How saving over 100,000 lives means profits for tech biz MedAdvisor

How saving over 100,000 lives means profits for tech biz MedAdvisor

Date of Report: Market close on Tuesday, 28th June
ASX: MDRPrice: A$0.160

52 Week Range: $0.135 - $0.415

Market Cap: $55.21M

Sector: Health Care Equipment & Services

Every second week we invite a leading fund manager to present at The Insider: Meet the Fund Manager. In February, Martin Pretty, from Equitable Investors, selected MedAdvisor as one of his three favourite stocks, pointing to recent success in the US market that he believes retail investors have overlooked.

11 February, 2022

11 May, 2022

The Insider: Meet the Fund Manager sessions are a great way to hear directly from leading fund managers. They share their approach to investing, favourite companies and their market view for the year ahead.

The Insider: Meet the CEO sessions feature a selection of company leaders who provide a succinct overview of big things their companies are doing. 

Roughly 125,000 Americans die every year after prematurely stopping treatment with prescription medications – a problem MedAdvisor hopes to end.

The company’s technology platform enables pharmacies and drug manufacturers to communicate directly with patients and encourage them to adhere to their treatment program.

Non-adherence is a big problem both in the US – where as many as 20% of those prescribed a medication won’t ever fill it, while 30% of those that do will do so only once – and globally.

In Australia, an estimated 9000 lives are lost each year as a result of this non-adherence.

“People, on average, take half the medications they’re prescribed,” MedAdvisor CEO Robert Read said.

“The causes of it can vary, from many things which are deliberate – such as feelings, side effects, cost, fear, social – and those that are not – like understanding or forgetfulness. It’s a complex problem and the solutions need to really appreciate and understand that.”

MedAdvisor’s service looks to overcome this problem by better connecting pharmacists and patients. The side effect of these life-saving efforts is a significant global market opportunity.

In the US, pharmaceutical companies spend close to US$6 billion each year in direct-to-consumer marketing efforts to help would-be patients find treatments for their conditions.

With so many patients then dropping off their medication, much of this investment is lost – but MedAdvisor’s service has consistently driven returns-on-investment in the order of seven to one, Mr Read said.

Martin Pretty, founding director and investment manager at Equitable Investors, said the business appears to have been overlooked by retail investors, who may not be aware of what the business does or how it operates.

“MedAdvisor’s mission is to deal with that adherence issue, and dealing with that benefits the pharmacist and it benefits the drug companies and big pharma, and both those players are customers,” he said.

“Financially, they recently came out and guided the market to $72 million to $74 million revenue for FY22, having beaten the revenue guidance they gave us for the calendar year just past.”

At the time, Mr Pretty noted the company was priced at only two times its revenue (based on the figures above) but expects to be cash flow positive by the end of the calendar year.

“I think that’s an important step to prove up the economics and ongoing financial sustainability of what they’re doing,” he said.

“Underlying that, the Australian business without the corporate overheads and development spend is cash generative already – that’s one of the first steps that gave us confidence in MedAdvisor.”

Click here to view more videos from Martin Pretty’s Meet the Fund Manager session in February, or click here to view the full Meet the CEOs session.

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Joseph ConstablePortfolio ManagerHancock & Gore

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Joseph Constable

Portfolio Manager
Hancock & Gore

Hancock & Gore is one of Australia’s oldest listed companies with a 100-plus year history of delivering shareholders long term investment returns. The company operates a wholly owned funds management business called H&G Investment Management Ltd and invests in small to medium-sized businesses with strong growth prospects and a sustainable competitive advantage. Joseph Constable is a portfolio manager with more than eight years’ experience across capital markets and is a former investment manager at Supervised Investments Australia with previous funds management experience at Smith and Williamson (UK) and Hunter Hall International. Joseph is currently a non-executive director of Po Valley Energy Limited (ASX: PVE).

The CEOs of all the companies chosen as Fund Manager favourite stocks are invited to present at our Meet the CEO series. Reach does not assume responsibility for the accuracy or completeness of any information provided, and the views expressed are not reflective of Reach Markets position.
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