MedAvail Holdings, Inc. (MDVL)·Q2 2023 Earnings Summary

Executive Summary

• Q2 2023 continuing-ops revenue was $0.41M, down 25% YoY and 35% QoQ; gross margin came in at 44% (in line with internal expectations). Operating loss narrowed to $(4.45)M; Adjusted EBITDA was $(3.99)M, essentially flat YoY. Net loss per share from continuing ops was $(3.06) (reverse-split adjusted) .
• Guidance reaffirmed: FY23 revenue ≈ $3M (vs. $1.4M in 2022 pharmacy tech), ~60% full-year gross margin, and 25 net new dispensing MedCenters (57 kiosks revenue-generating exiting 2023). No changes vs Q1 guide; emphasis on cost efficiencies and path to 2025 operating cash flow breakeven without additional dilutive equity .
• Execution highlights: 2 net new units placed (YTD 6); Epic Willow API integration reduced dispense times ~36% and lifted throughput ~11%; first partner live on Google Cloud with full migration targeted by YE23; added FQHC channel via Curant Health .
• Balance sheet/listing: Ended Q2 with ~$15.0M cash including restricted ($14.4M excluding restricted); completed 1-for-50 reverse split to support Nasdaq bid-price compliance, removing a potential listing overhang .

What Went Well and What Went Wrong

• What Went Well

  • Successful technology and channel execution: Epic Willow API reduced average script dispense times by ~36% and increased MedCenter throughput by ~11% at Texas Health Resources; first partner live on Google Cloud with all partners to migrate by YE23 .
  • Pipeline and deployments moving: 2 net new revenue-generating MedCenters placed in Q2 (YTD 6); 19 contracted units plus 3 additional committed in 2023; FMOL’s initial four were deployed and moving online; Oak Lawn contracted for 10 M4s .
  • Cost discipline and runway: Pharmacy services exit substantially complete; OpEx run-rate and cash burn expected to benefit in 2H23/2024; management reiterates path to 2025 operating cash flow breakeven without further dilutive equity .

• What Went Wrong

  • Revenue pressure during pivot: Q2 revenue fell to $0.41M vs. $0.54M in Q2’22 and $0.62M in Q1’23 as the business transitions from legacy arrangements to pharmacy technology-only model .
  • Scale still early: Adjusted EBITDA loss remained $(4.0)M, roughly flat YoY, indicating scale benefits are not yet flowing through despite gross margin improvement trajectory .
  • Listing risk overhang addressed late in the quarter: The company required a 1-for-50 reverse split (effective July 31) to regain bid-price compliance, signaling prior sustained share weakness and potential investor caution on near-term growth visibility .

Financial Results

Segment/Revenue Mix

KPIs and Operating Metrics

Notes:

• Management stated full-year gross margin ≈60% expected for 2023 (see Guidance) .

Guidance Changes

Additional capital/cash flow outlook: Management targets operating cash flow breakeven in 2025 without additional dilutive equity financings .

Earnings Call Themes & Trends

Management Commentary

• “We generated total revenue of approximately $405,000 and we remain on track to achieve full-year revenue of $3 million... greater than 100% growth over 2022 stand-alone pharmacy technology revenue of $1.4 million” — Mark Doerr, CEO .
• “Following the successful API integration with THR, we were able to reduce prescription dispense times by approximately 36%... increasing MedCenter prescription throughput by approximately 11%” .
• “We brought our first net new partner, Curant Health, live on our Google Cloud based software... migrate all partners to the Google Cloud by the end of this year” .
• “Our current pipeline stands at nineteen contracted MedCenters, with an additional three that have also been committed in 2023... confidence in our prior guidance of 25 net new dispensing MedCenters” .
• “We ended the second quarter with $14.4 million of cash and cash equivalents, excluding restricted cash... we believe we can achieve operating cash flow breakeven in 2025 without the need for additional dilutive equity financings” .

Q&A Highlights

• The company discontinued live earnings calls beginning with Q2; written commentary now accompanies releases and includes information typically discussed on calls .
• Clarifications provided in writing: FY23 revenue (~$3M), gross margin (~60%), 25 net new MedCenters maintained; cash burn expected to improve post-SpotRx wind-down; Epic Willow API and Google Cloud migration enhance throughput and scalability .

Estimates Context

• Wall Street consensus (S&P Global) for Q2 2023 EPS and revenue was unavailable via our S&P Global feed for MDVL at this time; therefore, we cannot provide a results-vs-consensus comparison for this quarter. Values retrieved from S&P Global were unavailable.
• In lieu of consensus, management reaffirmed FY23 internal guidance (revenue ≈$3M; ~60% full-year gross margin; 25 net new units), which serves as the de facto benchmark for near-term execution .

Key Takeaways for Investors

• Execution on integrations (Epic API) and cloud migration is improving throughput and partner experience—key for scaling capital-light, higher-margin revenue in 2024+ .
• 2023 remains a transition year: revenue variability persists QoQ as the model reorients to pharmacy technology-only; however, gross margin trajectory and OpEx discipline point to operating leverage as deployments ramp .
• Pipeline depth and channel expansion (FQHCs, health systems, urgent care) support the 25 net-new placement guide and 2024 revenue visibility; monitoring timing from contract to dispensing remains critical for near-term forecasts .
• Liquidity appears sufficient to reach 2025 operating cash flow breakeven target without additional dilutive equity, reducing financing overhang if execution stays on plan .
• Regulatory momentum (e.g., Colorado, potential North Carolina) steadily expands the serviceable market—an underappreciated multi-year catalyst for unit growth and ARR .
• The reverse split resolved Nasdaq bid-price risk; near-term stock catalysts include evidence of accelerated deployments, recurring software/maintenance growth, and validation via additional Epic-based health system wins .

Additional Context (Prior Quarters)

• Q1 2023: Revenue $0.62M; operating loss $(5.01)M; transition-related warrant accounting increased reported loss; restructuring reduced debt and strengthened liquidity .
• Q4 2022 / Jan 2023: Strategic pivot announced to pharmacy technology; exit of SpotRx; targeted OpEx savings of $35–$37M vs. 2022; 2022 pharmacy tech revenue expected at $1.2–$1.4M baseline .