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A Closer Look At Progressive Care Inc (OTCMKTS: RXMD)

A Closer Look At Progressive Care Inc (OTCMKTS: RXMD)
Written by
Aaron Smith
Published on
September 9, 2016
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Progressive Care, Inc., (OTCMKTS: RXMD, “Progressive Care”, or the “Company”) through its subsidiary, PharmCo, LLC (“PharmCo”), engages in the distribution of pharmaceuticals. The stock is presently trading around the $0.03 level. Its high on the year was $0.05 and it has been as low as $0.01.

From a strictly organic perspective, the Company has exceeded and outperformed expectations. On August 15, 2016, Progressive Care outperformed expectations by delivering 16,600 prescriptions in June 2016, just short of their first strategic goal of 20,000+ prescriptions per month, achieved $8.5 million in sales, stratospherically higher than their second strategic goal of increasing annual overall sales to $15 million and reporting positive year-to-date earnings, achieving their third strategic goal of achieving full enterprise profitability. The only item left on the strategic goals list is, merging, acquiring or otherwise aligning themselves with a synergistic independent pharmacy to create economies of scale.

The key is that while building their business organically, through acquisitions, and reaching self-sufficiency, the Company has publicly clearly stated that one of its four strategic goals for the year include stated that they are pursuing a merger or acquisition. The Company has announced its strategic goals for the year:

● Increase filled prescription counts to 20,000+ per month;● Increase annual overall sales to $15 million;● Achieve full enterprise profitability; and● Merge, acquire or otherwise align ourselves with a synergistic independent pharmacy to create economies of scaleOn August 22, 2016, the Company made a major announcement that they entered into a Placement Agent and Advisory Agreement with Monarch Bay Securities, LLC (“MBS”). MBS will act on an exclusive basis with respect to finding investors for potential offerings of the Company's securities, which if successful should cause the stock to spike. And, on a non-exclusive basis as an advisor to identify and introduce prospective parties to an acquisitions, merger, joint venture or other similar transaction or relationship.The purpose of this engagement is to identify strategic merger/acquisition targets, both private and public, that will be synergistic with the Company's core business and raise funds pursuant to a securities offering in conjunction with an approved transaction. As such, an executed merger/acquisition and offering may present the Company with opportunities to achieve accelerated growth, economies of scale, and the ability to up-list to a national exchange such as Nasdaq."To achieve the next phase of development as a publicly traded company, we have been working diligently to identify opportunities for large scale growth," stated S. Parikh Mars, CEO of Progressive Care. Furthermore, “Monarch Bay, with is its unique expertise in the healthcare industry, has become an impactful advisor on new avenues for targeting potential mergers and acquisitions. We believe that our relationship with Monarch Bay will ultimately yield the opportunity to take Progressive Care to the next level and become the institution it was always destined to be."The pharmaceutical industry has been consolidating. On August 19, 2015, CVS Health Corp. (NYSE: CVS) completed the acquisition of Ohio-based pharmacy services provider, Omnicare, for $12.7 billion, including debt of $2.3 billion. The buyout reflects the company’s foray into a new pharmacy distribution channel, the long-term specialty care market, a market Progressive Care is focused on.On October 28, 2015, Walgreens said that it will buy rival Rite Aid in a deal that would whittle the nation's one-time mom-and-pop drug-store industry into two massive chains. Walgreens Boots Alliance, which operates the namesake drug store chain, paid $9 per share in cash in a valuation that includes the assumption of debt. That reflects a 48% premium above Rite Aid's value at the close of trading the previous day. And at the end of last year, on December 16, 2015, CVS Health Corporation (NYSE:CVS) and Target Corporation (NYSE:TGT) announced that CVS Health completed the acquisition of Target's pharmacy and clinic businesses for approximately $1.9 billion.Progressive Care has been quietly whittling away at a health services business model that focuses on a small but substantial piece of the very large pie. This piece of pie, however, concentrates on high-margin revenue derived from medications and services for an under-served segment of the market. Progressive Care specializes in the care and management of patients with special needs, long-term care needs, including medications for infectious diseases.As also stated in the Open Letter to Shareholders, Progressive Care "will also look for opportunities to expand the pharmacy through establishing new locations or through mergers/acquisitions with similarly positioned independent pharmacies and will seek licensures in additional states in order to begin positioning PharmCo as a national brand." And the Company is making good on its statements. On September 1, 2016, PharmCo received its Connecticut non-resident pharmacy license and its its non-resident license in Georgia.With the announcement that the Company entered into a Placement Agent and Advisory Agreement with MBS, it appears it is reaching out to complete its final strategic goal. The major pharmaceutical chains must continue to increase shareholder value. As the pending market consolidation in the major pharmacy store and services sector is nearing completion, these companies will look to the next opportunities, especially those that offer higher gross margins. They will not be able to do this organically through existing infrastructure, as the services are much more specialized than what a discount pharmacy operation can profitably support. The only way they will be able to continue improving shareholder value is through acquisitions.So, now that the Company has achieved almost all of its strategic goals, including, but not limited to increasing filled prescription counts to 20,000+ per month, increasing annual overall sales to $15 million, achieving full enterprise profitability; the last piece of the puzzle is finally, merging, acquiring or otherwise aligning with a synergistic independent pharmacy to create economies of scale.So whether its through organic growth or mergers as acquisitions, it appears that Progressive Care is poised to go much higher. We will be updating our subscribers as soon as we know more. For the latest updates on RXMD, sign up below!Disclosure: We have no position in RXMD and have not been compensated for this article.

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