CEO: Bob Schneiderman
WSA: Good day from Wall Street. This is Juan Costello, Senior Analyst with the Wall Street Analyzer. Joining us today is Bob Schneiderman CEO of ScripsAmerica Incorporated. The company trades on the bulletin board, ticker symbol is SCRC. Thanks for joining us today, Bob.
Bob Schneiderman: And Juan, thank you for having me.
WSA: Anytime now, starting off, give us a history of ScripsAmerica for some of our listeners that didn’t catch the last interview.
Bob Schneiderman: Well, ScripsAmerica is a distributor of pharmaceuticals through different venues. And in addition to that we have a retail pharmacy called Main Avenue Pharmacy in Clifton, New Jersey that specializes in filling unique prescriptions, and is often referred to as compounding which is the taking of various ingredients, blending them together to customize them as per the doctors’ instructions to fit the particular needs of the patients.
We started business in 2010. Initially we were distributing our goods to McKesson, and we kind of changed gears in 2012, due to the fact that we didn’t think we were making enough money at that point. So, we changed, bought a pharmacy, and have now been distributing through our two distributors that we own a good portion off, one in Tennessee and one in Florida. We are distributing controlled and not controlled substances to independent pharmacies. That’s our niche, the independent pharmacies.
WSA: Great. And yeah, can you talk about the recent orders there approved on your specialty pharmacy?
Bob Schneiderman: Yes. We started this specialty pharmacy in February of this year, the last two weeks of February. We’ve grown from about $125,000 for half a month in February to 5.6 million in October. We hope to continue our — what seems to be and is a meteoric rise in the gross revenues, and we’re taking steps to ensure that happens.
WSA: Excellent. And — so, what are some of the key trends that you are focusing on right now in this sector and how are you positioning the company to capitalize and grab market share?
Bob Schneiderman: Well, again, it seems that this compound specialty pharmacy area is growing by leaps and bounds. Doctors are very much in favor of using the compounds instead of addictive type of medications. The compounding area, products are non-addicting. They’re very effective for pain and for scars. They avoid the overall treatment that a narcotic type of drug might give. If you’re in a serious pain in a particular area and you take an oral product, it’s going to affect the whole body; whereas with a tropical cream, it’s going to be absorbed into the area that you’re putting it on.
Believe me people are not going to swallow this because there’s not a narcotic in it that would give an ill effect of habit-forming scenario that is what everybody wants to avoid. I mean, there are fewer side effects to taking it. As I said, it’s not addictive and that’s the most important part of it. It also reduces the risk of drug-to-drug interaction. If a patient is on another medication that they take orally, there’s no fear that our product will interact adversely with it and cause further problems.
So, that being the case and with the continuing and increasing use of compounding prescriptions, we are increasing the size of our pharmacy. We have partnered with some other pharmacies in Ohio, and Tennessee, and Alabama, and we will continue to do so. And the benefit of that is we have no capital investment to make. We help bring them the traffic that will raise their level of compounding, and then we participate on a revenue sharing basis with them.
With our Main Avenue Pharmacy, we’re going to be expanding the number of states, and this is important because you can only ship to and distribute into states that you have licenses with. Currently we’ve got seven states that we’re licensed in, and we hope to grow that to as many as possible, time permitting. Each state has their own nuance to get licenses but we will take that step. And additionally we have increased the staff and the size of the operation in Main Avenue so we can handle the increased volume that is going to be placed upon them based on the expansion of the states into which we can ship.
WSA: Definitely. And what are some of the factors that make ScripsAmerica unique from some of the other players in the sector?
Bob Schneiderman: Well, I’d like to say two things basically, service and pricing. Now, in addition to the compounding scenario, we also have a large majority interest in a distributor in Florida, PIMD is their name. One of the things that makes that a good scenario is that they are DEA-approved and licensed. So, that opens up the ability to ship controlled substances to different areas and they are expanding their licensed states so that they’ll be able to ship into other states than what they’re currently licensed.
With our partnership with the other compounding pharmacies, they are buying their raw materials from which the compounding is done from–through PIMD. It is not a tremendous markup for them. In fact it is at or below market price. Because of the buying we’re doing, we’re able–to get a discount through PIMD. Therefore, we can make a small profit without affecting the price to the pharmacy.
We also have a distributor in Tennessee, and their specialty is the ability to furnish controlled substances that normally independent pharmacies cannot buy. The reason that the independent pharmacies can’t buy them is because the large suppliers require minimum orders . And as a result, and I’ll just use an example–The numbers are made up just for example purposes. If they have a minimum on a particular drug of a 100 bottles and the drug is at $50, and they come at a very large bottles, , you’re talking about an outlay of capital that perhaps an independent pharmacy can’t afford
So, what we would do through WRX – that’s the company in Tennessee, is we will buy the minimum or more, and then parse it out to them on an individual basis. So, pharmacy A may get three bottles, pharmacy B gets ten, another pharmacy gets 11, and so forth. Therefore, that allows them to fill prescriptions that they normally would not be able to, their margins are good, our margins are good, and everybody is very happy.
WSA: Great. And what are some of the key goals and milestones you’re hoping to accomplish over the next year?
Bob Schneiderman: Well, over the next year. I would say the goals are as follows: We’re expanding our compounding business and prescription business both by extending into other states, by developing and adding new products toin addition current creams we have. They will cover very wide range of ailments such as diabetes and allergies. We hope to launch our RapiMed product in Hong Kong and later in China. We’re waiting for the final approval of our distributor over there from the health authority. We would love to and as soon as we qualify to up list to a major exchange. The elimination of our remaining convertible notes, which we intend to pay down by the end of the year. All of the previously unfortunately necessitated by business “toxic, convertible notes” have been eliminated. So they’re gone.
We’re also looking at other formulations of our oral delivery technology. While the RapiMed for children is our first product, we have just developed a new vitamin that will be in the same format. We can take the same formulation and apply it to such products for sleep deprivation, allergies, migraines,with the same benefit of the quick release almost instant application and absorption into the system. And as a result, it offers a unique product but it’s not out there yet.
And another possibility would be strategic acquisitions which could include other pharmacies, instead of partnering with them. Depending on the situation we might be interested in buying them. And eventually, I don’t know if it will be 12 months from now or 18 months from now, but we would contemplate getting into the manufacturing so that instead of contracting out the manufacturing of our products, we would be manufacturing them ourselves.
WSA: And perhaps you can walk us through your background and experience there, Bob, talk about the management team.
Bob Schneiderman: Well, to walk you through mine, it will take a while. So, I’ll be brief. And I only say that because I’m 72. So, I’ve been around a while.
Bob Schneiderman: I’m one of the founding partners, there were two of us, of the company back in 2010. Prior to that, I did consulting work in the field of the medical and pharmaceutical area, and helped various companies to help grow their business. I have marketing and a PR background as well. For 30 plus years, I ran a personnel recruiting firm out at Philadelphia. When I say, “Ran,” it was mine. And that’s basically my background. I have had experience with public companies, mostly in the advisory capacity, but this is my first venture into being the CEO of a company that is public.
Jeffrey Andrews is our CFO. He’s steep in experience with public companies and understands the nuances of the SEC He’s backed up by Pete Magill who is our Corporate Controller. We got Pete from an accounting firm that specializes in public companies, and he has saved us a lot of money. He’s been a great asset to us. Adam Brosius is our Director of Business Development. Always bringing us new ideas and new relationships that hopefully would help the company. And Chad Beene is our National Sales Manager. He’s young — he’s the young guy on the team, and young relative to Jeff and myself. And he’s out there hustling. And he’s got a great team building, network building background, and again, a tremendous asset to the company.
So, we’re young in some respects, we’re old in some respects, but together we work very well and we’re very happy, all of us, to be on this team with the potential growth of the company. And we feel with the Q coming out, and the preliminary numbers, and the estimates that we put out, we have become a profitable company.
I’m probably going to lead up to your last question, which I hope is, well why should people invest in ScripsAmerica, and the reason is because we are a profitable ‘penny stock.’ I hope that’s not going to be for long. We’ve turned the corner. This Q will reflect the fact that we are profitable and we see nothing but good things coming along with both what we can tell the public and what we cannot yet tell the public about what’s going to happen. We feel that our stock is grossly undervalued.
WSA: Right. Well, just a lead in to that, as you continue to speak with investors and the financial community, Bob, you were recently at the SeeThruEquity Conference. Do you believe that the company story, and your message, and upside are completely understood and appreciated by them? And if not, what do you wish investors better understood about the company?
Bob Schneiderman: Well, I think it’s going to become understood only because it wasn’t much a reason to go out into the public and make ourselves available until we had enough of a story, and showing progress to make them standup, and take notice. Hopefully they will invest in the company. The only misconception, I think, that may be out there is that we’re still saddled with toxic convertible debt, and that is not the case since we dispensed with it last quarter.
So, the only debt we have, falls into two categories. There are three people holding convertible debt that, — we expect that that would be dispatched with by the end of the year. And a board member who has given us a term loan. . It should be paid off by mid-2016. It’s a four-year loan, and it has been paid each month. So, we’re really in good shape. The balance sheet compared to what it has been is extremely impressive, and the fact that we are on sound footing now is very good.
WSA: Great. Well once again, joining us today is Bob Schneiderman, CEO of ScripsAmerica Incorporated which trades on the bulletin board, ticker symbol SCRC. Currently trading at 13 cents a share, market cap north of 18 million. And before we conclude here, Bob, to recap some of your key points, why should investors consider the company a good investment opportunity today?
Bob Schneiderman: Low debt, the share count is going to be stable from here on. We had to do some convertible debts before, and the conversion brought our outstanding number of shares up to 137 million, but we do not see the need for that going forward. And any debt that we incur going forward from here will be straight debt and not convertible. So, we think it’s a solid shareholder base, a stable number of shares, revenue growing by leaps and bounds, and profitable. Therefore, grossly undervalued.
WSA: Well we certainly look forward to continue to track the company’s growth and report on your upcoming progress. And we’d like to thank you for taking the time to join us today, Bob, and update our investor audience on Scrips. It’s always great to have you on.
Bob Schneiderman: Juan, always a pleasure and I appreciate you making this forum available to us.