Hello, ladies and gentlemen, and welcome to today's conference call. My name is Nitasha, and I'll be coordinating your call today. I will now hand you over to Caroline Paul from Investor Relations. Over to you.

Thank you, and thank you all for participating in today's call. Joining me are Ed Kilroy, Chief Executive Officer; and Ramona Seabaugh, Chief Financial Officer. Earlier today, MedAvail Holdings released financial results for the third quarter ended September 30, 2021. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance or similar statements are forward-looking statements. All forward-looking statements, including, without limitation, those relating to our operating trends and future financial performance, the impact of COVID-19 on our business and prospects for recovery, expense management, expectations for hiring, growth in our organization and reimbursement, market opportunity and expansion and guidance for revenue, gross margin and operating expenses in 2021 are based upon our current estimates and various assumptions. Also, management may make additional forward-looking statements in response to your questions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements and do not guarantee future performance. Accordingly, you should not place undue reliance on these statements and should not rely on them in making an investment decision without considering the risks associated with such statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section in our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, November 8, 2021. MedAvail Holdings disclaims any intention or obligation except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I will turn the call over to Ed.

Thank you, Caroline, and good afternoon, everyone, and thank you for joining us. We are encouraged by our strong top line performance of 15% sequential revenue growth from the second quarter of 2021. As a reminder, our business model has two segments: Retail Pharmacy Services consists of sales from the operation of our technology-enabled high-touch retail pharmacy and pharmacy technology revenues comprised of the sale or provision of these technologies to large customers to support their own pharmacy operations. Our Retail Pharmacy sales segment generated $5.4 million of revenue in the third quarter of 2021, representing 149% growth over the period in 2020 and a 21% increase from the second quarter of 2021. Our pharmacy technology revenues decreased 93% year-over-year in the second quarter of 2021 to approximately $350,000. Notably, 2020 included a onetime benefit of $4.7 million recognized in conjunction with the accounting for a nonrecurring commercial agreement from 2018. Excluding this onetime accounting adjustment, Pharmacy Technology revenues increased 51%. After a challenging first half of the year, we saw momentum return and made meaningful progress during the third quarter, signing partnerships and expanding into new sites with existing clients. We remain focused on growing with clinic operators that have large numbers of sites to maximize the potential of our land and expand strategy. We deliver a unique value proposition to our partners with our SpotRx embedded pharmacy model. These care providers are focused on improving both medication adherence and patient satisfaction and we are delivering results to them each and every day. Our real-time operationalized data identified at-risk patients and enables tracking by patient clinic and disease state. By evaluating metrics such as proportion of days covered or PBC scores, we are able to place patients on auto refill, work with clinicians to prevent hospitalization and perform a…

Thank you, Ed. I am very excited to be joining MedAvail and look forward to partnering with the team as we continue to execute on the business growth strategy. Turning to our third quarter results. Net revenue for the 3 months ended September 30, 2021, was $5.8 million, a 19% decrease from $7.1 million in the same period of the prior year. As mentioned earlier, this decrease was due to the completion of a nonrecurring commercial agreement in the 3 months ended September 30, 2020, with associated revenue of $4.7 million. This decrease was offset by a 149% increase in retail pharmacy services sales. As we have indicated in the past, Pharmacy Technology sales can be variable from quarter-to-quarter due in large to processing patterns associated with these enterprise level capital sales. As Ed mentioned, during the third quarter, we deployed 14 med centers in the Retail Pharmacy Services segment compared to 11 in the third quarter of 2020. Gross margin for the third quarter of 2021 was 3%, flat sequentially from the second quarter and 70% as compared to the prior year period. Gross margin in the third quarter of 2020 includes the onetime noncash benefit of $4.7 million recognized in conjunction with the accounting of a nonrecurring completed commercial agreement from 2018. Excluding this onetime benefit, gross margin for the third quarter of 2020 was 11%. Total operating expenses for the third quarter of 2021 were $11.2 million, a 60% increase from $7 million in the third quarter of 2020. This expected increase in operating expenses was driven primarily by investments in personnel, facilities and other expenses necessary for the continued build-out of our operating footprint, including the launch of operations in Florida. Additionally, we continue to make accelerated investments to automate additional workflow is important to our customer service capabilities, including our investments in compliance packaging. Adjusted EBITDA, which we calculate by adding back interest expense, depreciation and amortization, stock-based compensation and exclude nonrecurring expenses and other income was a loss of $10.1 million in the third quarter of 2021 compared to a loss of $5.1 million in the third quarter of 2020 reflecting the various initiatives and investments and growth you've heard us talk about. We ended the third quarter of 2021 with $35.9 million cash and cash equivalents. We now have approximately 32.8 million shares of common stock outstanding, and we expect to have a weighted average share count in the fourth quarter of approximately 32.9 million shares. Turning to our outlook for 2021. We continue to expect at least $21 million of net revenue and 45 new in-clinic deployments this year. Regarding our gross margin outlook. We remain focused on improving our gross margins throughout the balance of 2021 as we continue to execute on the initiatives we have previously discussed. And with that, I'll turn the call back over to Ed for closing comments.

Thank you, Ramona. Thank you for joining the call today. With the return of momentum in the third quarter, we look forward to updating you on our progress as we continue to execute in this expanding market. And with that, we will now open it up for questions. Operator?

[Operator Instructions] We take our first question from Charles Rhyee of Cowen.

Maybe, Ed, if I could first ask, obviously, a strong number of deployments here in the third quarter. Can you give an update on where we're at so far here in the fourth quarter? Clearly, getting to 14 here, you need less deployments, it's looks like about 18 to get to your target of 45. Any update where we're at here sort of mid-quarter?

I would just say, Charles, that we are on track to deliver the 45 for the full year as we outlined, and we have a good line of sight into those as you would fully expect. We will be deploying throughout the quarter. And so they're happening on a monthly basis. So again, we are reconfirming the 45.

Okay. Great. Another question here is I think last quarter, you talked about changes in the board of pharmacies that has caused some delays to get sites really up and running. Any kind of update there? I think you had talked about 8 to 12 week delays. I'm wondering if that has -- some of those time lines have improved at all?

We haven't seen any changes, Charles, and I don't -- I'm not anticipating any for the balance of the year. Obviously, we take that into consideration as we are moving forward and deploying right now. And just as a note, in Florida, there isn't the Board of Pharmacy inspection as there are in California and Arizona and Michigan. And so we can move a little quicker in Florida, but there's been no change to the other states that we mentioned earlier.

Great. And then maybe just 2 quick ones. One is on utilization. Just revenues came in better than we were expecting. Have you seen volumes kind of come back? I know other companies have talked a little bit about some delays in elective procedures as well as maybe some higher COVID-related expenses. Just curious what you're seeing there. And then lastly, maybe a question for you, Ramona. As you kind of come here and start working with the team, what would you -- what would you list in terms of your priorities as you think about helping MedAvail here, take the next step?

So thanks, Charles. So I'll just jump in with the -- from a clinic volume perspective, and I'll say patient visits, we have seen improvements quarter-to-quarter. I would expect to see those to continue into the fourth quarter as well. You did comment on the board of pharmacy approvals, which we continue to see similar time lines, as we've discussed previously. Obviously, we've taken that into consideration in any planning. But the -- what we are seeing is the traffic patterns improve and which is very encouraged again as we come into the back half of the year or last part of the year, I should say. Ramona?

Thanks, Ed. Charles, yes, coming into the role, I see some maybe key areas for us to focus on will be to clearly our continued top line growth in both segments of our business. We'll want to continue to drive programs around our efficiency and productivity within our operating units. An example, we have an agreement with McKesson to start deploying to fulfill by the end of this year. And then finally, we will continue to focus on improving our overall financials with the company and reducing our overall cash burn. So those probably are the 3 buckets that we will spend the majority of our time.

That's great. If I could just follow up on partnering with McKesson. Would that alleviate the need for your central pharmacies to do some of the refill work and that would leave that to McKesson. What would your central pharmacy would be doing more first fill prescriptions then?

[indiscernible]

Yes, go ahead, sorry.

What McKesson is going to be doing for us, Charles, is packaging the medication into, say, 30-, 60-, 90-day vials. We would then process that order in our pharmacy. So what it's doing is saving us the pill counting into the breakdown by customer and then also the inventory management because they would be managing the inventory at their end.

I see. Okay. What kind of financial...

This is just a labor reduction.

Right. So is that -- I would say that more next year?

Yes. Yes, you would because we're just beginning to roll it out. And we're evaluating right around a percent of our refills that would be driving through that process. Obviously, we want to maximize it, but I don't have a specific number right now on dollar savings, but we certainly are counting on this to improve our productivity as we move into 2022.

[Operator Instructions] We take our next question from Brooks O'Neil of Lake Street Capital Markets.

This is Travis Spangler filling in for Brooks. I see that InnovaCare signed to open 3 SpotRx locations in Florida. And given that InnovaCare operates more than 30 clinics, can you discuss the opportunity to get into the other 27 clinics or so?

I would say that we are in discussions with all of our enterprise customers with regards to continued growth. So I can't speak for InnovaCare's internal plans, but we -- that the offering we have can have a direct impact on patient adherence and satisfaction, which is very important to them as a business. So we are going in there with an expectation that we will have the right to earn that business.

Got it. And one more question. Do you guys see a shift in your home delivery option? Or do you patients like the opportunity to pick up the medications at the end of the clinic visit?

It's a little of both. When we have the patients that are in chronic medications, some of them choose to pick it up when they're visiting the clinic. Others prefer to have it courier home delivered. Certainly, when we see first fills, we do see a large number of those filled at the site itself, but the chronic medications the patients can choose either channel to receive their refills.

We also have a follow-up question from Charles Rhyee of Cowen.

Ed, I want to talk about sort of the commitment here kind of seeing 100% growth in revenue for next year. When you look at that number, where do you think the puts and takes are to kind of achieving that? And clearly, it looks like we're tracking at least in line if maybe not a little better on deployments, which means some of those sites can be generating revenues ramping sooner than maybe we had been expecting. What do you think are kind of swing factors that we should think about as we kind of round out this year and then into next year?

Well, I think, Charles, the -- obviously, the deployment of -- the go-live of the 45 we have put in this year, will put in this year is very important. So the timing of the go-live of those will be important. And then the -- I'll say the cadence as we get into next year of quarterly deployments, as you know, we haven't provided any guidance for next year yet on volume of sites. But you do know from this year that the vast majority of our -- certainly the first half sites that we deployed were deployed in the last part of June. So there was not a lot of benefit of those. So we're hoping that as we move into this year, earns 2022, I should say that we have a smoother cadence based on the number of clients we have and the geographies we're operating in. So that will be very key for us as we get into 2022. But the main driving factor will be continued scaling of the sites that we have -- we exit this year within the ground.

And is it fair to think, obviously, this year, most of the deployments are back half weighted because of switching of the contract manufacturer. Can you just quickly update us that? And would you expect then the cadence of deployments going forward here in '22 and beyond starts becoming more even throughout the year? Or is there any kind of seasonality that you might expect in terms of how some of these -- your clinic partners think about deployments?

So the contract manufacturing is going very well. So that is not an issue as we go into 2022. With regards to the seasonality, we really -- we don't see a seasonality, although I would say that early in the first quarter, people aren't usually deploying in late fourth quarter of the next year, they are slowing things down a bit. It's mainly a holiday season and hours of operation. So other than that, there's really no seasonality that we see from a deployment perspective. And then as I said, we haven't provided guidance for next year, but we certainly will be expecting to have a smoother cadence as we move through 2022.

Great. And then maybe if I could just ask one more here. Obviously, a lot of efforts here in Florida sounds like a very fertile ground to be making inroads in. I know Texas has been on the radar for you guys. Any update on how you're thinking about further state expansions?

So you're absolutely correct. Florida is a very, very significant market for us. And based on the signings that we've done in Florida so far, we've got a very large footprint within that state, just looking at the sites that our current clients have, there's a significant opportunity. Most of those clients, certainly not all, but most of the Florida clients as well as other clients we have a presence in Texas. So that is a state that we are having discussions with our customers about that state, but there's also a couple of others that are in play as well. So we have to think about the growth path that we're on and how many states we want to open at one time. But we're certainly having very active discussions on a number of states with Texas certainly being one of the key ones as we've talked about before.

Great. And sorry, if I could just ask one more here. If we think about the deployment schedule and sort of the cadence of it, assuming that all your partners we're willing to deploy quickly. What is right now your sort of your capacity maybe in a quarter to be able to deploy? Because clearly, you did 14 this quarter, I think you did 12 basically at the end of the second quarter. What do you kind of think of as sort of your max capacity in terms of resources to be able to deploy currently and maybe your plans for expansion of that capacity?

Yes. I'm not going to declare a specific max, Charles, because it really is driven by -- as we deploy in a site, the actual installation of physical deployment of the technology is not usually the longest part of the plan. It's the education of the staff that we're -- the clinic we're going into. It's our hiring and training of our CAMs, so our clinic account managers. And so we have ramped up our recruiting capability, our education and training capability, but it's usually the rate and pace that the client wants to move. And as we see more demands move faster then we'll have to ramp up our internal skills to do that, which, again, it's not a physical installation. It's more of us hiring and putting the -- our people on the street and training and educating the staff of each of the clinics. But as you've noted, I mean, we did 14 and we did more than that in the fourth quarter to get to our 45 for the year.

Is it possible to exceed 45? Or is that just more of a timing issue on the road map you have with your partners? Because given that you seemed like you did a little bit more here in the third quarter than you kind of were indicating last quarter. Does that free up kind of space to do a few more? Or is this kind of sat here?

What I would say, Charles, is we're not changing the 45 guidance right now.

We have no further questions, so I will hand back to Ed for any closing remarks.

Thank you all for taking the time and joining us, and we look forward to updating you on our next call. Have a nice evening.

This concludes today's call. Thank you for joining. You may now all disconnect your lines.