MedAdvisor Announces Record Revenue in FY19 Results

MedAdvisor Limited, Australia’s leading digital medication management company, has released its Appendix 4E and is pleased to report its financial results for the 12-month period ending 30 June 2019.

Finance Overview

MedAdvisor reported record operating revenue of $8.2m, up 25% for the 12-month period to 30 June 2019 on the prior corresponding period.  Total revenue inclusive of R&D tax concession and interest was $9.2m up 24% year on year. Revenue growth was driven by a combination of recurring SaaS revenue through a growing pharmacy network, and user-based revenue from health services & programs that promote health literacy and improved adherence (“Health Programs”).

Gross profit increased 24% to $7.2m with gross margins remaining stable at 88% creating significant operating leverage as the business scales. The company reported a net loss of $8.2m versus a loss of $4.5m for the prior year, reflecting the decision to scale the team to pursue global markets and develop a globally scalable technology platform and infrastructure. A key focus of this incremental investment has been in the US, the world’s largest pharmaceutical market however the investment made into the platform and infrastructure will have benefits to all markets over time. This investment of capital has been expensed in the Income Statement.

Operational Overview

Domestic Business

MedAdvisor’s Australian business represents a strong, growing core business for the company. At the close of FY19, MedAdvisor had over 3,300 pharmacies using PlusOne (~57% of the Australian market). PlusOne enabled MedAdvisor’s pharmacy network to digitally connect to over 1.2 million patients and to process in excess of $300m worth of medication orders. In addition, MedAdvisor’s pharmacy network grew the number of Government-funded professional services recorded in PlusOne by 76%. MedAdvisor also delivered 58 Health Programs, up from 30 in FY18, with revenue from health programs growing by 48% to $1m.

 

International Expansion

US

In March 2019, MedAdvisor signed an initial 12-month agreement with Adheris Health, the leading provider of dynamic patient adherence and engagement solutions to US biopharmaceutical customers. Adheris Health has built a participating network of 26,000+ pharmacies that account for ~197m US patients. The relationship also brings relationships with the top 100 US retail-dispensed branded pharmaceutical manufacturers, including the US arms of many of MedAdvisor’s existing Australian clients.

The advantage of the Adheris Health partnership for MedAdvisor is that it can offer Health Programs via Adheris Health in the US without the need for US pharmacy chains to license and install PlusOne. This reduces the requirements for integration with multiple dispense vendors, reducing lead times and allowing the team to focus on the Health Program requirements in the largest pharmaceutical market in the world, whilst preserving optionality regarding the sale of PlusOne software in the future.

Under the agreement, Adheris Health will promote and jointly sell MedAdvisor powered Health Programs in the US to its existing pharmaceutical clients as an extension of its suite of Health Program solutions.  Revenue is expected to come online in 1HFY20.

Asia

During 2HFY19, MedAdvisor announced a 50/50 joint venture (JV) with Zuellig Pharma. Zuellig Pharma is one of the largest healthcare services groups in Asia. Started almost a hundred years ago, it has grown to become a US$13 billion business covering 13 markets with over 10,000 employees, serving over 350,000 medical facilities and working with over 1,000 clients, including the top 20 pharmaceutical companies in the world. 

The joint venture will operate from Singapore, with Zuellig Pharma to commercialise MedAdvisor’s medication management platform and drive Health Programs through the region. In return, MedAdvisor will license its core intellectual property to the JV on an exclusive royalty free basis and develop localized versions of its platform. In May 2019, the JV signed its first customer, MedExpress Drugstores in the

Philippines. MedExpress is the leading hospital out-patient pharmacy in the Philippines, serving over 1.5million people across 50 hospitals in the Philippines. Revenue is expected to come online in 1HFY20.

UK

MedAdvisor secured its first customer in the UK in August 2019 with the signing of Day Lewis Pharmacy Group (‘Day Lewis’) - one of the largest independent pharmacy chains in the UK owning over 270 pharmacies, and servicing over 1 million customers. Day Lewis will license PlusOne and promote and distribute a Day Lewis branded version of the MedAdvisor consumer app to its customers for medication ordering and management. Rollout of the MedAdvisor platform across Day Lewis pharmacies will take place during Q3 FY20.

 

Key Appointments

During the year, MedAdvisor made several appointments to the Executive team. In February, Victor Kovalev, was appointed as CTO and Global Head of Product.  Victor Kovalev is an experienced Silicon Valley CTO, and prior to joining MedAdvisor was CTO at Redbubble (ASX:RBL). This appointment followed the appointment late last year of Ruba El-Afifi former EGM of HR at Aconex as EGM People & Culture as GM of People and Culture. Following Carlo Campiciano stepping down as CFO of MedAdvisor, in August 2019, Simon Glover was appointed as the new CFO. Simon is a highly regarded finance professional who has held senior finance roles in large listed companies including Tabcorp Holding (ASX:TAH) and Coles Group (ASX:COL) and also brings industry experience from his time at Mayne Pharma. Carlo will remain as Company Secretary of MedAdvisor until his retirement in late 2020.

In the US, MedAdvisor appointed James Rotsart and Lucas Merrow, founders for Adheris, as key advisors to accelerate the US expansion. Both advisors are highly experienced, with established networks in the key focus areas for MedAdvisor being Pharmacy Chains, Manufactures and Insurers.

These significant appointments both locally and globally reflect MedAdvisor’s ability to continue to attract high calibre talent to accelerate its growth initiatives.

Outlook

The Australian market continues to show significant opportunities for growth utilising the MedAdvisor product suite to connect more patients, pharmacies, GPs and Health Programs. The traditional patient acquisition channel – our pharmacy customers – continues to drive patient uptake and remains a key focus. Additionally, MedAdvisor continues to explore ways to drive further patient growth via other stakeholders in patient health, including hospitals and GPs. Growth in take up of Health Programs shows great promise, with MedAdvisor seeking new opportunities to bring new program funders beyond pharmaceutical companies to leverage our platform, such as hospitals, private health insurers and the Government.

From a global perspective, FY19 has been a landmark year for MedAdvisor’s international expansion. MedAdvisor is well placed to take advantage of the opportunity that is being unlocked through partnerships and initial customer sign ups across the US, Asia, and the UK. By globalising the MedAdvisor platform and partnering with leading local companies in those markets, MedAdvisor is providing a lower cost, faster market entry and a shorter path to revenue.

Robert Read, CEO & Managing Director said “The Australian market continues to grow strongly, and we have increased our network and revenue per pharmacy. FY19 also saw us take the decision to invest capital in developing scalable US ready technology and infrastructure to open the US market. We now have landmark deals in 3 significant markets being the US, Asia and most recently the UK. The revenue opportunity over the medium term is significant and the quality of partners and customers is testament to the fact we have built something that helps solve a global problem in a unique way. Through these global partnerships we will be able to help tens of millions of patients better manage their medication and therefore have better health outcomes.”

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About MedAdvisor 

MedAdvisor is a world class medication management platform focused on addressing the gap and burden of medication adherence. Founded with a desire to simplify medication management, the highly automated and intuitive Australian software system connects patients to medication related tools and education materials from their community pharmacy. Available free on mobile and internet devices, the platform also incorporates a variety of valuable and convenient features including reminders, pre-ordering of medications and medicines information, which together improves adherence to chronic medications by over 20%. 

Since launching in 2013, MedAdvisor has connected over one million users through ~55% of Australian pharmacies and a network of thousands of GPs across Australia and in 2018, was recognised in the AFR Fast 100.