PROGRESSIVE CARE INC. – 10-Q – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the attached
unaudited Condensed Consolidated Financial Statements and notes thereto. In
addition to historical information, the following discussion contains
forward-looking statements that involve risks, uncertainties and assumptions.
Where possible, we have tried to identify these forward-looking statements by
using words such as "anticipate," "believe," "intends" or similar expressions.
We strongly encourage investors to carefully read the section entitled "Risk
Factors" in our Form 10-12G filed April 7, 2022 for a description of certain
risks that could, among other things, cause actual results to differ from these
forward-looking statements. We assume no responsibility to update the
forward-looking statements contained in this quarterly report on Form 10-Q. The
following should also be read in conjunction with the unaudited Condensed
Consolidated Financial Statements and notes thereto that appear elsewhere in
this report.

Overview

Progressive Care Inc. was incorporated under the laws of the state of Delaware
on October 31, 2006 under the name Progressive Training, Inc. We changed our
name to Progressive Care Inc. in connection with a merger with Progressive Care
Inc. on November 23, 2010. Progressive, through its wholly-owned subsidiaries,
PharmCo, LLC (referred to as "PharmCo 901"), Touchpoint RX, LLC doing business
as PharmCo Rx 1002, LLC (referred to as "PharmCo 1002"), Family Physicians RX,
Inc. doing business as PharmCoRx 1103 and PharmCoRx 1204 (referred to as "FPRX"
historically or "PharmCo 1103" and "PharmCo 1204" currently) (pharmacy
subsidiaries collectively referred to as "PharmCo"), ClearMetrX Inc., and RXMD
Therapeutics, Inc (collectively with all entities referred to as the "Company"
or "we") is a personalized healthcare services and technology company which
provides prescription pharmaceutical and risk and data management services to
healthcare organizations and providers.

We provide Third Party Administration ("TPA"), data management, COVID-19 related
diagnostics and vaccinations, prescription pharmaceuticals, compounded
medications, tele-pharmacy services, anti-retroviral medications, medication
therapy management, the supply of prescription medications to long term care
facilities, medication adherence packaging, contracted pharmacy services for
340B Covered Entities under the 340B Drug Discount Pricing Program, and health
practice risk management. We are focused on improving lives of patients with
complex chronic diseases through a patient and provider engagement and our
partnerships with payors, pharmaceutical manufacturers and distributors. We
offer a broad range of innovative solutions to address the dispensing, delivery,
dosing, and reimbursement of clinically intensive, high-cost drugs.

PharmCo provides contracted pharmacy services for 340B Covered Entities under
the 340B Drug Discount Pricing Program. Under the terms of these agreements, we
act as a pass through for reimbursements on prescription claims adjudicated on
behalf of the 340B Covered Entities in exchange for a dispensing fee per
prescription. These fees vary by the covered entity and the level of service
provided by us.

We currently own and operate four pharmacies, which generate most of our
revenues. Our prescriptions revenues were 93% and 85% of total revenues for the
three months ended June 30, 2022 and 2021, respectively. Our prescriptions
revenues were 89% and 88% of total revenues for the six months ended June 30,
2022 and 2021, respectively.

Our revenue is derived from customized care management programs, Medication
Therapy Management ("MTM") services we deliver to our patients, including the
dispensing of their medications. We also provide patient health risk reviews and
free same-day delivery.

Our focus is on complex chronic diseases that generally require multiyear or
lifelong therapy, which drives recurring revenue and sustainable growth. Our
pharmacy services revenue growth is from our expanding breadth of services, new
drugs coming to market, new indications for existing drugs, volume growth with
current clients, and addition of new customers due to our focus on higher
patient engagement, benefit of free delivery to the patient, and clinical
expertise. We also expect expanded revenue growth through the signing of new
contract pharmacy service and data management contracts with 340B Covered
Entities and expansion of data management and analytics services to healthcare
organizations.

We formed ClearMetrX in June 2020, the Company's first wholly-owned data
management company with services designed to support health care organizations
across the country. We believe Artificial Intelligence ("AI") will improve
preventive healthcare by helping physicians make informed decisions in the
medication therapy management process. Through ClearMetrX, third party
administrative and data management fees for the three months ended June 30, 2022
and 2021, was approximately $0.2 million for both periods. Third party
administrative and data management fees for the six months ended June 30, 2022
and 2021, was approximately $0.3 million and $0.4 million, respectively. These
fees have gross margins significantly greater than those generated from our

pharmacy operations.

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According to data provided to Drug Channels by HRSA, discounted 340B purchases
were at least $38.8 billion in 2020 with an overall growth rate of 217% over the
past five years. ClearMetrX includes data management and TPA services for 340B
Covered Entities, pharmacy analytics, and programs to manage HEDIS Quality
Measures including Medication Adherence. These offerings cater to the glaring
need for frontline providers to understand best practices, patient behaviors,
care management processes, and the financial mechanisms behind these decisions.
We provide data access, and also deliver actionable insights that providers and
support organizations can use to improve their practice and patient care. The
Company's TPA services include management of wholesale accounts and contract
pharmacies, patient eligibility with regard to the 340B drug program,
development and review of 340B policies and procedures, and management of
receivables.

We have isolated and prioritized key marketing methods which have yielded the
lowest cost of customer acquisition and the most opportunity for growth. Social
media, website maintenance, and thought leadership are being optimized to
promote brand awareness and recognition, which increases the likelihood of
securing physician referrals and customer loyalty.

For the three months ended June 30, 2022 and 2021, we recognized overall revenue
from operations of approximately $10.0 million and $9.6 million, respectively.
Prescription revenue for the three months ended June 30, 2022 was approximately
$9.3 million when compared to $8.2 million the same period in 2021, a 13% period
over period increase. We have filled approximately 118,000 and 107,000
prescriptions during the three months ended June 30, 2022, and 2021,
respectively, a 10% period over period increase in the number of prescriptions
filled. Revenue from COVID-19 testing was approximately $0.4 million and $1.1
million for the three months ended June 30, 2022, and 2021, respectively. The
decrease was primarily due to lower COVID-19 testing sales. As the COVID-19
pandemic faded worldwide, the need for testing has decreased as it relates to
travel and business continuity. However, despite the downturn in COVID-19
testing needs, we have generated approximately $0.4 million in COVID-19 testing
revenue for the three months ended June 30, 2022. It is difficult to predict
whether these conditions will be recurring given recent COVID-19 pandemic
conditions in Florida. We are well positioned to react if another COVID-19
outbreak occurs as we have built a reputation of being a reliable partner for
COVID-19 testing solutions. We have built reputable relationships with
well-known media productions companies and these relationships provide us with
recurring COVID-19 testing revenue.


For the six months ended June 30, 2022 and 2021, we recognized overall revenue
from operations of approximately $20.0 million and $19.2 million, respectively,
a 4% year over year increase. Prescription revenue for the six months ended June
30, 2022 was approximately $17.9 million when compared to $16.8 million the same
period in 2021, a 6% period over period increase. We have filled approximately
229,000 and 223,000 prescriptions during the six months ended June 30, 2022, and
2021, respectively, a 3% period over period increase in the number of
prescriptions filled. We believe this trend will continue through the remainder
of the year as the medication adherence measures begin to impact providers
performance and their future potential monetary incentives, which are tied to
their patient's adherence measures. Revenue from COVID-19 testing was
approximately $1.7 million and $1.6 million for the six months ended June 30,
2022, and 2021, respectively. We have recognized record COVID-19 testing revenue
in January 2022 as the country was dealing with the Delta and Omicron outbreak
during that period. Since January 2022 the demand for COVID-19 testing has
slowed down as the need for testing has decreased as it relates to travel and
business continuity. It is difficult to predict whether these conditions will be
recurring given recent COVID-19 pandemic conditions in Florida. We are well
positioned to react if another COVID-19 outbreak occurs as we have built a
reputation of being a reliable partner for COVID-19 testing solutions. We have
built reputable relationships with well-known media production companies and
these relationships provide us with recurring COVID-19 testing revenue.



During 2022 we have experienced significant decreases in the reimbursement rates
for uninsured patients enrolled in the Gilead PREP program that became effective
beginning the first quarter of 2022 that had an overall unfavorable impact on
our 340B contract revenue. Dispensing fee and third-party administration revenue
earned on our 340B contracts for the three months ended June 30, 2022 and 2021
were approximately $0.7 million for both periods. Dispensing fee and third-party
administration revenue earned on our 340B contracts for the six months ended
June 30, 2022, and 2021 were approximately $1.1 million and $1.4 million,
respectively. As a result of the decrease in reimbursement rates from Gilead
PREP program, we experienced an unfavorable impact on our 340B contract revenue
in the amount of approximately $0.1 million for the three months ended June 30,
2022, and an unfavorable impact of approximately $0.3 million for the six months
ended June 30, 2022. Since the beginning of the year, 340B covered entities
significantly increased patient enrollment in alternative programs and insurance
plans that provide greater reimbursements. For the three months ended March 31,
2022 we recorded approximately $0.4 million from our 340B contracts, compared to
approximately $0.7 million during the three months ended June 30, 2022, an 82%
increase from the first quarter of 2022 when compared to the second quarter of
2022. We believe the increase is a direct result of the patient enrollment
effort and believe this trend will continue for the remainder of the year. We
are continuing to strengthen our knowledge and expertise in the 340B arena and
working towards diversifying our 340B business as well as expanding it
nationwide through the offering of our ClearMetrX software, when completed.



We continue to experience an overall reduction in the gross profit per drug
prescribed predominantly in high cost brand drugs where in many cases
reimbursements are at or below dispensed drug costs. Our gross profit per
prescription continued to be eroded through increases in contractual rate
adjustments such as generic and brand effective rates. We continue to promote
the health and well-being of the community through ensuring necessary
medications are received by the patient regardless of cost to us, and we are
working with physicians and patients alike to optimize medication practices to
dispense drugs that do not result in losses. Our pharmacy staff is trained to
recognize all opportunities to recommend and dispense less expensive generic
drug alternatives to minimize the risk of loss and potentially decrease profit
erosion. We believe this approach will benefit our pharmacy operations and
attract new business from value-based providers and health care organizations
with a focus on minimizing drug spending.


Management expects that future growth will be driven by new data management and
virtual healthcare service lines; expansion of 340B Covered Entities Third Party
Administrative services; market penetration in existing geographies; development
of enhanced healthcare B2B services; development of cash based products and
services; and continued implementation of MTM protocols.

Additionally, profitability and cash flow might be positively impacted by the
elimination of non-recurring expenses and diversification to revenue streams
outside of the third-party insurance payor model.

In February 2021, we entered into a service agreement with EagleForce Health,
LLC to integrate its proprietary telehealth platform, called "myVax", and
develop a platform for the Company's Digital Passport for COVID-19 testing and
vaccination results. The platform was launched on July 20, 2021 and is capable
of managing an individual's COVID-19 vaccine and test records. The Company has
been able to build an Ecosystem that allows a patient, employer, or coordinator
in-charge to chat with the company's support team, schedule a test, pay for the
test, and at the point of arrival to the site by scanning a QR code from a
mobile devise create a profile and access test results. Using the same
Ecosystem, the companies support staff is able to manage the entire patients
journey and provide automated reporting of the results to regulatory
authorities, supervisors and coordinators in-charge. Once a PharmcoRx myVax
profile has been created, patients have a secure way to store health records,
including testing records, vaccination records, medications, vitals, and
passport data. It is also capable of tracking vital health data from smart
watches and other smart devices. The myVax Passport serves as an easy and secure
way to store and manage verifiable COVID-19 related records for traveling or
work purposes.

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COVID-19 Pandemic

Global health concerns relating to the outbreak of COVID-19 continue to have an
impact on the economies of the U.S. and around the world. We believe COVID-19's
impact on our business, financial condition and operating results primarily will
be driven by the geographies impacted and the severity and duration of the
pandemic, as well as the pandemic's impact on the U.S. and global economies,
consumer behavior and health care utilization patterns. In addition, the
outbreak has resulted in authorities implementing numerous measures to reduce
the transmission of the virus, such as travel bans and restrictions,
quarantines, shelter-in-place orders, and business shutdowns. These measures may
not effectively combat the severity and/or duration of the COVID-19 pandemic.
The ultimate extent of the impact of any epidemic, pandemic, outbreak, or other
public health crisis on our business, financial condition and results of
operations will depend on future developments, which are highly uncertain and
cannot be predicted, including new information that may emerge concerning the
severity of such epidemic, pandemic, outbreak, or other public health crisis and
actions taken to contain or prevent further spread, among others. Accordingly,
we cannot predict the extent to which our business, financial condition and
results of operations will be affected. We will continue to work diligently with
our partners and stakeholders to continue supporting patient access to their
prescribed medications to the extent safe to do so for patients, caregivers and
healthcare practitioners, as well as ensuring the continuity of our supply
chain. Specific COVID-19 related impacts on the Company for the six months ended
June 30, 2022 and 2021, are further described below.

During the third quarter of 2020, the Company launched an aggressive expansion
of its COVID-19 testing service registered through the FDA under its Emergency
Use Authorization ("EUA") guidelines, featuring Polymerase Chain Reaction
("PCR") and Antigen testing systems that produces rapid detection of the
SARS-CoV-2 virus, and Antibody testing to detect the presence of IGG and IGM
antibodies in the blood with market-leading accuracy in 15 to 45 minutes. The
systems we use for Rapid Detection of the SARS-CoV-2 virus is a molecular test
using a lab technique called PCR, an antigen-based testing system designed to
detect proteins from the virus that causes COVID-19, and COVID-19 IgG/IgM Rapid
Test Cassette authorized for the detection of antibodies to SARS-CoV-2 in human
venous whole blood. The Company provides these new testing systems to patients
at its North Miami Beach, Hallandale Beach, Palm Springs and Orlando locations.
Our testing sites are equipped with analyzers capable of detecting positive or
negative COVID-19 results within minutes. Each site is operated by clinically
trained Pharmacy staff and administering tests on and off site. The Company has
established a reputation of a reliable testing partner and currently provides
testing services to international travelers and international airlines, chain
restaurants, US and international production and entertainment companies, and
local healthcare communities. The Company has been able to build an Ecosystem
that allows a patient, employer, or coordinator in-charge to chat with the
company's support team, schedule a test, pay for the test, and at the point of
arrival to the site by scanning a QR code from a mobile devise create a profile
and access test results. Using the same Ecosystem, the companies support staff
is able to manage the entire patients journey and provide automated reporting of
the results to regulatory authorities, supervisors and coordinators in-charge.

For the six months ended June 30, 2022 and 2021, we have earned approximately
$1.7 million and $1.6 million, respectively from COVID-19 testing. We have
recognized record COVID-19 testing revenue in January 2022 as the country was
dealing with the Delta and Omicron outbreak during that period. Since January
2022 the cases of COVID-19 infections and demand for COVID-19 testing have
slowed down. It is difficult to predict whether these conditions will be
recurring given recent COVID-19 pandemic conditions in Florida. We are well
positioned to react if another COVID-19 outbreak occurs as we have built a
reputation of being a highly reliable partner for COVID-19 testing solutions. We
have built reputable relationships with well-known media productions companies
and these relationships provide us with recurring COVID-19 testing revenue.

With the FDA's recent revision of the drug's emergency use authorization, as of
July 7, 2022 our Pharmacists here at PharmCo, with some limitations, can now
prescribe Paxlovid, COVID-19 antiviral pill, directly to patients who face high
risks for severe COVID-19. Pharmco has Paxlovid and Molnupiravir (COVID positive
therapies) in stock and are able to dispense immediately to patients when
prescribed to treat and minimize or reduce the symptoms of COVID.  Paxlovid is
authorized to treat mild to moderate COVID-19 in adults and in kids ages 12 and
older who weigh at least 88 pounds. Patients who report a positive test are
eligible for Paxlovid under the FDA authorization.

Products and Services and their Markets

Pharmacy operations

We provide prescription pharmaceuticals, compounded medications, tele-pharmacy
services, anti-retroviral medications, medication therapy management, the supply
of prescription medications to long term care facilities, contracted pharmacy
services for 340B Covered Entities under the 340B Drug Discount Pricing Program,
and health practice risk management. We improve the lives of patients with
complex chronic diseases through our partnerships with patients, payors,
pharmaceutical manufacturers and distributors, and physicians. We offer a broad
range of innovative solutions to address the dispensing, delivery, dosing, and
reimbursement of clinically intensive, high-cost drugs. We also provide patient
health risk reviews and free same-day delivery. On a trailing twelve months
basis, we fill on average approximately 37,000 prescriptions per month. We
believe we are well positioned to continue expanding our market share in the
pharmacy industry.

We offer a variety of value-added services for no additional charge that further
encourage satisfaction across all medication stake holders and enhance loyalty
and key performance metrics. These services include language support for broad
demographics, prior authorization assistance, same-day home-medication delivery,
on site provider consultation services, reporting and analytics, customized
medication adherence packaging solutions, and patient advocacy. Our pharmacies
accept most major insurance plans and provide access to co-pay assistance
programs, discount and manufacturer coupons, and competitive cash payment
options. We sell common blood pressure, statin and other common drugs, and
dispense either brand name or generic drugs according to the doctor's
prescription. We also offer e-commerce of over-the-counter products, certain
disease testing, and vaccinations.

We enhance patient adherence to complex drug regimens, collect and report data,
and ensure effective dispensing of medications to support the needs of patients,
providers, and payors. Our patient and provider support services ensure
appropriate drug initiation, facilitate patient compliance and persistence, and
capture important information regarding safety and effectiveness of the
medications that we dispense.

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We provide contracted pharmacy services for 340B Covered Entities under the 340B
Drug Discount Pricing Program. The drugs are owned by the 340B Covered Entity up
until sale, so we do not incur out of pocket costs for this drug inventory.
Under the terms of these agreements, we act as a pass through for reimbursements
on prescription claims adjudicated on behalf of the 340B Covered Entities and
receive a dispensing fee per prescription. These fees vary by the covered entity
and the level of service we provide.

For our Long-Term Care customers, we provide purchasing, custom packaging and
dispensing of both prescription and non-prescription pharmaceutical products. We
utilize a best practice unit-of-dose packaging system as opposed to the
traditional vials, using the same robotic packaging systems currently used by
chain, mail order, and large-scale pharmacies. We also provide computerized
maintenance of patient prescription histories, third party billing and
consultant pharmacist services. Our consultant pharmacy services consist
primarily of evaluation of monthly patient drug therapy, as well as monitoring
the institution's drug distribution system.

We currently deliver prescriptions to Florida's diverse population and ship
compounded medications to patients in states where we hold non-resident pharmacy
licenses as well. We currently hold Florida Community Pharmacy Permits at all
Florida pharmacy locations and our PharmCo 901 location is licensed as a
non-resident pharmacy in the following states: Arizona, Colorado, Connecticut,
Georgia, Illinois, Minnesota, Nevada, New Jersey, New York, Pennsylvania, Texas,
and Utah. We are able to dispense to patients in the state of Massachusetts
without a non-resident pharmacy license because Massachusetts does not require
such a license for these activities.

Data Management Services

Global healthcare systems have been taxed in recent years with aging populations
seeking care in greater numbers. Big data and analytics have seen large
increases in the market as healthcare stakeholders seek to use information to
increase efficiency, lower costs, improve patient outcomes, and innovate.
Frontline and independent providers have benefitted from improvements to their
digital systems, but data insights are a rare commodity. Regardless of size,
digitization of healthcare as global trend will encourage the usage of data
analytics to improve care and allow us to compete in an intense healthcare
market. Per Fortune Business Insights Report on the Healthcare Analytics Market,
the healthcare analytics market size is projected to reach $80.2 billion by
2026, exhibiting a compound annual growth rate of 27.5%.

Through our wholly owned subsidiary, ClearMetrX, we offer data management and
reporting services to support health care organizations. Our 340MetrX offering
includes data management and TPA services for 340B Covered Entities, pharmacy
analytics, and programs to manage HEDIS Quality Measures including medication
adherence. These offerings address the glaring need for frontline providers to
understand best practices, patient behaviors, care management processes, and the
financial mechanisms driving decisions. We deliver data access and actionable
insights that providers and support organizations can use to improve their
practice and patient care.

Industry Overview and Market Opportunities

Pharmacy operations

The retail pharmacy and pharmaceutical wholesale industries are highly
competitive and dynamic and have experienced consolidation and an evolving
competitive landscape in recent years. Prescription drugs play a significant
role in healthcare, constituting a first line of treatment for many medical
conditions. New and innovative drugs will improve quality of life and control
healthcare costs.

The U.S. retail pharmacy industry relies significantly on private and
governmental third-party payors. Many private organizations throughout the
healthcare industry, including PBM companies and health insurance companies,
have consolidated in recent years to create larger healthcare enterprises with
greater bargaining power. Third-party payors, including the Medicare Part D
plans and the state-sponsored Medicaid and related managed care Medicaid
agencies in the United States, can change eligibility requirements or reduce
certain reimbursement rates.

Changes in law or regulation can also impact reimbursement rates and terms. The
Patient Protection and Affordable Care Act was enacted to help control federal
healthcare spending, including for prescription drugs. These changes at the
federal and state level are generally expected to reduce Medicaid reimbursements
in the U.S. When third-party payors or governmental authorities take actions
that restrict eligibility or reduce prices or reimbursement rates, sales and
margins in the retail pharmacy industry could be reduced. In some cases, these
possible adverse effects may be partially or entirely offset by controlling
inventory costs and other expenses, dispensing higher margin generics, finding
new revenue streams through pharmacy services or other offerings, dispensing a
greater volume of prescriptions or any combination of these actions.

Generic prescription drugs have continued to help lower overall costs for
customers and third-party payors. In the U.S. in general, generic versions of
drugs generate lower sales dollars per prescription, but higher gross profit
percentages, as compared with patent-protected brand name drugs. In general, in
the U.S., specialty prescription business is also growing and generates higher
sales dollars per prescription, but lower gross margin, as compared to generic
prescription drugs.

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Pharmacists are on the frontlines of the healthcare delivery system, and we
believe rising healthcare costs and the limited supply of primary care
physicians present opportunities for pharmacists and retail pharmacies to play
an even greater role in driving positive outcomes for patients and payors
through expanded service offerings such as immunizations and other preventive
care, healthcare clinics, pharmacist-led medication therapy management and
chronic condition management.

Pharmaceuticals represent a significant and growing total addressable healthcare
market. The pharmaceutical market experienced significant growth in recent years
as complex chronic conditions, care coordination, technology-enabled patient
care, biotechnology research and outcomes-based healthcare have increased in
focus.

In light of accelerating usage of mail order and delivery-based services, both
before and after the global COVID-19 pandemic, we believe the market for
personalized and convenient care access is increasing. We have provided same-day
and next-day home delivery services over the past 15 years of our operations. We
are uniquely positioned in Florida to gain an increasing market share among a
broad demography of patients due to our high-performance scores and value-added
services. Additionally, we see value in the opportunity to create strategic
partnerships, acquire synergistic operations and expand current operations to
round out pharmacy capabilities which could include specialty medications,
sterile compounding, and mail-order.

Virtual healthcare services and healthcare technologies

Virtual healthcare services, or Telehealth, is a growing segment of the
healthcare sector. It involves remotely exchanging patient data between
locations for purposes of obtaining assistance in monitoring and diagnosing.
Telehealth allows the healthcare practitioner to easily offer their services on
consultation, care management, diagnosis, and self-management services using
information and communication technologies. These services are being offered
through various modes of delivery, such as on-premise, web-based, and
cloud-based delivery. A growing population over the age of 65, the increase in
the number of chronic diseases, and a rise in demand for home monitoring devices
are the major drivers which are likely to aid the growth of the telehealth
market.

In the U.S. and globally there has been a surge in interest in digital health
services as the COVID-19 pandemic upended the traditional practice of medicine.
The pandemic has encouraged accelerating adoption of digital and remote health
technologies by providers, and patients have seen the value in using virtual
care services for routine care and consultation. Increased usage of these
services has shown new methodologies for reducing healthcare spending and
increasing access to patients in both rural and urban settings. CMS has recently
adopted CPT codes to allow physicians to bill for virtual healthcare encounters.
While those codes are initially expected to be temporarily tied to the pandemic,
industry experts anticipate broader adoption of insurance acceptance of virtual
healthcare claims as the broader market seeks to use the services to perform
triage, lower backlogs, and increase access at lower costs than traditional
healthcare encounters.

Virtual healthcare today centers on singular health encounters on an as-needed
basis with limited integration into the overall care management plan of the
practice or the patient. We see a widening gulf between the intent of virtual
care services and actual application. Market opportunities exist for us to
leverage existing core competencies in remote patient monitoring and home-based
care management to enhance the quality of health services provided virtually,
increase connectivity and integration, and focus on the intrinsic value of the
relationship between physician and patient.

A growing trend involves the capturing of personal health data by smartphone
apps and wearable technology. A patient can easily mislead a care provider on a
questionnaire regarding what they ate or how much they exercised, but a wearable
device can track and transmit healthcare data in real time without being
manipulated. Getting access to personal health and fitness data could favorably
impact follow-up care, too, as medical professionals are better able to monitor
and communicate with patients after they are discharged from care. Patients may
be able to address follow-up care without having to go back to the doctor's
office or hospital, saving them time and saving the clinic or hospital money.
Better follow-up care is key to lowering hospital readmission rates.

In the current environment, healthcare information is increasingly fragmented
with numerous electronic healthcare record platforms, virtual care systems,
pharmacy software, and data silos and transmitters which lack fundamental
integration. Healthcare stakeholders are often at odds about proper care
techniques and this lack of alignment increases burdens on providers and
patients alike and is associated with decreasing satisfaction with healthcare
services and negative health outcomes. We believe our unique vision of pharmacy
enabled health technology will lead the way to independent and integrated health
systems.

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Data Management Services

The latest trend in healthcare is to use data to improve patient outcomes and
quality of life - a practice known as "Applied Health Analytics". "Data
analytics" refers to the practice of aggregating large data sets and analyzing
them to draw important insights and recommendations. This process is
increasingly aided by new software and technology that facilitates the
examination of large volumes of data to detect hidden information.

In the context of the increasingly data-reliant health care system, data
management services can help derive insights on systemic wastes of resources,
track individual practitioner performance, and identify people within the
population that are most at risk for chronic diseases. With this information,
the healthcare system can more efficiently allocate resources to deliver
individualized patient care at lower costs, improve the health of the population
and maximize revenues and margin in the healthcare system.

Insurance companies and healthcare providers are also working to use medical
data to identify and better manage high-risk, high-cost patients. Insurance
companies and self-funded organizations want to identify these patients to
provide early interventions that could keep patients in better health and reduce
medical costs later. Another sophisticated use of this kind of healthcare data
could be to use algorithms with ICU patients to foresee who is more at risk for
readmission. Medical staff can then take different, proactive measures as
necessary to try to lower that risk of readmission, such as precise discharge
instructions, different prescriptions, or a specific follow-up visit schedule.

We have a different approach to data and how to incorporate it into business and
professional practice. The goal of all businesses with access to large data
collections should be to harness the most relevant data and use it for optimized
decision making. ClearMetrX focuses on using data-driven analytic tools to
identify insights targeting three key areas where we see the potential to
improve patient outcome and maximize revenue and margin for our clients:

1. Improving medication adherence. Increasing patients' adherence to medication

treatment plans means they will be healthier, reducing costly advanced

treatment claims for those patients. Third party payors will see lower claim

payments, and the physicians are rewarded with higher reimbursement under

managed care contracts with third party payors.

2. Improving patient engagement with their physicians. Reducing abandonment

while nurturing patients to comply with their therapy through education,

reminder, and medication synchronization will improve refill rates, resulting

     in healthier outcomes.

  3. Optimizing operational efficiency and costs.

As a result, the data provided to our physicians' practices will help doctors to
meet third party payor performance goals which will improve reimbursement
payments from third party payors.

RESULTS OF OPERATIONS

Results of Operations for three months ended June 30, 2022 and 2021.

The following table summarizes our results of operations:

                                           For the Three Months Ended June 30,
                                  2022            2021          $ Change         % Change
Total revenues, net            $ 9,973,584     $ 9,597,134     $   376,450                4 %
Total cost of revenue            7,943,231       6,987,545         955,686               14 %
Total gross profit               2,030,353       2,609,589        (579,236 )            -22 %
Operating expenses               2,227,623       2,795,196        (567,573 )            -20 %
Loss from operations              (197,270 )      (185,607 )       (11,663 )             -6 %
Other expenses                    (682,586 )        (1,715 )      (680,871 )         -39701 %
Loss before provision for
income taxes                      (879,856 )      (187,322 )      (692,534 )           -370 %
Provision for income taxes            (866 )        (3,840 )         2,974               77 %
Net loss                       $  (880,722 )   $  (191,162 )   $  (689,560 )           -361 %




For the three months ended June 30, 2022 and 2021, we recognized overall revenue
from operations of approximately $10.0 million and $9.6 million, respectively.
Net pharmacy revenues increased by approximately $0.4 million for the three
months ended June 30, 2022 when compared to the same period in 2021. For the
three months ended June 30, 2022, the increase in revenue was mainly
attributable to an increase in pharmacy revenue of approximately $1.1 million,
which was offset by a decrease in COVID-19 testing revenue of approximately $0.7
million when compared to the same period in 2021. 340B contract revenue for the
three months ended June 30, 2022 was flat as compared to the same period in
2021.

Gross profit margins decreased from 27% for the three months ended June 30,
2021, to 20% when compared to the same period in 2022. The 7% period over period
decrease is due to the decrease in COVID-19 testing revenues, which have
significantly higher margins than pharmacy operations.

The loss from operations increased by approximately $12,000 for the three months
ended June 30, 2022, when compared to the same period in 2021, due to the
decrease in COVOD-19 testing revenues, which was offset by an increase in
prescription revenue and a decrease in overall operating expenses.

Results of Operations for six months ended June 30, 2022 and 2021.

The following table summarizes our results of operations:

                                              For the Six Months Ended June 

31,

                                   2022             2021           $ Change         % Change
Total revenues, net            $ 20,024,580     $ 19,201,598     $    822,982                4 %
Total cost of revenue            15,613,620       14,160,620        1,453,000               10 %
Total gross profit                4,410,960        5,040,978         (630,018 )            -12 %
Operating expenses                4,743,787        5,870,261       (1,126,474 )            -19 %
Loss from operations               (332,827 )       (829,283 )        496,456               60 %

Other (expenses) income (1,908,505 ) 673,922 (2,582,427 )

           -383 %
Loss before provision for
income taxes                     (2,241,332 )       (155,361 )     (2,085,971 )          -1343 %
Provision for income taxes             (866 )         (8,949 )          8,083               90 %
Net loss                       $ (2,242,198 )   $   (164,310 )   $ (2,077,888 )          -1265 %




For the six months ended June 30, 2022 and 2021, we recognized overall revenue
from operations of approximately $20.0 million and $19.2 million, respectively.
Net pharmacy revenues increased by approximately $0.8 million for the six months
ended June 30, 2022 when compared to the same period in 2021. For the six months
ended June 30, 2022, the increase in revenue was mainly attributable to an
increase in pharmacy revenue of approximately $1.1 million, an increase in
COVID-19 testing revenue of approximately $48,000, a decrease in PBM fees of
approximately $49,000, which was offset by a decrease in 340B contract revenue
of approximately $0.4 million, when compared to the same period in 2021.

Gross profit margins decreased from 26% for the six months ended June 30, 2021,
to 22% when compared to the same period in 2022. The 4% period over period
decrease is due to the decrease in COVID-19 testing revenues. which have
significantly higher margins than pharmacy operations.

The loss from operations decreased by approximately $0.5 million for the six
months ended June 30, 2022, when compared to the same period in 2021, due to the
increase in pharmacy revenue, decrease in overall operating expenses, which was
offset by a decrease in 340B contract revenue.


9






Revenue

Our revenues were as follows:

                                                                    Three Months Ended June 30,
                                                2022                              2021
                                     Dollars        % of Revenue        Dollars       % of Revenue       $ Change       % Change
Prescription revenue               $  9,275,774                93 %   $ 8,172,840                85 %   $ 1,102,934            13 %
340B contract revenue                   706,102                 7         725,323                 8         (19,221 )          -3
Testing revenue                         368,197                 4       1,057,232                11        (689,035 )         -65
Other revenue                             1,450                 -           1,300                 -             150            12
                                     10,351,523               104       9,956,695               104         394,828             4
PBM Fees                               (377,939 )              -4        (356,748 )              -4         (21,191 )          -6
Sales returns                                 -                 -          (2,813 )               -           2,813           100
Revenues, net                      $  9,973,584               100 %   $ 9,597,134               100 %   $   376,450             4 %




For the three months ended June 30, 2022 and 2021, we recognized overall revenue
from operations of approximately $10.0 million and $9.6 million, respectively.
Net pharmacy revenues increased by approximately $0.4 million for the three
months ended June 30, 2022 when compared to the same period in 2021. For the
three months ended June 30, 2022, the increase in revenue was mainly
attributable to an increase in pharmacy revenue of approximately $1.1 million,
which was offset by a decrease in COVID-19 testing revenue of approximately $0.7
million. 340B contract revenue for the three months ended June 30, 2022 was flat
as compared to the same period in 2021.



Prescription revenues represented 93% and 85% of all revenue for the three
months ended June 30, 2022 and 2021, respectively. Prescriptions revenues as a
percentage of total net revenues for the three months ended June 30, 2022, have
increased when compared to 2021 due to the increase in prescription revenue of
approximately $1.1 million and a decrease in revenue from COVID-19 testing of
approximately $0.7 million when compared to the same period in 2021. Revenue
from 340B contracts is 7% and 8% as a percentage of total net revenues for the
three months ended June 30, 2022 and 2021, respectively. Dispensing fee and
third-party administration revenue earned on our 340B contracts for the three
months ended June 30, 2022, and 2021 were flat.

We have filled approximately 118,000 and 107,000 prescriptions during the three
months ended June 30, 2022 and 2021, respectively, a 10% period over period
increase in the number of prescriptions filled.

During 2022 we have experienced significant decreases in the reimbursement rates
for uninsured patients enrolled in the Gilead PREP program that became effective
beginning the first quarter of 2022 that had an overall unfavorable impact on
our 340B contract revenue. Dispensing fee and third-party administration revenue
earned on our 340B contracts for the three months ended June 30, 2022, and 2021
were approximately $0.7 million for both periods. As a result of the decrease in
reimbursement rates from Gilead PREP program, we experienced an unfavorable
impact on our 340B contract revenue in the amount of approximately $0.1 million
for the three months ended June 30, 2022. Since the beginning of the year, 340B
covered entities significantly increased patient enrollment in alternative
programs and insurance plans that provide greater reimbursements.


For the three months ended June 30, 2022 and 2021, we have earned approximately
$0.4 million and $1.1 million, respectively from COVID-19 testing. The decrease
was primarily due to lower COVID-19 testing sales. As the COVID-19 pandemic
fading worldwide, the need for testing has decreased as it relates to travel and
business continuity. However, despite the downturn in COVID-19 testing needs, we
have generated approximately $0.4 million in COVID-19 testing revenue for the
three months ended June 30, 2022. It is difficult to predict whether these
conditions will be recurring given recent COVID-19 pandemic conditions in
Florida. We are well positioned to react if another COVID-19 outbreak occurs as
we have built a reputation of being a reliable partner for COVID-19 testing
solutions. We have built reputable relationships with well-known media
production companies and these relationships provide us with recurring COVID-19
testing revenue.

                                                                      Six Months Ended June 30,
                                                2022                               2021
                                     Dollars        % of Revenue       

Dollars % of Revenue $ Change % Change
Prescription revenue

               $ 17,881,657                89 %   $ 16,803,888                88 %   $ 1,077,769             6 %
340B contract revenue                 1,094,057                 5        1,449,821                 8        (355,764 )         -25
Testing revenue                       1,659,214                 8        1,610,506                 8          48,708             3
Rent and other revenue                    1,657                 -          

 1,305                 -             352            27
                                     20,636,585               103       19,865,520               103         771,065             4
PBM Fees                               (612,005 )             -53         (660,985 )              -3          48,980             7
Sales returns                                 -                 -           (2,937 )               -           2,937           100
Revenues, net                      $ 20,024,580               100 %   $ 19,201,598               100 %   $   822,982             4 %




For the six months ended June 30, 2022 and 2021, we recognized overall revenue
from operations of approximately $20.0 million and $19.2 million, respectively.
Net pharmacy revenues increased by approximately $0.8 million for the six months
ended June 30, 2022 when compared to the same period in 2021. For the six months
ended June 30, 2022, the increase in revenue was mainly attributable to an
increase in pharmacy revenue of approximately $1.1 million, an increase in
COVID-19 testing revenue of approximately $48,000, a decrease in PBM fees of
approximately $49,000, which was offset by a decrease in 340B contract revenue
of $0.4 million, when compared to the same period in 2021.



Prescription revenues represented 89% and 88% of all revenue for the six months
ended June 30, 2022 and 2021, respectively. Prescriptions revenues as a
percentage of total net revenues for the six months ended June 30, 2022, have
increased when compared to 2021 due to the increase in prescription revenue of
approximately $1.1 million and a decrease in 340B contract revenue approximately
$0.4 million when compared to 2021. COVID-19 testing revenue is 8% as a
percentage of total net revenues for both six month periods ended June 30, 2022
and 2021.

We have filled approximately 229,000 and 223,000 prescriptions during the six
months ended June 30, 2022 and 2021, respectively, a 3% period over period
increase in the number of prescriptions filled.

During 2022 we have experienced significant decreases in the reimbursement rates
for uninsured patients enrolled in the Gilead PREP program that became effective
beginning the first quarter of 2022 that had an overall unfavorable impact on
our 340B contract revenue. Dispensing fee and third-party administration revenue
earned on our 340B contracts for the six months ended June 30, 2022, and 2021
were approximately $1.1 million and $1.4 million, respectively. As a result of
the decrease in reimbursement rates from Gilead PREP program, we experienced an
unfavorable impact on our 340B contract revenue in the amount of approximately
$0.3 million for the six months ended June 30, 2022. Since the beginning of the
year, 340B covered entities significantly increased patient enrollment in
alternative programs and insurance plans that provide greater reimbursements.
For the three months ended March 31, 2022 we recorded approximately $0.4 million
from our 340B contracts, compared to approximately $0.7 million during the three
months ended June 30, 2022, an 82% increase from the first quarter of 2022 when
compared to the second quarter of 2022. We believe the increase is a direct
result of the patient enrollment effort and believe this trend will continue for
the remainder of the year.


For the six months ended June 30, 2022, and 2021, we have earned approximately
$1.7 million and $1.6 million, respectively from COVID-19 testing. We have
recorded record COVID-19 testing revenue in January 2022 as the country was
dealing with the Delta and Omicron outbreak during that period. Since January
2022 the demand for COVID-19 testing have slowed down as the need for testing
has decreased as it relates to travel and business continuity. It is difficult
to predict whether these conditions will be recurring given recent COVID-19
pandemic conditions in Florida. We are well positioned to react if another
COVID-19 outbreak occurs as we have built a reputation of being a reliable
partner for COVID-19 testing solutions. We have built reputable relationships
with well-known media productions companies and these relationships may provide
us with recurring COVID-19 testing revenue.

Operating Expenses

Our operating expenses decreased by approximately $1.1 million, or 19%, for the
six months ended June 30, 2022 when compared to the same period in 2021. The
decrease was mainly attributable to the following:

? Decrease in salaries, wages and employee related expenses due to period over

period decrease in headcount, and less time invested in training on pharmacy

software when compared to 2021 in the amount of approximately $0.4 million;

? Decrease in consulting fees in the amount of approximately $0.2 million;

? Decrease in rent expense due to non-recurring leasehold improvement related

expenses in the amount of approximately $0.2 million;

? Decrease in amortization expense due to intangible assets being fully

amortized in the amount of approximately $0.2 million;

? Decrease in other operating expenses in the amount of approximately $0.1

    million.



Other (Expense) Income

Other (expense) income decreased by approximately $2.6 million for the six
months ended June 30, 2022 when compared to the same period in 2021. The
decrease was mainly attributable to the following:

? An adverse change in the fair value of derivative liability of approximately

$1.9 million;

? Decrease in (loss) gain from debt extinguishment of approximately $0.7 million

due to the decrease from the forgiveness of the Paycheck Protection Program

("PPP") loans in the amount of approximately $0.4 million in 2021 and

non-recurring in 2022, a reduction in the Iliad Research and Chicago Venture

Partners notes from the excess sales of converted common stock in the amount

of approximately $0.1. million, and an increase in fees associated with the

extension of the maturity date of the Iliad Research note in the amount of

approximately $0.2 million;

? Increase in other finance cost associated with the Iliad Research note in the

amount of approximately $0.1 million;

? Decrease in interest expense in the amount of approximately $0.1 million.

10






Net Loss

We sustained a net loss of approximately $2.2 million for the six months ended
June 30, 2022, compared to a net loss of approximately $0.2 million for the same
period in 2021. As discussed above, the increase in net loss is mainly
attributable to non-operating items such as (loss) gain on debt settlement,
other financing costs, and loss from the adverse change in the fair value of the
derivative liability.

Non-GAAP Financial Measures

We define Adjusted EBITDA as net income (loss) before interest expense, income
taxes, depreciation and amortization, share-based compensation, and certain
other items that we do not consider indicative of our ongoing operating
performance (which items are itemized below). Adjusted EBITDA is a non-GAAP
financial measure.

We consider Adjusted EBITDA to be a supplemental measure of our operating
performance. We present Adjusted EBITDA because it is used by our Board and
management to evaluate our operating performance. It is also used as a factor in
determining incentive compensation, for budgetary planning and forecasting
overall financial and operational expectations, for identifying underlying
trends and for evaluating the effectiveness of our business strategies. Further,
we believe it assists us, as well as investors, in comparing performance from
period to period on a consistent basis. Adjusted EBITDA is not in accordance
with, or an alternative to, measures prepared in accordance with U.S. GAAP. In
addition, this non-GAAP measure is not based on any comprehensive set of
accounting rules or principles.

As a non-GAAP measure, Adjusted EBITDA has limitations in that it does not
reflect all of the amounts associated with our results of operations as
determined in accordance with U.S. GAAP and therefore you should not consider
Adjusted EBITDA in isolation from, or as a substitute for, financial information
prepared in accordance with U.S. GAAP. You should be aware that in the future we
may incur expenses that are the same as or similar to some of the adjustments in
the presentation, and we do not infer that our future results will be unaffected
by unusual or non-recurring items. Adjusted EBITDA does not include:

? depreciation expense from property and equipment or amortization expense from

acquired intangible assets (and although they are non-cash charges, the assets

being depreciated/amortized will often have to be replaced in the future);

? interest expense on our debt and capital leases or interest income we earn on

cash and cash equivalents;

? the amounts we paid in taxes or other components of our tax provision (which

    reduces cash available to us);

  ? change in fair value of derivatives;

  ? certain expenses associated with our acquisition activities; or

? the impact of share-based compensation or other matters we do not consider to

be indicative of our ongoing operations.

Further, other companies in our industry may calculate Adjusted EBITDA
differently than we do and these calculations may not be comparable to our
Adjusted EBITDA metric. Because of these limitations, you should consider
Adjusted EBITDA alongside other financial performance measures, including net
(loss) income attributable to us and our financial results presented in
accordance with U.S. GAAP.

The table below presents a reconciliation of the most directly comparable U.S.
GAAP measure, net (loss) income attributable to us, to Adjusted EBITDA for the
periods indicated below: