OptimizeRx Corporation

Good afternoon, everyone, and thank you for joining OptimizeRx's third quarter fiscal 2022 earnings discussion. With us today is the Chief Executive Officer of OptimizeRx, Will Fevo. He is joined by Company Chief Financial and Operating Officer, Ed Stallmark, Chief Commercial Officer, Steve Silvestro, General Counsel and Chief Compliance Officer, Marion Odins Ford, and Senior Vice President of Corporate Finance, Andrew DaSilva. At the conclusion of today's earnings call, I will provide some important cautions regarding the forward-looking statements made by management during today's call. I would like to remind everyone that today's call is being recorded. and will be made available for replay via webcast. Instructions are included in today's press release and in the investors section of the company's website. Now with that, I'd like to turn the call over to OptimizeRx CEO, William Febo. Sir, please go ahead.

Thank you, Operator. Good afternoon, everyone. Thank you for joining our third quarter fiscal 2022 earnings call. Our third quarter results were in line with our expectations, and as a result, we are maintaining our guidance for the year. We are optimistic that the macro headwinds outlined on our last call will begin to subside in 2023 and are seeing several positive signs. For example, the bandwidth issues at the FDA, which impacted not all new drug approvals this year, appear to be improving with the majority of vacant positions having been backfilled and the FDA increasing the rate of approvals over the last two months. Furthermore, while the great resignation increased average employee turnover across the life science industry, which resulted in substantial changes with key decision makers, the rate of turnover appears to be slowing and should eventually return to normalized levels. Finally, we mentioned longer sales cycles tied to our shift toward participating in larger, more complex programs with our pharma clients. As a reminder, these AI-enabled real-world evidence deals represent multimillion-dollar per-brand opportunities and offer OPRX significant scalability. The closing of these deals naturally takes longer to complete given the increased number of stakeholders involved at the customer level. Despite these factors, we are seeing significant momentum off the mid-year trough that we believe should materially benefit the company in 2023. For example, we recently won two new real wood evidence contracts with top 20 pharma clients during the fourth quarter and have multimillion-dollar annual contract values. In addition, we renewed one of the first two RWE contracts we launched in 2021, and that client expanded its scope to an additional indication and is interested in further expanding across multiple oncology grants. We are in late-stage discussions to renew the second RWE contract from last year and also have numerous additional opportunities in our pipeline with multimillion-dollar ACVs. We are confident that we are gaining traction with this very important growth driver and believe it aligns extremely well with the digital trends across the life sciences industry. With pharma manufacturers moving a greater percentage of their commercial spend toward omni-channel digital solutions while looking for those solutions to deliver more impactful results. by not only identifying patients known to HCPs, but also pinpointing new patients for their therapies. We believe smarter solutions, such as OptimizeRx's RWE, will capture the lion's share of the pharma spend, particularly with legacy commercial dollars that are reallocated to digital. With that said, we expect we'll have at least six RWE deals running during the first half of 2023. with many more in the hopper and believe just executing on the RWE opportunity we have in front of us today would position us to grow our top line by over 20% in 2023. Meanwhile, on the product side, we continue to drive significant value creation on behalf of our customers. helping them increase the ROI seen by their commercial teams by providing unique physician and consumer platforms and strategies which help patients afford and adhere to their treatment regimens. We recently highlighted one of those implementations with a top 20 pharma customer. The analysis detailed the success of our real-world evidence solution in identifying HCPs with patients at risk of non-adherence due to an unexpected cost. Our RWE solution was a key in assisting doctors and patients navigating coverage gaps. Through the application of machine learning and artificial intelligence to real-world data, our RWE solution was able to accurately predict HTPs with at-risk patients in real time. And the results speak for themselves as the program drove more than 200% growth over the manufacturer's initial number of HCPs identified with at-risk patients, over 46,000 incremental scripts among HCPs receiving affordability information and financial resources for their patients, and more than 6 to 1 ROI on the manufacturer's investment in the program, while 27% of the HCPs identified and targeted for the affordability information program enrolled a patient for the first time. In a different case study for another top 20 manufacturer, which analyzed results over a 12-month period, we demonstrated the effectiveness of our RWE solution in identifying patients that required specialty therapy within a very narrow timeframe from diagnosis. With our proprietary technology, we are able to collect, sort, and make sense of information to directly identify providers who would likely have a patient suitable for this therapy and notify those providers of those patients in a timely and efficient way. We delivered extraordinary results for our manufacturing partner while reducing the complexity in the care delivery system for healthcare providers and their patients. Results included a 23% increase in patients commencing the therapy per healthcare provider, with 33% of the new patients from the targeted HCPs having been identified by the model. Meanwhile, we continue to strengthen our channel network and recently renewed our exclusive partnership with Nucro, which is now a subsidiary of Therapy Grants and a leading electronic prescribing service trusted by hundreds of EHRs nationwide. Nucrop offers HCPs a seamless e-prescribing experience within the EHR workflow. The expansion of this alliance showcases our leadership in contextual point-of-care HCP messaging as we consistently leverage an increasing number of touchpoints throughout the patient journey with our best-in-class platform. Finally, I would like to reiterate that we continue to be at the nexus of a significant systemic shift within the life science industry. where a substantial portion of pharma's existing commercial spend is expected to rapidly migrate to sophisticated, strong ROI solutions. And I believe our platform, technologies, and best-in-class team are poised to capture a significant market share in the coming years. That positions us for strong, profitable growth. And with that, I'd like to turn the call over to our CFO and COO, Ed Selmack, who will walk us through the financial details for Q3. Ed?

Thanks, Will, and good afternoon, everyone. As with all our calls, the press release was issued with results of our third quarter and the September 30th, 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 10Q, which will be filed in the coming days. Turning to our financial results for the third quarter of 2022, our reported revenue for the period was $15.1 million, a decrease of 6% over the $16.1 million from the same period in 2021. The decreased revenue was tied to the macro factors we'll discuss, which we continue to believe are temporary in nature. Gross margin for the quarter increased from 56.3% in the year-ago period to 62.4% in the quarter ending September 30th, 2022, due to a favorable solution and network partner mix. As we have highlighted in the previous earning calls, we have seen 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 third quarter of 2022, we are reiterating our guidance, which calls for revenue to come in between $62 and $68 million for the year, and gross margin between 59% and 62%. Our operating expenses increased to approximately $13.2 million for the third quarter of 2022, as compared to approximately $9 million in the same year-ago period. The increase in expense is primarily due to the investment in and expansion of the OptimizeRx team to enable future growth, which also includes our April acquisition of EventsMed. Providing more cover around our year-over-year increase in APEX, nearly three-quarters of the $4.1 million total increase was tied to non-cash expenses, with the remaining amount being primarily related to the EventsMed acquisition. We expect our cash-based APEX run rate for the fourth quarter of the year to stay relatively consistent with Q3 2022. We had a gap net loss of $3.5 million in the third quarter of fiscal 2022 as compared to net income of $0.04 million during the same period in 2021. For further details, please refer to the MD&A section of our forthcoming 10Q. On a non-gap basis, the net income for the third quarter of 2022 was approximately $1.3 million or $0.07 per fully diluted share as compared to non-GAAP net income of approximately $1.6 million or $0.09 per fully diluted share in the same year-ago period. We also generated $7.9 million in cash flow from operations for the first nine months of 2022 and $3.5 million during the third quarter. Our balance sheet remains strong with cash, cash equivalents, and short-term investments totaling $78.8 million as of September 30, 2022, as compared to $87.4 million as of June 30, 2022. The sequential decline in our cash, cash equivalents, and short-term investments was tied to our buyback. As a reminder, we announced a $20 million share repurchase program during the second quarter, And during the third quarter, we have bought back 693,000 shares for $12.2 million at an average price of $17.66. In total, we have purchased 1.1 million shares year-to-date at an average price of $16.70 per share and have 1.5 million remaining for repurchase under the Buy Back program. This amounts to nearly 6% reduction in our shares outstanding, which now stands at 17.2 million, which we view as a positive outcome for shareholders. We believe our strong balance sheet and cash flow favorably position us to further expand our business solution offerings and drive profitable growth. We do not anticipate the need to raise additional capital in the short or long term for operating purposes, or to fund our organic growth plans. We are focused on growing our revenue and partner network. However, as a company in the market that is active with merger and acquisition activity, we may have opportunities such as for acquisitions or strategic partner relationships, which may require additional capital. We will assess these opportunities as they arise with the view of maximizing shareholder value. Now, I'd like to turn to the company's KPIs that we introduced this past February to 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 came in at 2.2 million at the end of the third quarter of 2022 versus 2.5 million in the year-ago period. This is largely due to the delay in the renewal of one of our initial RWE contracts that Will referenced in his prepared remarks, and the addition of one new top 20 manufacturer over the last 12 months, which is still very early in their life cycle with us. We continue to maintain a meaningful presence with 19 of the top 20 largest pharma companies, which represents the better part of the industry's commercial spend. Our third quarter of 2022 net revenue retention came in at 96%, a reduction versus the second quarter of 2022, driven by this year's slower revenue growth. Meanwhile, our operating model continues to demonstrate significant capability for leverageable growth with revenue per full-time employee at $619,000 for the third quarter of 2022. We continue to stay ahead of the technology industry PAC average of approximately 500,000 per FTE, further demonstrating the strength of our operating model. Our KPIs illustrate the state of our business in an effective and transparent fashion, and we plan on continuing to communicate them as a way of keeping our stakeholders informed and connected to the underlying trends and dynamics of our business. This wraps up the discussion of our financial results. And now I'd like to turn the call back over to Will. Will? Thank you, Ed.