Statements of Operations
Three Months Ended March 31, 2020 and 2019
| 2020 | 2019 | |||||||
| Revenues, net | $ | 2,203,320 | $ | 1,512,521 | ||||
| Cost of Sales | 563,184 | 365,839 | ||||||
| Gross Profit | 1,640,136 | 1,146,682 | ||||||
| Operating Expenses | ||||||||
| Warrants and Options Expense | 141,086 | 35,979 | ||||||
| General and Administrative | 1,310,823 | 938,944 | ||||||
| Total Operating Expenses | 1,451,909 | 974,923 | ||||||
| Operating Income | 188,227 | 171,759 | ||||||
| Loss on Extinguishment of Debt | - | (28,972 | ) | |||||
| Interest, net | (7,924 | ) | (17,558 | ) | ||||
| Net Income | $ | 180,303 | $ | 125,229 | ||||
| Net Income per Common Share – Basic: | $ | 0.03 | $ | 0.02 | ||||
| Net Income per Common Share – Diluted: | $ | 0.02 | $ | 0.02 | ||||
| Weighted average Common Shares Outstanding Basic | 6,971,438 | 5,560,695 | ||||||
| Weighted average Common Shares Outstanding Diluted | 7,423,680 | 5,998,056 | ||||||
Reconciliation of Net Income attributable to Trxade Group, Inc., to Earnings before Interest, Taxes,
Depreciation and Amortization (EBITDA) and Adjusted EBITDA*
| March 31, 2020 | March 31, 2019 | |||||||
| Net Income attributable to Trxade Group, Inc. | $ | 180,303 | $ | 125,229 | ||||
| Add (Deduct): | ||||||||
| Interest, net | 7,924 | 17,558 | ||||||
| Depreciation and Amortization | 1,250 | 1,250 | ||||||
| EBITDA | 189,477 | 144,037 | ||||||
| Add (Deduct): | ||||||||
| Share in Equity Loss on Investment | - | 28,972 | ||||||
| Stock Based Compensation | 141,086 | 35,979 | ||||||
| Adjusted EBITDA | $ | 330,563 | $ | 208,988 | ||||
* EBITDA and Adjusted EBITDA are non-GAAP financial measures. These measurements are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. See also “Use of Non-GAAP Financial Information”, above.