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MedAvail Holdings, Inc. (MDVL)·Q4 2022 Earnings Summary

Executive Summary

  • Q4 2022 revenue was $11.35M, up 56% year over year from $7.28M, but slightly below Q3 ($11.46M); gross margin turned negative (-1.1%) as cost of products sold exceeded revenue; GAAP EPS was $(0.14) versus $(0.38) in Q4 2021, reflecting YoY loss per-share improvement .
  • Management announced a strategic restructuring and sale of a majority of SpotRx pharmacy services assets to CVS to pivot to a technology-only model, targeting a $35–$37M 2023 OpEx run-rate reduction and ~65% lower annual cash usage, positioning for accelerated profitability .
  • 2023 guidance (technology-only): revenue ~$3M (>100% YoY vs $1.4M stand-alone tech in 2022), gross margins >60%, and 25 net new dispensing MedCenters to reach 57 cumulative generating revenue by year-end .
  • Liquidity strengthened by a $16M private placement (Mar-2023); the pivot and high-margin focus are the primary near-term stock narrative catalysts .

What Went Well and What Went Wrong

What Went Well

  • Strong YoY top-line growth: Q4 revenue rose to $11.35M (+56% YoY) and full-year revenue reached $43.11M (+95% YoY) on expansion of retail pharmacy services and continued technology placements .
  • Technology progress: completed Epic Willow integration and listing in Epic App Orchard, supporting the software/MedCenter platform scale-up under the technology-only focus .
  • Balance-sheet and cost actions: $16M financing and the CVS asset sale underpin material OpEx and cash burn reductions, supporting the transition toward profitability in 2023 .

What Went Wrong

  • Margin pressure in Q4: gross margin declined to -1.1% (gross profit -$0.126M on $11.35M revenue) versus 11.3% in Q3 and 8.2% in Q2, driven by cost of products sold exceeding revenue in Q4 .
  • Continued operating losses: Q4 operating loss was $(10.74)M and adjusted EBITDA was $(8.72)M, reflecting the pre-restructuring retail services cost structure .
  • Sequential softness: revenue dipped slightly vs Q3 ($11.35M vs $11.46M) while total Q4 cost of products sold and services increased ($11.48M), pressuring quarterly profitability .

Financial Results

MetricQ4 2021Q2 2022Q3 2022Q4 2022
Revenue ($USD Millions)$7.280 $11.184 $11.461 $11.350
Cost of Products Sold & Services ($USD Millions)$7.642 $10.266 $10.169 $11.476
Gross Profit ($USD Millions)$(0.362) $0.918 $1.292 $(0.126)
Gross Margin %-5.0% 8.2% 11.3% -1.1%
Operating Loss ($USD Millions)$(12.37) $(11.42) $(11.49) $(10.74)
Net Loss ($USD Millions)$(12.626) $(11.718) $(11.806) $(11.070)
GAAP EPS ($)$(0.38) $(0.17) $(0.15) $(0.14)
EBITDA ($USD Millions)$(11.801) $(10.933) $(9.875) $(9.279)
Adjusted EBITDA ($USD Millions)$(10.918) $(10.321) $(9.310) $(8.724)

Segment breakdown (Quarterly):

SegmentQ4 2021 Revenue ($000)Q4 2021 Segment Gross Profit ($000)Q4 2022 Revenue ($000)Q4 2022 Segment Gross Profit ($000)
Retail Pharmacy Services$6,846 $(55) $11,095 $(248)
Pharmacy Technology$434 $(307) $255 $122
Total$7,280 $(362) $11,350 $(126)

Selected KPIs:

KPIQ2 2022Q3 2022
Net MedCenter Total Net Cumulative Deployments98 104
Net MedCenter Total Net Dispensing Deployments91 103

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Total Revenue (Company)FY 2022≥ $42M (Aug-2022) ≥ $42M (Nov-2022) Maintained
Net New Dispensing DeploymentsFY 202230–35 (Aug-2022) ≥ 40 (Nov-2022) Raised
Stand-alone Technology RevenueFY 2023N/A~ $3M (vs $1.4M in 2022) New
Gross Margin (Technology-only)FY 2023N/A> 60% New
Net New Dispensing MedCenters (Technology-only)FY 2023N/A25 New
Cumulative Net Dispensing MedCenters (Generating Revenue)FY 2023 YEN/A57 New
OpEx Run-Rate ReductionCY 2023N/A$35–$37M New
Annual Cash Usage ReductionCY 2023N/A~65% New

Earnings Call Themes & Trends

TopicQ2 2022 MentionsQ3 2022 MentionsQ4 2022 Current PeriodTrend
Margin trajectoryTarget mid-teens LT margin; operational levers (DIR fees, sourcing, tech) Reported 11.3% gross margin (2nd consecutive quarter expansion) Guides >60% gross margins under technology-only model Pivot to higher-margin tech
Deployment scale98 cumulative; 91 dispensing; raised FY22 net new to 30–35 104 cumulative; 103 dispensing; raised FY22 net new to ≥40 2023 plan: +25 net new to 57 cumulative (tech-only) Retail services exit; tech placements
Financing/liquidity$10M second closing (Jul-2022) Cash $27.2M at 9/30/22 $16M private placement (Mar-2023) Strengthened balance sheet
Strategic focusEmbedded pharmacy + tech growth Continued embedded model with partners Restructure; sell majority of SpotRx to CVS; tech-only focus Strategic pivot
Technology integrationsEPIC integration pipeline build Leveraging EPIC in 2023 pipeline Epic Willow integration completed; listed in Epic App Orchard Execution progress

Management Commentary

  • “We made the difficult decision earlier this year to restructure and sell a majority of our SpotRx pharmacy services assets to CVS. This action will reduce our operating expense run rate by $35 million to $37 million this year, and our annual cash usage by approximately 65%.” – Mark Doerr, CEO .
  • “We will be focused exclusively on our MedCenter pharmacy technology business as a lean and nimble organization… primarily within the primary care and urgent care channels…” .
  • “With our recently completed financing, we have a strengthened balance sheet… intended to allow us to progress toward profitability without the need for an additional equity capital raise.” .

Q&A Highlights

  • The call emphasized the rationale and expected benefits of the CVS asset sale and the shift to a technology-only model, including specific cost and cash-burn reductions and a high-margin focus .
  • Management clarified 2023 technology guidance: ~$3M stand-alone technology revenue (>100% YoY) and >60% gross margins, plus 25 net new MedCenter placements to reach 57 cumulative .
  • For full Q&A details, refer to the external transcript sources: Marketscreener (S&P Capital IQ) , Seeking Alpha .

Estimates Context

  • S&P Global/Capital IQ consensus estimates for MDVL Q4 2022 were unavailable due to a missing CIQ mapping for the ticker in the SPGI dataset. As a result, we cannot provide a formal beat/miss assessment versus Wall Street consensus for revenue or EPS at this time [GetEstimates error].

Key Takeaways for Investors

  • The pivot to a technology-only model and CVS asset sale materially reduce OpEx and cash burn, potentially reshaping the profitability trajectory and risk profile in 2023 .
  • Near-term financials reflect pre-restructuring retail services cost structure; watch for margin inflection as the mix shifts to high-margin technology (>60% guided) .
  • 2023 technology revenue guidance (~$3M) implies >100% YoY growth off a $1.4M stand-alone tech base, with MedCenter placements (+25 net new) as the primary growth driver .
  • Liquidity improved via the $16M financing; execution risk centers on ramping placements, converting pipeline opportunities (post Epic integrations), and sustaining margin targets .
  • Without accessible S&P consensus, traders should focus on qualitative catalysts (restructuring, guidance) and upcoming execution milestones (MedCenter deployments, margin delivery).
  • Monitor subsequent quarters for confirmation of cost savings ($35–$37M run-rate reduction) and cash usage decline (~65%) translating into improved EBITDA and cash flow metrics .
  • Partnership breadth and integration (Epic Willow/App Orchard) strengthen the commercial narrative for technology-led expansion with primary/urgent care channels .