📺 Stream EntrepreneurTV for Free 📺

Is MedAvail a Winner in the Healthtech Industry? Shares of MedAvail (MDVL) have more than doubled in the past month. Let's see if this stock has more room to run.

By Aditya Raghunath

entrepreneur daily

This story originally appeared on StockNews

shutterstock.com - StockNews

Shares of MedAvail (MDVL) have more than doubled in the past month. Let's see if this stock has more room to run.

Companies part of the digital health industry gained significant momentum in 2020 as the COVID-19 pandemic acted as a massive tailwind. Several countries imposed lockdowns and travel came to a standstill. As clinics were closed, the demand for digital health solutions accelerated quickly.

According to a report from Grand View Research, the global telehealth market is forecast to reach $787.4 billion, indicating annual growth rates of 36.5% in the forecast period. A rapidly expanding addressable market allows companies such as MedAvail (MDVL) to grow revenue at a robust pace over a period of time.

The evolution of smartphones and strong internet connectivity has made telehealth products and services accessible at a reasonable cost, driving adoption rates higher. Let's see if MedAvail should be part of your portfolio given the above-mentioned factors.

An overview of MedAvail

Valued at a market cap of $161 million, MedAvail is a tech-enabled retail pharmacy company. It develops and commercializes self-service pharmacy, mobile apps, kiosks as well as drive-thru solutions in the U.S. and Canada.

MedAvail has two primary business segments which are Retail Pharmacy Services and Pharmacy Technology. Its MedCenter enables on-site pharmacy in medical clinics, employer sites, and retail store locations. It also establishes an audio-visual connection to a pharmacist enabling the dispensing of prescription drugs to the patient on a real-time basis. Additionally, MedAvail owns and operates SpotRx which is a retail pharmacy platform.

The company has managed to increase sales from just $3.7 million in 2019 to $22.12 million in 2021. However, its operating loss widened from $20.7 million to $43.5 million in this period.

In Q4 of 2021, MedAvail reported revenue of $6.95 million, compared to $3 million in the year-ago period. However, its cost of sales also increased by 128% to $7.64 million.

What next for MedAvail stock investors?

Analysts tracking the stock expect MedAvail to increase sales by 86.8% to $41.33 million in 2022 and by 65.8% to $68.5 million in 2023. Comparatively, its adjusted loss per share might narrow from $1.34 in 2021 to $0.54 in 2023.

We can see that MedAvail stock is valued at a forward price to sales multiple of 4x which is quite reasonable given its growth rates. However, its less than impressive gross margins indicate, the company will have to grow revenue at a fast clip to turn profitable.

MedAvail ended 2021 with $19.7 million in cash and $12.25 million in debt which means it will have to raise equity capital and offset cash burn rates.

Earlier this month, MedAvail announced the closing of a private placement amounting to $40 million. It offered 37.6 million shares of common stock at an offer price of $1.0625 per share. The proceeds will be used for general corporate purposes as well as to fund strategic initiatives.

The Foolish takeaway

While there are several drivers positively impacting MedAvail stock, it remains a high-risk bet due to its small size and consistent losses. However, it might be a good acquisition target for some leading telehealth players.

I believe there are far better players in the telehealth industry, such as Teladoc (TDOC) and WELL Health Technologies (WHTCF), that should be considered instead of MedAvail right now.

MDVL shares fell $0.11 (-6.32%) in premarket trading Wednesday. Year-to-date, MDVL has gained 16.43%, versus a -7.41% rise in the benchmark S&P 500 index during the same period.

About the Author: Aditya Raghunath

Aditya Raghunath is a financial journalist who writes about business, public equities, and personal finance. His work has been published on several digital platforms in the U.S. and Canada, including The Motley Fool, Finscreener, and Market Realist.


The post Is MedAvail a Winner in the Healthtech Industry? appeared first on StockNews.com

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Starting a Business

I Wish I Knew These Four Things Before Starting My Own Business

Starting a business is hard work to say the least. These are four lessons I wish someone had shared with me before going solo, so I'm here to share them with you.

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.


Add Some Life to the Office with $60 off This Bluetooth Speaker

This TREBLAB speaker provides 360-degree HD sound and high-powered connectivity.

Business Solutions

Organize Your Podcasts and Audio Content with This $40 Plan

Player FM lets you organize and sync podcasts across different platforms in one place.

Resumes & Interviewing

Find Jobs Easier with This AI Resume Builder on Sale for $90

Canyon Pro features automated resume writing, application autofilling, and more helpful tools for finding a job.

Science & Technology

Brand New GPT-4o Revealed: 3 Mind Blowing Updates and 3 Unexpected Challenges for Entrepreneurs

Unveiling OpenAI's GPT-4.0: The latest AI with vision, auditory, and emotional intelligence abilities is revolutionizing industries. How will it affect your business?