Greetings. Welcome to the Assure Holdings Corporate Update Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star one on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, John Farlinger, CEO of Assure Holdings. You may begin.
Good afternoon, everyone, and welcome to today's Assure Danam Health shareholder webinar. I'm going to go through and talk briefly about Assure, the recent series of events leading up to today's meeting, and then talk about the transition to Danam and then hand the meeting over to Tim Canning, the CEO of Danam Health. Next slide. Assure Holdings has been a healthcare services company providing best-in-class outsourcing intraoperative neurophysiological monitoring services. The model was really built on having a technologist working in the operating room, an Assure-employed board-certified technologist working with a surgeon on typically up to 200 surgeries a year.
That service was augmented with a teleneurology platform that performed, t hat was able to scale, handle multiple surgeries at a time, driving down the low cost of neurology partners, neurology services, and ultimately, we felt we'd create a highly scalable model. Assure expanded into over 6 states, grew to over 14,000 surgeries or managed cases per year, but was severely impacted by the downward pressure in the cost of reimbursement. And as we jump on to the next slide, there's an overview of really the series of events over the last 6-8 months. Starting in September of 2022, where the board of Assure directed management to evaluate strategic alternatives for the business due to the rapid decline in out-of-network medical reimbursement. Management was requested to present options to retain value in the public vehicle and really ultimately seek to dispose of the existing clinical operations and related assets.
Management reviewed and assessed 17 potential M&A candidates, choosing Danam Health as the merger candidate of choice. On February 12th, 2024 Assure entered into an agreement and plan of merger with Danam. By March 20th, Assure had submitted its plan of compliance with NASDAQ to maintain its listing, requesting until July 22, 2024 to complete the merger with Danam. Following that, on March 26, 2024, Assure closed the sale of its clinical assets to MPOWERHealth. By May 3, Assure had filed its preliminary S-4 with the SEC, and by May 13, 2024, a NASDAQ panel had approved Assure's plan of merger with Danam.
On May fourteenth of this month, Assure's shareholders approved the increase in authorized capital, allowing the company to issue up to 250 million shares, thus giving it the flexibility to complete the Danam transaction and also raise additional capital. Assure will be seeking shareholder approval in the second calendar quarter of this year for the approval of the Assure and Danam merger and plans to close the transaction prior to the NASDAQ panel deadline of July 22nd, 2024. If we move on, we'll give a brief description of the business combination terms. As I mentioned, on February 12th, 2024 , Assure entered into an agreement and plan of merger with Danam Health. Upon shareholder approval, a newly formed subsidiary of Assure will merge with and into Danam, with Danam surviving the merger as the wholly owned subsidiary of Assure.
In this case, Danam will be deemed the accounting acquirer, and therefore the combined company will be required to satisfy all applicable initial NASDAQ listing requirements. Following the closing of the merger, the former Assure equity holders are expected to own approximately 10% of the outstanding capital stock, and the equity holders of Danam are expected to own approximately 90% of the outstanding capital stock of the combined company on a fully diluted basis. The merger will result in a combined company that will focus on pharmaceutical and healthcare services that will advance Danam's micro health ecosystem. It is anticipated to include a portfolio of companies with pharmacy, wholesale operations, and a technology division with a novel platform for hub and clinical services. Relevant pro forma financial information can be found in the recently filed registration statement on Form S-4, currently filed with the SEC.
With that, I'm going to hand the balance of the meeting over to Tim Canning, the CEO of Danam Health.
Hey, thank you so much, John. It's an honor to virtually engage with the Assure shareholders and provide a company overview on Danam Health. We're gonna discuss our business model and our vision going forward. So, registration statement. Before, before we get rolling, just take, let me take a quick minute on my background. As John mentioned, I joined Danam Health, the Danam Health team in January as CEO. I've been in the pharmacy business for a little over 40 years, including leadership roles in sales, marketing, and general management. But probably the most relevant portion of my career was spent at the McKesson Corporation, where I led the independent pharmacy segment. That's the mom-and-pop or locally owned pharmacies.
As president of Health Mart's retail pharmacy franchise, I led the strategic vision, the execution, and assembled the team that grew Health Mart from 260 pharmacies to nearly 3,000, and it represented $6 billion in revenue. This is where I really developed a passion for the independent pharmacist. The value that they provide to the healthcare ecosystem and their communities is centered on the personalized care that they provide. That's just a quick little bit on me, because it's relevant, because we're focused on this independent segment. Let's get started with the company overview. So Danam Health is a pharmaceutical, a healthcare services company. We provide integrated solutions across our wholesale operations, technology platform, and specialty pharmacy.
So we're bringing together these three synergistic business units that you see up here on the screen now. On the far left is our Wellgistics distribution business. So Wellgistics is a wholesale distributor. It gets pharmaceutical products from manufacturers to independent, locally owned pharmacies. This business was founded in 2013, and it's a National Association of Boards of Pharmacy, or NABP, the common acronym that's used, approved distributor in all 50 states. Then if we slide to the middle there, the DelivMeds technology and health platform, this is a cutting-edge technology business.
If you think of it, it's essentially a digital or online pharmacy, much like Roman, Hims, or Amazon, except we ultimately enable locally owned pharmacies to fill the prescription, and then they can provide face-to-face care within hours or the same day, rather than relying solely on a mail order type delivery. This business connects doctors, patients, and pharmacies. Simply stated, what happens is the doctor electronically sends a prescription to the DelivMeds patient-facing app. DelivMeds then channels that prescription to a locally owned or mom-and-pop pharmacy. They, in turn, fill the prescription and provide that superior personalized care we talked about. Now, if you slide over to the far right, that's our community specialty pharmacy or CSP business. CSP is actually a pharmacy. It's licensed in 35 states.
From a regulatory perspective, we need to have a pharmacy in order to accept that electronic prescription from the doctor. Once CSP takes possession of that script, we can perform back-end services, like getting a prior authorization, if any of you have ever had that, where you gotta get an approval from the insurer. So we take that back-end activity, the approval or maybe a discount card, if appropriate. This allows DelivMeds to send what we call a clean prescription with the hard work done on the back end to the local pharmacy. This gives that local pharmacy incremental new business in an efficient way, as that back-end work has been done for them. Importantly, we seamlessly integrate into their pharmacy system, which significantly reduces cost.
So to summarize on the, w hat you're seeing on this slide is three synergistic business units that empower independent pharmacies to enhance the quality of patient care, improve population health, and reduce the per capita cost. That's our basic business model. But, let's hit the next slide, and, we're gonna look at some quick facts on the company. So our technology platform has patents pending, and the wholesale business we just talked about had $35 million in revenue in 2023, distributing pharmaceutical products for over 75 manufacturers to our network of 4,500+ pharmacies. And we hold ourselves to the highest standards of regulatory compliance, and that's demonstrated by some of those logos you see on the slide there, you know, our best-in-class industry accreditations.
And then if you look at the bottom right over there, there are significant opportunities to monetize our data, our efficiencies, and the improved population health that we deliver for health systems, employer groups, and payers. Let's go to the next slide, and we'll talk a little bit about how we are differentiated from a competitive standpoint. And that competitive differentiation is based on the digital pharmacy model that we talked about, but it's a digital pharmacy model that leverages the bricks and mortar of our network of independent, locally owned pharmacies. This provides a powerful combination of cutting-edge technology with the convenience of filling the prescription within hours at your own locally owned pharmacy. So patients receive the enhanced quality of care through the in-person and compassionate care that these independent pharmacists deliver.
And then our platform, it collects the data, and we're gonna be able to document the increases in adherence to therapy and improve outcomes and the reduced cost from our system. So the Danam Health model provides efficiencies in connecting with manufacturers, providers, and patients. Our Wellgistics wholesale distribution model and the DelivMeds technology are at the core of connecting these healthcare constituents to local independent pharmacies. And those local independent pharmacies are a surprisingly viable business segment. Many of you may not be aware of how large and viable they are. There's 19,000 of them in the U.S. Annually, they fill about 1.3 billion prescriptions, totaling about a $47 billion market. These professionals are known for providing excellence in patient care, and they're pillars of their communities.
So when we invest in this technology and infrastructure, we empower these local mom-and-pop pharmacies to compete and deliver quality care. We can go on to the next slide. Pulling that up. So as we look at that, you know, our Danam Health model is a highly attractive business model. The compelling economics that we deliver bring a significant return on investment at very relatively low risk. So today, the majority of our revenue is produced by that Wellgistics wholesale business, but that's pretty much low-margin business, which is consistent with the big three, as they call them, the McKesson, Cardinal, and Amerisource or Cencora.
But however, if you look forward to where we're going with this business, our mix is gonna to get more diversified across the technology platform, our market access and manufacturer services, and we're gonna produce recurring software as a service revenue. In addition to that, our pharmaceutical distribution focus for Wellgistics is gonna become more centered on the profitable, what we call Specialty Lite category of drugs. Specialty Lite are drugs that are $500-$3,000 therapies that require, in general, a higher level of patient care. Furthermore, our initial investment in that technology platform is gonna provide us leverage in the future. As our company scales, our margin profile will increase as we shift from low-margin distribution to higher-margin services.
So if we go on to the next slide, I kind of give you a little snapshot of the overall U.S. pharmaceutical market. It's a massive market. It's rough. It's just north of $400 billion. If you go down a layer, that's the total market, $400 billion. The retail sector of the pharmaceutical market is about 40% of that $400 billion, or about $180 billion. Then we're gonna slice it again. If you slice the retail segment down to just the independent mom-and-pop segment that we talk about, and then I'm gonna even slice it even more, the big three that we talked about, Cardinal, Amerisource, and McKesson, they control 90% of the drug distribution into that channel. But that still leaves an addressable serviceable market of $5.4 billion. Not bad.
Currently, if you look at our business all the way down at the bottom there, we've only got about $36 million of that $5.4 billion. And like that title says at the top of the slide, if we can just capture 5% of that serviceable market with the compelling synergies of our three-pronged business model, we'll be approaching $300 million in revenue. And we can go on to the next slide. And, when we look at our platform, the Danam Health Technology platform provides comprehensive integrated solutions that drive the value to, the key stakeholders across the healthcare system while monetizing our data services and channel access. We refer to these five things you see across the middle there, the constituents in healthcare, as the five Ps.
So the patient, the pharmacy, the provider, that pharma manufacturer, and the payer or PBM. And if you look at that chart, and I'm not gonna go through all the details in there, but if you look at the top, the things we deliver on to all those constituents, at the top it says adherence, and adherence rises, rises to the top across all of those. And when you look at just in, just the adherence segment, our impact on the quality of patient care, overall population health, and reducing costs can be dramatic. To give you an example, about 20% or one in five prescriptions are never even filled, not picked up. And of the 80% that are filled, half of those are not taken properly.
So that lack of adherence, as we call it, affects the quality of individual's health, and it significantly increases the total cost to healthcare. Our Danam Health Technology solutions help optimize medication adherence. We have things like automated refill reminders and compliance and educational resources. Plus, we increase access to those independent pharmacists we talked about, and we empower them to deliver that face-to-face, personalized care that they're known for, which has a big impact on compliance with therapy. So we can go on to the next slide. So kind of talking at you a lot without being able to look people in the eye, but to try to cement home our business model, we have this little graphic here. And, you know, we're delivering interoperable solutions to key constituents across this ecosystem.
So if you start on the top left in that graphic there, we get drugs from pharma manufacturers through our Wellgistics Distribution platform into the independent pharmacies. That's the left side. At the center of our model, center of everything we do, is the patient, and of course, our DelivMeds tech and hub platform. So if you shift now to the top right, you see the provider, that's the doctor. The doctor writes the script into, you know, transfers it electronically to the DelivMeds app, and then we channel that prescription into one of our network pharmacies, a mom-and-pop pharmacy, and they in turn, fill that prescription, and they take care of the patient. You see the RX going back up to the patient at the core, and they take care of that patient, and that's what, where we get the differentiation and increase of adherence.
And it's also important to mention, you see those little green circles around there on data? We're able to monetize data to pharma, providers, and payers, which generates recurring revenue for us. So if we go on to the next slide. So as we've combined these businesses, and if you're tracking with me with some of these slides, it does get a little bit confusing. We realize that four names can be a little bit confusing. So under the strategic guidance of our marketing and brand team, we've initiated an effort to consolidate the naming convention in ways that provide the clarity. So this process will take several weeks. It'll involve some regulatory and licensing tasks for our wholesale distribution and the pharmacy, but we wanted to give this group a sneak peek.
So if we go on to the next slide, we see that we're gonna move to a simplified naming to have Wellgistics Health become the parent. And, you know, as an old, broken down marketer from years ago, when I helped launch the Advil pain reliever brand, the Wellgistics name is a tremendous name in healthcare. And just graphically, with the well being highlighted and, you know, essentially, what we are, when you think about what we do, we are simplifying the logistics of prescription fulfillment. So I love the name. And even the graphic representation with the two capsules, the blue and light blue capsule, and the little orange pill. Just looking at that, right away, you get very clearly that we are a pharmacy-based healthcare business.
So we like that, and so we'll have Wellgistics Health as the parent, Wellgistics Distribution as the wholesaler, Wellgistics Tech and Hub as the platform that we talked about, and Wellgistics Pharmacy is the one that allows us to take possession of that prescription. So before I go off of this, and this is really my last content slide, I'm gonna highlight the our management team and our board of directors. But I wanted to hit one thing about strategy, and to demonstrate it, maybe I talk in baseball terms for those who are baseball fans. You know, baseball singles are good. You know, you can win with what they call small ball, hitting a bunch of singles. For us, in our business, a single would be a manufacturer decides to put a drug through our Wellgistics wholesaler.
That's a good business decision. That's good for us. We get a drug into Wellgistics. Another single might be a doctor choosing to use our tech and hub platform to get a prescription into an independent pharmacy. Another single, that single is good. A single would be our pharmacy doing a prior authorization for a patient. All those things are singles, and you can win with small ball and singles. But for us, a grand slam would be, we get a limited distribution and exclusive distribution right to a particular drug. The doctor prescribes that exclusive drug into our tech and hub platform. We take that, and we send it to one of our network pharmacies, and those independent mom-and-pop pharmacies do what they're best at, and they deliver world-class care, and it increases the adherence, and the patient is healthier, and we reduce overall costs.
So that's, that's kind of the grand slam of our business model. And I'm just gonna highlight, if you go on to the next slide, a couple things about the management team that we've assembled and our board. So first, we'll talk about our management team. Proud to announce that just last week, Chuck Wilson joined us from McKesson, where he led. As I mentioned earlier, I was at McKesson for 10 years, running Health Mart. He ran Health Mart operations. He's a pharmacist, and he agreed to join us. And before Chuck came to McKesson, he took Target from a handful of stores to 1,400 pharmacies prior to them selling out to CVS. So he's an operator that gets pharmacy. Dr. Shafat Durrani is a PharmD.
I was with his dean of USF, University of South Florida Pharmacy School, this weekend. They emphasize technology, cutting-edge technology, from pharmacogenomics to technology, and he is, you know, working with outside experts and created that DelivMeds platform. Vishnu Balu has joined us as VP of Finance, will be working with our investment community and the team on finance. And Brian Norton is the CEO currently of Wellgistics. So that's our leadership team. I couldn't be more proud of this team. A lot of people experienced. If we go to the last slide here, quickly I'll hit a little bit on our board of directors. We have an impressive board of directors. They're leaders with extensive executive management and corporate board experience.
And if you look on there, three of our board members are pharmacists, and combined between the three of them, they have led the nation's largest group purchasing organization that serves over 10,000 of the independent pharmacies we've been talking about. And across that group of three, they have founded and sold successful pharmaceutical service companies. So, we have tremendous guidance from the board. We've got a strong management team. Our future is bright, and we're just excited to get rolling on this business and start growing it. So, with that, I'd like to thank the Assure shareholders for your time and attention this evening. I look forward to sharing our strategic and financial success over the coming months. And with that, operator, I think I will shut up and listen a little bit.
If anybody has questions, we'll open the mic, and we'll address the questions.
Thank you. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Okay, our first question comes from Kelly Ahl, private investor. One moment.
Thank you very much for, h i, thank you very much for an excellent introduction. I thought that was very well done. Provides a great snapshot of where you guys are taking the company, the new company, and so I'm excited about that. Just looking backward, I just wanted to just briefly understand how we came up with the notional value, the implied value for legacy Assure Holdings shareholders, you know, the 10%, you know, how that was derived. And that's just, I'm just curious about that, but really excited about where you guys are taking the company.
Hey, hey, John. John, I assume you're gonna take this question?
Yeah, I am.
You might be-
Sorry, I just got off mute.
Yeah.
Yeah, a good-
Get off mute.
Good question. You know, we, we went through a fairly detailed negotiation with the Danam team, had a third-party valuation firm do an analysis of the Danam business. They came back, and we had a couple of groups look at the fundamentals of the business, but we came back with a valuation that was in excess of $100 billion on the business, and ultimately it, it led to some horse trading and agreeing to enough, a number of approximately 10%. And we felt that was kind of in order, given the value of NASDAQ-listed vehicles right now. Does that answer your question, or are you looking for a bit more precision on that?
No, that's good. Thank you very much.
Yeah, and all of this is detailed. If you want more data, you can go to our Form S-4 registration statement, where there are detailed copies of the fairness opinions, and work that was done on this, in coming to the negotiated number of a 90/10 split.
Perfect. Thank you.
You're welcome.
Once again, if you have a question or a comment, please indicate so by pressing star one on your touch-tone phone. Okay, we have no further questions in queue. I would like to turn the floor back to CEO John Farlinger for closing remarks.
Everyone, thank you very much for attending today. We felt it was on the Assure side and on the Danam side, we felt it was important to expose the huge opportunity now in front of us with the potential Danam business being vended into Assure. On the Assure side, we did a lot of work and carefully vetted a number of potential candidates. The clear winner, you know, as far as a partner going forward for our shareholders, was Danam Health. Couldn't be excited more about what Tim and his team are gonna bring, and really excited about the potential merger opportunity going forward.
I encourage all of you to support the opportunity, and we're working hard to get this transaction done, both the Danam and Assure teams are, and we fully expect to have this completed within the timetable of July 22nd. Tim, is there anything else that you would like to say in wrapping this up?
No, John, I'd just like to thank the shareholders for joining this, and I'd like to thank you and your team for the collaboration that we've had throughout this process, and just excited about our future together.
Great. With that, thank you, everyone, and if any of you have questions, please feel free to reach out to us. We can get Tim and the Danam team on a call if any of you have questions. Again, we're just really excited about the go forward. Again, thank you for your patience, your support, and have a great afternoon, everyone.
This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.