Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to TRxADE Health's 2022 annual earnings conference call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. The earnings press release accompanying this conference call was issued at the close of the market today. The company's annual report, which includes additional information regarding the company's results of operations for the year ended December 31st, 2022, was filed with the SEC earlier today. On our call today is TRxADE Health's Founder, Chairman, and Chief Executive Officer, Suren Ajjarapu, and Prashant Patel, its Chief Financial Officer. The replay of this call and webcast will be available for the next 30 days on the company's website under the NASDAQ: MEDS link. The company's website also includes more supporting industry information.
At this time, I'd like to turn the call over to Prashant Patel, the company's Chief Financial Officer. Prashant, the floor is yours.
Thank you, operator, and thank you for joining us today. I'd like to welcome you to our 2022 annual financial results conference call. Our press release announcing our 2022 financial results was issued after the close of market today and is posted on our website. We have also furnished that press release to the SEC on Form 8-K. Statements made on this call and webcast will include forward-looking statements. These statements include, but are not limited to, our outlook for the company and statements that estimate of future projects, results of operations, or the performance of the company, including the potential continued impact of COVID-19, increased interest rates and inflation on the company's business and results of operations.
These statements speak only as of the date hereof, and the company assumes no obligation, except as required by law, to revise any forward-looking statement that may be made in today's press release, call, or webcast. These statements are not a guarantee future performance and are subject to risks, uncertainties, and assumptions. For information on risks, uncertainties, and assumptions that may cause actual results to differ materially from forward-looking statements, please refer to the press release, risk factors, and documents we file with the Securities and Exchange Commission. These documents include, but are not limited to, our most recent annual report on Form 10-K and subsequently filed periodic report of current report on Form 8-K. In addition, during today's call and webcast, we will discuss non-GAAP financial measures which we believe are useful as supplemental measures for TRxADE Health performance.
These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation results. You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results, at the end of our earnings press release. Unless otherwise stated, all financial comparisons in this call will be our results for the comparable period of fiscal 2021. During the question and answer portion of today's call, please limit yourself to no more than one question and one follow-up. At this time, I'd like to turn the call over to Suren Ajjarapu, our company's Chief Executive Officer. Suren, the floor is yours.
Thank you, Prashant. We saw improvement in 2022 for our core TRxADE pharmaceutical exchange platform. Our nationwide footprint continues to grow. We remain committed to the focus of exciting new ways to support our large growing network of registered users. With the development of technology and products for our local pharmacies, we are dedicated to supporting these pharmacies with new innovative products that better enable them to service their customers and strengthen loyalty to their local retail pharmacy. Before we do a more detailed walkthrough of financial and operational results for 2022, for those of you who are new to the company, I'd like to walk through who we are and how we are digitalizing the retail pharmacy experience through the optimization of drug procurement, prescription journey, and patient engagement.
Prior to the launch of TRxADE, obtaining drug quotes as an independent pharmacy was an extremely laborious and time-inefficient process with no insight or transparency into a fair market price or what others are paying for the same drug. Traditional wholesalers would provide unfavorable payment terms, slow delivery, and create a difficult conundrum for the approximately 19,400 independent pharmacies nationwide. We identified this market inefficiency as well as the incredible potential in these independent pharmacies, which together maintain an estimated approximately $67 billion in annual purchasing power and proceeded to launch TRxADE. We designed, own, and operate a business-to-business web-based market platform, bringing together the nation's independent pharmacies with accredited national pharmaceutical suppliers to provide a uniquely efficient and transparent buying and selling process.
Our platform lets independent pharmacies know that they are receiving a fair price from competing suppliers on fair payment terms and often with next-day delivery. We believe this radical price transparency, economy of the scale, and competition among suppliers leads to up to a 10% reduction in pharmacy's total drug purchasing costs, with drug level savings of up to 90% on certain pharmaceutical products. Our platform saves pharmacists from having to manually compare prices across distributors, saving hundreds of hours of unnecessary labor annually and eliminating negative reimbursement or fulfilling a prescription at a loss. Our revenue model is simple. We pay an administrative fee of up to 6% of the buying price on generic pharmaceuticals and up to 1% on brand pharmaceuticals that pass through our pharmaceutical platform, similar to PayPal or Visa like model.
To date, we have seen incredible success in garnering attention from independent pharmacies nationwide, validating our business model. We currently have over 14,400+ registered members on our platform, with approximately 1,212 new registered members added in fiscal 2022, compared to approximately 790 added in fiscal year 2021. Another exciting growth metric on our TRxADE platform includes a 17% increase in the volume of sales processed across our platform for the year 2022 compared to 2021. Subsequent to December 31st, 2022, on January 20, 2023, we entered into agreements to sell 100% of the outstanding membership interest in our subsidiary companies like Community Specialty Pharmacy and Alliance Pharma Solutions.
The company will receive $225,000 in consideration for both companies and agreed to enter into a master service agreement, which it is currently supporting. We expect transaction to complete closing by April 30th, 2023. The full details of and information regarding the transaction can be found in our Form 8-K filed with the Securities and Exchange Commission on January 23rd, 2023. The sale of these subsidiary companies is part of our plan to focus on our core business-to-business revenue model. I would like to turn the call over to our interim Chief Financial Officer, Prashant Patel, to walk through some key financial highlights from our fiscal year 2022.
Thank you, Suren. Let us discuss 2022 annual financial results. Consolidated revenue for the 12 months of 2022 increased 16% to $11.4 million, compared to revenue of $9.9 million for the 12 months of 2021. This year-over-year increase in revenue is driven by improved revenue on the TRxADE platform and for TRxADE Prime in 2022. The TRxADE platform revenue increased 10% and the TRxADE Prime revenue grew 46% in 2022 compared to 2021. Our Community Specialty Pharmacy revenue decreased 29% in 2022 compared to 2021. There was a 13% improvement in gross margin as a percentage of revenue for TRxADE Prime in 2022 compared to 2021.
For the 12 months of 2021, TRxADE Prime reported negative gross margin of 12% compared to a positive 1% for the same period in 2022. Initiatives to improve gross margin included improved vendor pricing and vendor contracts. Our Community Specialty Pharmacy recorded a decrease in gross margin as a percentage of revenue, dropping from 10% in 2021 to a negative 8% in 2022. Moving forward, the company is working to grow TRxADE Prime revenue with the foundation of reduced overhead and improved gross margin. Consolidated gross profit for the fiscal year of 2022 compared to 2021 improved $700,000, but remained consistent year-over-year at 48% as a percentage of revenue. Operating expenses in the 12 months of 2022 were $9.9 million compared to $10 million for the same period in 2021.
There were decreases in professional fees, losses on inventory and general and administrative costs of approximately $1.1 million. Also recorded are increased expenses of approximately $1 million related to impaired assets, technology costs of research and development, as well as accounting and legal expenses. Net loss for the year ended December 31, 2022, was $3.9 million loss or $0.41 loss per basic and diluted share outstanding, compared to $5.3 million loss or $0.65 loss per basic and diluted share outstanding for the year ending December 31, 2021. Year-over-year comparison for the fiscal periods of 2022 and 2021 for adjusted EBITDA or non-GAAP financial measure reflect -$0.09 million for fiscal year 2022 compared to -$3.1 million for the same period in 2021.
Looking at our balance sheet, cash and cash equivalents were $1.1 million as of December 31, 2022, compared with $3.1 million as of December 31, 2021. The decrease in cash is mainly driven by $875,000 spent on inventory purchases of Community Specialty Pharmacy in May 2022, $225,000 spent on part of a legal settlement in February 2022, and $275,000 spent in connection with the formation of SourceRx LLC in February 2022. With that, I will turn the call back to Suren for closing remarks.
Thank you, Prashant. In summary, we are focusing on exciting new innovation and partnerships to drive forward our core business to business strategy while diversifying our revenue base. Taken as a whole, I think we are building an incredible, compelling ecosystem. I look forward to seeing what the future holds as we continue a rapid pace of operational execution, creating sustainable long-term value for my fellow shareholders. With that, I'll turn it over to operator to begin the question and answer session. Operator?
Thank you, sir. We will now begin the question and answer session. If you would like to ask a question, please press the star followed by the one on your touch tone phone. If you would like to withdraw your question, please press the star followed by the two, and if you are using speaker equipment, you will need to lift the handset before making your selection. One moment please while we pull for questions. Thank you. Our first question is from Allen Klee with Maxim Group. Please proceed with your question.
Good afternoon. Can you talk a little about the status of your speaking with group purchasing organizations related to TRxADE Prime? Can you give us some detail about the number of GPOs, the number of pharmacies they represent and kind of the timing of if you believe that you can get relationships to go live. Thank you.
Sure. Thank you, Allen. The TRxADE Prime, we, it's considered as a GPO, but in reality we almost got our 1,300 new pharmacies that are working through that. We don't have any Prime relationships under that model yet. We are going through the existing suppliers, but we increased that model to 1,300 pharmacies.
I'm sorry, I didn't understand. Are you talking to GPOs or is it more that you're just working with adding pharmacies the way you have been adding pharmacies? I didn't understand. I apologize.
Our TRxADE Prime, TRxADE platform is independent pharmacies. TRxADE Prime model is we want to bring in multiple pharmacy locations under the TRxADE Prime. That include up to 1,300 pharmacies. For example, a pharmacy has 10 or 15 stores under their umbrella. Those relationships grown up to 1,300 pharmacies.
Okay. If they come in under Prime, does that mean that it comes in with the Prime type margins versus the TRxADE platform type margins?
Correct.
Okay. Thank you. The SourceRx LLC partnership that's gotten wound down. What is your future liability for that?
We don't have any future liabilities for that.
You, in your press release, you provide, full year adjusted EBITDA reconciliation. To come up with Q4 numbers, are there some numbers in the full year numbers that are not in the prior four months? Should all those numbers go in the adjustments for the Q4 , or did you change the definitions of any of the items that go into calculating adjusted EBITDA?
We did not change any model, but, whatever we used to report as adjusted EBITDA, we've considered the same model. We have not changed anything to report those adjusted EBITDA numbers.
Okay. Then, your gross margin improved in this quarter. Well, if I looked at it just for the quarter, backing into the quarter, it would've been 61% for the Q4, the gross margin. Do you believe that the gross margin is sustainable at that level or higher going forward?
I think the blended gross margin, if you look at it, is for the entire year, is 48%. Once we take out the business to consumer model, we focus on B2B. We'll try, strive to improve that gross margin model.
Okay. The 48% was for the full year.
Yes.
If I backed into the Q4, it was like 61%. I'm trying to understand if, as you take out the other businesses, I guess the margin, these other businesses were lower margin, so the blended margin likely improves?
Correct. Yeah, because under B2B model, business to business model, it's a technology platform, right? Our gross margin is higher than the consumer side of it, so it should improve. Correct. To cure that.
Well, do you have a target for Prime? What margins can be for Prime segment?
As you're aware that, Allen, that construction Prime was started last year. We're still trying to stabilize that model to understand so that we can give you a more accurate information going forward in a couple of quarters.
Okay. maybe my last question. If your salespeople talk to the independent pharmacies, what do they say is the reason that they're not buying more? I mean, they're buying a small percent of what they could potentially buy from you guys. What do you think are the reasons why they're not buying more, and what are you focused on to try to maximize that?
Sure. No, that's an excellent question. That's what the TRxADE is focusing on. In organic growth, as you're aware, average pharmacy that does like $3 million- $3.5 million annual revenue, they buy anywhere between quarter million dollars to $300,000 worth of goods. The primary contracts are dictating them how much they can buy through the secondary sources. That's what we're trying to change, the remaining that the 10%-15% or 10%-20% that they can bring it into our platform. The two ways that we're trying to improve them, one, adding the additional catalog, to provide them, not only the prescription drugs, the OTCs and stuff, and providing the other technological tools, whether the DIR fees and so on and so forth.
we want to empower them through the technology so that they can buy more through our platform.
Okay, got it. Like, going forward, is the way to look at the segments, you'll have the TRxADE segment. You won't have Community Specialty. Integra, you'll still have because that's TRxADE Prime. I guess other is probably not material. It's until something gets decided with Bonum Health. Is that the way to look at it?
Our 100% focus is now on the B2B, business to business, so it's a marketplace and as well as Integra Pharma, correct.
Community Health, that goes away effective, the Q2 of 2023?
Correct.
Okay. Okay, thank you so much. Appreciate it.
No problem.
Thank you. Our next question is from Howard Halpern with Taglich Brothers. Please proceed with your question.
Good afternoon, guys. In terms of the core TRxADE platform, what are you seeing in terms of the mix right now between branded and generics? Will that shift maybe more to generics help accelerate growth over the next couple of years?
Great question, Howard. We're currently the mix approximately, 60% generics and 40% brand. That's the reason our fees are low. Yes, that dynamic is changing to more and more into the generics. Our goal is to reach up to 70%-75% on the generic side and 25% on the brand.
Okay. You're not seeing any constraints, like we had in the past with, you know, overseas manufacturing and such. Everything is quote, unquote, "Back to more normal"?
Yeah, back to more normal because the COVID is, I won't say it's gone, but at least the impact on the supply side is gone. Yeah, it's back to normal.
In terms of looking at operating expenses, you're obviously going back to the B2B, so you'd be able to streamline. Where should we see some of the streamlining effects? Will it be in technology spend, professional fees? If you could just share a little.
More on the. Sure. More on the technology spend and a little bit on the professional spend to take it to the next level.
Okay. Okay. Thanks, guys. Everything else has been asked and answered.
Thank you.
As a reminder, if you have a question, please press the star followed by the one on your touchtone phone. There are no further questions at this time. I would like to turn the floor over to Suren Ajjarapu for closing remarks.
Thank you, operator. I'd also like to thank all of you for joining our earnings conference call. We look forward to continuing to update you on our ongoing progress and growth. If we're unable to answer any of your questions, please reach out to our IR department who will be more than happy to assist. For any of you who may have joined the call in progress, remember that the replay of this call and webcast will be available for the next 30 days on the company's website under the NASDAQ: MEDS link. That more information regarding the financial information disclosed on this call and webcast, including a reconciliation of non-GAAP financial information, can be found in our press release, which was filed after the close of market today. Thank you all.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.