Progressive Care, Inc.
Q4 2019 Earnings Call Transcript

Published: 31 Mar 2020

[Stuart Smith:]

All right, everybody. You are in the right place for the Progressive Care 2019 Annual Earnings Call and Business Update. Once again let me say that for those who just joined us on the call. You are in the right place for the Progressive Care 2019 Annual Report Earnings Call and Business Update. Now, before we get started, I would like to read the forward-looking statements. Forward-looking statements mean that the statements contained herein, that are not based upon 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, performances and opportunities that involve substantial risk and uncertainties.

[Shital Mars:]

Hi everybody. It has been a very interesting 2020. I don’t think anybody really expected for the world to change overnight and yet it is. Because we are in essential service, we are open and continuing to provide care to our patients and increasing number of patients who are seeking out our services. I do want to kind of keep this program really tight and focus on the financial statements and things of that nature, things that are more pressing in the near term. We will be discussing COVID-19 toward the end of the call, but if I don't get to some of your question it's just because I want to keep this -- the call pretty tight to the financial statements and those items and then get to your question in a subsequent interview and address those things. So just say posted we will get to everything even if it's not this call try to answer as many of those questions subsequent to this as I can possibly can. So I want to go into the financial statements as I do on these calls. I want to start right away into the balance sheet and a lot of you guys are going to be looking at -- you're looking at our balance sheet for the first time. A lot of these numbers seem to change pretty dramatically from year-to-year. So if you're not familiar with us, we did an acquisition in June of last year. That acquisition was of financial size and adding about $15 million, $16 million in revenue to our existing base. So we will be recognizing their performance from June 1 onwards. Not the full year of June 01. So a lot of this change that you're going to see here has to do with that with that acquisition of Family Physicians RX. I may refer to it as FPRX or five star RX on this call but they are all the same thing.

[Q - Stuart Smith:]

All right. Very good. Thanks for that Shital. Well, the company filed an S1 registration statement with the SEC in April.

[Shital Mars:]

So our primary goal now after filing this financial we have three years of audited financials under our belt. PCAOD that can be included in the S1. We had a draft ready a couple of years ago that put on hold for the acquisition obviously. So now we are looking at end of April beginning of May to file the S1. We're already speaking with our attorneys about the new draft. We already have the financial statements to be included and we're looking at engaging an SEC, PCAOB auditor for that S1 and going forward. is a wonderful firm and they've been very good to us and they’ve stood by us and they perform this audit. But they knew that eventually we would be filing our S1 and they're incredibly supportive. So we were interviewing firms now to be part of that S1 and go after that do our audits after that. So we're looking at end of April, beginning of May and if that changes, we will be updating all of our shareholders in advance. We're not here to change things last minute. So if we see that there is going to be a change in timing, we will be informing all our shareholders.

[Stuart Smith:]

All right. Well this next question is a three-part question. So I am going to ask it in pieces, what's the current status on the convertible notes?

[Shital Mars:]

So the current status on the convertible notes is they are eligible for conversion. The first part of is that 1.15 that we took down in January is already converting. If you look at subsequent events on the financial statement, it's the very, very last page. We list out all the conversions that have taken place to date. I believe it's close to 7 million shares issued about $250,000 converted.

[Stuart Smith:]

All right. So that's kind of the next question in this and I think that you just answered it. How many shares then have been converted so far.

[Shital Mars:]

So again that's about 7 million shares give or take and you can look at the last page there for an exact count and it's about $250,000 that have been converted of the note so far.

[Stuart Smith:]

And a timeline to complete all the conversions.

[Shital Mars:]

So we don't have an exact timeline especially because our investor here have been incredibly gentle, surprisingly gentle with us and I think that goes to show you the value of the relationship, the value they place on our company and how much they believe in our company. They have indicated to us that they're looking at the market conditions very closely. We're looking at it as an essential service and they're being very gentle. And so they have not -- they have elected not to do weekly conversion. They have only done monthly conversions and in smaller amounts than we had anticipated. So the first one was 50,000, the second one was 100,000, the one after that was 100,000 and they have not approached us and the last time they did that conversion was February 29. They've not approached us for more shares since that time. So it's been about a month. They are looking at the long-term prospects of this. One of the things that I wanted to talk about is we've spoken to them at length and especially in the beginning of receiving this financing, they were well aware that we were going to be seeking alternative financing. Financing that would be on better terms that would eliminate the dilutive effective of their note and then they were very supportive of that idea. They wanted that they're not going to be an impediment to us securing a financing under more traditional term that will allow us to eliminate -- the allowance to eliminate the derivative liability and have a more stable market for our shares and so while we don't know the exact timing its monthly that they're doing conversion. We will be looking for and have been approaching a number of different bankers and investors about the possibility of refinancing instead of receiving financing under more favorable terms for the future growth of our company. And to that end that's really why the S1 is so important because under -- while once we become SEC registered, a lot of those terms open up for us and a lot of these bankers and investors open up to us and we can secure things on better terms. So that's what we're looking forward to going forward with this note and as I said before they've been amenable to not being aggressive in their liquidation of the stock. They’ve been very slow and we have appreciated that and appreciate the fact that they understand that we're not a fly by night company. We're an essential services and we'll be open through the duration of this crises.

[Stuart Smith:]

Well I do and we thank all of your shareholders and interested parties for submitting their questions and of course many of you submitted this next question. So we're only going to ask it once, Shital what is the impact of COVID-19 on your company's business?

[Shital Mars:]

Sorry Stuart, can you repeat that question? I apologize.

[Stuart Smith:]

Not a problem. What is the impact of COVID-19 on your company's business?

[Shital Mars:]

Okay. So that's a really good question and I want to spend a good few minutes talking about it. A lot of you’ve seen our videos, a lot of you are watching us on social media. The number one thing that we're concerned with is care and our pharmacy are operating at full capacity. We're observing as much of social distancing guidelines as we can. We're trying to sanitize our buildings and facilities frequently. We were the first to market here with contact less delivery and once we saw -- we have pharmacists that are incredibly well versed in infectious disease and as soon as this crisis started bubbling up and we started seeing it impact our community, we started a protocol for contact-less delivery that it was also secure. We're not here to just drop medications off of people doorstep. So we're confirming identities through the medications. So we are not doing hand-to-hand transfers. As much as possible we're avoiding hand to hand transfers of medications so as to protect both our delivery staff and our patients. So as far as impact in the beginning here of January, February March, we were seeing an upswing in prescriptions. We're seeing more and more doctors seeking this out, we're seeing more isolation to our pharmacy because we offer that contact-less delivery. We're not asking anyone to go through a drive-through, we're not asking anyone to go into the grocery store and pickup, we're not asking anybody to walk into a drugstore. Anybody who uses our pharmacy can get free delivery and that's been that way since inception of our company. So we've seen an influx of patients. We've seen an influx of doctors who have been turning to us and another thing that we were looking at and we have done is donating hand sanitizer and working on hand sanitizer so we produce through FDA approved guidelines to be able to bring more of this product out to those who need it. We're looking at media, first responders, doctors offices and our primary goal there to be a source of support and by doing good work and this has been my mantra from the beginning is by doing good work that will be good for our business. The more we ingrain ourselves into our communities and more good we do for our community, the more it will pay off in increased sales, increased loyalty to our pharmacy and our patients are really happy and they're really grateful for the services we provide on top of we're not trying to get into every fact that's out there. We're trying to make sure that every medication is going to a patient in need. The medications are going out appropriately that we're curtailing as many abusive prescriptive practices as there are. We're trying to avoid any of the scam artists out there that are trying to take advantage of an intent how crisis. So we're seeing -- our business is well-suited for this because again we are one of those businesses that are a lot of sales and at full capacity. So January through March is looking good. The only caveat to that would be that if the crises worsens to a point that it starts to impact doctor's ability to see patients, see their normal patients, doctor's ability to be prescribe if there is any by supply chain disruptions in medication. These are things that we don't foresee happening because we believe that now the government has gotten a good control over the situation and mandated the social distancing that's required and hospital are planning ahead and we're trying to secure as much PPE and supplies for our hospitals and doctors that we can. So we're not foreseeing the worst-case scenario that you see out there, but that would be the only instance that would impact our business in a way that we could be materially negatively impacted by it. We don't foresee that happening again. We see that we will be able, we will be one of the few pharmacies that are able to provide service and to be able to expand our reach through this crisis because services are necessary. A lot of doctors have switched their patients over to us because they're afraid of their patients going to big-box stores or going to grocery stores, patients that are over 70, patients with maintenance medication they're trying to automate a lot of that and that's just patients that are older. They are trying to isolate their families to us too. So patients between ages of 35 and 55 are also coming to us because they don't want to expose their family are don’t want to expose their family. So they're coming to us and using us and we've gotten a lot of the testimonials. One of the things that I highlight most about our company during this time is we've been doing this for a long time and so unlike companies that are just we've been doing this for ever. So we already have the delivery infrastructure. We already have the capacity to do contact-less. We already have the capacity to sanitize our facilities because we know infectious disease better than pretty much anybody out there. So when we went out to our doctors and reminded them, hey get patient on 90-day supply. Hey make sure that they are maintaining their maintenance that they're taking everything that they're monitoring their health and well-being during this crises, they were really appreciate that we were leaving that we were proactive, that we were calling them and not waiting for them to call us and we were reminding them that now is not the time to let up on monitoring their patients because we also don't want during this crises for their patients to have hypertensive event, preventable hypertensive or diabetic event that will lead them going to ER when ERs are inundated with the sick. We don't want to expose patients to the coronavirus. They don’t need to be exposed simply because they were not adherent with their medications during the crises. We're seeing class reporting as many cases out there that we can doing videos, time interviews trying to get out with media to be able to promote what we believe our best practice and we believe we're leading those. So for us I hate saying it this way but for us we are well-positioned, well under this crises and we're luckier than the most.

[Stuart Smith:]

All right very good. Next question then when do you expect to start having full enterprise profitability?

[Shital Mars:]

So we're looking at 2020 and I think this year is the year for that. We had last time we had profitability as we were in 2017 and so we had a couple interviews while we were doing expansion and while there were increasing cost through . So we're now looking because of our model.

[Stuart Smith:]

Okay. I think we're losing Shital just a little bit. Shital I think you're on a cell phone, maybe just repositioning.

[Shital Mars:]

Hold on one second. Okay. So your question we're looking at 2020 this year. Last two years we were aggressively expanding and last two years we have enormous headwinds from pharmacy benefit managers in the form of DIR and everybody knows that would affect all year in the last years. So we believe that 2020 is the year that we will return to full enterprise profitability. The pharmacy the pharmacies are doing well. As I just spoke about the COVID-19 does not have a negative impact on our revenues, or our profitability. So we're moving forward in that direction and we think that through this crises as more people tune into us and see what benefits we bring to the table as far as healthcare, we'll be able to bring more patients on board to our model and be able to increase our market share. So 2020 is year that's our goal and we're trying to monitor across as much as possible. We will be doing a build out this year. So there are some costs and obviously we're going to have the derivative but as far as cash based profitability the ability to bring in positive cash flow and pay our bills and increase our cash from operation. So this is the year.

[Stuart Smith:]

All right. We're taking questions in real time and I do want to get this one in here Shital because it goes back to the COVID-19 between nodes on the forefront of everyone's mind. hydroxychloroquine are you guys stocking or do you have hydroxychloroquine 200 mg available?

[Shital Mars:]

So we do have it available. We are being very careful about how we dispense it. One of the things that we noticed very quickly was that doctors were prescribing it to themselves and to their family proactively. So we definitely are not allowing prescriptions like that to go out. We're trying to make sure that each prescription of it is vital, each prescription of it is medically necessary and also we want to anything listening here, hydroxychloroquine is very promising and you look at the anecdotal information that's coming out. We're looking at the clinical studies very carefully and we're very, very hopeful. But for anybody looking to just take it, the question I would provide you is that hydroxychloroquine has an effect on heart tissue. So it is an known side effect of the drug and there haven't been studies. I mean it was used to treat malaria, it's used to lupus. I have a person who has lupus in my family and she can't get the medication. So we're trying to make sure that there's enough medication for those who already are on the medication. So another reason why we have stock of it but for those that are just looking to take it prophylactically or in advance of having COVID-19 symptoms, I strongly caution against that to speak to a physician to be under the care of a physician when taking that medication because if you have a heart condition, it can lead to an arrhythmia and a fatal heart event. So be very careful and very mindful. We're hopeful that this is a drug that will lead to a quick resolution of this crises but we're monitoring this out process. To answer the question, we have it.

[Stuart Smith:]

All right. Well let's wrap it up with this question then with such a robust acquisition strategy in your recent history, is there an acquisition plan in place for 2020?

[Shital Mars:]

So we had a number of conversations and we've gotten into different points of our lives. We have different things standing out where we're negotiating on our lives and negotiating on other things and we're trying to bring other companies on board. We're also looking at partnerships for ourselves whereby may be and we're either preliminary but the thought process if a combination with another company that is already listed on a national exchange would be beneficial to us or combining our forces with another company that has a strong market presence, we are ready in negotiations with a couple of companies. We've put preliminary LOI out there and we're waiting response. COVID-19 the crisis has put a hold on a lot of business development aspects, a lot of the company's business plans over the next 90 days for a lot of the companies were talking to our healthcare companies and so their primary concern right now is care and providing care. New York City has been pretty hit hard. A lot of metropolitan areas are being hit pretty hard. So that's their focus right now. So we're just -- not at all moving pattern but trying to reach out and be very ginger with how we approach this situation because we want to make sure that we also are keeping our eyes on the delivery of care for our patients. So I think an acquisition is not necessarily probable in 2020 but we're hopeful that one of these that we have out there is going to close one.

[Stuart Smith:]

All right. Excellent. Well that is a wrap on the Progressive Care 2019 annual report earnings call and business update. Shital, any closing thoughts or comments for those listeners and shareholders.

[Shital Mars:]

So for our listeners and shareholders I take my closing comments and usually make them about being thankful for the work that my staff does. I can work from home and a lot of my corporate employee can work from home and are working from home because we're trying to keep in mind all of the best practices for keeping everyone safe, but understand that for my pharmacists and for my pharmacy technician and for my delivery personnel, they can't stay home and they're scare too and they're worries about their families too and we hope for a very swift end to this crises. So we also understand that we mid, we are necessary and we have to stay open and ready to work at a moment's notice. We're looking at expanding our efforts. We're looking at expanding into Saturdays and Sundays to be able to provide more care and more support to our communities, to our local leaders, to our hospital. A lot of the reason we were looking at donating the hand sanitizer and while we thought the doctor's offices across the city to be able to give them units of hand sanitizer I think we were in the process of donating over 6,000 individual units of sanitizer to healthcare workers across South Florida and hoping to give more as we're able to ramp up our compounding facilities to be to process the alcohol and provide FDA approved sanitizer. So our number one concern is care, number two concerns is the health and welfare of our employee and we're doing everything possible from giving them food to giving them safety, to giving them support that they need and trying to deliver them supplies. For everybody out there as an investor and everybody out there that's a shareholders we consider ourselves very fortunate that we are an essential service. When we look at it and look at the other opportunities out there, we were one of the few that was ready before this crisis began and we will be ready after this crisis is over and we don't expect any patient that turns to us now, we don't expect any patient to meet because once they come to PharmCo and realize the difference we make on their lives, they understand that no other pharmacy can do the same for them. So our patients are very sticky. They typically don't transfer adolescent they move and they move beyond an area where we can deliver. So we think we are a prime investment opportunity as shareholders, investors are looking at us. We're holding -- our stock price is holding steady and the market is really volatile and our company is not going anywhere. Our company is going to be here now, it's going to be here tomorrow, going to be here for a very long time to support everybody and provide the results that shareholders and investors should look to us. And one other thing that I wanted to reiterated is I know I did not answer a lot of questions. We had a lot of questions about other areas of operation in our business and I look forward to working with Stuart about doing an additional interview to be able to answer those questions. So just please keep posted and please follow up on social media, please follow our press releases and filing on our website and all the information that we're putting out there. We also turn to us for information about COVID-19 if you're confused or if you have questions about that we'll answer anything that you guys have and be at the forefront of this crisis and be able to capitalize on it once it's all said and done to be a premier pharmacy is not just Florida but in the nation. So that's what you can look for from us but just also take a moment and be thankful for your healthcare workers, for your food service workers, for grocers and police officers and media personnel that you may know out in your life that have to go to work in are risking their lives. I am going to say a special thank you to my staff right now because they are essentially risking their lives and their health and well-being. So thank you to all of them and thank you to all the shareholders that are supporting us and continued support and we ask that you support us now more than ever because we feel like it's beneficial to you, it's beneficial to the community and we're incredibly appreciative of everything that you’ve done for us. Thank you very much and we look forward to talking to you in another 45 days with quarterly results.

[Stuart Smith:]

Well very good. Listeners thanks for joining me in and please keep sending those questions in. As you heard from Shital Mars we will be doing a follow-up interview here in the near future. Have a wonderful evening and stay safe out there.