MedAvail Holdings, Inc. (MDVL)·Q1 2023 Earnings Summary

Executive Summary

• Q1 2023 marked MedAvail’s first full quarter pivoting to a pure pharmacy technology model: revenue rose to $0.62M (vs. $0.27M a year ago) on early traction with MedCenter hardware, subscriptions, and services; adjusted EBITDA improved to $(3.66)M from $(4.42)M YoY as SpotRx is exited and costs are removed .
• Management reaffirmed FY2023 guidance: approximately $3M pharmacy-tech revenue (>100% YoY), full-year gross margin >60%, and 25 net new dispensing MedCenters in 2023 (57 cumulative by year-end) .
• Strategic catalysts executed in Q1: (i) sale of pharmacy assets to CVS (up to $4.4M consideration; reduced debt to ~ $2.5M), (ii) 75% workforce reduction targeting $35–$37M annualized OpEx savings, and (iii) $16M private placement to bolster runway .
• Stock-relevant narrative: management expressed confidence in achieving operating cash flow breakeven without additional dilutive equity, citing a growing deployment pipeline and favorable regulation (e.g., Colorado authorization for remote kiosk dispensing) .

What Went Well and What Went Wrong

• What Went Well

  • “Our pipeline continues to grow… we remain on track to [add] 25 net new dispensing MedCenters… [and] identify cost savings opportunities… to reduce our expense run rate and extend our cash runway.” – CEO Mark Doerr .
  • Regulatory tailwinds: “Colorado [is] the latest state to enact legislation… favorable to remote kiosk pharmacy dispensing,” expanding long-term addressable market .
  • Balance sheet and runway: “We are well financed… we believe we can achieve operating cash flow breakeven without the need for additional dilutive equity financings,” supported by a $16M private placement closed March 13 .

• What Went Wrong

  • GAAP noise from financing: a $10.42M non-cash loss on issuance of warrants and $(3.05)M gain from change in fair value of warrant liabilities drove a larger GAAP loss in the quarter .
  • Continued investment ahead of scale: adjusted EBITDA remained negative at $(3.66)M despite YoY improvement, reflecting early-stage revenue scale in the tech model .
  • Transition execution costs: restructuring (75% workforce reduction) and the SpotRx exit required one-time actions; management guided to ~$6.5M one-time costs in 1H23 tied to the restructuring (ex-loan paydown) .

Financial Results

Overall P&L and cash (oldest → newest)

Non-GAAP adjustments (Q1 2023)

Segment context (Q4 2022, for comparability)

KPI snapshot (deployment trajectory)

Notes: (i) Q4 2022 segment data shown to enable apples-to-apples comparison with the continuing tech business; (ii) Q1 2023 revenue excludes discontinued operations per company’s new model .

Guidance Changes

Earnings Call Themes & Trends

References for call: MedAvail Q1 2023 earnings call transcript (May 18, 2023)

Management Commentary

• “We remain on track to achieve our previously stated goal of adding 25 net new dispensing MedCenters… [and] cost savings opportunities… will… extend our cash runway… primarily through faster, more seamless software integrations and the creation of an in-house service organization.” – CEO Mark Doerr (press release) .
• “The regulatory landscape continues to evolve in our favor, with Colorado… favorable to remote kiosk pharmacy dispensing… an opportunity to significantly expand our addressable market.” – CEO Mark Doerr .
• “We are well financed… we believe we can achieve operating cash flow breakeven without… additional dilutive equity financings.” – CEO Mark Doerr .

Q&A Highlights

• Topics addressed on the call included: deployment cadence toward 25 net new MedCenters in 2023, regulatory developments (Colorado) and state-by-state expansion, cost structure efficiency post-SpotRx exit, and balance sheet runway following the $16M financing; management reiterated FY2023 guidance and confidence in cash flow breakeven without further equity dilution .
• Management emphasized pipeline quality and improved customer experience via faster integrations and an in-house service organization, aligning with the scaled tech-only model .

Estimates Context

• Wall Street (S&P Global) consensus EPS and revenue estimates for MDVL were not available in our data pull; therefore, comparisons to consensus could not be made at this time. If/when S&P Global consensus becomes available, results should be benchmarked against FY2023 revenue of ~$3M and gross margin >60% guidance to assess revision risk .

Key Takeaways for Investors

• Execution on pivot: Q1 revenue inflected with the tech-only model; adjusted EBITDA trend improving YoY; immediate focus is scaling deployments while maintaining tight OpEx .
• Visible catalysts: reaffirmed FY2023 revenue, margin, and deployment targets; favorable regulatory momentum (Colorado) enhances medium-term TAM .
• Runway secured: asset sale proceeds, debt paydown to ~$2.5M, and $16M private placement, with $18.8M cash at quarter-end, support breakeven aspirations without added dilution .
• GAAP volatility from warrants: expect continued non-cash P&L swings tied to warrant accounting until fully resolved; focus on adjusted metrics for operating trajectory .
• Near-term trading implications: progress against the 25-deployment target and any additional state-level regulatory wins are likely to be key stock movers; watch for partner announcements and conversion from pipeline to live sites .
• Medium-term thesis: sustainable high gross margins (>60%) in a capital-light deployment model could drive operating leverage as recurring software and service scale; maintaining deployment cadence and customer satisfaction remain critical .

Additional Context and Prior-Quarter References

• Q4 2022: Reported total revenue $11.35M including SpotRx (discontinued); Pharmacy Technology segment revenue was $0.255M, providing a baseline for tech-only comparability .
• Strategic restructuring (Jan 19): exit SpotRx; 75% workforce reduction; annualized OpEx savings $35–$37M; 2022 tech revenue expected $1.2–$1.4M .
• Asset sale to CVS (Jan 26): up to $4.4M consideration; debt reduced to approximately $2.5M; one-time restructuring costs in 1H23 of ~$6.5M (ex-loan paydown) .