The action in shares of Progressive Care Inc. (OTCMKTS:RXMD) has been the action of a stock that is coming to terms with a new phase of trend: a strong bullish upward trend. The technical signals on display here are very clear as we read the tea leaves.
The lowest low – back in early November – came off of a type-specimen bullish MACD divergence, which led to a break of the downward trend and an explosive move higher. However, that rally was ‘corrected’ by the market, as all rallies are. What’s important is where that rally checked back to: On a closing basis, the pullback found confluence at the 61.8% fib level, the topside of the broken downtrend line, and the 50-day simple moving average.
From there, we have seen a strong bid come into place with more aggressive upside. That’s exactly what you want to see.
The Bright Future
Part of this is likely because the company is undergoing a transition from a slower growth business model to a faster growth, more scalable model.
On the conference call following its Q3 report, the company discussed its vision for the future, and noted that a dramatic realignment toward a scalable model with national reach is in progress, including a transformation from a pharmacy model to a comprehensive health services model that includes significant expansion in products and services, including RXMD Therapeutics branded products in the CBD and nutraceutical space, as well as a defining expansion into the Telehealth marketplace.
The company believes its vision for monetization in telemedicine has the potential to be disruptive in the healthcare space, and will have powerful synergies with its existing legacy pharmacy business and its emerging RXMD Therapeutics.
The opportunity to capitalize on its in-house expertise to expand through disruptive technology while providing needed care and services to underserved populations is a powerful step that will drive shareholder value while achieving a tremendous positive social impact. Targeting a leadership position in this market will be a signature objective for the Company in 2020.
“Get ready for a transformation,” continued Mars. “We are extremely excited about the opportunity to monetize telemedicine in a manner that will truly change the game as it is currently played. We look forward to introducing current and prospective shareholders to this vision in the months ahead. 2019 has been a breakout year. But the core message that we have right now for our shareholders is this: expect a transformative evolutionary leap to a vastly more scalable, diversified, and higher margin Progressive Care in 2020 and beyond.”
This is a vision that is far more scalable in terms of model. And the market should begin to assign a higher multiple to all that cash flowing in from operations as it starts to leverage this fact.
Even with this transition, it should be noted that the company has been growing a lot faster in its legacy model than one would normally expect from a pharmacy.
Recently, the company posted its Q3 data covering things through September, which showed consolidated quarterly year-over-year Revenue Growth of 91% to $10.14 million, gross margins expanding to 24.4% (versus Q2 22.7%, Q1 19.8%), and gross profit up 128% year-over-year to $2.47 million.
“Q3 set new records across basically all metrics. We saw accelerating growth in sales and prescriptions while continuing our strong multi-quarter trends of falling costs and expanding gross margins. Beyond the numbers, we are seeing a major positive impact from our recent Family Physicians Rx acquisition, and the Company is firing on all cylinders post-integration. Ultimately, this creates a very favorable backdrop for continued aggressive expansion in the months and quarters ahead as we prepare to launch several powerful new initiatives in Q4 and 2020.”
To follow that up, October sales and prescriptions filled set a new record performance pace for Q4 results.
The CEO, S. Parikh Mars, said: “The annualized pace we set in October equates to new records across the board as we continue to see broad-based top-line expansion on improving margins. Our $3.4 million in overall sales for October is an understatement because it leaves out the cash flows we took in during the month related to third-party billing activity. With all factors included, the number of gross billing would be closer to $4.2 million. And our 46k prescriptions filled puts Q4 on pace to handily supass our breakout Q3 performance already. Execution continues to be tremendous, and I am very proud of our talented and dedicated team.”
According to that release, the Company achieved over $3.4 million in overall October sales (not including an additional $800,000 third-party related billing activity), representing 78% annual growth in sales compared to October 2018, and 10% monthly growth in sales on a sequential monthly basis. The Company is also excited to report over 46,000 in filled prescriptions during the month, representing a 48% annual growth rate, and a 12% sequential monthly growth rate. In addition, the Company continues to see expanding bottom-line results, with gross margins tracking over 24% for October operations.
In other words, the company is firing on all cylinders and the stock reflects that shift and path forward right now.