Dec. 8 at 3:13 PM
$WGRX contd…Financial Risks
Risk 1: Working capital requirements exceed projections
• Scenario: Inventory buildup or A/R lag requires
$10M+ in additional capital.
• Impact: Free cash flow pressure; dilution if equity raise required.
• Mitigation: WGRX raised
$4M from IPO; can access capital markets; optimized
supply chain.
Risk 2: Operating leverage delayed
• Scenario: OpEx doesn't scale as fast as revenue; operating margin falls from 20%
to 15%.
• Impact: Year 3 net income =
$36M (vs. base case
$47.6M); EPS =
$0.40 (vs.
$0.53).
• Mitigation: Fixed platform architecture supports many drugs; management has
executed OpEx discipline.
X. BULL, BASE, AND BEAR CASES
Bull Case (Probability: ~30%)
Brenzavvy adoption exceeds guidance: Hit
$5–6M/month by Q3 2026 (vs.
$3–4M by
Month 5).
GLP-1 complement category scales faster:
$120M+ revenue by Year 3 (vs. base case
$80M).
5–6 drug categories active by Year 3: Obesity, generics, other affordable brands all
scaling.
EinsteinRx licensing deal signed:
$10M+ annual recurring revenue (high-margin
software).
Operating margin reaches 22% by Year 3: Efficiency gains exceed expectations.
Outcome: Year 3 revenue
$400M+; net income
$70M+; EPS
$0.78; fair
value
$14.00+/share at 18× P/E.
Base Case (Probability: ~50%)
Brenzavvy achieves
$126M Year 3 revenue per guidance.
Multi-drug platform reaches
$301M Year 3 revenue (Brenzavvy
$126M + GLP-1
$80M + generics
$30M + obesity
$25M + other
$40M).
Operating margin holds at 20% through Year 3.
Network effects accelerate adoption of each new drug category.
EinsteinRx licensing generates
$3–5M incremental ARR by Year 3 (upside to base
case).
Outcome: Year 3 revenue
$301M; net income
$47.6M; EPS
$0.528; fair
value
$9.51/share at 18× P/E.
Bear Case (Probability: ~20%)
⚠ Brenzavvy plateaus at
$90–100M by Year 3 (slower prescriber adoption; payer
resistance).
⚠ Only 2–3 drug categories active by Year 3 (partnership delays; market slower to
adopt multi-drug thesis).
⚠ Operating margin falls to 16–17% (SG&A overhead higher than expected).
⚠ Competitive entry fragments market share.
Outcome: Year 3 revenue
$180M; net income
$26M; EPS
$0.289; fair
value
$5.20/share at 18× P/E.
XI. CONCLUSION & RECOMMENDATION
The Investment Case
WGRX is not a single-drug company. It is a platform distributor for affordable
pharmaceuticals with proven economics:
• 50% gross margins (pharmaceutical wholesale to retail spread)
• 20% operating margins achievable across all drug categories
•
$100M of new revenue = ~
$0.18 EPS contribution (with no incremental R&D)
Brenzavvy is proof-of-concept (
$126M Year 3 revenue,
$0.221 EPS,
$3.98/share fair
value). But the real value multiplier comes from replicating the platform across GLP-1
complements, obesity drugs, generics, and other affordable therapeutics.
By Year 3, a fully scaled multi-drug platform could generate:
•
$301M platform revenue (7.2× from Year 1)
•
$47.6M net income (7.2× from Year 1)
•
$0.528 EPS (2.4× from Brenzavvy-only)
•
$9.51/share fair value at 18× P/E (2.4× from Brenzavvy-only)
Current stock price (~
$1.15) implies:
• Market is pricing in bear-case or Brenzavvy-only scenario
• 7–8× upside to base case fair value if platform executes
Key Catalysts (2026–2028)
1. 2. 3. 4. Q3 2026: Platform revenue hits
$43–50M annualized (validates on-track
trajectory)
Q1 2027: GLP-1 complement revenue accelerates; second major partnership
announced
Q4 2027: Platform revenue reaches
$127M+ (proves 3× Year 1 growth trajectory)
Q1 2028: Year 3 projections updated with visibility to
$301M revenue; market re-
rates valuation
Investment Recommendation
For value investors with 2–3 year horizon and tolerance for near-term volatility:
• WGRX offers compelling risk/reward at current price
• Base case
$9.51/share (8× upside) assumes successful platform execution
• Bull case
$14.00+/share (12× upside) if GLP-1 and obesity categories scale faster
For risk-averse investors:
• Wait for Q3 2026 and Q1 2027 validation milestones before accumulating
• At that point, platform thesis will be clearer; more patient buyers will have lower
risk
Downside protection:
• Even Brenzavvy-only scenario supports
$3.98/share (3.5× current price)
• Platform failure would be dramatic; company would need to be fundamentally
broken
APPENDICES
Appendix A: Unit Economics by Drug Category
Brenzavvy (SGLT2 inhibitor):
• Wholesale cost: ~
$38/patient/month
• Retail price:
$47.85/patient/month
• Gross margin: 20.2%
• Annual revenue per patient:
$574
• 1.4M patients by Year 3 =
$801M total addressable revenue (at 50% capture,
$126M)
GLP-1 Complements:
• Addressable: 12M patients on GLP-1s
• Average annual spend per patient on complements:
$600–800
• Gross margin: 50% (relatively high; manufacturing partners absorb costs)
• 5% adoption by Year 3 = 600K patients =
$360M–
$480M total addressable
revenue (at 20% capture,
$80M)
Low-Cost Generics:
• Addressable: 8M patients on eligible drugs
• Average annual spend:
$200–300
• Gross margin: 45% (lower due to competitive generics market)
• 2% adoption by Year 3 = 160K patients =
$32M–
$48M total addressable revenue
(at 60% capture,
$30M)
Obesity/Weight Loss:
• Addressable: 6M eligible patients (high BMI, motivated to lose weight)
• Average annual spend:
$1,200–1,500
• Gross margin: 50%
• 1.5% adoption by Year 3 = 90K patients =
$108M–
$135M total addressable
revenue (at 20% capture,
$25M)
Appendix B: Sensitivity Analysis
Year 3 EPS sensitivity to key variables:
Brenzavvy-only scenarios:
• If revenue =
$100M (vs.
$126M base): EPS =
$0.176 (vs.
$0.221)
• If gross margin = 45% (vs. 50%): EPS =
$0.198 (vs.
$0.221)
• If operating margin = 18% (vs. 20%): EPS =
$0.199 (vs.
$0.221)
Multi-drug platform scenarios:
• If Year 3 revenue =
$250M (vs.
$301M base): EPS =
$0.438 (vs.
$0.528)
• If blended gross margin = 47% (vs. 49%): EPS =
$0.505 (vs.
$0.528)
• If operating margin = 18% (vs. 20%): EPS =
$0.475 (vs.
$0.528)
Appendix C: EinsteinRx Licensing Opportunity (Upside
Not in Base Case)
Hypothesis: By Q1 2027, WGRX has built sufficient EinsteinRx IP and proof-of-concept
to license the platform to:
• Major PBMs (CVS Caremark, Anthem Pharmacy, Humana Pharmacy)
• Regional health systems and hospital networks
• Employer direct pharmacy programs
• International pharmacy networks
Potential revenue:
$10–20M annual recurring revenue (ARR) by Year 3
Gross margin: ~75–80% (software licensing; minimal variable cost)
Impact: Not included in base case P&L, but represents meaningful upside if executed.
Prepared by: Research and Analytics Division
DISCLAIMER: This memorandum is for illustrative purposes and does not constitute
investment advice. Forward-looking statements involve risks and uncertainties. Past
performance does not guarantee future results. Consult a financial advisor before
making investment decisions. Information based on publicly available data as of
December 8, 2025