Progressive Care Inc (OTCMKTS:RXMD) Stumbles Again

At least as far as revenues are concerned, Progressive Care Inc (OTCMKTS:RXMD) seems to be among the relatively solid OTC companies. The enterprise has been around for about ten years now and, to some extent, it has managed to make a name for itself in the pharmacy services industry.

Last year, RXMD‘s management team managed to record more than $11.2 million in sales and during the first quarter of 2015, they logged a further $3.1 million in sales – a 17% increase on a year-over-year basis. Things seem to be getting even better. On June 25, they announced that they have seen record-breaking revenues for the month of May, and, although they emphasized on the fact that predicting the future is really hard, they announced that they are on track to record more than $1 million in average sales per month before the end of the year.

All in all, business seems to be going well. Unfortunately, the same can not be said about the stock performance.

Last year, the ticker dropped from $0.06 per share all the way to a 52-week low of just $0.0016 in a matter of a few short weeks. Then, it bounced and it climbed to a high of $0.08, but it quickly ran out of steam and it embarked on a descent that saw it go back down to less than a penny three months later. The news about the record-breaking revenues from last week gave it another boost and on June 25, RXMD reached more than $0.04, but it once again lost its footing and on the very next day, it obliterated more than half of its value. After another 15% drop, RXMD closed yesterday’s session at $0.015.

The question has probably popped up in your mind already: “If the business is going well, then why is the stock performance so atrocious?”

The most obvious culprit can be found in the financial statements. While the revenues have grown quite a bit over the last few years, RXMD hasn’t been able to turn a profit for quite a while. The losses for last year amount to more than $1 million and in Q1 the company recorded a net loss of $294 thousand.

Couple this with some rough patches in RXMD‘s history and you’ll see that an investment might not be quite as appealing. According to the latest financial report, the controlling shareholder at the moment is called Armen Karapetyan. He was once at the helm of Basis Financial, LLC – a broker dealer based in Florida. While he was there, he started receiving a monthly fee of $5,000 from Pharmco (one of RXMD‘s current subsidiaries) for “ongoing investor awareness and business advisory services” and he later persuaded sixteen investors to pour $500 thousand into the company. Sadly, he forgot to disclose some important information about Pharmco, like, for example, the figures in the financial statement. More details about this, as well as a few other actions performed by Mr. Karapetyan while he was working for Basis can be read in this settlement agreement with FINRA.

And while we’re on the subject of settlements, RXMD has had some problems repaying its debts over the years. In August, an entity called Tarpon Bay Partners LLC decided to repurchase some of the past due convertible notes and they immediately started turning the debt into shares of common stock. As a result, RXMD‘s O/S count grew from less than 28 million in May 2014 to just under 98 million in May 2015.

The chart at the beginning of the article shows that, at least for the time being, the impressive revenues aren’t enough to offset the rather catastrophic dilution.