MedAdvisor’s Vaccine Program Deferrals Trigger Revenue Drop, Strategic Review Underway

A Challenging Quarter for MedAdvisor

MedAdvisor Limited (ASX: MDR), a global leader in pharmacy-driven patient engagement solutions, has reported a challenging second quarter for FY25, with operating revenue falling 38.6% to $30.8 million. The decline was primarily driven by a 43.7% drop in US revenue to $25.3 million, attributed to deferrals in vaccine-related health programs from two major pharmaceutical clients amid lower-than-expected vaccination rates during the US flu season.

Despite the revenue setback, MedAdvisor's gross profit margin improved significantly by 8.4 percentage points to 63.6%, reflecting a favorable shift in product mix towards higher-margin programs powered by its THRiV platform. The Australian and New Zealand (ANZ) segment showed resilience, posting a modest 1.9% revenue increase to $5.4 million, supported by growth in health program revenues and ongoing migration to a cloud-based pharmacy platform.

Strategic Transformation and Cost Management

In response to the softer quarter, MedAdvisor has commenced its Transformation 360° initiative, partnering with Mindsprint to develop a next-generation patient engagement platform aimed at delivering hyper-personalized experiences and improving medication adherence. The project cost is now estimated at $8.3 million, down from an initial $10-15 million estimate.

As part of this transformation, a business restructure began in January 2025, expected to yield annual cost savings of at least $5 million starting FY26. The company anticipates severance costs of approximately $500,000 to be recorded in the third quarter. These measures underscore MedAdvisor’s commitment to operational efficiency and sustainable profitability.

Outlook: Diversification and Growth Prospects

Chief Executive Officer Rick Ratliff expressed cautious optimism, highlighting a stronger and more diversified US health program pipeline for the second half of FY25. The pipeline includes over 50% more brands compared to the previous year, with several new customer accounts nearing finalisation. This diversification is expected to drive a revenue uplift in the second half, offsetting the earlier deferrals.

In Australia, the company expects continued solid performance, with planned pricing adjustments set for March 1 anticipated to further boost revenue. The ongoing cloud migration of the MedAdvisor for Pharmacy platform is on track for completion by the end of March 2025, enhancing pharmacy service flexibility and supporting growth in transactional services.

Financial Position and Capital Management

MedAdvisor ended the quarter with $12.4 million in cash, down from $22.5 million a year earlier, and refinanced its debt facility at a reduced interest rate of 9.25%, maturing in December 2027. An additional US$3.5 million facility was secured in November 2024, providing further liquidity. Operating cash flow was negative $4.0 million for the quarter, reflecting the revenue decline and timing of receipts and payments.

The company has also initiated a formal strategic review process to explore options aimed at maximizing shareholder value. This review is progressing well and will continue through the third quarter of FY25, with multiple initiatives under consideration across both US and Australian operations.