Earnings call transcript: OptimizeRx Q1 2025 revenue beats forecast, stock surges

OptimizeRx Corp (OPRX) reported its Q1 2025 earnings, showcasing a revenue of $21.9 million, exceeding forecasts of $19.1 million. Despite a slight EPS miss, the company’s strategic transition and robust revenue growth led to a 17.5% increase in aftermarket stock trading, closing at $10.81. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value calculation, with the company demonstrating remarkable YTD returns exceeding 105%.

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Key Takeaways

• Revenue exceeded expectations at $21.9 million, up 11% year-over-year.
• EPS slightly missed forecasts at -$0.12, compared to the expected -$0.1198.
• Stock surged 17.5% in aftermarket trading, reflecting investor optimism.
• Transition to subscription-based model is gaining traction.
• Strong revenue visibility with over 80% projected for the year.

Company Performance

OptimizeRx demonstrated strong revenue growth in Q1 2025, with an 11% increase year-over-year. The company is transitioning to a subscription-based model, which is expected to provide more predictable revenue streams. This strategic shift, alongside its robust point-of-care network, positions it well within the digital pharma marketing space, which sees over $10 billion in annual spending. InvestingPro data shows the company has maintained impressive revenue growth with a 5-year CAGR of 30%, while operating with a moderate debt level and maintaining strong liquidity with a current ratio of 2.89.

Financial Highlights

• Revenue: $21.9 million, up 11% year-over-year.
• Adjusted EBITDA: $1.5 million, an improvement of nearly $2 million from the previous year.
• Gross Margin: 60.9%, down from 62% in Q1 2024.
• Net Loss: $2.2 million, or $0.12 per share, compared to $6.9 million, or $0.38 per share, in Q1 2024.
• Cash Balance: $16.6 million, up from $13.4 million on December 31, 2024.
• Debt Balance: $33.8 million, with $6.2 million paid off in Q1.

Earnings vs. Forecast

OptimizeRx’s revenue of $21.9 million surpassed the forecast of $19.1 million, marking a positive surprise. However, the EPS of -$0.12 slightly missed the forecast of -$0.1198, indicating a marginal underperformance in profit metrics despite strong revenue growth.

Market Reaction

Following the earnings release, OptimizeRx’s stock surged 17.5% in aftermarket trading, closing at $10.81. This increase reflects investor confidence in the company’s revenue performance and strategic direction, despite the minor EPS miss. The stock’s movement contrasts with broader market trends, highlighting the company’s unique growth potential. InvestingPro shows the stock has demonstrated strong momentum with a 71% gain over the past six months, while maintaining a beta of 1.28, indicating moderate market sensitivity.

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Outlook & Guidance

The company provided a full-year revenue guidance of $101 million to $106 million, with an adjusted EBITDA guidance of $13 million to $15 million. With over 80% revenue visibility, OptimizeRx remains confident in its strategic initiatives, including the transition to a subscription-based model and leveraging its omni-channel technology platform. InvestingPro analysis reveals analysts are generally optimistic about the company’s prospects, with a consensus recommendation of 1.57 (Strong Buy), though 5 analysts have recently revised their earnings expectations downward for the upcoming period.

Executive Commentary

CEO Steve Silvestro stated, "We are not seeing significant headwinds directly impacting our business at this time," underscoring the company’s resilience. CFO Ed Stelmark added, "We’re hoping subscription will have a little bit more of a life cycle to it," highlighting the potential long-term benefits of the subscription model.

Risks and Challenges

• Decline in gross margin could pressure profitability.
• Continued net losses, despite improvements, remain a concern.
• Execution risk in transitioning to a subscription-based model.
• Competitive pressures in the digital pharma marketing space.
• Macroeconomic factors could impact pharmaceutical marketing budgets.

Q&A

Analysts inquired about the sustainability of the revenue growth and the transition to subscription contracts. The company expressed confidence in its pipeline and the potential to convert the remaining 20% of annual revenue into predictable subscription models, indicating a steady growth trajectory.

Full transcript - OPTIMIZERx Corp (OPRX) Q1 2025:

Conference Call Operator: Good afternoon, everyone, and thank you for joining OptimizeRx First Quarter Fiscal twenty twenty five Earnings Conference Call. With us today is Chief Executive Officer, Steve Silvestro. He is joined by chief financial officer, Ed Stelmark, chief legal officer, Maureen Odens Ford, and senior vice president of corporate finance, Andrew DeSilva. At the conclusion of today’s call, I will provide some important cautions regarding the forward looking statements made by management during today’s call. The company will also be discussing certain non GAAP financial measures, which it believes are useful in evaluating the company’s operating results.

A reconciliation of such non GAAP financial measures is included in the earnings release the company issued this afternoon as well as in the Investor Relations section of the company’s website. I would like to remind everyone that today’s call is being recorded and will be made available for replay as an audio recording of this conference call on the Investor Relations section of the company’s website. I would now like to turn the conference over to OptimizeRx CEO, Steve Silvestro. Mr. Silvestro, please go ahead.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Thank you, operator, and good afternoon to everyone joining today’s first quarter twenty twenty five call. I’m delighted to share our first quarter twenty twenty five results, which came in ahead of both consensus estimates and our internal expectations. Momentum from Q4 has continued into 2025 with Q1 revenues increasing 11% year over year to $21,900,000 with adjusted EBITDA coming in at $1,500,000 an improvement of nearly $2,000,000 year over year during what is typically our seasonally weakest quarter. Moreover, our contracted revenue continues to increase to more than 20% year over year, which positions us favorably going to the back half of the year. I believe this is a clear indicator that our focus on operational excellence while ensuring we delight our customers and forge stronger relationships with valued business partners is bearing fruit.

In addition, despite media coverage in the market related to initiatives being implemented by the new administration, we are not seeing significant headwinds directly impacting our business at this time, and we are closely monitoring pharma leading indicators by continuously engaging with our clients. With that said, I’m happy to say we are increasing our guidance for the year and are looking for revenue to come in between $101,000,000 and $106,000,000 with an adjusted EBITDA to be between 13,000,000 and $15,000,000 We believe that the combination of disciplined cost management and targeted upselling strategies, centered around educating customers on budget allocation approaches that drive script lift, has positioned us strongly for success in 2025 and beyond. This progress is bringing our goal of achieving rule of 40 performance in the coming years well within reach. Additionally, we’re seeing early momentum in our transition to a subscription based model, with over 5% of our projected annual revenue already converted to subscription contracts for 2025. Before moving on, I want to take a moment and thank our market leading team.

We deeply appreciate the dedication and hard work of everyone at OptimizeRx as we navigate an increasingly complex, dynamic, and the still emerging digital pharma marketing landscape. The industry is undergoing a significant shift and our products and services are poised to fundamentally reshape how pharmaceutical companies, patients, and prescribers engage. Our mission driven culture not only fuels this transformation, but also positions us to attract, retain, and strengthen the critical relationships a leading technology company needs to be a trusted and enduring partner. We believe OptimizeRx is uniquely positioned to drive significant value creation and deliver long term sustainable shareholder growth. By leveraging one of the largest point of care networks in the country, we enable pharmaceutical manufacturers to reach healthcare providers directly at the point of care.

Building on this foundation, we have combined our unmatched network with a purpose built omni channel technology platform with leading patient finding capabilities through DAP and micro neighborhood targeting that is redefining how pharmaceutical companies, physicians, and patients engage, receive, and digest information, ultimately helping to improve patient outcomes. These advantages give us a distinct and durable competitive edge. With unrivaled reach at the point of care and directly to consumers, we believe we are the only company in the industry capable of effectively connecting with both doctors and patients at scale. This unique position has allowed us to develop the broadest suite of solutions in the market, empowering us to meet the diverse and evolving needs of our customers across every stage of the product lifecycle. As mentioned on our last call, our business continues to evolve.

A key focus for the company will be drawing greater attention to our reach and scalability, while positioning ourselves as a strategic partner in addressing some of the most critical commercialization challenges facing pharma today. These include improving brand visibility, reducing script abandonment, enhancing interoperability, and supporting growing shift toward more complex and costly specialty medications. I’m confident that success in these areas combined with the strong performance we are already delivering, including ROI exceeding 10 to one and script lifts of 25% on programs running just six months, will drive significant short and long term shareholder value. Moreover, this momentum will position us to capture greater market share while also expanding the overall size of pharma’s digital spend, which already exceeds $10,000,000,000 annually. Our customers remain deeply embedded within our ecosystem of offerings, and it remains our goal to help them stay present throughout the patient care journey across the integrated HCP and DTC business at OptimizeRx.

And with that, I’d like to turn the time over to our CFO, Ed Stelmak, who will walk us through our financial details. Ed?

Ed Stelmark, Chief Financial Officer, OptimizeRx: Thanks, Steve, and good afternoon, everyone. As with all our calls, the press release was issued this afternoon with the results of our first quarter ended 03/31/2025. A copy is available for viewing and may be downloaded from the Investor Relations section of our website, and additional information can be obtained through our forthcoming 10 Q. First quarter twenty twenty five revenue was $21,900,000 an increase of 11% from the $19,700,000 we recognized during the same period in 2024. Gross margin for the quarter decreased from 62% in the quarter ended 03/31/2024, to 60.9 percent in quarter ended 03/31/2025.

Year on year change in gross margin was primarily due to product and channel partner mix, as we did see an increase in DTC related managed service revenue. Our operating expenses for the quarter ended 03/31/2025 decreased $1,800,000 year over year, primarily driven by stock based compensation and cost savings implemented last year. The company had a net loss of $2,200,000 or $0.12 per basic and diluted share for the three months ended 03/31/2025, as compared to a net loss of $6,900,000 or $0.38 per basic and diluted share for the three months during the same period in 2024. On a non GAAP basis, the company’s net loss for the first quarter of twenty twenty five was $1,500,000 or $08 per diluted share, as compared to a non GAAP net loss of $2,000,000 or $0.11 per diluted share in the same year ago period. Meanwhile, our adjusted EBITDA came in at $1,500,000 for the quarter compared to $300,000 loss during the first quarter of twenty twenty four.

Operating cash flow came in at $3,900,000 for the first quarter, and the cash balance at the end of the quarter was $16,600,000 as compared to $13,400,000 on 12/31/2024. Our debt balance currently stands at $33,800,000 and we paid off $6,200,000 of principal through first quarter of twenty twenty five. Given our strong working capital position and operating cash flow, we are confident in our ability to fund our operating needs, as well as key strategic priorities to achieve the Rule of 40. Our committed contracted revenue as of the end of the first quarter of twenty twenty five exceeded $70,000,000 which is a greater than 25% improvement over the same period last year. This is a testament to all the investments that have been made in building market leading solutions that meet and exceed our clients’ expectations, and positions us well to continue our march toward becoming a Rule of 40 company.

Now, let’s turn to our KPIs for the first quarter of twenty twenty five. Average revenue per top 20 pharmaceutical manufacturer now stands at approximately $3,000,000 with these top 20 companies representing 63% of our business in Q1 twenty twenty five. Net revenue retention rate remains a strong 114%. Meanwhile, revenue per FTE came in at $710,000 topping the $641,000 we posted in Q1 twenty twenty four. We are encouraged by our continuous improvement in our KPIs and the overall progress in the business performance so far.

And with that, I would like to turn the call back over to Steve. Steve?

Steve Silvestro, Chief Executive Officer, OptimizeRx: Thank you, Ed. Operator, let’s go ahead and move to Q and A.

Conference Call Operator: Thank you. We will now begin the question and answer session. The first question comes from Ryan Daniels with William Blair. Please go ahead.

Ryan Daniels, Analyst, William Blair: Guys, did you hear the question?

Steve Silvestro, Chief Executive Officer, OptimizeRx: No, we couldn’t hear the question. Sorry.

Ryan Daniels, Analyst, William Blair: We didn’t

Ed Stelmark, Chief Financial Officer, OptimizeRx: hear anything.

Ryan Daniels, Analyst, William Blair: Sorry about that. Thanks for taking the question and congrats on the strong performance. And I hate to ask this because you increased your guidance and said you’re not seeing anything. But by far the biggest question we keep getting is just all the noise in end market with tariffs and with price negotiations, etcetera. I’m curious how real time your feedback is from your sales team?

And number two, if you’ve seen any hesitation in any of your customers or if they’re just not at this point making any changes because it’s so uncertain in the marketplace today? Thanks.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Thanks for the question. We’ve we’ve not seen really any pullback from our clients. We are getting real time information and updates as we’re kind of daily dealing with them. What we have seen really is just a leaning in and trying to drive a little bit harder at these markets. Jury is still out on how things will be impactful going forward into the future and how things will be rolled out.

But right now, no indication of any sort of pullback in the business at all. We actually see the opposite people leaning in trying to leverage digital channels a little bit more than before. And I think that the other thing to look for is just, I would say the cost effectiveness of digital versus some of the other channels that they use to promote. If they get in a cost cutting sort of state, we’ll probably see some of the other things ratchet back faster than digital. You may see even more acceleration in our favor if they go down that road.

Yeah, to date, no, nothing really to panic about.

Ryan Daniels, Analyst, William Blair: Okay. No, that’s super helpful color actually. And then can you remind us when you move to subscription based revenue, upon removal, how does that impact kind of the revenue recognition over a twelve month period in the margins? Does that just I’ll leave it there. How does it really impact margins in rev rec if we think about the total revenue?

Conference Call Operator: It’d be

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: more I’ll

Ed Stelmark, Chief Financial Officer, OptimizeRx: take it and

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: grab it

Steve Silvestro, Chief Executive Officer, OptimizeRx: and ask oh, go ahead Ed, you take it. Go ahead.

Ed Stelmark, Chief Financial Officer, OptimizeRx: Yes, no problem. Hey, Ryan. Yeah. Basically, I mean, it’s really simple. Kind of spreads your revenue over the twelve month period.

It takes the dollars associated with subscription related solutions and services and spreads spreads those over the course of the year.

Ryan Daniels, Analyst, William Blair: Okay. But it’s

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: You’re not giving it

Ed Stelmark, Chief Financial Officer, OptimizeRx: to actually accretive to us because of the revenue share perspective. We kind of keep most of that revenue to ourselves and the cost of sales for that revenue is pretty low.

Ryan Daniels, Analyst, William Blair: Okay. Okay. Just want to confirm. And then you mentioned, I think, Ed, that the direct to consumer managed services kind of mix is diluting gross margins a little bit. How should we think about the gross margin profile of the company going forward?

Is that kind of low 60% range still the right target? Or might you see more growth there that pushes it slightly below that? Thanks.

Ed Stelmark, Chief Financial Officer, OptimizeRx: Yeah, we’re certainly working on trying to increase that above the low 60% mark. But right now, our kind of makeup for our portfolio is such that when we do have some solutions that are a little bit lower on the margin side, you’ll see that sort of a dilution. The good news is we’re diversified enough where none of our solutions really will have an impact that material at this point, so we feel pretty comfortable with the current range.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Okay. Yes. Ryan, so what we’ve historically talked about is high 50% range to the low to mid-sixty percent range for gross margins. And so first quarter was well within that range. Okay, perfect.

Thanks a lot guys. Appreciate it.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Yes. Good to hear your voice, Ryan. Thanks for the questions.

Conference Call Operator: Thank you. The next question comes from David Grossman with Stifel. Please go ahead.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Thank you very much. I think in your prepared remarks, you know, I think Steve you said that or maybe it was that that you had $70,000,000 in committed revenue and I assume you’re speaking to visibility on the year and that was up 25. So just back the envelope math, does that suggest that you’ve got a little over 70% or about 70% visibility today at this point in the year versus 60% last year? Did I get that right?

Steve Silvestro, Chief Executive Officer, OptimizeRx: Yeah, it’s north of 80%.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Yeah,

Steve Silvestro, Chief Executive Officer, OptimizeRx: yeah, you’re in the ballpark. It’s north of 80% where we currently sit. That’s what’s in the prepared remarks. You’re in the ballpark, David.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Okay. So what was being said in the prepared remarks was at the end of the first quarter, so March, that’s where we said. So What Steve just said

Steve Silvestro, Chief Executive Officer, OptimizeRx: was where we’re at right now. Was the release. But

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: just on an apples to apples basis, it sounds like you’re up about 10 points at the March in terms of visibility on the year, right?

Ed Stelmark, Chief Financial Officer, OptimizeRx: Well, we’re actually up about 25% from last year on the committed backlog as of the end of Q1, which is what’s given us so much optimism by the year.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Gotcha. And then in terms of the amount or how much more revenue we can convert to subscription, know, kind of just think about it over the balance of the year, How should we think of how that 5% may migrate? Yeah, I mean, if

Steve Silvestro, Chief Executive Officer, OptimizeRx: ahead, Steve. Go ahead, Ed.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Yeah, if you think about it,

Steve Silvestro, Chief Executive Officer, OptimizeRx: Sorry. I’ve got a delay. Go ahead, Ed. No, no, you go. Go ahead.

Ed Stelmark, Chief Financial Officer, OptimizeRx: Yeah. Basically, if this works out the way we’re planning and the way we hope, the the the subscription revenue will convert into next year, and we’ll have some legs in the following several years. So versus what we’ve had in the past, where most of our revenue was one year in tenure or less, Hopefully subscription will have a little bit more of a life cycle to it. We’re hoping current percentage will continue to grow and expand, and it will smooth out our revenue recognition over time.

Ryan Daniels, Analyst, William Blair: As we think

Steve Silvestro, Chief Executive Officer, OptimizeRx: could think about it in terms of all of the DAP business and the audience business. So all of the components of data, both from the legacy Medix business that’s producing audiences as well as the data business, coming out of DApp. So those two components, are what have the potential for subscription based revenue. So that’s that’s the component that we can push on. The transactional components of the business will continue to be transactional over time.

And so that’s that’s kind of the target. That’d be the high watermark.

Ed Stelmark, Chief Financial Officer, OptimizeRx: Got it.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Yeah, what you’re seeing what you’re seeing now is early signs of good progress against the conversion and prosecuting that work, but we still have a lot of work to do on that. We did wanna report out on it because it’s substantial considering that we’ve been at it for a little bit more than a quarter and made some good progress on it, but lots more work to do there. Lots of them to chop.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: So thanks for that. Steve, can you just remind us how what percentage of revenue is represented by the data business?

Steve Silvestro, Chief Executive Officer, OptimizeRx: We don’t break it out that way. We were breaking out sort of adapt and core stuff for a bit, but we can we can circle back and give you a little bit better view. We haven’t broken it out to date that way.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Got it. And then just one last one for me. I know it’s a modest kind of decline there, but anything to call out on what may be impacting the NRR sequentially? Yeah, I can take that question. We talked about this on the last call, it’s a trailing twelve month look.

So, now we’re running into trailing twelve month comps year over year that have the the benefit of, Medix, the acquisition. And so as you go more into time, there’s just more Medix revenue in the year over year comp. So it becomes less favorable of a year over year comp on NRR. That’s all.

Ed Stelmark, Chief Financial Officer, OptimizeRx: Got it.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Alright, guys. Nice job. Thanks very much. Thanks, David. Great to talk to you.

Conference Call Operator: Thank you. The next question comes from Richard Baldry with ROTH Capital. Please go ahead.

Richard Baldry, Analyst, ROTH Capital: Thanks. Just back to the NRR. I’m sort of curious, is there any further headwinds in the second half? And the reason I ask is the top line guide at the high end would be 15% growth and your NRR is 114%. So essentially accounts for the upper end of revenue guide.

So I just want to make sure I know there’s Nothing else has an incremental headwind in the second half?

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Well, NRR, we said on the last call, back of the envelope would end up around 100 by the end of the year, right? Based on our guidance. So call it 5% to 15% of our business every year comes from new logos. And so obviously NRR, the maximum we grow, if you went through 15% would be an NRR of 115%. So if five to 10% or 15% of our business comes from new logos, by the end of the year, you’ll be about a %.

So there the we we made the acquisition in October of twenty twenty three of Medix, so it’s a trailing twelve month look back comparison. So even at the first quarter of twenty twenty four, the trailing twelve months there, you know, we we didn’t have a full year of Medix as a as a reported entity.

Richard Baldry, Analyst, ROTH Capital: Got it. When we look at the OpEx side now, it come down pretty substantially. So is this a pretty good run rate on a go forward basis? How do you think about your leverage on OpEx as the top line grows?

Steve Silvestro, Chief Executive Officer, OptimizeRx: Yeah, I can take that. Yeah.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: I think we had about

Steve Silvestro, Chief Executive Officer, OptimizeRx: 5,000,000 out of it last year, as you know, about the fourth quarter, right? So we’re at a good, I think run rate now. We don’t really need to take more out and I don’t think we’ll need to add more. So I think what we’ve demonstrated here is. Do you feel free to add anything else?

Ed Stelmark, Chief Financial Officer, OptimizeRx: Yeah, that’s Richard. I think Steve was breaking up a bit on my end.

Richard Baldry, Analyst, ROTH Capital: Yeah, broke up a little at the end. I think I got it.

Ed Stelmark, Chief Financial Officer, OptimizeRx: You got it. Okay.

Richard Baldry, Analyst, ROTH Capital: I’m curious. Then in terms of new business, can you talk about sort of how RFP season played out on the DTC side and how you view new wins on that side of the table? And then I think you gave the number last quarter of paying DAP deals was 48 versus 24 starting the year. I’m not sure if you’re willing to update that number or just talk generically about new wins in the DAP side.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Yes. I can take the DAP question. So we’re just given it’s such a large percent of our business right now, for competitive purposes, we’re no longer breaking out, like how many deals we’re getting or anything like that. That was just really to show initial adoption. And then, I mean, Steve can give a little bit more detail on the DTC side of the business, but both parts of the business have been performing well this year and are contributing to our increased guidance.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Yes, just to sort of double down on that, Rich, hopefully you can hear me okay. I’m not sure why the signal was cutting there for a second, but GAAP continues to perform at the same speed as it was before. So everything’s sort of in line. As Andy said, we’re not going to count the number of deals just because competitively, we’re not wanting to disclose that. But in addition to that, I think what we can safely say is we’ve seen a strong DTC recovery in the fourth quarter and into the first quarter of this year.

And we anticipate that that acceleration will continue for the DTC component of the business.

Richard Baldry, Analyst, ROTH Capital: Great. Thanks.

Conference Call Operator: Thank you. The next question comes from Maxwell Michalis with Lake Street Capital Markets. Please go ahead.

Maxwell Michalis, Analyst, Lake Street Capital Markets: Hey, guys. Thanks for taking my Great job on the quarter. When we look at Q2, now we’re about halfway through now. Should we expect typical seasonality Q1 to Q2 pretty much flat? Are you seeing demand here more outsized demand here in Q2 and we should expect sequential growth?

I know you guys didn’t give quarterly guidance, but maybe directionally you can help. Thanks for taking my question.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Yes, sure. Happy to do it, Maxim. Thanks.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Andy, why don’t you take that one? Yes. We would expect a small step up sequentially. You know, first half of the year revenue is typically between 35 and 45 percent of full year revenue. So the I I I think we’re we’re in a pretty pretty good pace compared to historicals.

Conference Call Operator: Nicholas, I hope that answers your question.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Yep. That would be the same. There we go. Great. Okay.

Conference Call Operator: Sure thing. Thank you. The next question comes from Constantine Davides with Credit Suisse. Please go ahead.

Constantine Davides, Analyst, Credit Suisse: Thanks. I just wanted to maybe drill into the pipeline a little bit more and kind of what you’re seeing there. Is it bigger on an absolute basis year over year? Maybe talk a little bit about are your win rates changing relative to what they were last year? And then, maybe just some commentary on average deal size and if you’re having any success with double barreled sales.

I know I just threw a lot at you, but just kind of curious if we can get a little more color on kind of what’s in the pipe.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Hey, Constantine. Good to hear from you. I’ll give the first couple of answers and ask Andy and I to chime in. But basically pipeline continues to grow at a steady rate. I think we feel confident with where it is.

We continue to convert, I think at a good pace, but our conversion ratio has become better. We’re finding that we’re winning particularly with the data and subscriptive component of our business. We’re winning more as our audience quality has improved and our data has been better. So that’s been helpful. And we’ve seen those pieces of the business go.

And then Andy, Ed, feel free to chime in on the other components. But I just wanted to call those out and sorry guys for the quality of the audio notes. Not sure what’s going on on the call side. Andy, you had anything else to add in there for Constantine?

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Yeah. We’re we’re not gonna break out average deal size or anything like that anymore. But I think I think Steve hit the nail on the head.

Constantine Davides, Analyst, Credit Suisse: Okay. And then just one more follow-up on the subscription. Are those are the subscription deals multi year? Are they just sort of one year evergreen arrangements?

Steve Silvestro, Chief Executive Officer, OptimizeRx: Right now they’re one year evergreen arrangements. The goal would be to get them to multi year status, but that’s kind of difficult to do Constantine in this space

Ryan Daniels, Analyst, William Blair: because

Steve Silvestro, Chief Executive Officer, OptimizeRx: marketing basically ascribes dollars on a yearly and an annual basis based on previous year’s full year performance. So it’s gonna be difficult to do three year, four year, five year deals. So for right now, we’re looking at twelve months and scaling as many of those as we can. As time progresses, if we can get that data component of the business to two and three year deals, that’ll be an enormous win for the business.

Constantine Davides, Analyst, Credit Suisse: Understood. And then I guess this last one for Ed on the guidance, should we assume that the high end of revenue correlates with the high end of EBITDA or does it sort of is there some dynamic here where you’re investing more to get to the top end? Just trying to understand that. Thanks.

Ed Stelmark, Chief Financial Officer, OptimizeRx: Yeah. So it’s less about investing more to get to the top end. We feel pretty confident that with the backlog build up and some of the tailwinds we’re experiencing now, that we’ll get to that number. Really the hedge there is around gross margin. The mix of solutions is one thing that is not as predictable.

So we’re probably betting on a little bit of a more conservative number on the gross margin side of the business, with OpEx more or less being kind of set for the year.

Conference Call Operator: Thank you. The next question comes from Jeff Garo with Stephens. Please go ahead.

Jeff Garo, Analyst, Stephens: Yeah, good afternoon. Thanks for taking the questions. Wanted to follow-up on the visibility topic and the roughly remaining 20% of revenue that you need to land for the year. Could you discuss what needs to be landed in terms of renewals or upsells or adding new logos? Thanks.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Yeah, I’m happy to take that one and then let Ed and Andy chime in as well. But and thanks for the question, Jeff. So as Ed said, we’ve got greater than 80% contracted revenue on the backlog for the full year. So that gives us good visibility into where we’re headed. Basically for what we need to do for that component, the Delta is really just delivery over time, which will happen organically as we prosecute these programs.

The Delta between what we’ve contracted and where we need to go is sort of the difference between the guidance and the visibility that we’ve got, or the top end of that guidance and the visibility that we’ve got. And so what needs to happen there is just conversion of the pipeline, very simple. And the pipeline like we, like response to Constantine is very healthy right now. So I think we’re feeling confident in that. Eddie, Andy, anything else you’d wanna chime in on?

Ed Stelmark, Chief Financial Officer, OptimizeRx: No, I think you’ve got the gist of it. I would just say again, pipeline is building, we’re constantly dealing with the quality of the pipeline. We’re staying on top of operational execution, as we said at the beginning of the year. So there’s definitely a very strong hyper focus on making sure that we have conversion that takes place within the quarter to drive that revenue earlier. So we feel pretty confident that we’ll be able to get that remaining 20% and some this year.

Jeff Garo, Analyst, Stephens: Understood. I appreciate that. And one more for me, maybe back to the topic of gross margins and the mix involved there. I was hoping you could help us understand a little bit further the progress you’ve made on conversion to data subscriptions and the benefits there and the comment about the gross margin percentage in the quarter being down a little bit year over year from an increase in managed services. So maybe it’s really around the appetite for customers to kind of rebound demand for that managed service offering versus it going one way towards data subscriptions.

Thanks.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Yeah. Go

Ed Stelmark, Chief Financial Officer, OptimizeRx: ahead, Ed. Yeah. Look, we have a portfolio right now that’s diversified enough that was built around meeting and exceeding customer needs. In some cases, we’ll need to take some business that is lower margin. But really, the focus for us as a company is to continue to build out the higher margin side of the business.

And that’s exactly what’s happening. Our current gross margin profile is right there where it needs to be. And we feel like as the year goes on, we should see more and more of the expansion take place. And certainly, as part of the Rule of 40 kind of ramp up margin expansion as part of the equation.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Jeff, I’d also add to that. Part of what we’re trying to capitalize on is a flywheel effect within the business, right? So in order for us to be able to do that, we’ve got to grow that subscriptive data component of the business, which as Ed said, it will positively impact the gross margin over time. There’s no rev share with that. It’s intellectual property that we own.

But in addition to that, it will unlock the ability to distribute more messages and transactions across the entire network as we plug into that. And so we’re laser focused on driving audiences and that data as a key component of our business. So you’ll expect to hear more updates from us on that as we go.

Jeff Garo, Analyst, Stephens: Great. Thanks again for taking the questions.

Andy DeSilva, Senior Vice President of Corporate Finance, OptimizeRx: Yeah, great questions. Thank you.

Conference Call Operator: Thank you. This concludes our question and answer session. I would like to turn the conference back over to Mr. Silvestro for any closing remarks.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Yep. Thank you, guys. No closing remarks. We can go ahead and close out the call.

Conference Call Operator: Thank you, mister Silvestro. Before we conclude today’s call, I would like to provide the company’s safe harbor statement that includes caution regarding forward looking statements made during today’s call. Statements made by management during today’s call may contain forward looking statements within the definition of section 27A and the Securities Act of 1933 as amended and Section 21E of Securities Act of 1934 as amended. These forward looking statements should not be used to make investment decisions. The words anticipate, estimate, expects, possible, and seeking, and similar expression identify forward looking statements.

They may speak only to the date that such statements are made. Forward looking statements in this call include statements regarding our growth plans, plans for shareholder value creation, becoming a rule of 40 company, transitioning to a subscription based model, achieving our goals to help patients stay present throughout the patient care journey across our integrated HCP and DTC businesses. Initiative biz being implemented by the new administration, cost management, targeted upselling, estimated 2025 revenue, and adjusted EBITDA range, estimation of total addressable market size, market penetration, technology, investment, growth opportunities, acquisition, and upcoming announcements. Forward looking statements also include the management’s expectations for the rest of the year. The company undertakes no obligation to publicly update or revise any forward looking statements, whether because of new information, future events, or otherwise.

Forward looking statements are inherently subject to risk and uncertainties, some of which cannot be predicted or quantified. Future events and actual results could differ materially from those set forth in contemplated by or underlying these forward looking statements. The risks and uncertainties to which forward looking statements are subject to include, but are not limited to, the effects of government regulation, competition, dependence on a concentrated group of customers, cybersecurity incidents that could disrupt operations, the ability to keep pace with growing and evolving technology, the ability to maintain contracts with electronic prescription platforms and electronic health records networks, and other material risk. Risks and uncertainties to which forward looking statements are subject could affect business and financial results are included in the company’s annual report on Form 10 k for the year end 12/31/2024 and in other filings the company has made and may take with the SEC in the future. These filings when available on the company’s website and on the SEC website at sec.g0v.

Before we end today’s conference, I would like to remind everyone that an audio recording of this conference call will be available for replay starting later this evening running through for a year on the investor section of the company’s website. Thank you for joining us today. This concludes today’s conference call. You may now disconnect your lines.

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