MedAvail Holdings, Inc.

Matthew Abenante - Investor Relations Joseph Mannello - Chief Executive Officer Joseph DiPietro - Controller

Brian Marckx - Zacks Investment Research Brian Schneider - Private Investor

Thank you, Jessie and thanks to everyone for joining us today and welcome to MYOS RENS Technology third quarter results conference call. Joining us on the call today is Joseph Mannello, Chief Executive Officer and Joseph DiPietro, Controller.

I would like to remind our listeners that any statements on this call that are not historical facts are forward-looking statements. Actual results may differ materially from those projected or implied in any forward-looking statements.

Such statements involve risks and uncertainties, including but not limited to those relating to product and customer demand, market acceptance of our products, the ability to create new products through research and development, the successful results of strategic initiatives, the successful launch for our products, including Qurr, Yolked, MYOS Enteral Nutrition Formula and MYOS Canine Muscle Formula products. The success of our research and development, the research of the clinical evaluation of Fortetropin and its effects, the ability to enter into new partnership opportunities and the success of our existing partnerships, the ability to generate revenue and cash flow from sales of our products, the ability to achieve a sustainable, profitable business, the effect of economic conditions, the ability to protect our intellectual property rights, competition from other providers and products, continued listing of our securities on the NASDAQ stock market, risks in product development, our ability to raise capital to fund continuing operations and other factors discussed from time-to-time in our filings with the Securities and Exchange Commission.

We undertake no obligation to update or revise any forward-looking statement for events or circumstances after the date on which such statement is made except as required by law. The statements made on today’s call have not been evaluated by the Food and Drug Administration.

Our products are not intended to diagnose, treat, cure or prevent any disease. With that, I would like to turn the call over to our first speaker, Joseph DiPietro to go over the financial results.

Good morning, Joe.

Good morning, everyone. Thank you for joining us.

I am going to go over our third quarter and nine months 2018 financial highlights. All the numbers I will be talking about are in thousands.

For the 3 months ended September 30, 2018, our net revenues decreased 59% to $66 compared to $160 for the 3 months ended September 30, 2017. The decrease in net revenues was primarily due to the non-recurring sale to Cenegenics of $100 in 2017, a $13 decrease in sales from our older products offset by a $21 increase from new products launched in 2018, which include Yolked and MYOS Canine Muscle Formula.

Gross profit for the 3 months ended September 30, 2018, decreased 93% to $7 compared to $95 for the 3 months ended September 30, 2017. Gross profit margin for the 3 months ended September 30, 2018 was 11% compared to 59% for the 3 months ended September 30, 2017.

Our operating expenses for the 3 months ended September 30, 2018 increased 7% to $916 compared to $852 for the 3 months ended September 30, 2017 and our net loss increased 21% to $911 for the 3 months ended September 30, 2018 compared to $753 for the 3 months ended September 30, 2017. For the 9 months ended September 30, 2018, our net revenues decreased 43% to $211 compared to $369 for the 9 months ended September 30, 2017.

The decrease in net revenues of $158 was primarily due to a one-time non-recurring sale of $116 to a related party and $100 of net revenues from our non-recurring sale to Cenegenics in the 9 months ended September 30, 2017 offset by an increase of $58 in net revenues for all-in product lines. Our gross profit for the 9 months ended September 30, 2018 decreased 51% to $61 compared to $125 for the 9 months ended September 30, 2017.

Gross profit margin for the 9 months ended September 30, 2018 was 29% compared to 34% for the 9 months ended September 30, 2017. Our operating expenses for the 9 months ended September 30, 2018 increased 3% to $3,216 compared to $3,113 for the 9 months ended September 30, 2017.

Our net loss increased 6% to $3,158 for the 9 months ended September 30, 2018 compared to $2,976 for the 9 months ended September 30, 2017. As of September 30, 2018, the company had cash at $459, total assets of $4.003 million and $1.1 million in working capital.

Net cash used in operating activities for the 9 months ended September 30, 2018 was $2.550 million, a decrease of $650 compared to $3.2 million for the 9 months ended September 30, 2017. I would now like to turn the call over to our Chief Executive Officer, Joseph Mannello.

Thank you, Joe. Good morning everyone and thank you for being on the call today.

In the third quarter, we continued to make progress executing our business plan, leveraging Fortetropin across our sports nutrition, veterinary and therapeutics verticals. While I am certainly not satisfied with our revenues for the quarter, we are actively positioning or could I say repositioning the company to accelerate our revenue generating efforts and I will outline that on today’s call.

Let me first discuss our sports nutrition segment. I believe we are ending 2018 on a very high note.

We continue to work closely with our marketing partner IMG, introducing our product Yolked to many Division 1 universities. We also are reaching out to universities on our own away from IMG and have had pretty good results in getting them to try our Yolked product.

I accompany IMG on trips to the D1 schools and feedback from both IMG and the coaches at these universities have been positive and we expect to visit more universities over the next couple of months. Having a partner such as IMG provides us with great credibility when entering these colleges, particularly in such a crowded marketplace.

However, what I found as I meet these sports and nutritionists at these schools and their trainers, there is this push to natural products, whether that’s cherry juice or other products, they are looking for natural food products and Fortetropin and Yolked fits that perfectly plus our NSF certification, which we received this year really helps us. In the coming days, we will be launching our Yolked product to the general public in time for the holiday season and just before we all make our New Year’s resolutions.

Yolked helps your body utilize protein more efficiently to build more lean muscle. It’s all natural and it contains three simple ingredients, fertilized egg yolk powder or Fortetropin, dextrose and natural vanilla flavor.

In April, Yolked received the prestigious NSF Certified for Sport certification as I said, which means it meets the rigorous standards for NSF, that include comprehensive lab testing, an extensive evaluation of the manufacturing process, to ensure contaminated substances or hidden ingredients are not added to the product. It’s safe for all age groups and we intend to reach out to our past customers as part of our marketing effort.

We anticipate future updates on our distribution of Yolked over the next several weeks. I am very, very excited about this product.

When deciding to name this product line geared to really a younger demographic and I can say that now that as demographic is 40 and below, it was suggested to me to call it Yolked and which I understand since the key ingredient Fortetropin is derived from fertilized egg yolk. However, when I approached my kids about that name, they understood it as not being anything to do with an egg but yolk means jacked up or muscular and that’s if you talk to athletes in their 20s and 30s and it doesn’t even have to be athletes, people in the sports nutrition market or CrossFit endurance athletes, they understand what Yolked means.

And since I have been able to visit these college campuses and see their reaction to the name and the kids saying, what is that? I want some of that.

I am glad we went down that path. I have to say we got a little lucky.

I was really, really surprised that we were able to not only go out with that name, but to secure a registered trademark for the Yolked brand. I was shocked that no one else had done that.

Just turning the page. One of our key pillars for growth and probably my favorite market or my favorite products that we have is in the veterinary segment and our MYOS Canine Muscle Formula product.

We launched this in June, late June really early July and we started to get people very interested, direct-to-consumer and veterinarians to start using the product. Last week, we announced our first distribution agreement for MYOS Canine with Miller Veterinary Supply East, which will allow for greater exposure to more than 6,000 veterinary hospitals.

Miller began marketing MYOS Canine at their New York Vet Conference on November 8 at the Javits Center, which was attended by veterinarians from around the globe and MYOS Canine was well received by all, including holistic veterinarians who are really impressed with this single ingredient product. Importantly, we have received very positive feedback and testimonials from our initial customers who have become repeat customers.

Please go to our website myospet.com and look at these testimonials. I can assure you they are not from my uncles or aunts or cousins.

These are people unsolicited and it really tells us that we have something here that’s incredibly unique. When we talk to vets there really is no product out there that addresses muscle health for middle-aged and older dogs and I think potentially down the road, this could be a supplement that would be given to dogs at any age.

And we were delighted, this quarter that we gained approval for a new MYOS Enteral Nutrition Formula, which is formulated with Fortetropin for Medicare and Medicaid reimbursement. We continue to believe that the therapeutic potential of Fortetropin and are committed to finding the optimal development pathways forward.

Many patients who require Enteral Nutrition are very sick and can benefit from access to high-quality nutrition products. Patients who have trouble eating due to issues related to swallowing or with their esophagus require the use of an enteral feeding tube to deliver their nutrients.

Our team of scientists continue exploring the developed and commercialization of medical nutrition products and it’s a long-term initiative that we believe will enable us to further leverage the versatility of Fortetropin. We are very committed to continuing our focus on our clinical research studies which underpin our commercial strategy for Fortetropin and also enhance our intellectual property assets.

We commonly have three clinical studies going on and one preclinical study ongoing. I just want to talk a little bit about meeting science with commercialization.

As we go down these path, the path of science, that helps us to decide which avenue to go with the product. And for years, this company has not done a lot of science and we have picked that up now, because it really, really, one, helps you sell the product and helps to tell you we know that this product works.

We don’t know 100% know why it works, we have a good idea or what avenues it can help with and we are exploring different ways. And science, I am afraid to say we will be getting more science, but we will start telling us, you know what, you went down that pathway maybe you need to shift it to this pathway or continue down that pathway.

So with our studies, let me go through what’s going on. Clinical study, the College of Veterinary Medicine at KSU focuses on the impact of Fortetropin on reducing muscle atrophy in dogs after TPLO repair surgery.

This study is expected to be completed by the end of the first quarter of 2019. We were hoping for it sooner, we might get that, but as I found with colleges, universities, these studies take longer than you expect.

And depending on the results of the study, we may explore a similar study in reducing muscle atrophy in humans after ACL surgery. This is basically a preclinical study to push us in that direction or not.

Our clinical study at the University of California, Berkeley’s Department of Nutritional Sciences & Toxicology, that’s a lot of words for, I can just say, our Berkeley study studies the effects of Fortetropin on increasing the fractional rate of skeletal muscle protein synthesis in men and women between the ages of 60 and 75 years of age. The study and proteomics and data analysis are expected to be completed by the second quarter of 2019.

And depending on the results of this study one, it will tell it will show our product, meets with the anecdotal evidence we have seen in this population and explore for future studies of sarcopenia and also providing much greater marketing opportunities in the active senior market. Our research discovery program with Rutgers allows for discovering compounds and products based on Fortetropin for improving muscle health and performance.

It’s an ongoing program. We believe it has great potential for us to discover new products.

Our preclinical cachexia study with Weill Cornell Medical Center focuses on the efficacy of Fortetropin in preventing weight and muscle loss associated with cancer in a mouse model of lung cancer. We anticipate that the study will be completed and the results announced around the end of the second quarter of 2019.

Depending on the results of this study, we will then figure out what the pathway will be in cachexia or another area. We anticipate launching several additional clinical studies over the next few months.

The timing and the scope of these studies will depend on the results of our current clinical studies. We are, as I go around and speak to universities, speak to distributors, speak to people looking to retailers etcetera to buy our product, I realize that we are one of the few companies that has so much science behind them, but is committed to do continuing science to try to develop better products for the consumer.

And overall, I am really proud of the progress we made during the third quarter and to continue to build a portfolio brands and products around Fortetropin. I am clearly not satisfied with our financial results, but over our goal, I believe the business is going in the right direction.

We are more focused on the company that’s rooted in research. Our brands are understandable and our products are being introduced to the right people.

We must strike the right balance between spending resources and traditional marketing efforts and reaching our internal sales goal. That’s what makes having a marketing partner like IMG for Yolked or a distribution partner like Miller Vet for MYOS Canine so important to us.

At the also same time, we have boosted our internal marketing team and I have been very pleased with results so far. In conclusion, there are many reasons for optimizing our ability to grow this business, by leveraging Fortetropin simply a remarkable disruptive ingredient, one that has demonstrated tremendous clinical and anecdotal evidence and versatility.

Over a year ago, I agreed to forgo an annual staff salary in lieu with stock options and while purchasing stock in the open market and making direct investments in the company, because I truly believe this is an undervalued stock in a very undervalued company. I have also lent the company $1 million in a 5% unsecured note.

We have a very strong balance sheet. We maintained conservative cash management and we have an improved scientific profile and we are now developing brands that I believe will yield long-term success.

Investors should keep an eye out for our announcements, particularly regarding Yolked as we expect to have additional announcements before the end of the year. At the same time, we are eagerly looking forward to 2019 when the results of our clinical studies will be announced and I think the result of how our new brands are being leveraged in the marketplace.

Thank you for joining us today. I am happy to answer any questions you have either now or after this call is over.

Just note, I am always available, everyone here can reach me if I am traveling. So I mean it when I say if you have any questions, call me, if I can’t answer it, if it’s over my pay grade with regard to the science, our scientists will be able to answer it for you.

Thank you and have a really happy Thanksgiving.

Good morning, Joe. I apologize I jumped on the call late, so you may have covered the questions that I’m going to ask in your prepared remarks.

They were prepared. Don’t assume they were prepared.

I tried to…

In terms of the Yolked rollout and sales, are you seeing repeat orders? I know I asked the question on the prior call, just...

We haven’t really launched it yet commercially. It’s still in the testing phase for schools.

We intend to do that over the next couple of weeks. So we are still talking to people about it.

The idea for Yolked was get it into the colleges, use them as a springboard and really make this a 2019 launch. That was the goal.

Obviously, if I had someone showing up at the door saying they want to buy millions of dollars of our Yolked product, that would be one thing, but the plan was get it into the schools with IMG, get feedback as the players and the teams take it, which is starting to happen now and then really make a launch, end of this year into 2019.

Okay. And the feedback that you are getting from the schools that you have it at today how is that?

Are you – is it positive feedback, you get a reasonable amount of it, can you use that, that kind of determine the strength of potential demand going into 2019?

We have had quite a bit positive feedback. Most of these schools, the players are still taking it.

We have given them the product for 4 months and we started out mid-to-late summer to get them to take it. Some people didn’t start until early fall.

It depends when their team was scheduled to they wanted it before their season. So, there are different teams taking it at different times.

So over the next couple of weeks, I will be getting feedback from the schools that started taking it in the mid-to-late summer and then early next year, I will get it of the feedback from the schools that are taking it – started taking it in the fall. As far as taste, the name, all that has been positive, no one has said, God this is – I don’t care if it makes me 10 pounds stronger or 3 feet taller, it tastes horrible, just the opposite, everyone likes the taste, they love the branding, but as far as repeat orders yet, we are still going down the path of them finishing their testing.

And then in terms of the athletes that take it at the schools that where you have it now, is it primarily men’s teams like football teams or is it more across the board in terms of the [indiscernible] of course.

It’s primarily men’s teams in all different sports depending on the school and what, it’s fascinating if you and I am not at liberty to say, but if you look at different schools you will say, oh they are known for X and that team tends to take it. We don’t know yet if any women at the schools or women’s teams, it could be happening.

There are couple of schools who are still deciding. So I will get that answer from the feedback but I know, it’s been football, basketball, ice hockey and those that’s the three sports I know so far.

Okay. And you mentioned the taste of it and I can relate to that comment, because I have bought protein powder over the years and it sounds pretty benign, but it is kind of a big deal to have a good taste.

The other thing is mixability. So on the mixability scale, does it rank high up like the taste too?

Mixability, I mean it mixes fine with yoghurt or remember this is not a protein. This helps your body utilize protein more efficiently to build lean muscle and that’s part of our sales pitch.

Everyone has to take protein to build muscle. This helps your body utilize it better, the protein you’re taking and that’s the story, and you add it to smoothies or you take it like many of them do just right out of the pack, PEDs open that up and you take it, this is adult’s PEDs and people say, it tastes like cake batter, which is – cake batter is pretty good.

It mix fine with smoothies and it doesn’t mix great with the water, its oily, that’s the beauty of it. That’s our whole process.

We keep it in its purest form or else we would create a shake, the uniqueness about our product is that, the form it is in, helps give it – that’s the fact that it is in this form is what makes it so great and people get that once you tell them the story.

Okay. And then going into 2019 in terms of the launch strategy and as it relates to the sales team, can you kind of give us the sort of the summary in terms of size of the team and sort of I guess just the initial strategic launch plan?

Sure, I mean, up to a limit. So, obviously, I don’t want to give forward-looking but we have two sales people here who are working to build the product here through contacts, we work, they are also working with distributors, they have been in the field for years.

We are using them, distributors in both the Canine and the Yolked product. So it’s internal distributors and then direct to consumer is the plan.

We have all three in place and we continue to build distribution relationships.

Okay. Thanks, Joe.

You are welcome.

Hey, Joe. How is it going?

Good, Brian.

Really quickly, so I see what kind of inventory you guys are carrying on your sheets and given how you are financing, I know when we spoke last, when we discussed current state of finance and inventories as you see 2019 progressing as you have your sales plans, how do you view, maybe a little context around how you view your current inventory with cash needing to go and procure more inventory vis-à-vis sales like – is it going to be a marvelous thing when you burn through all the inventory and then have to go and you start to deplete cash in order to go and acquire more inventory or how are you looking at that right now?

The answer is, yes. That would be a wonderful thing and I’m optimistic that, that will happen.

Moving to the current inventory we have, remember that’s at our costs so that would generate quite a bit of cash, which will give us the ability to go out and purchase more. I am not concerned with that.

As we build our business, we have plenty of inventory here to get us through 2019 and…

Is that both on the Yolked and on the Canine side?

Yes.

Okay, great.

Now, I can make projections for you that we will say, hey, we need to get inventory. I am not concerned about that the inventory is easy to build up.

It would be a good thing to go through all that. We would have some – I would have a lot of good calls in 2019 discussing that.

Our relationship with our supplier is phenomenal. I was just in Germany in the late summer.

We spoke to them last week. They are ready to go when we are ready to go.

That’s helpful. Thank you so much.

Just I want to thank everyone for supporting MYOS. I know it’s been a long road for people who have been in the stock as long as I have.

I truly see a lot of light here and a real opportunity. It’s taking longer than I expected.

I think to build anything right, sometimes takes little longer, but I am very, very optimistic. And anyone again has any questions please feel free to call me.

I will always be available for a call or a meeting or both. So again have a happy Thanksgiving and a happy and healthy holiday.

Thank you.