PD-Rx Pharmaceuticals posted their 2013 annual report online yesterday. PD-Rx has been receiving some attention this year, and I don’t think this has gone unnoticed at the company since the CEO explicitly welcomes the new shareholders in the annual report. What I found very positive is that this is accompanied by an increased amount of information about the business. The 2013 annual report is the longest one since 2009 (I don’t have access to older versions) and it doesn’t even include the financial statements. Instead they have provided a link to the full audited statements that include all the footnotes.
Compared to SEC-reporting companies the amount of information that PD-Rx provides to it’s investors is of course still limited, but I do think that PD-Rx’s reaction the increased investor interest is very encouraging with respect to the shareholder friendliness of the company.
But what really matters is the financial performance and PD-Rx doesn’t disappoint here. Revenues increased by only 2 percent, but net profit jumped 74 percent from $0.40/share to $0.70/share. The increase in profitability is for a large part attributable to a decrease in SG&A costs of $348,000, and a large part of this amount can be explained by lower shipping costs ($145,000) and lower advertising costs ($33,000). I don’t know if this is sustainable – especially the shipping costs are substantially lower – but it does create a ‘pretty’ picture:
What’s also worth mentioning is that the company bought back 44,609 shares (approximately 2.5% of the outstanding share capital) after the end of the period at an average cost of $2.74/share. I think this is probably a repurchase from an employee that left the company or something similar and I don’t think it really signals anything w.r.t. future capital allocation plans, but it is nevertheless good to see.
Disclosure
Long PD-Rx Pharmaceuticals
Interesting pick – thanks..
One thing that caught my and scared me off here (since I couldn’t find any sufficient explanation in 2013 annual report) is the dramatic hike in Accounts Receivables [from $1.5m to almost $5m].
Did you find any good explanation to that?
Can that suggest a potential problem in revenue recognition being to aggressive?
Given that accounts payable also increased a similar amount I think they simply got a large order at the end of the fiscal year. It might mean that 2013 would have been a bit of a slow year if it wasn’t for this order, or it could mean that they are seeing growth and that things could be even better in 2014.
Great analysis!! Thank you!
So thanked I kept my position.
Great blog. I’ve really enjoyed reading your analyses over the past few months since I stumbled across your site.
One question I have – and I ask this because I’m in primary care – is how ubiquitous are PDRX’s products? I haven’t heard of them and have asked around with no one being familiar with their products or the company.
Additionally, it looks like PDRX products need to be ordered through an EHR/EMR which also makes me wonder how easy that will be with certain EHRs that are very popular (i.e. EPIC, AllScripts, PracticeFusion, etc.)?
PD-Rx doesn’t really have their own products or brand: they don’t make the medication, they only package it and deal with the logistics and regulations to make it possible for patients to get medications directly from their primary care physicians instead from a pharmacist. So I think it makes sense that not a lot of people know the company: what they do is mostly behind the scenes.
I do think that their software works with most EMR/EHR solutions. In the 2012 annual report the company states the following: