My partner works in the pharmacy industry and told me some interesting news about MedAdvisor that was reported in the AJP.

In their half year presentation it was announced that they would start charging for transactions for vaccinations and ProjectStop.

While pharmacies will have an option on how they manage vaccinations, ProjectStop is a mandated government initiative in a majority of states to prevent pseudo shoppers and was incorporated into MedAdvisor when they acquired GuildLink then rolled into the PlusOne platform.

https://www.guild.org.au/__data/assets/pdf_file/0011/5015/project-stop.pdf

If MedAdvisor start charging pharmacies per transaction in which they have no choice, they can likely expect some disgruntled customers and for me is a bit of an ethical grey zone.

Pharmacies may then also either stop using the program in the states where they don't need to, reducing the positive impacts it has had, or just stop selling pseudoephedrine-based products.

https://www.mymedadvisor.com/plusone/pricing

But also an example of pricing power in play.

Not the highest quality company listed on the ASX, but a short-term (18 months) thesis could play out here, I have 60% confidence in this playing out:

- Recent quarters demonstrate an inflection point where cash flow breakeven can now be sustained (although certainly not consistent), indicating improved operational efficiency and financial stability.

- KKR's acquisition of shares in MedAdvisor on the market suggests some validation of Andrew Smith's thesis (Perenial); emphasising that the company's transformation into a profitable business will make it takeover attractive. 

- Andrew Smith highlights MedAdvisor's attractive valuation metrics, trading at 1.5x revenue compared to peers in the US at five times sales. My opinion is that a takeover offer could potentially be executed at 3x revenue, indicating good upside potential from the current stock price.

I think it's fair to say that MedAdvisor impressed us all when they reported fantastic results. 

Overall revenue was up 89.9% to $44.1 million and their US was up 97.7% to $39.4 million. This resulted in positive operating cashflow of $21M. It’s quite rare to see so much positive cashflow for companies still reporting on a 4C cycle. 

As we can see, the vast majority (89%) of the revenue came from the US business. MedAdvisor acquired the Adheris LLC business from Syneos Health in 2020 for US$34.5 million. The intent of this move was to help the company become the leader of tailored opt-out, direct-to-patient medication adherence programs in the US as well as Australia. Since then, the big revenue has come from marketing campaigns though. And the big boost here was from a Covid awareness program. This is clearly an incredible result and I tip my hat to the team, but doesn’t give us the same visibility of growth to come in the future as a pure Saas player would. 

If you’d like to understand more about the business, Claude Walker wrote up a good piece on a Rich Life after the results. I will be looking at them a little more closely in the future to see what they can achieve.

MedAdvisor signs 5-year deal with Australian Pharmaceutical Industries (ASX:API) - July 31 2021

Old news now, but noticed there wasn't a straw for this.

Highlights of this deal:

• 5-year agreement with API, a pharmacy group listed in the ASX known for Priceline Pharmacy stores (among others).
• Expected revenue is approximately $2.5m over 5 years before transaction and other variable fees (The model is a monthly  recurring  licence  fee).
• Medadviser will be the framework for the Priceline Covid-19 Vaccination booking (now live) and also a branded version of its mobile application for the Priceline Pharmacy network

That being said I went ahead to book for my vaccination and it was quite satisfying to see it working well as a MDR shareholder, although the UI could use some improvements. It would be great to see more contracts like this come through given the government is extending COVID-19  vaccinations  being  available  in  selected pharmacies. 

December 2020 Quarterly Report and 4C

Key highlights

? Purchased Adheris, LLC creating immediate scale in the USA

? Full year CY20 pro-forma revenue of AUD$56m up 484% on CY19 (AUD:USD $0.70)

? MedAdvisor US (incorporating Adheris) achieved USD$19.3m pro-forma in sales for the December half-year (up 85% on the prior corresponding period (p.c.p) and +40% on the Company’s initial forecast of USD$13.8m pro-forma for the half-year)

? Signed contracts to deliver 50%+ of CY21 Adheris earnout revenue hurdle of USD$32.5m (~AUD$40m) and pipeline is strong

? Recognised revenue of AUD$12.8m for the half-year to 31 December 2020, up AUD$8.3m on the p.c.p. (+188%), and AUD$10.3m for the quarter, including the 6 weeks following the Adheris acquisition on 17 November 2020

? Vaccine product was the highest revenue product for CY20, indicating the significant opportunity for MedAdvisor in this space, as programs drive awareness and dose series completion, critical to ensure patients are adequately vaccinated

? Increased operating cash inflows to AUD$14.2m for the half-year to 31 December, up 196% on the p.c.p.

? MedAdvisor (excl. USA) total revenue of AUD$2.7m for the quarter, up 15.4% on p.c.p

? Raised AUD$42.2m equity from a number of existing shareholders, including HMS, and new institutional investors

? Funded to execute integration and growth plans with AUD$21.2m cash at bank

DISC~I have a small holding