Kenbe read the Small Cap report from last month a great Sunday Read! Go SCRC! Tut
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
January 14, 2015
SUMMARY:
ScripsAmerica, Inc., (OTCBB: SCRC), (“the company”) provides supply chain management for the distribution of pharmaceutical products. The company focuses on the development, branding, and distribution of disintegrating (dissolving) drug formulations for over-the-counter (“OTC”) drugs, vitamins, and supplements; the support and financing of pharmaceutical supply chain management services to independent pharmacies; and the management of specialty pharmacy business. The Company's therapeutic categories include pain, arthritis, prenatal, urinary, and hormonal replacement drugs. The company was founded in 2008, and is incorporated in Delaware.
The company’s areas of focus include:
The marketing, sales, and distribution of RapiMed®products – the company has developed a branded OTC product called RapiMed® (www.rapimeds.com), based on acetaminophen, which is the active ingredient in Tylenol. RapiMed® is a children’s pain reliever and fever reducer, targeted to 2 to 11 year olds, and is being launched in Hong Kong, through a joint venture with Global Pharma Hub, an international pharmaceutical marketing and distribution company. Under a February 2014 agreement, Global Pharma Hub has a license to market and distribute RapiMed® worldwide, except for in the United States. The company anticipates launching RapiMed® into North American retail outlets in 2016, if it can obtain the necessary financing.
Services to independent pharmacy distribution business – ScripsAmerica has entered into agreements with third parties under which the company will receive fees based upon a formula tied to gross profit on sales of pharmaceutical products.
Specialty Pharmacy Business – In February 2014 the company entered into a business management agreement with Main Avenue Pharmacy, Inc. (“MVAP”), a New Jersey-based pharmacy specializing predominantly in topical pain and scar creams. The company acquired MAVP in the fourth quarter of 2014.
The company competes with a number of competitors in both the independent pharmacy distribution space, as well as for orally dissolving drug formulations. Many of these competitors are larger and better funded than the company.
The company’s independent pharmacy distribution competitors include both medium size and large pharmaceutical distribution companies, such as: AmerisourceBergen Corporation (NYSE: ABC); Anda Pharmaceuticals; Capital Wholesale Drug Company; Cardinal Health, Inc. (NYSE: CAH); Harvard Drug Group; Henry Schein, Inc. (NasdaqGS: HSIC); Matrix Distributors, Inc.; McKesson Corporation (NYSE: MCK); Medsource Corporation; Sunrise Wholesalers, Inc.; and Top Rx.
Caprock Research – Independent Investment Research
2
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
Competitors for the company’s orally dissolving drug formulations include such large pharmaceutical companies as: ALZA Corporation; Becton, Dickinson and Company (NYSE: BDX); BTG; Catalent Pharma Solutions; Genzyme Corporation; Shire plc (NasdaqGS: SHPG); and Watson Pharmaceuticals.
PROS:
In early January 2015, the company announced $5,280,402 in approved orders for December 2014, from its Main Avenue Pharmacy subsidiary. This was the fourth consecutive month that the company’s specialty pharmacy line of business generated over $5 million in sales, and the company’s annual run rate for this business exceeds $60 million. The company also announced that it had launched a diabetes patient supply program. Through this program, the company will provide diabetes patients in certain states with medical supplies that are only available through a physician's prescription and typically covered by medical insurance and Medicare. The company will provide meters, test strips, swabs, pens, lancing devices and lancets, and other supplies to patients. The company began generating revenue through its diabetic supply program in December 2014.
In December 2014, the company made a series of positive announcements, including acquiring PIMD International, LLC, a Florida-based pharmaceutical wholesaler with licenses from the DEA, and the states of Alabama, Florida, Illinois, Kentucky, New York, Ohio, Pennsylvania, Tennessee, and Texas. In December 2014, the company made several moves to improve its balance sheet, including securing a $4 million line of credit from Triumph Healthcare Finance to fund expansion of the company’s specialty pharmacy business, and payoff $325,000 in high interest current debt.
As of September 30, 2014, the company had approximately $1.2 million in cash, with approximately $6.4 million in current assets, $4.6 million in current liabilities, and $1.8 million in working capital. The company anticipates cash flow from operations will be sufficient to support its working capital requirements, debt service, debt maturity requirements, and operation expenses through September 30, 2015. These metrics should all show continued improvement when the company reports earnings for the quarter and full year ended December 31, 2014.
On March 10, 2014, the company received a $200,000 purchase order for its children’s pain relief rapid orally disintegrating 80 mg tablets from Global Pharma Hub for the Chinese market.
As of September 30, 2014, the company’s deferred revenue balance was $418,540. The company’s specialty pharmacy revenue is not recognized until the patient receives the filled prescription. The company will prepare and fill a prescription that has been approved by an insurance provider, ship the filled prescription to the patient, and upon confirmation of receipt of the prescription by patient will recognize revenue. Any prescription in which patient has not received product, but the company has been reimbursed by the insurance provider, is recorded as deferred revenue.
Caprock Research – Independent Investment Research
3
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
The company has set goals for expanding its compounding business both in the
number of states, and into new products with wide applications such as allergies and diabetes. It is also looking at other formulations for orally delivered products including vitamins, products for migraines and sleep deprivation.
The company has successfully “de-levered” its balance sheet by eliminating its “toxic” convertible debt. This elimination should stabilize the company’s common share count at approximately 137 million shares outstanding. The company has set a future goal to “up list” to a major exchange and become a listed security.
CONS:
As of November 14, 2014, no shipments of the company’s rapid orally disintegrating 80 mg tablets had been made from Global Pharma Hub into the Chinese market.
The company’s ability to obtain regulatory approval and launch RapiMed® in the United States is highly dependent upon management’s ability to: (i) equal or exceed the planned operating cash flows, (ii) maintain continued availability on the existing line of credit, and (iii) obtain additional financing or capital to fund and reduce the Company’s debt service obligations coming due and its operating expenses in addition to the normal regulatory and marketing risks expected.
As a result of the company’s evolving business model, it has a limited operating history in its lines of business and, therefore, it may not be able to correctly estimate its future operating expenses, which could lead to cash shortfalls.
Disruptions in the company’s supply chain or among other companies providing services to the company could adversely affect its ability to fill purchase orders for its independent pharmacy distribution business, which would have a negative impact on its financial performance.
The company does not have any written contracts with its customers. This allows such customers to use other companies instead of the company which may negatively impact on its sales.
Competition from horizontal and vertical markets involved in distribution to independent pharmacies may erode the company’s sales.
Any technologies, products and businesses that the company may acquire to expand or complement its business may be difficult to integrate, could adversely affect its relationships with key customers, and/or could result in significant charges to earnings as well potential dilution to existing stockholders.
The company currently relies on a third-party contract manufacturing organizations to manufacture and supply its RapiMed® products. If the company’s manufacturer fails to perform adequately or fulfill its needs, the company may be required to incur significant costs and devote significant efforts to find a new manufacturer.
Caprock Research – Independent Investment Research
4
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
The company does not own the formula used for the RapiMed® products to be
sold outside of the United States, as the formula is owned by the manufacturer it will be using. If it is unable to continue to use that manufacturer, its sales of RapiMed® products outside of the United States could be negatively affected.
The company could suffer reputational and financial damage in the event of product recalls.
Changes in the U.S. healthcare environment could have a material adverse impact on the company’s results of operations.
Until the company’s evolving business plan generates sufficient cash flow from operations to cover its expenses, it will need to raise additional capital by sales of its common stock and it may issue shares of its common stock for payment of services, which may adversely affect the market price of the company’s common stock and investors rights in the company may be reduced.
VERDICT:
Despite the fact that SCRC has yet to deliver any of their RapiMed® products into the Chinese market, and continues to “evolve” its business plan, the company has focused on several large, growing, and underserved markets. The company has competed against a number of larger and better known pharmaceutical distributors, successfully expanded its business lines, and strengthened its balance sheet. The company appears to be poised to continue strong growth into 2015. An “up listing” of the company’s stock and additional announcements, such as earnings for Q4 2014, have the potential to continue the recent upward movement in the price for the company’s stock.
Caprock Research – Independent Investment Research
5
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
SOURCES:
http://finance.yahoo.com/q?s=scrc&fr=uh3_...p;uhb=uhb2.
http://investing.businessweek.com/research/st...icker=SCRC.
http://www.nasdaq.com/symbol/scrc.
http://www.researchandmarkets.com/research/9pddt6/global.
http://scripsamerica.com.
http://www.sec.gov/Archives/edgar/data/152147...-index.htm.
http://topics.nytimes.com/top/news/business/c...index.html.
http://wallstreetanalyzer.com/scripsamerica-i...iew-series.
Disclosure: I, Charles I. Reed, CFA have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
DISCLOSURE:
The information contained herein is not intended to be investment advice and does not constitute any form of invitation or inducement by Charles I. Reed, CFA to engage in investment activity. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Securities, financial instruments, strategies, or commentary mentioned herein may not be suitable for all investors and this material is not intended for any specific investor and does not take into account an investor’s particular investment objectives, financial situations or needs. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only current as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fluctuate, and an investor may, upon selling an investment lose a portion of, or the entire principal amount invested. Past performance is no guarantee of future results. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.
FORWARD-LOOKING STATEMENT
This report may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward- looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of mentioned company to be materially different from the statements made.
COMPLIANCE PROCEDURE
Content is researched, written and reviewed on a best-effort basis. This document, article or report is written and authored by an outsourced research services provider, which provided Small Cap IR this article or report. However, we are only human and are prone to make mistakes. If you notice any errors or omissions, please notify us. Small Cap IR is not entitled to veto, interfere or alter the articles, documents or report once created and reviewed by the outsourced research provider. All parties responsible for the creation and dissemination of this report do not engage in high frequency trading.
NO WARRANTY OR LIABILITY ASSUMED
Small Cap IR is not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. Small Cap IR has not been compensated for this brief report. Owners and operators of Small Cap IR do not currently have any positions in SCRC. No liability is accepted by Small Cap IR whatsoever for any direct, indirect or consequential loss arising from the use of this document. Small Cap IR expressly disclaims any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Small Cap IR does not (1) guarantee the accuracy,
Caprock Research – Independent Investment Research
6
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.
Small Cap IR is the party responsible for hosting the analyst report. Small Cap IR has compensated 3rd party research provider two hundred and fifty dollars for the right to disseminate this report.
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute
http://www.prnewswire.com/news-releases/focus...21025.html
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
January 14, 2015
SUMMARY:
ScripsAmerica, Inc., (OTCBB: SCRC), (“the company”) provides supply chain management for the distribution of pharmaceutical products. The company focuses on the development, branding, and distribution of disintegrating (dissolving) drug formulations for over-the-counter (“OTC”) drugs, vitamins, and supplements; the support and financing of pharmaceutical supply chain management services to independent pharmacies; and the management of specialty pharmacy business. The Company's therapeutic categories include pain, arthritis, prenatal, urinary, and hormonal replacement drugs. The company was founded in 2008, and is incorporated in Delaware.
The company’s areas of focus include:
The marketing, sales, and distribution of RapiMed®products – the company has developed a branded OTC product called RapiMed® (www.rapimeds.com), based on acetaminophen, which is the active ingredient in Tylenol. RapiMed® is a children’s pain reliever and fever reducer, targeted to 2 to 11 year olds, and is being launched in Hong Kong, through a joint venture with Global Pharma Hub, an international pharmaceutical marketing and distribution company. Under a February 2014 agreement, Global Pharma Hub has a license to market and distribute RapiMed® worldwide, except for in the United States. The company anticipates launching RapiMed® into North American retail outlets in 2016, if it can obtain the necessary financing.
Services to independent pharmacy distribution business – ScripsAmerica has entered into agreements with third parties under which the company will receive fees based upon a formula tied to gross profit on sales of pharmaceutical products.
Specialty Pharmacy Business – In February 2014 the company entered into a business management agreement with Main Avenue Pharmacy, Inc. (“MVAP”), a New Jersey-based pharmacy specializing predominantly in topical pain and scar creams. The company acquired MAVP in the fourth quarter of 2014.
The company competes with a number of competitors in both the independent pharmacy distribution space, as well as for orally dissolving drug formulations. Many of these competitors are larger and better funded than the company.
The company’s independent pharmacy distribution competitors include both medium size and large pharmaceutical distribution companies, such as: AmerisourceBergen Corporation (NYSE: ABC); Anda Pharmaceuticals; Capital Wholesale Drug Company; Cardinal Health, Inc. (NYSE: CAH); Harvard Drug Group; Henry Schein, Inc. (NasdaqGS: HSIC); Matrix Distributors, Inc.; McKesson Corporation (NYSE: MCK); Medsource Corporation; Sunrise Wholesalers, Inc.; and Top Rx.
Caprock Research – Independent Investment Research
2
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
Competitors for the company’s orally dissolving drug formulations include such large pharmaceutical companies as: ALZA Corporation; Becton, Dickinson and Company (NYSE: BDX); BTG; Catalent Pharma Solutions; Genzyme Corporation; Shire plc (NasdaqGS: SHPG); and Watson Pharmaceuticals.
PROS:
In early January 2015, the company announced $5,280,402 in approved orders for December 2014, from its Main Avenue Pharmacy subsidiary. This was the fourth consecutive month that the company’s specialty pharmacy line of business generated over $5 million in sales, and the company’s annual run rate for this business exceeds $60 million. The company also announced that it had launched a diabetes patient supply program. Through this program, the company will provide diabetes patients in certain states with medical supplies that are only available through a physician's prescription and typically covered by medical insurance and Medicare. The company will provide meters, test strips, swabs, pens, lancing devices and lancets, and other supplies to patients. The company began generating revenue through its diabetic supply program in December 2014.
In December 2014, the company made a series of positive announcements, including acquiring PIMD International, LLC, a Florida-based pharmaceutical wholesaler with licenses from the DEA, and the states of Alabama, Florida, Illinois, Kentucky, New York, Ohio, Pennsylvania, Tennessee, and Texas. In December 2014, the company made several moves to improve its balance sheet, including securing a $4 million line of credit from Triumph Healthcare Finance to fund expansion of the company’s specialty pharmacy business, and payoff $325,000 in high interest current debt.
As of September 30, 2014, the company had approximately $1.2 million in cash, with approximately $6.4 million in current assets, $4.6 million in current liabilities, and $1.8 million in working capital. The company anticipates cash flow from operations will be sufficient to support its working capital requirements, debt service, debt maturity requirements, and operation expenses through September 30, 2015. These metrics should all show continued improvement when the company reports earnings for the quarter and full year ended December 31, 2014.
On March 10, 2014, the company received a $200,000 purchase order for its children’s pain relief rapid orally disintegrating 80 mg tablets from Global Pharma Hub for the Chinese market.
As of September 30, 2014, the company’s deferred revenue balance was $418,540. The company’s specialty pharmacy revenue is not recognized until the patient receives the filled prescription. The company will prepare and fill a prescription that has been approved by an insurance provider, ship the filled prescription to the patient, and upon confirmation of receipt of the prescription by patient will recognize revenue. Any prescription in which patient has not received product, but the company has been reimbursed by the insurance provider, is recorded as deferred revenue.
Caprock Research – Independent Investment Research
3
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
The company has set goals for expanding its compounding business both in the
number of states, and into new products with wide applications such as allergies and diabetes. It is also looking at other formulations for orally delivered products including vitamins, products for migraines and sleep deprivation.
The company has successfully “de-levered” its balance sheet by eliminating its “toxic” convertible debt. This elimination should stabilize the company’s common share count at approximately 137 million shares outstanding. The company has set a future goal to “up list” to a major exchange and become a listed security.
CONS:
As of November 14, 2014, no shipments of the company’s rapid orally disintegrating 80 mg tablets had been made from Global Pharma Hub into the Chinese market.
The company’s ability to obtain regulatory approval and launch RapiMed® in the United States is highly dependent upon management’s ability to: (i) equal or exceed the planned operating cash flows, (ii) maintain continued availability on the existing line of credit, and (iii) obtain additional financing or capital to fund and reduce the Company’s debt service obligations coming due and its operating expenses in addition to the normal regulatory and marketing risks expected.
As a result of the company’s evolving business model, it has a limited operating history in its lines of business and, therefore, it may not be able to correctly estimate its future operating expenses, which could lead to cash shortfalls.
Disruptions in the company’s supply chain or among other companies providing services to the company could adversely affect its ability to fill purchase orders for its independent pharmacy distribution business, which would have a negative impact on its financial performance.
The company does not have any written contracts with its customers. This allows such customers to use other companies instead of the company which may negatively impact on its sales.
Competition from horizontal and vertical markets involved in distribution to independent pharmacies may erode the company’s sales.
Any technologies, products and businesses that the company may acquire to expand or complement its business may be difficult to integrate, could adversely affect its relationships with key customers, and/or could result in significant charges to earnings as well potential dilution to existing stockholders.
The company currently relies on a third-party contract manufacturing organizations to manufacture and supply its RapiMed® products. If the company’s manufacturer fails to perform adequately or fulfill its needs, the company may be required to incur significant costs and devote significant efforts to find a new manufacturer.
Caprock Research – Independent Investment Research
4
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
The company does not own the formula used for the RapiMed® products to be
sold outside of the United States, as the formula is owned by the manufacturer it will be using. If it is unable to continue to use that manufacturer, its sales of RapiMed® products outside of the United States could be negatively affected.
The company could suffer reputational and financial damage in the event of product recalls.
Changes in the U.S. healthcare environment could have a material adverse impact on the company’s results of operations.
Until the company’s evolving business plan generates sufficient cash flow from operations to cover its expenses, it will need to raise additional capital by sales of its common stock and it may issue shares of its common stock for payment of services, which may adversely affect the market price of the company’s common stock and investors rights in the company may be reduced.
VERDICT:
Despite the fact that SCRC has yet to deliver any of their RapiMed® products into the Chinese market, and continues to “evolve” its business plan, the company has focused on several large, growing, and underserved markets. The company has competed against a number of larger and better known pharmaceutical distributors, successfully expanded its business lines, and strengthened its balance sheet. The company appears to be poised to continue strong growth into 2015. An “up listing” of the company’s stock and additional announcements, such as earnings for Q4 2014, have the potential to continue the recent upward movement in the price for the company’s stock.
Caprock Research – Independent Investment Research
5
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
SOURCES:
http://finance.yahoo.com/q?s=scrc&fr=uh3_...p;uhb=uhb2.
http://investing.businessweek.com/research/st...icker=SCRC.
http://www.nasdaq.com/symbol/scrc.
http://www.researchandmarkets.com/research/9pddt6/global.
http://scripsamerica.com.
http://www.sec.gov/Archives/edgar/data/152147...-index.htm.
http://topics.nytimes.com/top/news/business/c...index.html.
http://wallstreetanalyzer.com/scripsamerica-i...iew-series.
Disclosure: I, Charles I. Reed, CFA have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in the article.
DISCLOSURE:
The information contained herein is not intended to be investment advice and does not constitute any form of invitation or inducement by Charles I. Reed, CFA to engage in investment activity. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Securities, financial instruments, strategies, or commentary mentioned herein may not be suitable for all investors and this material is not intended for any specific investor and does not take into account an investor’s particular investment objectives, financial situations or needs. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only current as of the stated date of their issue. Prices, values, or income from any securities or investments mentioned in this report may fluctuate, and an investor may, upon selling an investment lose a portion of, or the entire principal amount invested. Past performance is no guarantee of future results. Before acting on any recommendation in this material, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice.
FORWARD-LOOKING STATEMENT
This report may contain certain forward-looking statements and information, as defined within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the Safe Harbor created by those sections. This material contains statements about expected future events and/or financial results that are forward-looking in nature and subject to risks and uncertainties. Such forward- looking statements by definition involve risks, uncertainties and other factors, which may cause the actual results, performance or achievements of mentioned company to be materially different from the statements made.
COMPLIANCE PROCEDURE
Content is researched, written and reviewed on a best-effort basis. This document, article or report is written and authored by an outsourced research services provider, which provided Small Cap IR this article or report. However, we are only human and are prone to make mistakes. If you notice any errors or omissions, please notify us. Small Cap IR is not entitled to veto, interfere or alter the articles, documents or report once created and reviewed by the outsourced research provider. All parties responsible for the creation and dissemination of this report do not engage in high frequency trading.
NO WARRANTY OR LIABILITY ASSUMED
Small Cap IR is not responsible for any error which may be occasioned at the time of printing of this document or any error, mistake or shortcoming. Small Cap IR has not been compensated for this brief report. Owners and operators of Small Cap IR do not currently have any positions in SCRC. No liability is accepted by Small Cap IR whatsoever for any direct, indirect or consequential loss arising from the use of this document. Small Cap IR expressly disclaims any fiduciary responsibility or liability for any consequences, financial or otherwise arising from any reliance placed on the information in this document. Small Cap IR does not (1) guarantee the accuracy,
Caprock Research – Independent Investment Research
6
ScripsAmerica, Inc. (SCRC)
Rating:
BUY
timeliness, completeness or correct sequencing of the information, or (2) warrant any results from use of the information. The included information is subject to change without notice.
Small Cap IR is the party responsible for hosting the analyst report. Small Cap IR has compensated 3rd party research provider two hundred and fifty dollars for the right to disseminate this report.
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute
http://www.prnewswire.com/news-releases/focus...21025.html
