medavail-20230331

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, 2023

☐ 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)

4720 East Cotton Gin Loop, Suite 220, Phoenix, Arizona

85040

(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 5, 2023, there were 80,523,932 shares of the registrant’s common stock outstanding.

MedAvail Holdings, Inc.

Form 10-Q

For the Three Months Ended March 31, 2023

TABLE OF CONTENTS


		Page

PART I
Item 1.	Financial Statements (Unaudited)	5
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss	7
	Condensed Consolidated Statements of Stockholders' Equity	8
	Condensed Consolidated Statements of Cash Flows	9
	Notes to Condensed Consolidated Financial Statements	11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	30

PART II
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3.	Defaults Upon Senior Securities	32
Item 4.	Mine Safety Disclosures	32
Item 5.	Other Information	32
Item 6.	Exhibits	33

Signatures		34

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, 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 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:

•the impact of our decision to exit our pharmacy services business and related asset sales and reductions in force;

•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;

•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;

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

•the impact of general market and macroeconomic conditions, the effect of inflationary pressure, including any impact of adverse developments affecting the financial services industry, such as those based on liquidity constraints or concerns and events including the outbreak of war in Ukraine, on our business.

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. These forward-looking statements are 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 and in our Annual Report on Form 10-K filed

with the Securities and Exchange Commission, or SEC. 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 this 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.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)


	March 31, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	18,796	$	11,444
Restricted cash	676		676
Accounts receivable	207		404
Inventories	8,701		3,994
Prepaid expenses and other current assets	2,072		2,569

Current assets from discontinued operations	2,079		4,842
Total current assets	32,531		23,929
Property, plant and equipment, net	789		5,261
Intangible assets, net	425		451
Right-of-use assets	773		624
Other assets	30		30

Long-term assets from discontinued operations	1,166		2,837
Total assets	$	35,714	$	33,132

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

MEDAVAIL HOLDINGS, INC.

Condensed Consolidated Balance Sheets (Continued)

(Unaudited)

(in thousands, except share and per share amounts)


	March 31, 2023		December 31, 2022
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	898	$	818
Accrued liabilities	592		552
Accrued payroll and benefits	1,240		1,379
Deferred revenue	275		152
Current portion of lease obligations	244		246

Current liabilities from discontinued operations	1,885		2,794
Total current liabilities	5,134		5,941
Warrant liabilities	23,378		—
Long-term debt, net	1,428		4,798
Long-term portion of lease obligations	590		441
Long-term liabilities from discontinued operations	1,015		1,128
Total liabilities	31,545		12,308
Commitments and contingencies (Note 10)
Stockholders' equity:
Common shares ($0.001 par value, 300,000,000 shares authorized, 80,480,641 and 80,169,719 shares issued and outstanding at March 31, 2023 and December 31, 2022, respectively)	81		81
Warrants	11,205		11,148
Additional paid-in-capital	256,847		256,229
Accumulated other comprehensive loss	(6,928)		(6,928)
Accumulated deficit	(257,036)		(239,706)
Total stockholders' equity	4,169		20,824
Total liabilities and stockholders' equity	$	35,714	$	33,132

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

MEDAVAIL HOLDINGS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

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


	Three Months Ended March 31,
		2023		2022
Revenue:
Hardware and subscription revenue		$	304	$	165
Service revenue		316		100
Total revenue		620		265
Cost of products sold and services:
Hardware cost of products sold		245		81
Service costs		118		50
Total cost of products sold and services		363		131
Other operating expenses:

General and administrative		4,960		5,190
Selling and marketing		132		100
Research and development		176		258
Total operating expense		5,268		5,548
Operating loss		(5,011)		(5,414)

Loss on issuance of warrants		(10,424)		—
Gain from change in fair value of warrant liabilities		3,045		—
Interest income		1		1
Interest expense		(169)		(251)


Net loss and comprehensive loss from continued operations		(12,558)		(5,664)
Discontinued operations:
Loss from discontinued operations		(4,772)		(7,358)


Net loss		$	(17,330)	$	(13,022)

Basic and diluted net loss per share:
Loss from continued operations		$	(0.16)	$	(0.17)
Loss from discontinued operations		$	(0.06)	$	(0.22)
Weighted average shares outstanding - basic and diluted		80,270,494		32,921,969

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

MEDAVAIL HOLDINGS, INC.

Condensed Consolidated Statements of Stockholders' Equity

(Unaudited)

(in thousands, except share amounts)


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







Balance at December 31, 2022	80,169,719	$	81		$	11,148		$	256,229		$	(239,706)		$	(6,928)		$	20,824
Net loss	—	—			—			—			(17,330)			—			(17,330)
Shares issued for vested RSUs	310,922	—			—			—			—			—			—

Warrants issued	—	—			57			—			—			—			57
Share-based compensation	—	—			—			618			—			—			618
Balance at March 31, 2023	80,480,641	$	81		$	11,205		$	256,847		$	(257,036)		$	(6,928)		$	4,169
















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 restricted stock units	6,874	—			—			—			—			—

SEC Form 10-Q filed by MedAvail Holdings Inc.