Today we released our half year results for the six-month period to 31 December 2020. It was a strong half and one where we focused on commercialising our strategic partnerships and technology across the world.
At the same time, MedAdvisor has worked to lower cashburn, increase gross profit margin and release market-leading solutions like ePrescribing and remote customer verification in Australia, launch its medication app in the UK and the Philippines and forge ahead with the delivery of digital health programs in the US.
Here are the key highlights from the results:
Purchased Adheris, LLC creating immediate scale in the USA
Expanded gross margin to more than 50%, up 90% yoy, with $1 in every $2 dropping to the bottom line
Full year CY20 pro-forma revenue of AUD$56m up 24.3% on CY19 (AUD $45.1m)
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 +60% 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 revenuehurdle of USD$32.5m (~AUD$40m) and pipeline is strong
Recognised revenue of AUD$12.9m for the half-year to 31 December 2020, up AUD$7.7m on the p.c.p. (+191%)
Increased operating cash inflows to AUD$13.8m for the half-year to 31 December, up 185% on the p.c.p.
Raised AUD$42.3m equity from a number of existing shareholders, including HMS, and new institutional investors
Adheris acquisition + US expansion
During the half, we completed the acquisition of US-based Adheris for US$27.5 million (<1x revenue) plus earnout payments that, if achieved, would result in a purchase price of US$34.5m. The Adheris business delivers significant US scale via a pharmacy network of 25,000. This scale, combined with MedAdvisor’s digital offering, is a significant opportunity for the Company with the US pharmaceutical market.
Full year CY pro-forma revenue for MedAdvisor and Adheris was AUD$56.1m, up 24% on the p.c.p. The December half pro-forma revenue was AUD$31.4m, up 64%. .
The Group reported AUD$12.9m operating revenue for the 6 month period ending 31 December 2020, an uplift of 191% from H2 FY20 (AUD$5.2m), driven by strong Adheris performance, generating AUD$7.9m in revenue in the 6 weeks to 31 December. Australian health programs also grew 56% over the half.
MedAdvisor is becoming a truly global player in medication adherence and digital medication management. Our revenues are up 191% year-on-year and approximately 80% of our revenue is now generated in the US. We are now working with our global customers, including pharmaceutical companies, at scale across multiple regions.
The Group reported operating cash receipts of AUD$13.8m in H1 FY21, up 185% on H2 FY20 (AUD$4.8m). The December half results were driven by strong performance by Adheris health programs post-acquisition. The Company closed the half with AUD$21.2m in cash, ensuring the business can execute on its integration and growth plans globally.
The market for Adheris Health’s services is robust, with strong booking activity in the December quarter which is continuing into 2021. Demand for vaccination delivery via retail pharmacies is expected to grow - this will accelerate opportunities to market MedAdvisor/Adheris Health services, especially with multiple vaccine manufacturers.
MedAdvisor has commenced go-to-market activities with HMS who has signed some initial health insurer clients for the March quarter, building a pipeline of secure digital programs with HMS’ customers. This will be the first time that MedAdvisor has run secure digital programs for the US insurer market and will be an important first step in opening up this market opportunity. The first project with Westmead Hospital in Sydney was announced this week.
Australian growth driven by health programs
Total revenue for Australian operations was up 13% for H1 FY21 compared to H1 FY20, largely through pharmacy network growth which was up to 3,600+ representing approximately 64% of the pharmacy market. As MedAdvisor continues to grow its network and reach, the opportunity to generate an increasing amount of revenue from patients within the network, and through health programs, will be a key growth driver for future periods.
Health programs revenue was up 56% on the p.c.p. as patient volumes grow and more sponsors are attracted to the scale and reach of MedAdvisor. Our ability to improve adherence and persistence to medication is a significant attraction for pharmaceutical companies. We had 10 new programs signed during the three months to 31 December 2020..
Relative to Q2 FY20, digitally connected patient numbers passed 1.8 million, up 41%. Patient numbers are a key leading indicator to health program revenues as they enable engagement with a larger group of people.
Patient app orders and items per order were up nearly 52% and 56% respectively year-on-year for Q2 FY21 vs Q2 FY20.
Electronic prescribing recently went live, with MedAdvisor the first conformant patient app for electronic prescribing in Australia. The workflows make it extremely easy for patients to handle multiple scripts whilst providing pharmacy with a more efficient workflow than with paper scripts.
The December half saw continued R&D and investment in our UK product and market development. This included enhanced functionality for the UK market and a consumer web product to complement that patient app.
MedAdvisor launched its white label app with Day Lewis. The roll out was paused in the December Quarter due to issues relating to COVID in the UK but will resume in the second half of FY21.
The UK variant of the MedAdvisor app, which is supported by the National Pharmacy Association (NPA) for its pharmacy members, is expected to go live in Q3 FY21 following with NHS accreditation.
The solution provided will integrate with NHS systems and include additional consumer features. MedAdvisor has a growing pipeline of pharmacies engaged for when the product goes live.
Through the Group’s joint venture with Zuellig Pharma (ZP MedAdvisor Pte Ltd.) in the Philippines and Malaysia, our first pharmacy customer, MedExpress, went live with a white label MedAdvisor app across 65 of its stores. Patient volumes are increasing but have not yet achieved meaningful scale.
Additional health programs also went live in the Philippines and Malaysia over the half. The product focus for this business is building a stand-alone version of the MedAdvisor app that is not integrated to a dispense system, given many pharmacies don’t have computers, but can operate in a mobile mode.