OptimizeRx Corporation

Good afternoon, everyone, and thank you for joining OptimizeRx's first quarter fiscal 2026 earnings conference call. With us today is Chief Executive Officer Stephen Silvestro. He is joined by Chief Financial and Strategy Officer Edward Silmak, Chief Legal and Administrative Officer Ariane Odense-Ford, and Chief Business Officer 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 investment 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. Now, I would like to turn the call over to Optimize RMX CEO, Steven Silvestro. Mr. Silvestro, please go ahead.

Thank you, Operator, and good afternoon to everyone joining us for today's first quarter 2026 earnings call. We delivered a solid start to the year, which exceeded consensus estimates on the top and bottom line. Revenue for the first quarter was 19.8 million and adjusted EBITDA was 3.3 million. While we're pleased with our performance in the quarter, the broader healthcare technology operating environment continues to evolve. We're seeing ongoing softness in our contracted revenue base relative to prior year levels, largely driven by what appears to be short to intermediate term disruption from last year's most favored nation pricing dynamics and other macroeconomic factors, which are resulting in more cautious budget allocations, contract durations, and in some cases, the delaying of campaign timing and scope. That said, we want to be clear, we do not view these pressures to endure. In fact, we've made good progress with several large manufacturers at this point, getting spend levels back up, and the issue is more limited in scope than it previously was. The long-term shift within life sciences toward digital data-driven engagement is accelerating, and OptimizerX is well-positioned to capitalize on this growth. Moreover, we continue to see encouraging signs of long-term adoption and expansion by our customers. Our AI-enabled DAP solution grew 60% in the first quarter, which highlights continued product market fit and customer adoption. In addition, another one of our top pharmaceutical clients has continued to broaden its use of point-of-prescribe solutions across multiple oncology brands. What began as targeted engagement within specific indications has evolved into a scaled multi-brand deployment driven by measurable improvements in prescriber engagement and campaign performance. This type of expansion underscores our ability to grow within large enterprise accounts. We are seeing similar momentum in MedTech, where we are driving increased adoption of DAP to identify and activate high-value prescriber audiences. Initial pilot programs are expanding into multi-million-dollar engagements, further reinforcing the repeatability of our growth model. From an operational standpoint, our business remains very strong as we continue to see consistent validation of our platform across both pharma and medtech customers. At the same time, we are expanding our presence with mid-tier and long-tail life science companies, which we believe represent a significant and under-penetrated growth opportunity for OptimizeRx. We are also making continued progress in shifting a greater portion of our revenue mix towards subscription-based models, particularly within DAP. Tied to our AI-enabled DAP solution, which showed growth in the first quarter, our DAP subscription revenue also grew by 45%. This transition is an important step in improving revenue visibility and building a more durable and predictable financial model over time. Despite seeing measurable growth within our business, macro headwinds are still present, and we have less visibility on our full year, Given this, we are updating our full year 2026 guidance to reflect a more conservative revenue outlook. We now expect revenue to be in the range of 95 to $100 million. Importantly, we're maintaining our adjusted EBITDA guidance of 21 million to 25 million. This reflects both the strength of our operating model and the proactive cost optimization initiatives we have implemented. We've taken steps to align our cost structure with the current environment by prioritizing strategic investments, optimizing discretionary spend, deploying new agentic technology tools within our own business for better efficiency, and leveraging the scalability of our largely fixed cost platform. These actions are expected to reduce cash operating expenses by approximately $3 million on an annualized basis, including savings of approximately $1 million in 2026 for an in-year benefit, excluding any severance-related impacts. In addition, our gross margin optimization initiatives are continuing to deliver positive results, and we now expect full-year gross margin to be in the high 60% range. We've also strengthened our financial position through the recent refinancing of our term loan. Ed will provide more details later in our presentation, but suffice it to say that the new term loan is expected to lower our interest expense by approximately 625 basis points. We want to thank Blue Torch for being a good partner over the last two years. As we recently announced, we continue to take the important steps to expand our platform capabilities and connectivity into the broader ecosystem. We are now enabling demand-side platforms that control more than 80% of digital promotional dollars to connect directly into OptimizerX proprietary EHR network. This technical evolution of our platform and expansion in our go-to-market strategy marks a significant opportunity for the business, and we anticipate it will drive outsized growth through the planning season and into 2027. Providing programmatic access to DSPs through our network enables media buyers to activate scalable point-of-care and point-of-prescribed campaigns within their existing programmatic workflows, effectively positioning OptimizeRx as a supply-side platform for marketers looking to engage healthcare providers directly within the clinical workflow. Today, we estimate that we are utilizing less than 10% of our available inventory across the network through traditional HCP marketing initiatives. We believe programmatic activation, the preferred way for pharma media agencies to buy these solutions, has the potential to significantly increase utilization over time. Given that programmatic has captured the majority of media spend across other verticals, we see a meaningful opportunity for this channel to scale and potentially become comparable in size to our current HCP business over the long term. As the question has been raised before, I want to briefly address artificial intelligence and reiterate that we do not view AI as a disruptor to our business. Rather, we see it as a potential accelerant. As our customers realize efficiencies in areas like content creation, we expect those savings to be redeployed into execution and engagement, areas where OptimizeRx is particularly well positioned. Finally, while we are navigating short-term pressures, our core value proposition remains unchanged, and our long-term outlook remains highly optimistic. We are deeply embedded in our customers' workflows, We're delivering both meaningful and measurable ROI, and we are operating in a large, dynamic, and growing market with significant long-term opportunities. And with that, I'd like to turn the time over to our CFSO, Ed Stelmack, who will walk us through the financial details. Ed?

Thanks, Steve, and good afternoon, everyone. As with all our calls, a press release was issued this afternoon with results of our first quarter ended March 31, 2026. A copy is available for viewing and may be downloaded from the Investor License section of our website, and additional information can be obtained through our forthcoming 10Q. First quarter 2026 revenue was $19.8 million, a decrease of 10% from the $21.9 million we recognized during the same period in 2025. We believe this decrease was driven in part by a decline in low-margin managed services revenue, revenue reduction on a major client account, and a more cautious budget allocation and shorter program duration commitments driven by most favored nations' pricing and other macroeconomic challenges. Our expenses for the quarter ended March 31, 2026, decreased $4.6 million year-over-year, primarily driven by a lower cost of revenue, and G&A. The decrease in cost of revenue was related to a favorable product mix, as we didn't have any DTC managed service revenue this quarter, as well as favorable channel partner mix. We believe various margin optimization strategies we implemented over the last 12 months continue to yield significant benefits. As a result, we now expect gross margins to normalize into the highest 60% range for the full year, 2026. GAAP net loss narrowed to 0.5 million, or $0.03, for basic and diluted share for the three months ended March 31st, 2026, as compared to a net loss of 2.2 million, or $0.12, for basic and diluted share for the three months during the same period in 2025. On a non-GAAP basis, the company's net income for the first quarter of 2026 increased to 2.7 million or 14 cents per diluted share as compared to a non-GAAP net income of 1.5 million or 8 cents per diluted share in the same year-ago period. Meanwhile, our adjusted EBITDA increased to 3.3 million for the quarter compared to 1.5 million during the first quarter of 2025. Operating cash flow came in at a negative 0.5 million for the first quarter, which was primarily due to the payout of 2025 bonuses and fourth quarter 2025 sales commissions during the first quarter of 2026. Meanwhile, our cash balance at the end of the quarter was 20.2 million compared to $23.4 million on December 31, 2025. Our debt balance at the end of the first quarter was $23.6 million, and we paid off $2.7 million of principal during the first quarter. Meanwhile, subsequent to the first quarter, our term loan with Blue Tours Capital was refinanced with Fifth Third Bank, through which we have a fully-drawn $25 million term loan and have access to a $10 million revolver. The current interest rate on the term loan with Fifth Third Bank is SOFR plus 2.25% versus SOFR plus 8.5% because of Blue Tour's capital, which represents approximately $1.5 million in annual interest expense savings. With that said, given our strong working capital position, we are confident in our ability to fund our operating needs as well as key strategic priorities as we continue to strive to become a sustained rule of 40 company. Now let's turn to our KPIs for the first quarter of 2026. Average revenue per top 20 pharmaceutical manufacturer now stands at approximately 2.8 million, with these top 20 companies representing 52% of our business in Q1, 2026. Net revenue retention rate remains a strong 110%. Meanwhile, revenue per FTE came in at 801,000, topping the 710,000 we had posted in Q1, 2025. These metrics reflect the stickiness of our solutions with existing accounts, as well as our highly leverageable operating model. As Steve mentioned, despite seeing measurable growth within our business, macro headwinds are still present, and we have less visibility on our full year. Given this, and as Steve stated before, we're updating our full year 2026 guidance to reflect a more conservative revenue outlook. We now expect revenue to be in the range of 95 to 100 million, but continue to believe our operating leverage will result in our adjusted EBITDA being between 21 and 25 million. Finally, we continue to expect revenue to be weighted toward the second half of the year at close to 40-60 split. Now with that, I would like to turn the call back over to Steve. Steve?