MedAdvisor (MDR: ASX) operates in the healthcare IT space, specifically in improving the interaction between pharmacies, patients, drug manufacturers and doctors. They provide a fully digital end to end experience for processing medical scripts for prescribed medication.
If we quickly look at each player from the above quartet and how the MedAdvisor app or platform helps solve at least 1 major problem for each of them?
Pharmacists/Pharmacies: It allows their customers to refill (where they have a repeat prescription) scripts on the app at any time, thus they can just come collect. This allows the pharmacists to process scripts more efficiently and allows them to provide regular customers with a faster and more streamlined service offering.
Patients: The app has inbuilt reminder functions for when to take your prescription and when your next script refill is due. These functions help to improve adherence to the medication prescribed and for better overall management of chronic conditions. It also acts as a detailed history of your medication history for any medical professional in the event of an emergency.
Doctors: Straight forward script renewals can be authorised through the app via an econsulatation and communicated to both the patient making the request and their local pharmacy. Thus cutting down the need for the patient coming in for an appointment. This assists doctors in providing a better service to patients with chronic conditions and improving the throughput of patients through their surgery as routine script refill appointments can be avoided.
Drug Manufacturers: For the first time drug manufacturers can market and communicate directly to patients actually taking their specific drug. Giving them advice on how to best utilise the drug, the latest research on the drug or new and improved versions that they should ask their doctor or pharmacist about.
There are many other benefits and functionality available within the MedAdvisor app, too many to go into here but needless to say, there are some attractive value propositions for each of the aforementioned user groups.
To date, MedAdvisor has managed to sign up, 9 Major Pharma Companies, 2,500 pharmacies, 4,000 doctors and 700,000 users. This has been delivered through organic growth and a major acquisition of a key competitor called Healthnotes. The current revenue is 50% SAAS based from the pharmacies and the other 50% is transactional fees being charged to the patient's and doctors and from marketing partnerships with the pharma companies. Transactional revenue is growing strongly and will eventually form the backbone of the business. Combining it all together MedAdvisor generates $8-$9 ($6 from pharmacy & $3 transactional) in revenue per user and is targeting a total of 6mil users over the long term.
Today MedAdvisor is approaching cashflow breakeven and expects to hit this milestone in the later half of 2018, in other words, the next 12/18 months. While this is a longer timeframe than I would normally be comfortable with the value proposition offered by the platform and the fact that they have taken over their largest competitor gives me a fair degree of comfort they will achieve this.
MDR is currently trading around 3c and market capitalisation of $28mil with $5mil of cash on the balance sheet. The current cash burn rate is around $300k a month. The recent capital raising to fund the Healthnotes acquisition and some smaller acquisitions appear to leave the company fully funded through to cashflow breakeven.
With an end to end, digital solution that is providing benefits to each of the 4 major market participants MedAdvisor appears to have a compelling investment proposition. Coupled with the fact that early adopters from each cohort have recognised these benefits and have engaged as paying customers of MedAdvisor appears to validate MedAdvisor's business model for each customer group.
Taking it all into consideration to me the MedAdvisor story is interesting.