Earnings call transcript: OptimizeRx Q4 2024 sees revenue growth, stock surges

OptimizeRx Corp (OPRX) reported a strong performance in its Q4 2024 earnings call, with a notable 14% increase in revenue year-over-year to $32.3 million. Despite a net loss of $100,000, the company showed significant improvement from a $4.1 million loss in Q4 2023. The stock reacted positively, soaring 20.53% in premarket trading, reaching $4.99, following the earnings announcement. According to InvestingPro data, the company’s impressive 40.4% revenue growth over the last twelve months signals strong business momentum, despite recent stock price volatility.

Key Takeaways

• OptimizeRx reported a 14% year-over-year revenue increase for Q4 2024.
• The company achieved a significant improvement in adjusted EBITDA, rising to $8.8 million.
• Gross margin expanded to 68.2% from 62.9% in the previous year.
• The stock price surged 20.53% in premarket trading after the earnings release.
• Plans to transition to a subscription-based data services model were highlighted.

Company Performance

OptimizeRx demonstrated robust performance in Q4 2024, with revenue climbing to $32.3 million, marking a 14% increase compared to the same period last year. The company’s efforts to enhance operational efficiency and expand its product offerings contributed to this growth. The integration of Medix Health and a strategic review of business processes have positioned OptimizeRx to capitalize on the growing demand for dynamic audience solutions in the pharmaceutical sector.

Financial Highlights

• Revenue: $32.3 million, up 14% year-over-year
• Full Year 2024 Revenue: $92.1 million
• Adjusted EBITDA: $8.8 million, compared to $5.8 million in Q4 2023
• Gross Margin: Increased to 68.2% from 62.9%
• Net Loss: $100,000, improved from $4.1 million in Q4 2023
• Cash and Short-term Investments: $13.4 million as of December 31, 2024

Market Reaction

Following the earnings announcement, OptimizeRx’s stock surged 20.53% in premarket trading, reaching $4.99. This positive market reaction reflects investor confidence in the company’s strategic initiatives and its ability to improve financial metrics despite a minor net loss. The stock’s performance contrasts with its 52-week low of $3.78, indicating a favorable market sentiment. InvestingPro analysis suggests the stock is currently undervalued, with two analysts recently revising their earnings expectations upward. For deeper insights into OPRX’s valuation and 8 additional exclusive ProTips, explore InvestingPro’s comprehensive research report.

Outlook & Guidance

Looking forward, OptimizeRx aims to achieve a Rule of 40 status within 3 to 5 years, with a projected 2025 adjusted EBITDA of at least $12 million. The company anticipates nearly 10% revenue growth and plans to maintain 100% net revenue retention. With a strong current ratio of 3.23 and liquid assets exceeding short-term obligations, InvestingPro data indicates the company is well-positioned to execute its growth strategy. Discover more about OPRX’s financial health and growth potential in the exclusive Pro Research Report, available for over 1,400 US stocks. Quarterly revenue distribution is expected to be 15-20% for Q1, 20-23% for Q2, 25-30% for Q3, and 30-40% for Q4.

Executive Commentary

CEO Steve Silvestro emphasized the company’s focus on growth and customer centricity, stating, "We’re working towards continuing the company’s growth, focusing very closely on customer centricity." He also highlighted OptimizeRx’s unique position in the industry, noting, "We believe we are the only company in the industry that can effectively connect both doctors and patients at scale." CFO Ed Selnick added, "Our business model was highly leverageable. So the drop through as we grow is significant."

Risks and Challenges

• Market Competition: Increased competition in the digital healthcare advertising space could impact market share.
• Economic Uncertainty: Macroeconomic pressures may affect customer spending and investment in digital solutions.
• Regulatory Changes: Changes in healthcare regulations could impact the company’s operations and revenue streams.
• Integration Risks: Successfully integrating acquisitions like Medix Health is crucial for realizing expected synergies.

OptimizeRx’s Q4 2024 earnings call underscored the company’s strategic focus on innovation and operational efficiency, driving positive investor sentiment and stock performance.

Full transcript - OPTIMIZERx Corp (OPRX) Q4 2024:

Conference Call Operator: Good morning, everyone, and thank you for joining OptimizeRx’s Fourth Quarter and Full Year Fiscal twenty twenty four Earnings Conference Call. With us today is Chief Executive Officer, Steve Silvestro. He is joined by Chief Financial Officer, Ed Selnick Chief Legal Officer, Marion Odunsford and Senior Vice President of Corporate Finance, Andrew Da Silva. 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 morning 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 and will also be provided on the Investor Relations section of the company’s website. Now, I would like to turn the call over to OptimizeRx CEO, Steve Silvestro. Sir, please go ahead.

Steve Silvestro, Chief Executive Officer, OptimizeRx: Thank you, operator, and good morning, everyone. Thank you for joining today’s fourth quarter and fiscal twenty twenty four earnings call. As many of you know, this is my third day as Optimizer X’s new CEO. I’m honored to have the opportunity to lead the next phase of Optimizer X’s growth and transformation. Now more than ever, we will be laser focused on operational excellence, while ensuring we delight our customers and forge stronger relationships with valued business partners.

Over the past few months, we’ve completed an extensive strategic review of the company’s business process, operations and growth plans, and we believe we’re on the right path forward. We’re working towards continuing the company’s growth, focusing very closely on customer centricity and delight, continuing to expand our unique value proposition with pharma, converting customers to our reoccurring revenue model, while driving to become a rule of 40 company and unlocking new opportunities for profitable revenue growth. Importantly, I’m looking forward to meeting more of our investors throughout the year and hearing our investors’ thoughts and perspectives on our shared objective, shareholder value creation. While we believe we are executing the right strategies, we’re always open to hearing our investors thoughts on alternative strategies that further our shared goals. As for our 2024 financials, I’m happy to say that we beat our guidance and street expectations with revenue and adjusted EBITDA coming in at $92,100,000 and $11,700,000 respectively.

I believe OptimizeRx is uniquely positioned to drive value creation and build long term sustainable shareholder growth by leveraging one of the largest EHR and E prescription networks in the country to help pharma manufacturers reach healthcare providers at the point of care. Building on that, we are combining that unparalleled network with a unique purpose built omni channel technology platform that is transforming how pharmaceutical companies, physicians and patients engage, ultimately improving care outcomes for patients. These elements give us a distinct competitive edge with an unrivaled point of care reach, we believe we are the only company in the industry that can effectively connect both doctors and patients at scale. This has allowed us to develop the broadest suite of solutions in the industry, enabling us to meet the diverse needs of our customers across the full spectrum of their product lifecycle. Coupled with our highly experienced team and a long standing track record of delivering for top tier pharma clients, we firmly believe we are in a leadership position in the industry that will take others years to match.

As our business continues to evolve, our offerings are scaling as we continue to tackle some of pharma’s toughest commercial challenges, including brand visibility as many clinicians and providers have reduced in person meetings and are spending more time in front of computers script abandonment as approximately fifty percent of patients never fill their scripts at the pharmacy Interoperability, as providers inability to access relevant patient information in one place to make more informed decisions at the point of care. And finally, the shift to more complex and expensive specialty medications or more complex diagnosis criteria is required to identify brand eligible patients as expensive specialty medications now account for roughly half of total drug expenditures in The U. S. On average, we’re driving strong brand engagement with measurable success. When launching a six month program with a brand, we consistently achieve an ROI well over ten:one on HCP marketing spend.

Additionally, we see a 25% average script list in our six month programs. These capabilities enable us to capture greater share of wallet from established customers. In 2024, our top five customers averaged over $9,000,000 in revenue and we’re on track to elevate at least one more customer to this level in 2025. A great example of our impact comes from one of our largest customers, a top five pharma manufacturer. After a successful 2023 supporting multiple brands, including a launch brand, 2024 began with strong bookings across the portfolio.

Independent program analysis for this manufacturer demonstrated a material impact on prescription lift, leading supported brands to increase their share of voice across the Optimizer X network. To drive further results, some brand teams focused on boosting incremental new prescriptions in addition to refills before year end. To support this objective, we identified key areas where additional investment could expand program scale, physician reach, improving patient conversion for each program. As I move forward in my new role as Optimizer X CEO, I’m working with our executive team to implement a robust multi year plan to grow the business and increase shareholder value. While many aspects of the business will be the same, everything will be going through the lens of getting us to a rule of 40 company over the next several years.

And moving towards this financial goal, we expect to drive substantial operating leverage and build a more predictable business, including by establishing a consistent reoccurring revenue component to our business as we aim to convert our DAP customers to a subscription based model from the data component of our offerings. We believe this will improve margins and visibility over time, while substantially enhancing the overall predictability of our revenue streams. In turn, this will also enhance our ability to scale the business and plan for substantial growth that we and our investors are seeking. With a $10,000,000,000 TAM and a large underpenetrated market and tailwinds driven by increased pharma advertising spend on digital channels, Optimizer X today is well positioned to execute on our Revance strategic plan. 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 our integrated ACP and DTC business.

We have strong momentum coming into 2025. And with that, I’d like to turn the time over to our CFO, Ed Stelmak, who will be walking us through our financial results. Ed?

Ed Selnick, Chief Financial Officer, OptimizeRx: Thanks, Steve, and good afternoon, everyone. The press release was issued with the financial results of our fourth quarter and fiscal year ended 12/31/2024. 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 K. Fourth quarter revenue came in at $32,300,000 an increase of 14% from the $28,400,000 we recognized during the same period in 2023, which was the result of the company benefiting from the increased DAPT related revenue streams in the fourth quarter. Gross margin increased from 62.9% in the quarter ended 12/31/2023 to 68.2% in the quarter ended 12/31/2024.

Year over year gross margin expansion is tied to favorable solution and channel partner mix. Our operating expenses for the quarter ended 12/31/2024, decreased by $10,400,000 year over year, largely due to lower M and A related costs as we completed the Medix Health acquisition during the fourth quarter of twenty twenty three. In addition, we saw significant benefits from cost cutting initiatives approaching $5,000,000 annually tied to the integration efforts with acquisition. Meanwhile, our net loss came in at $100,000 for the fourth quarter of twenty twenty four compared to a net loss of $4,100,000 during the fourth quarter of twenty twenty three. On a non GAAP basis, our net income for the fourth quarter of twenty twenty four was $5,500,000 or $0.3 per diluted shares outstanding as compared to a non GAAP net income of $4,600,000 or $0.26 per diluted shares outstanding in the same year ago period.

Our adjusted EBITDA came in at $8,800,000 for the fourth quarter of twenty twenty four compared to $5,800,000 during the fourth quarter of twenty twenty three. We ended the year with cash and short term investments totaling $13,400,000 dollars as of 12/31/2024, as compared to $13,900,000 on 12/31/2023. The majority of the year over year decline was due to the pay down of principle of our debt, where we made an incremental $2,000,000 payment during the fourth quarter of twenty twenty four. Our current debt balance stands at $34,300,000 after paying off $2,500,000 of principal during the fourth quarter. We continue to believe we are well funded to execute against our strategic and operational goals.

Now I’d like to turn to our KPIs for the twelve months ended 12/31/2024, which showed broad based improvement as our business continues to evolve. Average revenue for top 20 pharmaceutical manufacturer was $2,900,000 which is an increase of 22% from the same period one year ago. This is driven by our continued success in expanding our share of wallet with top manufacturers and especially our top five accounts, which hit an all time high with an average of $9,100,000 in 2024. Net revenue retention rate showed improvement at 121%, up from 105% in the trailing twelve month prior period. Revenue per FTE came in at $701,000 topping the $586,000 we posted during the twelve months ended 12/31/2023.

With that, I’ll turn the call back over to Steve. Steve?

Steve Silvestro, Chief Executive Officer, OptimizeRx: Thanks, Ed. Operator, now let’s move to Q and A.

Conference Call Operator: We will now begin the question and answer session. Our first question comes from Jared Haas with William Blair. Please go ahead.

Jared Haas, Analyst, William Blair: Hey, good morning. This is Jared Haas on for Ryan Daniels. Thanks for taking our questions. And Steve, congrats to you on stepping into the CEO seat in a permanent basis here. Maybe I’ll start with one for you.

You mentioned both in the release and the prepared comments, you alluded to the idea of really focusing on customer centricity and driving more and more value for clients. So I’m curious if you could just unpack that a little bit in terms of from your perspective, what might be different going forward regarding the strategy and how you engage with clients?

Unnamed Executive, OptimizeRx: Hey, Jared, good to hear your voice and thanks for the question. I mean, I think throughout our business, we’re looking at opportunities to increase the level of customer centricity. And really what we mean by that is taking the lens of the customer and promulgating that throughout the organization, making sure that we’re easy to do business with, that clients have a pleasurable experience with us, we’re driving good results for them, which we’ve consistently done historically, but sort of enabling them to make it easy to renew and continue to expand footprint. So that’s really a big lift within the organization, a big focal point right now. And you’ll continue to hear that from us as we go forward.

Jared Haas, Analyst, William Blair: Okay. I appreciate that. And then you also alluded to transitioning to more and more subscription based revenue in terms of these data services contracts. And just was hoping to maybe understand what impact that might have on the revenue model, any changes we should be thinking about in terms of the predictability of the business, anything that might shift in terms of the core sort of variables or drivers of contract value going forward? Just would love to unpack that a little bit more as well.

Unnamed Executive, OptimizeRx: Sure. I’ll answer and then maybe Ed and Andy can also chime in. But essentially over the last twenty four months, we’ve been launching we’ve launched and have been scaling our DAP solution, which is got a data component, which is subscriptive in nature and then it’s got a transactional component. And getting clients to be able to come along that journey of trying it, proving it out and then scaling it, which we sort of talked about in previous earnings calls, we sort of taken them on that journey. Now we’re at a point where it’s really starting to scale pretty significantly.

And so the opportunity to move the data component that feeds through all of the systems to more of a subscription recurring revenue model is there. And so we have a pretty large push now going there. And so from your perspective, I think and from everyone’s perspective, certainly ours, a larger portion of the revenue will be predictable and reoccurring. So Andy, anything else you would add to that?

Ed Selnick, Chief Financial Officer, OptimizeRx: I think you covered it well, Steve. Yes, basically it’s the data portion of our adapt deals that we’re pushing to get more to a subscription model, which then obviously creates the ability to renew and extend contract values into the future, some more predictable sticky revenue.

Jared Haas, Analyst, William Blair: That makes sense. Maybe a quick follow-up. Is there a way to contextualize kind of how you’re thinking about what portion of total contract value could come from data services versus more transactional over the next couple of years?

Ed Selnick, Chief Financial Officer, OptimizeRx: Yes, it’s a little difficult to estimate that. I mean, if you look at our HCP plus PTC business in totality, we are trying to move as much as possible into DAP overall. As you know, DAP has covered around 20%, thirty % of our business over time. So if you take basically a portion of that attributed to data and that should be that will give you a nice little benchmark to go after.

Jared Haas, Analyst, William Blair: Okay. That’s helpful. And I’ll hop back in queue, but congrats on all the momentum. Thanks guys.

Unnamed Executive, OptimizeRx: Thanks, Jared. Appreciate it.

Conference Call Operator: Our next question comes from Anderson Schock with B. Riley. Please go ahead.

Anderson Schock, Analyst, B. Riley: Hi. Congrats on the great quarter and thank you for taking our questions. First, you saw a pretty significant gross margin expansion in the quarter. Can you discuss what drove this and whether you expect this level of gross margin to continue going forward?

Ed Selnick, Chief Financial Officer, OptimizeRx: Hey, thanks, David. Go ahead,

Anderson Schock, Analyst, B. Riley: Ed. I understand.

Ed Selnick, Chief Financial Officer, OptimizeRx: Yes, it’s really driven by product mix. We get a large portion of our revenue exhibited to DAP and a lot of the things that we just talked about related to data analysis, kind of HCP, target list generation. Those are things that are, first of all, not really shareable revenues. So we get to keep a larger portion of it and also have a higher margin profile.

Anderson Schock, Analyst, B. Riley: Okay. And do you expect this level of gross margin to continue in the future?

Ed Selnick, Chief Financial Officer, OptimizeRx: We’re hoping to get to that level on a more permanent basis, but it is definitely much higher than we typically see. So is that kind of seasonal Q4 phenomenon that we always see in our kind of revenue flow and this time in our gross margin profile as well. So I don’t think we’re going to stay at that level, but obviously the more we push on what Steve just described, the closer we get to that number.

Anderson Schock, Analyst, B. Riley: Yes. I have a little bit more color on that. So our margins should be in the high 50s to mid 60s range. Obviously, the fourth quarter was in the high 60s range. So that’s something we aspire to, but wouldn’t be something we would expect.

Okay, got it. And it was a really excellent quarter for new DAP deals. Can you just go into what maybe drove this and talk on your backlog and visibility into the next year for new deals?

Unnamed Executive, OptimizeRx: Yes. Happy to do that, Anderson. So I mean, we’ve been pretty vocal about the progress of DAP over the last twenty four months. And really what we’re seeing now is the scale up. So typical pharma, they’ll try things out, prove them, measure the ROI.

If things work well, they’ll start to scale both within the existing program as well as across therapeutic areas or disease states. And we really saw that in several clients in the fourth quarter, which we talked about earlier on in the script. And so our view into 2025 is that that drumbeat will continue. There’s definitely a demand for audience creation and dynamic audiences specifically. And so that will affect both our ACP business as well as our DTC business, which is sort of the thesis of why we acquired Nynix to begin with was to drive best in class audiences and able to market.

The other piece that I would say, which would be interesting for folks on this call to hear is, given that we’re commercializing these audiences and we’re having such a degree of success, the audiences aren’t always tied, as Ed said, to message execution. And so if those audiences continue to grow at the rate that we’re seeing, which we’re all encouraged that they will, that will change the go forward margin profile of the business and the recurring revenue of the business both positively. And so we’re leaning pretty heavily into that. But we’re encouraged very much by the progress we’ve seen here in the fourth quarter and then coming into this year.

Ed Selnick, Chief Financial Officer, OptimizeRx: I can take the second part of the question in terms of visibility into the year. So we are significantly stronger than we were a year ago. A year ago, we’re probably in the low 50% range as far as contracted revenue is concerned. We’re sitting here today at low 60s in terms of percentage of total revenue for the year, so up about 20% year on year.

Anderson Schock, Analyst, B. Riley: Okay, got it. That’s very helpful. Thank you again for taking our questions and congrats on a great quarter.

Unnamed Executive, OptimizeRx: Thanks, Anderson. Appreciate the support.

Conference Call Operator: Our next question comes from Konstantin Davidis with Citizens. Please go ahead.

Konstantin Davidis, Analyst, Citizens: Thanks. You guys have alluded to sort of transforming into a rule of 40 company and I know some of that is coming from some of the things you’ve outlined for us today. But I guess over what timeframe is that an expectation? And can you maybe just bridge between how much of that is sort of top line growth acceleration and maybe what the margins of the business look like at scale?

Unnamed Executive, OptimizeRx: Yes. Ed, do you want to take that one?

Ed Selnick, Chief Financial Officer, OptimizeRx: Yes, I can take that one. Yes. So as far as time is concerned, certainly, it’s not going to be one year that will be a journey, it’s more probably three to five year journey. As far as the breakdown with being top line and bottom line, as you know, we’ve said that a number of times, our business model was highly leverageable. So the drop through as we grow is significant.

If I could look at our results in Q4 of this year, you can see the kind of margin we can generate when we have a high level of profitability and a high growth rate on the pipeline. So I would say most of it is going to come from EBITDA expansion, but a good chunk of it will come from top line growth as well. So a combination of the two should get us to a little 40%. My guesstimate is near between three to five year timeframe.

Konstantin Davidis, Analyst, Citizens: Great. Thanks. And then, I guess just in terms of 2025 guidance, are there any kind of quarterly puts and takes with respect to either margins or typical sort of seasonality on the revenue front that we should contemplate again for 2025? Thanks.

Anderson Schock, Analyst, B. Riley: Yes, I can give that information actually. So as far as the margin goes, I follow the kind of seasonality that you’re seeing, natural progression throughout the year type of situation. And then as far as quarters go, I would say in the typical seasonal ranges, 15% to 20% of revenue in Q1, ’20 percent to 23% in Q2, ’20 ’5 percent to 30% of revenue in Q3 and then Q4 obviously a really biggest quarter, I’d say around 30% to 40% of revenue in Q4.

Konstantin Davidis, Analyst, Citizens: Thank you.

Unnamed Executive, OptimizeRx: Thanks, Constantine. Looking forward to seeing you hopefully soon.

Conference Call Operator: Our next question comes from Richard Baldry with Roth Capital. Please go ahead.

Richard Baldry, Analyst, Roth Capital: Thanks. If we look at just baseline growth expectations for next year, it looks like it’s a little baseline says around the 10% number, but your net retentions in the 20s, the number of DAPT deals was up 100% year over year. There’s a lot of trending arguably higher. So can you talk about sort of the backdrop that’s put that baseline in for your forecasting? How conservative you think it is?

If there’s any externalities we should be thinking about as we think about next year?

Unnamed Executive, OptimizeRx: Hey, Rich, happy to talk about it. Good to hear your voice. Ed, maybe I’ll start and then pass it back to you.

Ed Selnick, Chief Financial Officer, OptimizeRx: Sure. Yes.

Unnamed Executive, OptimizeRx: So I think we were encouraged, Rich, by the start to the new year, we’re feeling very optimistic about what the year could look like. But as we talked about several weeks back during my interim period, we’re going to on the side of conservatism and go for a beat each time. So we’ll let the numbers speak for themselves. You’re right about the KPIs and how things are looking going forward. And I think we’re all encouraged by that, but it’s still early days for us.

And so we’re going to have a bias toward conservatism naturally and just let the numbers speak for themselves. But Ed, feel free to chime in and is there anything else you’d like to there?

Ed Selnick, Chief Financial Officer, OptimizeRx: I think you’ve covered it well, Steve. I would just say, look, I mean, out of the gates, our book of business is solid. We’re up 20% versus last year’s Q1, but there’s still a lot of wood to chop throughout the year. And obviously, the second half of the year is always our biggest two quarters. So we are optimistic, but we want to be cautious and want to make sure this year we actually deliver on what we are putting out there.

Unnamed Executive, OptimizeRx: Rich, the one thing I’d say to you just to sort of strengthen or sort of give a strong response to your question here is, we’ve not had this level of visibility in our business for a very long time to Ed’s earlier comment. So I think we’re all feeling encouraged about that, but we have committed to under promise and over deliver throughout the year. And so that will be the drumbeat you hear from us, but we’re off to a great start.

Richard Baldry, Analyst, Roth Capital: So I often think about companies when their net retention rates as strong as yours is, the customers are obviously pretty happy with what they have, the existing customers. So how does that translate to new client or new drug win rates? How do you think your pipeline for that looks? How those cadences sort of changed as dApps become more recognized in the market? Thanks.

Unnamed Executive, OptimizeRx: Great question. I’ll take it. And then Andy, if you wanted to chime in too. One of the things that was great about the fourth quarter for us was we did see a significant increase in new logos coming into the business and that was very encouraging. So net revenue retention looking great, new logos also looking very strong.

And one of the key learnings for us as a business was we saw that the DAP solution and other solutions that we have in the portfolio and the DTC solutions meet sort of several business needs that mid tier and smaller companies can’t afford to bring in house or do for themselves. And so they outsource a lot more of their thinking to companies like ours and that was radically beneficial. So we’re starting to see growth in the mid and small markets, which is super encouraging because as you know, Rich, the long tail is a massive opportunity that no one’s really addressing at this point. So great question. Andy, anything else you’d add to that?

Jared Haas, Analyst, William Blair: Yes, yes. While still fairly

Anderson Schock, Analyst, B. Riley: early days, I’d say we’re seeing some synergies with our sales team, stronger collaborations and that’s just fostering a better culture and driving more business. So again, still early. We’d like to see more of what we’ve been seeing over the last six months continue, but definitely optimistic.

Ed Selnick, Chief Financial Officer, OptimizeRx: Yes. Just one more thing to add to that. On external factors, I mean, a couple of years ago, we had a little hiccup with the FDA. Number of approvals dropped significantly. So we’re watching that very closely, especially with some of the things that are going on in Washington, D.

C. So far so good. In ’25, there’s about five approvals versus last year’s three approvals at the same time in the middle of the year. So as long as that number continues to kind of move that piece, pharma typically will be pretty pleased in terms of their portfolio health and the ability to get products to market. That’s one metric we’re watching very closely.

Richard Baldry, Analyst, Roth Capital: Great. Thanks and congrats on the new seats, Steve.

Unnamed Executive, OptimizeRx: Thanks, Rich. Appreciate the support.

Conference Call Operator: Our next question comes from Eric Martinuzzi with Lake Street. Our next question comes from David Grossman with Stifel. Please go ahead.

David Grossman, Analyst, Stifel: Good morning. Thank you. I know Steve you talked already a little bit about your migration to a subscription based model, but wondering if you could just explore that a little bit more and talk about, first, what compels the customer to migrate to a more of a subscription versus a transactional model? And I guess, how does this potentially flow into other parts of the business maybe that are more transactional in nature now, but could actually convert to subscription based businesses down the

Unnamed Executive, OptimizeRx: road? David, great to hear your voice. Yes, so if you think about our historical business, it was largely transactional based because we were delivering or have been and continue to deliver messages, whether it’s point of care or on the DTC front via the DSP. And that’ll still be a large component of the business. The pieces that have evolved over the last, I would say, thirty six months are really the DAPT components, which is mobilization of data.

So thinking about finding patients and physicians and mobilizing that data to be able to deliver those messages based off of that information. And that’s a growing part of our business. As Ed said, it went from 10%, fifteen % to now a little bit over 30% of our business. And that lends itself to being naturally subscription because clients are looking for regular real time updates to where those patients and where those physicians are. So they’re not looking to buy at a single point in time, have a stale list and then have to buy it again twelve months down the road.

So the frequency of that information being updated real time is a major value driver within the market. And that applies both to DTC and to HCP, so both components of our business. And we’re confident that that growth rate will continue. And that’s why we’re seeing kind of that reoccurring or subscription revenue start to grow, which is I think very encouraging for this business. The transactional components of message delivery, those won’t be subscriptive.

Those will continue to be transactional. That’s the nature of how that business operates. But a good component of the growth will now come from audience creation within our business.

David Grossman, Analyst, Stifel: And is there any material difference in the customer acquisition costs for the data component versus the transactional component, anything to think about there?

Unnamed Executive, OptimizeRx: No material difference at all. It’s the same conversation, same call points, same sales team that’s doing it. So customer acquisition is exactly the same. And in fact, the Adapt deals that we’ve done, a good component of each of those DAP deals has been that audience, has been that dynamic audience in addition to the transactional stuff. So we’re already now twenty four, probably thirty six months into that transition.

David Grossman, Analyst, Stifel: Right. And then just on the I know this was asked earlier about the revenue retention rate. Is there something in the 2020 I’m trying to remember something in the 2024 number that impacts that so that 2025 will not necessarily be a good comp to that. Just trying to remember whether that number is kind of artificially high and maybe we should expect it at least from a modeling perspective to come down a little bit on a year over year basis.

Anderson Schock, Analyst, B. Riley: Are you talking about yes, sorry, are you talking about the upfront portion of DAP revenue as far as the model fee? C. So I don’t think that’s going to be as pronounced in 2025 as it was in 2024. There’s definitely still be some of that going on, but it won’t be as pronounced.

David Grossman, Analyst, Stifel: Okay. Andy, can you give us a better sense of how to think about revenue retention in 2025 just as we think about building our models?

Anderson Schock, Analyst, B. Riley: Net revenue retention? Yes. Yes. I would say we’re targeting 100% for the year. Our revenue growth at $100,000,000 just under 10%, right?

So typically we see, call it, between 520% of our business coming from new logos. So, yes, we’re targeting 100%.

David Grossman, Analyst, Stifel: Great. All right, guys. Thank you and

Unnamed Executive, OptimizeRx: good luck. Thanks, David. Appreciate the situation.

Ed Selnick, Chief Financial Officer, OptimizeRx: Thank you.

Conference Call Operator: Now, our next question comes from Eric Martinuzzi with Lake Street. Please go ahead.

Anderson Schock, Analyst, B. Riley: Yes. Just curious regarding the administration of the medics business. One of

Jared Haas, Analyst, William Blair: the issues that the company

Anderson Schock, Analyst, B. Riley: had faced in 2024 was a shift on the amount of managed services, so customers going from managed service to self-service. I was wondering where we are in that transition. Have most of the large exposures been handled there or are we still kind of midstream?

Steve Silvestro, Chief Executive Officer, OptimizeRx: Hey, Eric, great to hear from you. Thanks for

Unnamed Executive, OptimizeRx: the question. Yes, luckily, we are through that transition of managed service. There’s still a very small component of the business for Medex that would that has some revenue attached to managed service, but it’s de minimis. What we can share also is that notwithstanding that kind of one time hit last year of the adjustment for managed service, the other solutions in that portfolio are growing very nicely. And specifically, the audience component of that business is what’s showing the most growth and that’s obviously our highest margin best profile solution.

So very much in line with kind of the guidance in the direction that we’ve shared on the call today.

Anderson Schock, Analyst, B. Riley: Got it. Thanks for taking my question.

Unnamed Executive, OptimizeRx: Absolutely. Great to hear from you.

Conference Call Operator: Our next question comes from Jeff Garo with Stephens Inc. Please go ahead.

Jeff Garo, Analyst, Stephens Inc.: Yes, good morning guys. Thanks for taking the questions. And Steve, let me chime in as well with congrats on the new and permanent role. And I want to hit on the margin outlook embedded in the guidance and maybe we can break that down to gross margin and OpEx. On the gross margin front, curious if there’s any kind of changes in product mix you would call out.

It seems like it should continue to trend favorably with the emphasis on the data subscriptions, but wanted to check-in there. And on the OpEx front, Steve, any incremental OpEx investment to really push that customer centricity that you were speaking about earlier? Thanks.

Unnamed Executive, OptimizeRx: Thanks, Jeff. Appreciate the question. I’ll ask Ed to go ahead and comment.

Ed Selnick, Chief Financial Officer, OptimizeRx: Yes. So as far as margin breakdown is concerned, we don’t guide at the gross margin level, but you can probably figure out that we’re going to be in the low to mid-sixty percent range and that increases as the year goes on, mainly due to mix. As the year goes on, we get more and more new DAP deals in and those generate higher margins for us. As far as bottom line is concerned, the same thing is highly leveraged whole business model. So we are guiding to kind of at least $12,000,000 in adjusted EBITDA.

The first quarter or two typically are on the low side and then we start to ramp up pretty aggressively on the back end of the year.

Jeff Garo, Analyst, Stephens Inc.: Got it. That helps. And And then I want to ask one on the competitive environment. We saw early here in 2025 a competitor added to its direct to consumer capabilities. So I wanted to check-in whether you’re seeing any impact from them or others mirroring your strategy of combining HCP and DTC approaches or any other changes to the competitive environment including on that data subscription side that’s gained momentum of late?

Thanks.

Unnamed Executive, OptimizeRx: Yes. Thanks, Jeff. The competitive environment is definitely interesting. I mean, with the DTC acquisition of the DTC business in addition to our business, it brought a whole sort of different component of competition that we’re dealing with, which I think is obviously welcome. And it also has given us a good sort of landing pad for learning in terms of where we have opportunities to bring the HCP and DTC business together to compete more effectively.

We still remain the only business out there that’s able to bring HCP and DTC together at scale with a proprietary network. And so as we said in the script, we really have we’re pretty sanguine on our position in terms of our competitive advantage in that area and ability to scale. I think I’ll give a shout out to our Chief Product and Technology Officer, Doug Besch, who’s done a wonderful job of bringing those audiences together. And that’s the data component that we’ve been kind of talking about throughout this call. And when you start to bring those together and deliver those succinctly to the same client, there’s obviously revenue synergy, there’s growth opportunity, there’s larger subscription growth specifically.

And it just creates a much better recurring business and a stronger foothold within our existing client base. I think we’re all encouraged by what we’re seeing there and feel pretty confident that we’re in a good position to beat the competition. And we’ll continue to be humble about it and lean in, see how we go, Jeff, but we’re feeling pretty strong.

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

Unnamed Executive, OptimizeRx: You got it. Thank you for the questions.

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

Unnamed Executive, OptimizeRx: Thank you, operator. And once again, thank you everyone for joining us on today’s call. Even though these remain early days and still relatively nascent industry, we believe that our business model, solutions and tech platform are responding to and meaningfully addressing customers’ needs. As it stands today, our synchronized HCP and DTC marketing capabilities, which are based on brand eligibility signals coupled with expanded functionality that includes micro neighborhood targeting that delivers hyper local privacy patient and HCP audiences is widening the competitive mode against our competitors. The remainder of the year will be extremely focused on increased customer utilization of GAAP and of establishing consistent recurring revenue component to our business as we convert our customers to subscription based model as we drive towards becoming a Rule of 40 company.

We believe these initiatives will be transformative and are critical to our efforts to drive shareholder value creation. Thank you for your time today and I look forward to our next quarter’s earnings call as well as meeting with more of you at the upcoming conferences throughout the year. Have a fantastic rest of your day. Operator, please proceed with OptimizerX’s safe harbor statement.

Conference Call Operator: Thank you, sir. Before we conclude today’s call, I would like to provide the company’s safe harbor statement that includes important cautions regarding forward looking statements made during today’s call. Statements made by management during today’s call may contain forward looking statements with the definition of Section 27A in the Securities Act of 1933 as amended and Section 21E of the Securities Act of 1934 as amended. These forward looking statements should not be used to make investment decisions. The words anticipate, estimate, expect, possible, and seeking and similar expressions 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, converting more customers to our reoccurring model, becoming a rule of 40 company, unlocking new opportunities for profitable revenue growth, our plans to make our revenue streams more predictable, plans to drive substantial operating leverage, estimated twenty twenty five revenue and adjusted EBITDA range, estimation of total addressable market size, market penetration, revenue growth, gross margin, operating expenses, profitability, cash flow, technology, investments, growth opportunities, acquisitions 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 risks 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 record networks and other material risks. 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 ks for the year ended 12/31/2023, and in other filings the company has made and may make with the SEC in the future. These filings, when made, are available on the company’s website and on the SEC website at sec.gov. Before we end today’s conference, I would like to remind everyone that an audio conference call will be available for replay starting later this evening running through for a year on the Investors 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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