This one was particularly impressive this morning: Progressive Care Inc. (OTCMKTS:RXMD) came out with its May 2020 monthly performance update this morning. And the results are a powerful affirmation of the company’s ability to demonstrate remarkable execution in an extremely difficult context.
The headline number is the 62% y/y top-line growth, which is an acceleration on a sequential basis. This is particularly interesting given the difficult environment in play right now for pharmacy players. One big factor that has acted as a difficult obstacle over the past 1-2 months for pharmacy companies is the apparent collapse in physician provider prescription orders – people are being prescribed less because they are going to the doctor less. Medical services are way down, and the pharmacy niche is a part of that stream of business.
However, as noted above, Progressive Care has managed to maintain and even ramp its growth rate by – according to company and management communications – expanding its patient footprint and market share, as well through diversification and corporate business model evolution.
Shrugging it Off
Somewhat remarkably, the company’s revenue performance remains steady despite what the company termed “persistent – but waning” downside catalysts, including the stiff shortfall in new prescriptions.
In our experience, one of the most important factors in evaluating an investment opportunity is management’s ability to continue to put up strong growth numbers when the chips are down. Clearly, we are seeing that capacity on display from RXMD right now.
For May, the company reported consolidated monthly gross sales across all locations totaling $2.92 million, representing year-over-year growth of 62% compared to May 2019, and prescriptions filled at 40,062, representing year-over-year growth of 41% compared to May 2019 – both big numbers that are all the more impressive given the obstacles on the road for all pharmacies right now.
“Once again, we are proud to turn in another very strong month of growth, with sales increasing over 62% y/y despite very clear exogenous obstacles,” stated S. Parikh Mars, CEO of Progressive Care. “According to our analysis, one might have reasonably expected a decline of 40% as an extrapolation in end-demand factors impacting performance a year ago. This performance data is a testament to our diversification and evolution as a company – something that will continue to define Progressive Care going forward.”
FQHCs as a Driver
One key part of that evolution is the growth the company is now seeing in its 340B third-party administrative services segment. In May alone, the company piled up nearly $1.1 million in billing claims serviced for its 340B clients and also added another three clients into the fold.
These clients are part of a segment in the market known as Federally Qualified Health Centers (FQHCs), which are 340B participants. And they are making up a more and more significant source or revenues for RXMD. The April data saw a 111% jump in 340B sales.
May outpaced that number, piling up nearly $127K in 340B revenues on well over $1 million in billing claims serviced.
Further Evolution
We would also note that RXMD shares – which are up about 35% from their levels in March – will likely be buoyed by three major forces as we head into the second half of the year.
First, the company is readying its S-1 filing as part of a move to uplist onto the NYSE or Nasdaq exchange (the stock trades on the OTC right now).
Second, Progressive Care recently launched its nationwide e-commerce hub, which has apparently gotten off on strong footing. This expands the company’s geographic footprint in terms of product sales, which was much needed and redefines the stock outside of the regional pharmacy mold and toward a more scalable ROI profile.
And, third, the company has also recently taken steps to expand into the telehealth/telemedicine space as part of a long-term plan in the works going back to early last year. However, that strategic directive has been bolstered by steps from the White House in March to introduce a number of key regulatory changes that open the door for companies like Progressive Care to step up the plate faster and on a wider basis in the telemedicine marketplace, including the expansion of telehealth services covered by Medicare, a lowering of the strict HIPAA bar for clinical interactions with patients over digital platforms, and the dismantling of interstate barriers – healthcare providers no longer need to be licensed in the patient’s state.
All three of these themes – uplisting onto a major exchange, new and expanding e-commerce presence, and expansion into the telehealth marketplace – are likely to expand and fuel the RXMD story in the second half of the year in interesting ways.
