OptimizeRx Corporation

Greetings. Welcome to OptimizeRx Corporation's first quarter 2022 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Will Febo. Thank you. You may begin.

Thank you, Operator. Hi, everyone. Good afternoon, and thank you for joining OptimizeRx for our first call of the new fiscal year. Our mission remains to stay ahead of healthcare's rapidly evolving digital transformation, building a more informed and empowered healthcare community by developing new technology solutions that help people start and stay on life-impacting therapies. In executing our operating strategy, we have the privilege of serving doctors and patients at the point of care but also enabling our pharma clients' digital engagement and connectivity at a time when the need could not be greater. Our technology solutions and market-leading HCP network are a pragmatic choice for our clients who are looking for strong digital connection to their end markets. The technology platform that we have built is incredibly powerful, especially when married with a large healthcare provider network. The connectivity we have to point of care is very valuable to our clients, doctors, and patients as the epicenter of care delivery and digital enablement. We are seeing more and more conversation with our clients and network partners, which expand beyond communication at the point of care and grant us a seat at the table for strategic initiatives that could drive significant incremental revenue opportunities. Before moving on, I want everyone to know we understand the markets have been tumultuous. As an investor in the business myself, I believe it's important to delve into some high-level fundamentals so everyone understands our position and why I'm more excited and bullish on our business than ever before. First off, nearly 80% of our business comes from the 20 largest pharma manufacturers. Our clients remain in strong financial position today and have performed remarkably well throughout the pandemic. In addition, pharma is continuing to innovate and grow while transforming its operating model by dismantling legacy commercial infrastructure and reallocating significant resources towards digital solutions. You don't need to look very hard to see clear evidence of this, as many of the industry's bellwethers have highlighted this move in their press releases and investor presentations in recent months. and have added new members to their C-suite, making this a strategic priority for their companies. On top of that, we've positioned our business for resilience to win even in an economic downturn. We have a pristine balance sheet, are generating meaningful operating cash flow, and have a profitable trailing 12 months adjusted EBITDA that has significantly outpaced our year-over-year revenue growth. This is rare error for digital health. particularly for companies with sub $1 billion market caps. And it positions us to capitalize on multiple M&A targets and other accretive strategic opportunities at better valuations with less shareholder dilution than before. We remain steadfast in our objective and disciplined when examining targets. We are extraordinarily selective in order to ensure that our M&A strategy stays consistent with our long-term vision of being a leading tech-enabled partner for the life science industry while maintaining significant scalability. Finally, like most successful disruptive innovation adoption cycles, we are following the S-curve trajectory and are in the very early stages of the inflection point for pharma's transition. We have been consistent in our approach of building higher value solutions to support our land and expand strategy. Our KPIs, which Ed will discuss in more detail, capture this well and will continue to provide transparency as we execute our objectives. Our business continues to operate outside current macro headwinds that are impacting the labor market, interest rates, and the supply chains of many industries. This is resulting in improved visibility and positioning us to maintain a strong growth trajectory well beyond 2022. When coupled with our strong balance sheet and scalable infrastructure, This affords us the opportunity to act nimbly and strategically as we continue to serve patients, healthcare providers, and our clients. Therefore, one of our highlights from this first quarter was the launch of our most expansive enterprise program to date, which consisted of a therapy initiation program for a new anti-inflammatory biologic brand from the top 10 pharma manufacturer. We are proud to be a key partner for our client in addressing patient therapy initiation challenges for this specialty drug launch. I have been more involved personally at high levels with our clients as they assess how to advance their digital strategies in the commercialization process. While building our current platform and network was complex and took many years, we will continue to develop solutions which set us apart from the other technologies seeking to support physician and patients at point of care. The elegant design of our technology allows for beneficial life science engagement with physicians and patients, supporting care while simultaneously sustaining a connected care experience for patients. It ensures our clients reach the point of care where critical medical decisions are being made. Pharma manufacturers are now well aware that having direct, uninterrupted access to point of care as part of their commercial toolkit is imperative. as events like COVID-19 pandemic can completely shut down traditional commercial activities at sites of care. The limitations and constraints created by COVID-19 have propelled the industry's estimated digital spend to increase from approximately $4 billion in 2019 to above $10 billion currently. In order to maximize our ability to capitalize on these megatrends, we have consistently made targeted investments to position ourselves as the premier technology partner to our clients. These investments continue to strengthen our platform and have laid the foundation for continued scalable growth. From a sequential perspective, we are carrying over the momentum of fiscal 2021, growing our partnerships with 95% of the top 20 largest pharma manufacturers. Our land and expand strategy remains key to unlocking revenue generation as we continue to win more of our clients' brands. as well as upcoming brands that can also benefit from our enterprise solutions. As we forge ahead, our operating strategy continues to center around three basic tenets of growth, which are having the right team at the helm to execute our initiatives, remaining focused on enhancing our solutions and digital enablement capabilities, and offering increasing strategic value to our clients. We continue to enhance our platform capabilities with the keen emphasis on our artificial intelligence and data-centric solutions. The cutting-edge science behind our proprietary algorithms positions us well to focus more on our key markets. And speaking of key markets, we are also excited to note the completion of our acquisition of EventsNet, which serves to further enable us with core markets, such as specialty medications, to enhance our organic growth trajectories. This strategic asset purchase expands the reach of our point-of-care solutions in order to simplify the prescribing process for specialty medications for healthcare providers, enabling greater access and faster time to therapy for patients. We are simplifying the prescribing process for specialty products by automating manual steps to determine drug eligibility and affordability across OptimizeRx's intelligent network. which currently connects over 60% of the US healthcare providers and millions of patients. Full integration of events med technology assets will advance our ability to help patients start and stay on therapy while also improving our margins and increasing our addressable market. As mentioned prior, this capability has shown to be valuable to life science companies, particularly those with specialty brands where early intervention can be the deciding factor and whether a patient will have a positive health outcome. While specialty drugs only account for roughly 2% of the total prescription volume in the US, they represent nearly 50% of the total pharmacy spend, which was roughly $219 billion in 2019, which is why we've chosen to focus heavily on this market. The cost and increasing use of specialty medications have exposed unique barriers to the prescription and patient access process. Although manufacturing support programs provide much needed services to aid in prescription medication process, access, affordability, and adherence, a recent survey found that 20% of patients were aware of such programs. Doctors and their staff are well positioned to assist patients with program enrollment. However, this process is currently a significant pain point for them, often resulting in delays in the patient's time to treatment. We are working diligently to simplify this process for the doctors and their staff. As we continue to see an accelerated growth in specialty and oncology medications, we are seeing increased demand for our enterprise solution. We are also seeing growing opportunities with the increase in therapies being developed for niche, rare, or orphan diseases. Discussions with clients continue to elevate in nature, requiring engagement from senior executives and strategic decision makers. There is also growing demand for our real-world evidence solution, which clients are using to find and communicate with specific physicians whose patients may qualify for their therapies. The predictive nature of this AI-driven solution, combined with its integration across our network, is a game-changing tool for our clients. It assists them in reaching hard-to-find patient populations, predicting affordability challenges, and illuminating early indicators of non-adherence in patients. Looking back at the 12-month KPIs, it only makes sense that we continue to capture industry white space. As we deepen our relationship across our clients' brands, we are generating more revenue per top manufacturer while also improving revenue per full-time employee as our platform has been built to optimize its scalability. For our clients, the end results are both quantifiable and compelling. Client ROI remains high at 13 to 1 against their spend. Now, before I pass the call to add, I want to mention the release of our first environmental, social, and governance report. The effort to measure, benchmark, and improve OptimizeRx as a good corporate citizen is led by our General Counsel and Chief Compliance Officer, Marion Odins-Ford. We've aligned our mission and goals with the stakeholder capitalism metrics of the World Economic Forum to demonstrate our commitment to long-term, sustainable value creation. that embraces the broader demands of people and planet. This is a mantra for our entire organization has adopted and continues to champion. And now with that, I'd like to turn the call over to our CFO and COO, Ed Stalmach, who will walk us through the financial details for Q1. Ed.

Thanks, Will, and good afternoon, everyone. As with all our calls, a press release was issued with the results of our first quarter ended March 31st, 2022. A copy is available for viewing and may be downloaded from the investor relations section of our website. Additional information can be obtained through our forthcoming thank you, which will be filed in the coming days. Turning to our financial results for the period. Our revenue for the quarter was $13.7 million, an increase of 22% over the $11.2 million from the same period in 2021. The increased revenue resulted from growth in sales in our messaging and access solutions. Our gross margin increased from 55% in the quarter ended March 31st, 2021, and 59% in quarter ended March 31st, 2022, as a result of solution and network partner mix. Generally, there has been an increase in the percentage of activity flowing through channels with more favorable economics when compared to a year ago. Given our performance in the first quarter of 2022, we are reiterating our guidance, which calls for revenue to come in between 80 and 85 million for the year, and gross margins between 57 and 60%. Our operating expenses increased from 6.8 million for the three months ended March 31, 2021, to 11.9 million during the first quarter of 2022. This increase in expense is primarily due to the investment and expansion of the OptimizerX team to enable future growth. 2.5 million of the year-over-year increase was tied to stock-based compensation, a non-cash expense. With a net loss of 3.8 million, or 21 cents per basic and fully diluted share, the three months ended March 31, 2022. As compared to a net loss of 0.6 million, during the same period in 2021. Overall, the increase in net loss resulted from significant investments made in our people and technology infrastructure to support future growth. On a non-GAAP basis, our net loss for the first quarter of 2022 was $98,000 for one cent per basic and fully diluted share outstanding. As compared to a non-GAAP net income of $596,000, or $0.04 per basic and $0.03 per fully diluted share outstanding in the same year goal period. Now, turning to our balance sheet. Cash and cash equivalents totaled $89 million on March 31, 2022, compared to $84.7 million on December 31, 2021. We plan to use these funds to further expand our business and accelerate revenue growth. Now I'd like to turn to the company's KPIs that we introduced this past February, which provide transparency as well as quantifiable metrics that can be used to continue to communicate our story as our business grows and matures. Our average revenue per top 20 pharmaceutical manufacturer grew year over year by 20% to $2.5 million in 2022, despite adding two new top 20 customers over the last 12 months, which are still early in the relationship life cycle with us. Growth here was primarily the result of our focus on signing larger and more comprehensive deals and through supporting additional brands as we continue to gain ground with now 19 of the top 20 largest pharma companies in the world, which again represents the lion's share of the industry's commercial spend. In addition, our ability to create tangible value for our clients as well as growing demand for our solutions is reflected in our net revenue retention rate of 124% for the first quarter of 2022. Our operating model continues to demonstrate significant capability for leverageable growth with revenues per full-time employee at $733,000 for the first quarter of 2022, which represents a 16% year over year improvement on what was already an industry leading metric and a testament to the team we have built in our ability to act minimally in an ever-evolving macro environment. We will continue to report on these KPIs on a regular basis throughout the year to ensure open and transparent communication with our shareholders. And now with that, I would like to turn the call back over to Will. Will?