medavail-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to_____

Commission File Number 001-36533

MEDAVAIL HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

90-0772394

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification Number)

6665 Millcreek Dr. Unit 1, Mississauga ON Canada

L5N 5M4

(Address of principal executive offices)

(Zip Code)

+1 (905) 812-0023

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.001 per share

MDVL

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 11, 2022, there were 70,555,977 shares of the registrant’s common stock outstanding.

MedAvail Holdings, Inc.

Form 10-Q

For the Three Months Ended March 31, 2022

TABLE OF CONTENTS


		Page

PART I
Item 1.	Financial Statements	5
	Consolidated Condensed Balance Sheets	5
	Consolidated Condensed Statements of Operations and Comprehensive Loss	5
	Consolidated Condensed Statements of Shareholders' Equity (Deficit)	6
	Consolidated Condensed Statements of Cash Flows	7
	Notes to Consolidated Condensed Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	27
Item 4.	Controls and Procedures	27

PART II
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29

Signatures		30

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

These forward-looking statements include, but are not limited to, statements about:

•our plans to modify our current products, or develop new products;

•the expected growth of our business and organization;

•our expectations regarding the size of our sales organization and expansion of our sales and marketing efforts;

•our ability to retain and recruit key personnel, including the continued development of a sales and marketing infrastructure;

•our ability to obtain and maintain intellectual property protection for our products;

•our ability to expand our business into new geographic markets;

•our compliance with extensive Nasdaq requirements and government laws, rules and regulations both in the United States and internationally;

•our estimates of expenses, ongoing losses, future revenue, capital requirements and our need for, or ability to obtain, additional financing;

•our ability to identify and develop new and planned products and/or acquire new products;

•the expectations regarding the impact of the COVID-19 pandemic on our business;

•existing regulations and regulatory developments in the United States, Canada and other jurisdictions;

•the impact of laws and regulations;

•our financial performance;

•the period over which we estimate our existing cash, cash equivalents and available-for-sale investments will be sufficient to fund our future operating expenses and capital expenditure requirements;

•our anticipated use of our existing resources; and

•developments and projections relating to our competitors or our industry.

We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Potential investors are urged to consider these factors carefully in evaluating the forward-looking statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any

forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to the Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

PART I

Item 1. Financial Statements

MEDAVAIL HOLDINGS, INC.

Consolidated Condensed Balance Sheets

(Unaudited)

(in thousands, except share amounts)


	March 31,		December 31,
	2022		2021

Assets
Current assets:
Cash and cash equivalents	$	5,274	$	19,689
Restricted cash	676		400
Accounts receivable (net of allowance for doubtful accounts of $96 thousand for March 31, 2022, $66 thousand for December 31, 2021)	1,748		1,189
Inventories	5,088		3,916
Prepaid expenses and other current assets	3,105		2,191
Total current assets	15,891		27,385
Property, plant and equipment, net	6,175		5,692
Intangible assets, net	2,765		2,300
Right-of-use assets	2,628		2,538
Other assets	233		228
Total assets	$	27,692	$	38,143
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities	$	8,527	$	6,740

Deferred revenue	107		83
Current portion of lease obligations	733		682
Total current liabilities	9,367		7,505
Long-term debt, net	9,608		9,538
Long-term portion of lease obligations	2,102		2,027

Total liabilities	21,077		19,070

Commitments and contingencies
Stockholders' deficit:
Common shares ($0.001 par value, 100,000,000 shares authorized, 32,908,922 and 32,902,048 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively)	33		33
Warrants	1,373		1,373
Additional paid-in-capital	217,249		216,685
Accumulated other comprehensive loss	(6,928)		(6,928)
Accumulated deficit	(205,112)		(192,090)
Total stockholders' equity	6,615		19,073
Total liabilities and stockholders' equity	$	27,692	$	38,143

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

Going concern (Note 2).

MEDAVAIL HOLDINGS, INC.

Consolidated Condensed Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per-share amounts)


	Three Months Ended March 31,
		2022		2021
Revenue:
Pharmacy and hardware revenue		$	9,014	$	3,781
Service revenue		100		246
Total revenue		9,114		4,027
Cost of products sold and services:
Pharmacy and hardware cost of products sold		8,563		3,526
Service costs		50		181
Total cost of products sold and services		8,613		3,707
Operating expense:







Pharmacy operations		3,929		2,593
General and administrative		6,535		5,676
Selling and marketing		2,313		1,534
Research and development		493		168

Total operating expense		13,270		9,971
Operating loss		(12,769)		(9,651)
Other gain (loss), net		—		161
Interest income		1		40
Interest expense		(254)		(2)
Loss before income taxes		(13,022)		(9,452)
Income tax expense		—		—
Net loss and comprehensive loss		$	(13,022)	$	(9,452)
Net loss per share - basic and diluted		$	(0.40)	$	(0.27)
Weighted average shares outstanding - basic and diluted		32,921,969		34,439,953

The accompanying notes are an integral part of these unaudited consolidated condensed financial statements.

MEDAVAIL HOLDINGS, INC.

Consolidated Condensed Statements of Shareholders' Equity

(Unaudited)

(in thousands, except per share amounts)


	Common Shares			Warrants			Additional Paid-in-Capital			Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
	Shares	Amount







Balance at December 31, 2021	32,902,048	$	33		$	1,373		$	216,685		$	(192,090)		$	(6,928)		$	19,073
Net loss	—	—			—			—			(13,022)			—			(13,022)
Shares issued for vested RSUs	6,874	—			—			—			—			—			—


Share-based compensation	—	—			—			564			—			—			564
Balance at March 31, 2022	32,908,922	$	33		$	1,373		$	217,249		$	(205,112)		$	(6,928)		$	6,615
















Balance at December 31, 2020	31,816,020	32			2,614			213,624			(148,275)			(6,928)			61,067
Net loss	—	—			—			—			(9,452)			—			(9,452)
Shares issued for options exercises	120,924	—			—			201			—			—

SEC Form 10-Q filed by MedAvail Holdings Inc.