Earnings call transcript Q2 2023

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Operator

Good afternoon, everyone. And thank you for joining OptimizeRx’s Second Quarter Fiscal 2023 Earnings Discussion. With us today is the Chief Executive Officer of OptimizeRx, William Febbo. He is joined by company Chief Financial Officer, Ed Stelmakh; Chief Commercial Officer, Steve Silvestro; General Counsel and Chief Compliance Officer; Marion Odence-Ford; and Senior Vice President of Corporate Finance, Andrew D’Silva.

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. remind be today’s via made to recorded is webcast like will and available would everyone call that being only. I for replay the company’s included section are in press and Instructions today’s of website. in the release Investors

Now OptimizeRx please William to call CEO, like I Febbo. to would ahead. the over turn go Sir,

William Febbo

thank for our second afternoon earnings call Good you everyone quarter and joining today.

and industry quarter’s unprecedented change While seeing in adoption we are their are solutions. results, disappointed we tech-enabled of digital with the pharma marketing the in

out post the coming piloting heavy basic pharma clients. making within now saw look as phase are We We many of decision COVID the firsthand partners. for and with scalable this has they slowed

delays are a solutions. for higher their demand driven models, We evaluating product and data marketing

Despite this, we remain excited business. about our

on digital legal our review. future second QX, optimizing care. In half the on more marketing medical, and needing saw clients health time laser-focused revenue into of we resources for due regulatory We push the in are to

are our While delays as indicator. are they view not we a frustrating today's at negative them and stage, and do environment typical impact in

the future which we confidence believe will offerings, are the our growth core today, up mentioned headwinds it calls. us previous have solid into where We and to past in we get on built drive we as

growth those today, are believe of through to half address in we access the many with best areas we opportunity. positioned customer as Our how of for optimize customers to from we on which on for clients prospects journey. patient experimenting position XXXX. XXXX and are our seen We've buy new plan to based us identified second we and them engagement solutions digital their partnered alongside We've those,

the awareness a partners clients, market. strong presence among our We have and and

and and with non-GAAP top spend as shareholder are able Our an even than you when will you effectively review balance to net line expected, limit lighter income. the post were breakeven numbers, And we see terrific. sheet base

continuing by our leverage and additional very to and want channels focused solid, future. clients is on technology we're team our the expand Our to delighting clients with into

market out dynamic this address we and do and bigger. stronger how come So

enablement With which on of the seen of rely crowded to pivots roll-up market. strategy, a and connectivity COVID, skyrocketed. patients response, the distracted has physicians we've rapid and rush is start-ups, In and company digital

our As ago. a to community. of with their transparency result, effect clients six has are a level The even point decision-making of compounding the months for been and higher care looking and pharma reach than this within as spending slowdown of in a dynamic return

we with as are in we view peers, we While will this digital around effect Pharma forefront have will will areas of resources one deploy we our to alone we preferred get partners. subside not our the through of remain and among majority believe XXXX. pharma we commercialization clearer seeing of our needs, To overwhelming of believe revenues. be the at partners our ensure we the those will the a client the

the run be of second the first In the which expense during quarter we rate based we OpEx at half run by on XX%, XXXX. also least reduce going cash rate into our would had of will XXXX XXXX,

Our focus our for renewed out to innovation to our on build platform with to scaling will attention continue closer core. and our be clients

in growth-oriented acquire it will helps emphasis year-over-year is climbing. patients. technology part which XXX% be and seen growth, we most our and AI-enabled the platform on differentiated our which primary is and of our forward, healthcare pharma This one have Going onboard still business,

enabling doctors an directing care. and part to the keep science it face towards we of intend RWD.AI life business our at ago, expectations Three years organizations is shifting of that We efforts of by the engage that customer in to best way launched that solution, markets point performing.

digital results incorporate channel producing beyond our go year expanded already omnichannel excellent data solution and care-focused is AI a the which health have to accommodate that to point-of-care sources to alongside platform, for media our traditional mass integrated, truly clients. a build this We RWD

to We pharma will have top clients engaged back get pipeline here, a growth. in which us

three Recall, closed years deals we market AI we offering in QX, have this over than in three our this clients. with started we been longer anyone additional ago, In the space. meaning

streamline valuable connections journey changes between patient enables along and wins dynamic the of of providers to to the and and importantly, precise still engagement machine More doctors, scale data to This sets our alike. interpret of a are use rapid at to drive customer adoption industry the for patients for digest, manufacturers. customers and decision-making of the and massive engagement indicative AI learning patients

We infusion to approach. customer see marketing the into scrutiny continued and expect of data new

proprietary have support of better a care. alongside own engaging We that together AI data, and methods patent the here bring stakeholders our point-of-care clinical of both experience health to in putting with data at years care head pending start

as the We at engagement are web playing digital social the such company for provider-focused best even positioned point-of-care. traditional and pharma media to field and between the

As be we scale, agile efforts. data-driven with marketing help their we clients and will our

that time firmly these nascent the of a all we term, of the in implication While right very changes but AI commercialization growing space point-of-care. relates in believe as are at short it at movement have we to the right

between million. in remains differences long-term our aside closing $XX the term, per the of spring. we Our from approximately nearly pipeline active deals currently and unchanged In and the remains update healthy, trajectory origination worth contracted as enterprise have deals, proposals XX very of our near

very as our we that new disposal. differentiate connectivity path We AI point-of-care competitors forward have our from ourselves their don't about our at alongside are excited

business X entrants. where believe market-leading area that ahead is segment an with become our being true engagement years the next We partner are X new AI-driven We are circle will best choosing transforming in clients. come a practice full to of to we industry the where market growth focus will of the standard and we on and our the fastest

Ed? us that, through the with Ed walk over financial to will turn COO, our and who like QX. I'd Now details to call for the CFO Stelmakh,

Edward Stelmakh

Thanks Will.

with As additional Investor A the XX-Q. of obtained downward website with was XXXX. quarter ended our all can press of forthcoming through second be our information be XX, section release and viewing for is June and Relations available our results calls, our copy from issued the may the

end programs. quarter our was ended was including from delayed of in generated gross partner ended XX.X% $XX.X the previous The the XXXX, June gross slightly mix, our decreased due was XX, XX.X% and June annual a quarter to lower due in and decrease XX, margin we've period channel our quarter from primarily guidance the the below revenue impact decrease $XX XXXX. date. million The the in decrease range. XXXX, solutions Second Meanwhile, of to to revenue slight RWD.AI decisions million, approval in same in macro program headwinds margin in

to from year XX% dynamics, these adjusting Given gross we range of margin XX% range new for XX%. a to our to are the XX%

or period million Our share X per operating months compared $X.X X in the in expenses XXXX same fully million months and $XX.X relatively versus We million the remained ended the XXXX. as million period loss loss XX, $X.XX for for XXXX. June and XX, consistent for diluted to net during same had June basic XXXX, year-over-year in at ended of net came $XX.X of $X.X a the a

and of loss $X.X per ago in basic $X.XX net outstanding to for fully million million a compared basic diluted diluted share year for the fully non-GAAP net $X.X and basis, or the or a as same quarter XXXX period. $X.XX On share income of second was non-GAAP

over Operating by P&L which came and amortized to million loss our cash impacted the the on being flow a in our paid quarter partners, $X.X for integration was contract. of of are at the fees materially upfront channel life

million $XX.X repurchase and to remained equivalents we the program, balance compared the to share June Our back December XXXX, strong quarter. of million The due was sheet on which with and bought totaling $XX.X XXXX. on majority during of million cash for to common $X.X XX, stock our $XXX,XXX shares XX, cash decline

our against We us sheet business remain well our in while growth. further believe profitable balance and to positions capitalized growth core strategy to our invest driving execute

that growth In to outlook. when more we remain at actively attractive priorities We confident year. looking in M&A strategic within addition, our opportunities fit long-term our valuations are compared last at

conditions, market revenue to low revising given to However, full are XXXX in come our mid-$XX current million $XX we range. between the projections year million

applications built opportunities. reasonable Our for new new upsells program mid-year backlog launch is and existing range around

turn is stable manufacturer quarter compared work which prior their XXXX, of COVID-XX sales largely XX the million the in we stabilized KPIs don't XX have $X continue companies largest world top to vaccines. the our with have of to to when second that top of pharmaceutical let's top per at to for the of pharma quarter. the Now as XX Average majority tied XXX% and XX revenue the

XX% showing revenue from XX% in rate is Net QX at retention XXXX. improvement

below slightly XXXX. FTE in QX New while $XXX,XXX, per came revenues $XX,XXX in at

we much market are metrics quarterly in As see signs continue you our our stability cases, through show sequential dynamics. way from as of to some external the and KPIs, our work to can starting improvements

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

William Febbo

Great, go to operator, let's Q&A.

Operator

[Operator you Instructions] of ahead. the Blair. comes from Daniels Ryan first from Your Thank line question Please go William

Ryan Daniels

pushing bit specifically, areas and guidance you the reduction, can at regarding outlook. issue, reviews a of is those did macro weakness, business which to the out, update. detail taking for you Thanks for legal a timing the business into X Will, and the medical lower how noncore questions more [Ph] are go contribute which look little headwinds the if highlighted, each the we then

William Febbo

X/X voice. Yes, spread say it's pretty I evenly. Good X/X, Ryan. your Yes. out Thanks, about X/X, to would hear

space. as the say We you noncore, On about the just impactful, relative access that's the It's On evolving think to inside the represent but medical said, had review, I disruption an Like there's engagement. they some just X/X current frustrating it's had -- to space. and of also revenue. I -- And our well yes, would part non-core of about less some and there. new not obviously, legal the adjustment. pieces, when XX% it's we other dynamic than it's patient

not you is is that the got yourself are miss team this X there. luckily, pretty put impactful. you've pipeline solid. focused slight So together it. base And and as on clients The the but But

can to we be back, not of I this So bring conservative. we in it some And but think market, enough. want

Ryan Daniels

a tonight. variables Okay. new we less And of the biggest think remainder here still of if provided in kind range than the have for of months now the We're broad pretty then you year? sitting are and range left, the you X what

hit to the things towards So need or the and range that miss would that what some of provided? upper you get are lower you to end of

William Febbo

attention -- and physicians reach that. a patients. as exists, but recent it's down, for given dying my or some really comment down. decision as I The things let two things, think I'll dying the there's to Steve We is still two that It and think in Ed come strategy piece We're and our swifter noise of positioned to mind the focus just AI are to we're the of well. making. well

connection want a We nice believe world, anything lot which of the media those landing expanding of to some we've Ed, dollars also to obviously Steve, got else continued a you manages the into dollars. capture pads that? have to add agency and

Edward Stelmakh

Yes, Ryan.

couple So things just a to mention. of

as of were go the to really range book the between kind bank. in XX% So right as commitments the signed and now XX% ends for far and

XX% So still year we XX% between is have for our and outstanding. revenue the that of basically total

in So opportunities pipeline to that current we we've feel RP fill season expected well got gap. enough as as state for in the

Ryan Daniels

what's going expense then the XX% that? a line quarter start be the with good workforce more in But growing queue. a And talk bottom driving refocus Thanks. that have despite keeping to little the that the operating again? of in Obviously, bit it color is this last in fact that? be operating expenses revenue what one, in a products? about it despite expenses. going Is you'll mix. Okay. on efforts kind Is specific Just reduction When hop I'll on Is check line restructuring? you to to the there go-to-market control just

William Febbo

Yes, Ryan.

our people that a So love team, and is obviously, comes first. we entire this business, and

not, in past we're to we're very any always to move into working not statistically the it on have we'll But So then strong really decisions very hone well. it. focus and And look to responsible is of going been will something sunset going business. rush if what's with and were part that

think up we're off combination on hiring, of right? I that built it the attrition to sort so, to And and was we're shift core just focus business We're this a into going going to today. going hold some of the have

that. if But good want you take emphasize very And in all there. to to we're do will get rush you those a up, a think things I again, to not it. approach I add handling very, we

Operator

Thank Please from you. next And Sean comes the RBC of your Dodge question line ahead. Capital go from Markets.

Sean Dodge

brings think all ones, us can detail total maybe you The the another or you X which similar to X deal, is of you How RWD should you've any they entail? won Will, give they they first mentioned how ramp? X Thanks. and to I there X new to could the more start sense those signed, big when dissimilar are be what on now. some

William Febbo

I'm going Thanks Steve to Steve. ask to Sure. that one. Silvestro answer

Stephen Silvestro

Good Sean. hear to Happy hear to you. Yes. from

X terms market in as of of all bringing similar And terms So ahead to earlier be a function. as that yes, we They that think executing. setup deals, follow all far composition. of in up are structure of pretty space this anyone Will well. good where, say I call, would compete we're heard the you something very which execution sort are consistent a The similar is accomplishment size-wise, to trying is actually of in pretty to in deals sort they're

manufacturers, probably things sort the Sean states generated we meaning with supporting efforts. ROIs, those disease several to within work last think, you out kind where did early we think one of the the I the gives opportunities. of of and I noteworthy is for here and other that year team that manufacturers on the the work same we've in good an I assets manufacturers idea prior would based call that's performance are did the of that same And future other expanded of

understand that market it through lot heard solution, I now to more a XX you've You've to to get starting rapid it and a MLRs talked it's XX RWD.AI see through, pharma and already we're to cross-sell, about. would talk it's our in had Will able bit to us But was little for the now months pretty adoption, heard extremely for last, novel exciting. be to the which say, about upsell a took

Sean Dodge

are guidance? run And then, assumption kind guess pretty quickly that And then Or I when type these out expected any deals relative Is active those active the to there approaching that how it has are renew what just kind is RWD.AI ones just are past? the handicapping now, you the the within of these Great. things the of are still any case the in Okay. of been they that to renew and renewal? assuming or year? handling you that some some of comes existing that of don't?

Stephen Silvestro

Yes. I can.

William Febbo

ahead, Great. Steve. Yes. Go Go ahead.

Stephen Silvestro

perform, sticky. have, reason the patient build. because an is -- audience, the creating is work meaning there's are that why when identifying a a then these of they execution you. for And just profile, we've that What Sean, that functions Thank seen, goes you're these to doing are the all very solutions basically on. we easy those most the it's manufacturer And into carry

with Will as is on say our both view into on factored current thinking been you've heard, the our We've renewals So optimistic. very been -- guidance. guidance. and It's I'd conservative we've that

specific optimistic at I think But we're with to on pretty covers very reason this be business and front. are looking positive the every it. have of line about what we also that RWA our

Sean Dodge

the for Thank questions. you Okay, guys taking great.

Stephen Silvestro

Thanks, Sean.

Operator

comes Instructions] question [Operator Eric ahead. Street. Martinuzzi your of you. And the from Thank Lake line go Please from next

Eric Martinuzzi

the to QX front guidance to that Yes, year, guidance. the that wanted I'm at the we half million for year, versus up about looking the roughly million we've in it's to which XXs, here I would focus a low given done prior million be the like your with leading up? where $XX on I of down Or $XX know, the And $XX coming just we kind is get of mid-XXs $XX.X million, the be about across year. a traditional $XX back should the big model QX it million quarters? of flat that more see $XX is it prudent a, thinking seasonality QX? million, Will million to step across of don't the across two and How $XX we the half

William Febbo

one? that Ed, do you want take to

Edward Stelmakh

Yes, sure. seeing seasonality different. past, you used the Yes, I say, would in nothing you

far for as are we We to us XX% concerned. as being as conservative, right is now range the before, said commitments are XX%

plan, exceed and time. of least hopefully our at guidance to this is hit So course,

Eric Martinuzzi

you I it so just -- and to for I and numbers, so round number $XX.X you less Okay. -- if not delivered in understood looking $XX.X sure I mean, referred let's with QX than that round Will take and as noncore was, start or thought when QX I'm stream XX.X% And we what then million. the was sorry guys now XX%, million

You're less $XX.X saying is that million? that noncore than million $X.X of

William Febbo

referenced. as Yes. noncore I the to the things break we miss mean, MLR contribute well did that we don't just out, but the as

Eric Martinuzzi

Okay. percent revenue And a the RWD.AI. then an RWD.AI? given on number saw Have the I on you actual

William Febbo

that of to the and and yet. value AI get doctor be stickiest, combination that have the of But by to to as the we going what's model That's the as best really actually fine-tune proposition, closer differentiator out our broken most the it's We client, It's be driven margin. It's we'll not that. key value a patient. enterprise. this for the

we very tricky. are, perfect the we you'll application the working and that's two But data we've AI the get patients So find about and apply through our health see quarters, for actually actually When it it's obviously, we'll clients get that when that is need. your fine-tune you're in connected end to and you of because machine at we sets platform locations the day, the more help way as care, on to learning -- try the are it's endlessly. these all read with next they more

more that. we're more yes, So on and focused going to get

team partners market clients and because I the we've with I is that's good and now years being I just a working for, our This on to As do data at opportunistic a the of three been said, as something in providers. years, want not here. referenced working we're the got couple really think

all tech-enabled. set So that's that's really a unique skill

about get specific about couple over But So Eric, we'll that, it. of excited we're the quarters. more next very

Eric Martinuzzi

Got Thanks taking for my it. questions.

William Febbo

Eric. Thanks,

Operator

Thank ahead. Securities. of your go the comes Chatterji Riley you. And from Neil next B. line question Please from

Unidentified Analyst

William Neil on today. for for Hi, is [Ph] Thanks this the questions. taking

of you shaped the second deals could kind RW throughout any things curious XQ if for these how then sort XXXX. of we expected half? expect on additional up of the Just provide how should and for cadence color And in

William Febbo

We're with see in, of is discussions strategic part and the I'll in Steve. RFP year I'll kicking start, season and where XXXX. of a around lot then clients that

now the been between encouraging. has part of a RWD.AI So I'll the anticipate end planning but the let we And day very lot going of a specific wouldn't on. that today. Steve closings big of in and But disease lot talk year, trench

Stephen Silvestro

Yes or where of forth. crossing William, the just exactly question. drug for be. good thanks we're can I discussions can for franchises support months? are season XX to having And And positive it it's places those support where now portfolio oncology so what of they of most support strategic you the we're RFP having an are right Yes, the manufacturer hey the to conversations that said, portfolio that's It's side think three incredibly months conversations larger of immunology and Will in are were this entire to you six the to entire and not the now.

implemented a the parts executives It's where of have is organization. think really based feels we've like on piece when that manufacturers and you to the of angelizing one solution strong in the most and a the program solutions the results. good cases, good I terms pretty tailwind other within we've in of RWD.AI support gotten other C-level C-level done also a

and And good things to set will fully a next really terms part of deploying up up programs second us XXXX half that first successful a the anticipate year. in of so, in year and we then running getting

Unidentified Analyst

extra Appreciate color additional Got there. last that One one it. one.

new you the quarter. same headwinds quarter, that half? of of XX, into had expecting And drove basically on might headwinds? during what second do macro mitigate macro the continue level to of sort You be the XX mentioned headwinds strategies we that second impacting the we do we in the terms XX and have weakness originally any expect those to second

William Febbo

Yes.

That's on manufacturing you'd dollars, -- we're a specialty still XXXX still an in look, terms while companies, XXXX that's see not the we're think, other real year marketing the behind headwind. people they LinkedIn, be to people medications industry not just jump opposite if for focused doing you seeing approvals everybody and to that's -- FDA these anything, I pay at growing companies if also attention level. of the you're in seeing may

disruption So there's still there.

the through of But then about. RFP headwinds talked obviously, noise think I that exciting issue addressing the way down is and the start in -- to this and the and is the stickier we But part going subside noise market on we've I just of the think what's really is the to season to growth really where double what's business most are working is.

simplifying focused across see think an the the by that, that, board. in by doing just on I productivity entire team uptick we'll

tuned about on focused. We're very stay and So that. we're it, excited pretty

Unidentified Analyst

Got you jump in questions taking Thanks. queue. the it. and I’ll my Appreciate back

William Febbo

Thank you.

Operator

questions time. I [Operator Instructions] As you. closing this we will further for have over to comments. at Thank no call the Febbo Mr. now turn

William Febbo

thank And on joining operator. call everyone you, the Thank you for us today.

remain active through work these near-term disruptions, we we in Pharma's digital needs. addressing As

have With growth the and are pharma will than $XX quarters. pharma continuing trends as the disrupted coming the at fortifying digital TAM subside spend for point-of-care over towards that We to billion AI-powered that hope we our historical in our engagement position complete the most next working partner grow, the marketplace. greater digital current

reverse proactive efforts business are to we return its headwinds Lastly, growth our to current historical results very and due in being our to trajectory.

announce but entrusted the shareholders. with are very today, to been end, aggressively which greatly as the proposition in we by accretive are shoulder alternatives in responsibilities to we an the of market. to strategic so We for value addition this we hunting long our have obvious makes active one. Nothing are To assets decision the stakeholders to aware our

to with quarter earnings prior We third investors call. also additional have plan our communication to

look say like I'd Bye-bye. talking to to you to soon. that, thanks, I forward and With

Operator

sir. you, Thank

to the statement today's with by may forward-looking that call the during Statements safe to XXA call, definition includes statements management Securities such and Section identify should Before we forward-looking investment during statements as amended today's statements. statements would only forward-looking are made amended. today's Act made not possible be the XXXX These that company's as of may and used important contain speak seeking and We make of word regarding The expect, of of anticipate go estimate, like made. expressions Section XXE the harbor call. the similar XXXX decisions. to Securities forward-looking I statements Act to cautions and provide date

Such in margin, of call, acquisitions, revenue market health raising adoption the regarding addressable platform. operating growth, additional market flow, including rest forward-looking capital. and company's statements this estimation of include statements profitability, expectations total cash penetration, year for expenses, gross upcoming need opportunities, size, for They announcements technology, the also the digital of investments, and management's growth the the

undertakes events The publicly information, future or whether or because company new obligation statements, otherwise. update no forward-looking revise any of to

forward-looking Forward-looking risks The statements which which by to those competition not subject quantified. in, results from uncertainties statements. effect other Future risks. the statements and to are be uncertainties to could limited are of forward-looking or predicted are subject contemplated but these inherently events forth not regulation, material some or cannot and set risks include, materially differ government and actual and to, underlying of

form results Form December is the This and XXXX. the Risks at website could business XX-K on affect on included ended are statements and website and which to subject annual company's company's sec.gov. available the on to in XX, the are forward-looking uncertainties report financial for quarter SEC

replay refer the later for through webcast like that running replay press release starting will call remind would I company's instructions via everyone today's to for evening this website to only, end available for this www.optimizerx.com. today's a we via at available conference, year. be Please Before

This today's call. Thank you concludes today. conference for joining us

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OptimizeRx (OPRX) 14 Aug 232023 Q2 Earnings call transcript