MedAdvisor Solutions reported a challenging third quarter with steep revenue declines, driven by delayed program launches and US sales underperformance, but is executing a strategic overhaul and cost-cutting measures to position for a rebound and 15% revenue growth in FY26.
- 3Q FY25 revenue down 49%, gross profit down 52%, impacted by US market challenges
- US commercial team restructured with new leadership and sales strategy
- Successful $5 million capital raise supports ongoing strategic initiatives
- Cost savings program targeting A$12.8 million by FY26 to improve margins
- ANZ business remains stable with SaaS fee restructuring and platform migration
A Difficult Quarter Masks Strategic Progress
MedAdvisor Solutions has disclosed a tough third quarter for FY25, with group revenue plunging nearly 50% year-on-year to AUD 12.3 million and gross profit falling 51.6% to AUD 7.4 million. The decline was largely attributed to delayed vaccine and non-vaccine program launches, alongside a restructuring of the US commercial team, which saw revenue in the US market drop 61.8% to AUD 7.1 million.
Despite these setbacks, the company emphasizes foundational improvements underway, including accelerated cost-saving initiatives and a strategic review expected to conclude by June 2025. The review aims to address the valuation gap between MedAdvisor’s market capitalization and the intrinsic value of its ANZ and US businesses, with multiple proposals received validating management’s belief in the company’s undervaluation.
US Business: Restructuring for Growth
The US segment, which accounts for the majority of MedAdvisor’s revenue, has been underperforming due to low sales engagement, limited customer diversification, and an inexperienced sales force. In response, MedAdvisor has restructured its US commercial team, appointing experienced leadership early in FY25 and cutting underperforming staff. The company is also revamping its customer success and pharmacy network teams to improve efficiency and strategic focus.
Market dynamics have posed challenges, including reduced vaccination rates leading to budget cuts and a shift in buyer preferences towards direct-to-consumer models, which extend sales cycles and compress contract values. However, MedAdvisor is positioning itself to capitalize on a rebound in vaccination programs anticipated in August-September FY26 and growing specialty medication spending, which now represents over 60% of US pharmaceutical expenditure.
Looking ahead, MedAdvisor forecasts a 15% compound annual growth rate (CAGR) in US revenue for FY26, supported by a diversified sales pipeline valued at AUD 177.8 million unweighted. The launch of the next-generation THRiV patient engagement platform in the US is expected to drive margin expansion by reducing fixed costs and enhancing digital engagement capabilities.
ANZ Business: Stability and Incremental Growth
In contrast, the Australia and New Zealand (ANZ) business remains a market leader with strong penetration, 98% patient access to prescriptions and 95% pharmacy adoption of MedAdvisor’s platform. Revenue declined modestly by 8.9% to AUD 5.1 million in 3Q FY25, reflecting timing impacts and SaaS platform changes incorporating transaction-based fees.
MedAdvisor is advancing price restructuring to standardize SaaS fees and completing the migration of its MedAdvisor for Pharmacy platform. The company is also leveraging expanded scope of practice initiatives, including telehealth and ecommerce solutions, to unlock new revenue streams. Recurring revenues from SaaS and transaction fees constitute 72% of ANZ revenue, supporting a healthy 4-year CAGR of 22.6%.
Cost Savings and Capital Raise Bolster Outlook
MedAdvisor is aggressively pursuing cost reductions through its Transformation 360⁰ program and targeted initiatives, aiming to deliver AUD 12.8 million in savings between FY24 and FY26. Operating expenses are forecast to decline from AUD 67.4 million in FY24 to AUD 54.5 million by FY26, aided by headcount reductions of approximately 44% in the US and 15% in ANZ.
The company also successfully raised AUD 5 million in capital to support its strategic initiatives and maintain financial flexibility during this transition period. Despite the challenging quarter, MedAdvisor has reiterated its FY25 guidance of AUD 93-99 million in revenue and an EBITDA loss between AUD 2.6 million and AUD 5.5 million.
Looking Forward: Growth and Margin Expansion
MedAdvisor’s management remains focused on executing its strategic review, optimizing sales processes, and capitalizing on market tailwinds. The company expects a stronger fourth quarter in FY25, with US revenue anticipated between US$14 million and US$18 million in the second half. The launch of the THRiV platform and continued pipeline diversification are key drivers for anticipated margin expansion and revenue growth in FY26.
Board changes, including the appointment of Kate Hill as Chair replacing Linda Jenkinson, signal a refreshed governance approach aligned with the company’s transformation goals. Investors will be watching closely as MedAdvisor navigates the complexities of its US market turnaround while leveraging its solid ANZ foundation.
Bottom Line?
MedAdvisor’s strategic overhaul and cost discipline set the stage for a pivotal FY26 rebound amid ongoing US market challenges.
Questions in the middle?
- Will the strategic review yield concrete corporate initiatives or divestment proposals by June 2025?
- How effectively can the restructured US sales team convert the expanded pipeline into sustainable revenue?
- What impact will the THRiV platform launch have on gross margins and customer engagement in the US?