OptimizeRx Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

OptimizeRx Corp (Nasdaq: OPRX) reported its Q2 2024 financial results, highlighting significant growth despite some challenges. Revenue increased by 36% year-over-year to $18.8 million, while gross profit surged 50% to $11.7 million with a gross margin of 62%. The company secured eight new DAAP deals in Q2. However, GAAP net loss remained at $(4.0) million, slightly improved from $(4.1) million in Q2 2023. Non-GAAP net income was $0.3 million, or $0.02 per diluted share, compared to a non-GAAP net loss of $(0.2) million, or $(0.01) per diluted share, in the year-ago period. Adjusted EBITDA turned positive at $0.5 million from $(0.8) million. Cash holdings increased to $15.0 million as of June 30, 2024. The company reiterated its 2024 guidance for revenue of at least $100 million and Adjusted EBITDA of $11 million. Notable was a timing issue with a $6 million DAAP deal that impacted expected revenues.

Positive

• Revenue increased by 36% to $18.8 million year-over-year.
• Gross profit rose 50% to $11.7 million.
• Gross margin was 62%, indicating strong profitability.
• Non-GAAP net income of $0.3 million, compared to a loss in Q2 2023.
• Adjusted EBITDA was $0.5 million, up from $(0.8) million.
• Cash and short-term investments totaled $15.0 million, up from $13.9 million.
• Secured eight DAAP deals in Q2.
• Reiterated 2024 guidance: revenue of at least $100 million and Adjusted EBITDA of $11 million.

Negative

• GAAP net loss remained high at $(4.0) million.
• Revenue fell short of expectations due to a delay in closing a major $6 million DAAP deal.

Financial Analyst

OptimizeRx's Q2 2024 results show mixed performance. While revenue grew 36% year-over-year to $18.8 million, it fell short of expectations due to a timing issue with a large DAAP deal. However, gross profit increased 50% to $11.7 million, with an improved gross margin of 62%.

The company's focus on DAAP (Digital Awareness and Activation Programs) is yielding results, with 8 new deals won in Q2. The revenue concentration among top clients is notable, with the top 3 pharma clients generating an average of $9.7 million compared to $2.7 million for the top 20. This suggests strong adoption of OptimizeRx's solutions by key accounts.

Despite the revenue miss, OptimizeRx maintained its 2024 guidance of at least $100 million in revenue and $11 million in Adjusted EBITDA. The company's ability to meet these targets will depend on successfully closing pending DAAP deals and expanding adoption across its client base.

Market Research Analyst

OptimizeRx's Q2 results highlight the growing importance of digital solutions in pharmaceutical marketing. The company's DAAP offering is gaining traction, evidenced by the 8 new deals and strong adoption among top clients. This aligns with the industry trend of pharma companies shifting budgets towards more targeted, data-driven engagement strategies.

The revenue retention rate of 124% is impressive, indicating strong customer satisfaction and upselling opportunities. However, the delay in closing a major DAAP deal underscores the complexity of sales cycles in the pharma industry, especially for innovative solutions that require multiple approvals.

The increase in revenue per average full-time employee from $565,000 to $658,000 suggests improving operational efficiency. As OptimizeRx continues to scale its DAAP offerings, maintaining this efficiency while managing growth will be important for long-term profitability.

–   Q2 revenue of $18.8 million, increasing 36% year-over-year
–   Q2 gross profit increased 50% year-over-year to $11.7 million with a gross margin of 62%
–   Won 8 DAAP deals during Q2

WALTHAM, Mass., Aug. 08, 2024 (GLOBE NEWSWIRE) -- OptimizeRx Corp. (the “Company”) (Nasdaq: OPRX), the leading provider of healthcare technology solutions helping life sciences companies reach and engage healthcare professionals (HCPs) and patients, reported results for the three months ended June 30, 2024. Quarterly comparisons are to the same year-ago period.

Financial Highlights

• Revenue in the second quarter of 2024 increased 36% to $18.8 million, as compared to $13.8 million in the same year ago period.
• Gross profit in the second quarter of 2024 increased 50% year-over-year to $11.7 million, from $7.8 million during the second quarter of 2023.
• GAAP net loss totaled $(4.0) million or $(0.22) per basic and diluted share in the second quarter, as compared to $(4.1) million or $(0.24) during the second quarter of 2023.
• Non-GAAP net income in the second quarter totaled $0.3 million, or $0.02 per diluted share, as compared to non-GAAP net loss of $(0.2) million or $(0.01) per diluted share during the second quarter of 2023 (see definition of these non-GAAP measures and reconciliation to GAAP below).
• Adjusted EBITDA for the second quarter of 2024 came in at $0.5 million compared to $(0.8) million in the same year ago period (see definition of this non-GAAP measure and reconciliation to GAAP below).
• Cash, cash equivalents and short-term investments totaled $15.0 million as of June 30, 2024 as compared to $13.9 million as of December 31, 2023.

Will Febbo, OptimizeRx CEO commented, “In the second quarter, revenue came in short of our expectations and consensus midpoint while adjusted EBITDA came in above consensus. This was primarily a result of a timing issue with closing one of our largest DAAP deals. We are having success in converting our DAAP pipeline into closed deals; however, because DAAP is a new, innovative solution in the market, there are additional approvals at the pharma customer level required to close out all the items that would allow us to take the revenue in the quarter. To be more specific, one of our long-standing customers committed to moving forward with an approximately $6 million multi-brand DAAP program that was due to launch in the second quarter of 2024 and got slightly delayed in their internal approval process. Without this delay, I believe we would have exceeded consensus expectations both on the top and bottom lines."

"In the meantime, we've observed a significant distinction among our top 3 pharma clients, with an average revenue per client at approximately $9.7 million, compared to an average revenue of $2.7 million for our top 20 pharma clients. This highlights the value our top clients see in our DAAP solutions, as they continue to allocate larger portions of their commercial budgets to OptimizeRx. The strong performance with our top 3 customers signals robust market adoption of our evolving solutions, which we are leveraging across other accounts."

Key Performance Indicators (KPIs)*	Rolling Twelve Months Ended 6/30/2024				Rolling Twelve Months Ended 6/30/2023
	(in thousands, except percentages)
Average revenue per top 20 pharmaceutical manufacturer	$	2,699			$	1,804
Percent of top 20 pharmaceutical manufacturers that are customers		100	%			100	%
Top 20 pharmaceutical manufacturers as percent of total net revenues		65	%			59	%
Net revenue retention		124	%			89	%
Revenue per averages full-time employee (FTE)	$	658			$	565

2024 Financial Outlook

For the full year 2024, the Company is reiterating its 2024 guidance and expects revenue to be at least $100 million with an Adjusted EBITDA of at least $11 million.

Conference Call

Date:        Thursday, August 8, 2024
Time:        4:30 p.m. Eastern Time (1:30 p.m. Pacific Time)
Toll Free:        1-800-343-4849
International:        1-203-518-9848
Conference ID:        "OPRXQ2"
Webcast:        https://viavid.webcasts.com/starthere.jsp?ei=1679004&tp_key=4b22d66114

Definition and Use of Non-GAAP Financial Measures

This earnings release includes a presentation of non-GAAP net loss and non-GAAP net loss per diluted share or non-GAAP EPS, and Adjusted EBITDA, all of which are non-GAAP financial measures.

The Company defines non-GAAP net loss as GAAP net loss with an adjustment, as applicable, to add back depreciation, amortization, amortization of debt issuance costs, stock-based compensation, acquisition expenses, severance expenses, income or loss related to the fair value of contingent consideration, gain or loss from the disposal of a business, asset impairment charges, other income (loss), and deferred income taxes. Non-GAAP EPS is defined as non-GAAP net loss divided by the number of weighted average shares outstanding on a diluted basis. Adjusted EBITDA is defined as GAAP net loss with an adjustment, as applicable, to add back depreciation, amortization, interest, stock-based compensation, acquisition expenses, severance expenses, income or loss related to the fair value of contingent consideration, gain or loss from the disposal of a business, asset impairment charges, other income (loss), and deferred income taxes. The Company has provided non-GAAP financial measures to aid investors in better understanding its performance. Management believes that these non-GAAP financial measures provide additional insight into the operations and cash flow of the Company.

Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a Company’s non-cash operating expenses, management believes that providing non-GAAP financial measures that exclude non-cash expenses allows for meaningful comparisons between the Company’s business operating results and those of other companies, as well as provides an important tool for financial and operational decision making and for evaluating the Company’s business operating results over different periods of time.

The Company’s non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate such non-GAAP financial results differently. The Company’s non-GAAP net loss, non-GAAP EPS and Adjusted EBITDA are not measurements of financial performance under GAAP and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. The Company does not consider these non-GAAP measures to be substitutes for or superior to the information provided by its GAAP financial results.

The table, “Reconciliation of Non-GAAP to GAAP Financial Measures,” included below, provides a reconciliation of Non-GAAP net (loss), Non-GAAP EPS and Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023. Although the Company provides guidance for Adjusted EBITDA, it is not able to provide guidance to the most directly comparable GAAP measures. Reconciliations for forward-looking figures would require unreasonable efforts at this time because of the uncertainty and variability of the nature and amount of certain components of various necessary GAAP components, including, for example, those related to compensation, acquisition expenses, amortization or others that may arise during the year, and the Company’s management believes such reconciliations would imply a degree of precision that would be confusing or misleading to investors. For the same reasons, the Company is unable to address the probable significance of the unavailable information.

Definition of Key Performance Indicators*
Top 20 pharmaceutical manufacturers: We have updated the definition of “top 20 pharmaceutical manufacturers” in our key performance indicators to be based upon Fierce Pharma’s most updated list of “The top 20 pharma companies by 2023 revenue”. We previously used “The top 20 pharma companies by 2022 revenue”. As a result of this change, prior periods have been restated for comparative purposes.

Net revenue retention: Net revenue retention is a comparison of revenue generated from all clients in the previous period to total revenue generated from the same clients in the following year (i.e., excludes new client relationships for the most recent year).

Revenue per average Full Time Employee: We define revenue per average full-time employee (FTE) as total revenue over the last 12 months (LTM) divided by the average number of employees over the LTM, which is calculated by taking our total number of FTEs at the end of the prior year period by our total FTE headcount at the end of the most recent.

About OptimizeRx
OptimizeRx provides best-in-class health technology that enables care-focused engagement between life sciences organizations, healthcare providers, and patients at critical junctures throughout the patient care journey. Connecting over 2 million U.S. healthcare providers and millions of their patients through an intelligent technology platform embedded within a proprietary digital point-of-care network, as well as mass digital communication channels, OptimizeRx helps life sciences organizations engage and support their customers.

For more information, follow the Company on Twitter, LinkedIn or visit www.optimizerx.com. 

Important Cautions Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipates”, “believes”, “estimates”, “expects”, “forecasts”, “intends”, “plans”, “projects”, “targets”, “designed”, “could”, “may”, “should”, “will” or other similar words and expressions are intended to identify these forward-looking statements. All statements that reflect the Company’s expectations, assumptions, projections, beliefs or opinions about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, statements relating to the Company’s growth, business plans, future performance. These forward-looking statements are based on the Company’s current expectations and assumptions regarding the Company’s business, the economy, and other future conditions. The Company disclaims any intention or obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise, except as required by applicable law. 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 the forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, the effect of government regulation, seasonal trends, our ability to maintain our contracts with electronic prescription platforms, competition, and other risks summarized in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, its subsequent Quarterly Reports on Form 10-Q, and its other filings with the Securities and Exchange Commission.

OptimizeRx Contact
Andy D’Silva, SVP Corporate Finance
adsilva@optimizerx.com

Investor Relations Contact
Ashley Robinson
LifeSci Advisors, LLC
arr@lifesciadvisors.com

OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands except share and per share data) (UNAUDITED)
	June 30, 2024				December 31, 2023
ASSETS
Current assets
Cash and cash equivalents	$	14,959			$	13,852
Accounts receivable, net		24,521				36,253
Taxes receivable		1,842				1,036
Prepaid expenses and other		4,647				3,190
Total current assets		45,969				54,331
Property and equipment, net		171				149
Other assets
Goodwill		78,357				78,357
Other intangibles, net		14,470				15,198
Tradename and customer relationships, net		33,003				34,198
Operating lease right of use assets, net		472				573
Security deposits and other assets		435				568
Total other assets		126,736				128,894
TOTAL ASSETS	$	172,876			$	183,374
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt	$	3,300			$	2,000
Accounts payable – trade		2,980				2,227
Accrued expenses		5,310				7,706
Revenue share payable		2,094				5,506
Taxes payable		—				49
Current portion of lease liabilities		219				222
Deferred revenue		1,053				172
Total current liabilities		14,956				17,881
Non-current liabilities
Long-term debt, net		32,296				34,231
Lease liabilities, net of current portion		271				371
Deferred tax liabilities, net		4,337				4,337
Total liabilities		51,860				56,821
Stockholders’ equity
Preferred stock, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding at June 30, 2024 or December 31, 2023		—				—
Common stock, $0.001 par value, 166,666,667 shares authorized, 20,061,907 and 19,899,679 shares issued at June 30, 2024 and December 31, 2023, respectively		20				20
Treasury stock, $0.001 par value, 1,741,397 shares held at June 30, 2024 and December 31, 2023.		(2	)			(2	)
Additional paid-in-capital		196,164				190,793
Accumulated deficit		(75,166	)			(64,258	)
Total stockholders’ equity		121,016				126,553
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	172,876			$	183,374

OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands except share and per share data) (UNAUDITED)
	For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Net revenue	$	18,812			$	13,818			$	38,502			$	26,821
Cost of revenues, exclusive of depreciation and amortization presented separately below		7,108				5,993				14,595				11,563
Gross profit		11,704				7,825				23,907				15,258
Operating expenses
General and administrative expenses		14,380				12,242				30,545				26,274
Depreciation and amortization		1,073				465				2,140				929
Total operating expenses		15,453				12,707				32,685				27,203
Loss from operations		(3,749	)			(4,882	)			(8,778	)			(11,945	)
Other income (expense)
Interest expense		(1,528	)			—				(3,074	)			—
Other income		75				—				75				—
Interest income		105				721				125				1,386
Total other income (expense), net		(1,347	)			721				(2,874	)			1,386
Loss before provision for income taxes		(5,097	)			(4,161	)			(11,652	)			(10,559	)
Expense (benefit) from income taxes		1,088				33				744				66
Net loss	$	(4,008	)		$	(4,128	)		$	(10,908	)		$	(10,493	)
Weighted average number of shares outstanding – basic		18,257,879				16,992,100				18,213,992				17,043,493
Weighted average number of shares outstanding – diluted		18,257,879				16,992,100				18,213,922				17,043,493
Loss per share – basic	$	(0.22	)		$	(0.24	)		$	(0.60	)		$	(0.62	)
Loss per share – diluted	$	(0.22	)		$	(0.24	)		$	(0.60	)		$	(0.62	)

OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (UNAUDITED)
	For the Six Months Ended June 30,
		2024				2023
OPERATING ACTIVITIES:
Net loss	$	(10,908	)		$	(10,493	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		2,140				929
Stock-based compensation		5,926				7,884
Increase in bad debt reserve		132				239
Amortization of debt issuance costs		365				—
Changes in:
Accounts receivable		11,600				3,635
Prepaid expenses and other assets		(1,457	)			(1,772	)
Accounts payable		752				(732	)
Revenue share payable		(3,412	)			(1,269	)
Accrued expenses and other liabilities		(2,264	)			(1,097	)
Taxes payable		(855	)			—
Deferred revenue		881				287
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		2,900				(2,389	)
INVESTING ACTIVITIES:
Purchase of property and equipment		(77	)			(49	)
Purchases of held-to-maturity investments		—				(109,501	)
Redemptions of held-to-maturity investments		—				112,501
Acquisition of intangible assets, including intellectual property rights		—				(3	)
Capitalized software development costs		(162	)			(1,274	)
NET CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES		(239	)			1,674
FINANCING ACTIVITIES:
Cash paid for employee withholding taxes related to the vesting of restricted stock units		(555	)			(244	)
Proceeds from exercise of stock options		—				145
Repurchase of common stock		—				(7,522	)
Repayment of long-term debt		(1,000	)			—
NET CASH USED IN FINANCING ACTIVITIES		(1,555	)			(7,621	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		1,106				(8,335	)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD		13,852				18,209
CASH AND CASH EQUIVALENTS - END OF PERIOD	$	14,958			$	9,874
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest	$	2,710			$	—
Cash paid for income taxes	$	110			$	—

OPTIMIZERX CORPORATION RECONCILIATION of GAAP to NON-GAAP FINANCIAL MEASURES (in thousands, except share and per share data) (UNAUDITED)
	For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Net loss	$	(4,008	)		$	(4,128	)		$	(10,908	)		$	(10,493	)
Depreciation and amortization		1,073				465				2,140				929
Stock-based compensation		2,903				3,503				5,926				7,884
Severance expenses		241				—				660				—
Other Income		(75	)			—				(75	)			—
Amortization of debt issuance costs		182				—				365				—
Acquisition expenses		—				—				243				—
Non-GAAP net income (loss)	$	316			$	(160	)		$	(1,649	)		$	(1,681	)
Non-GAAP net income (loss) per share
Diluted	$	0.02			$	(0.01	)		$	(0.09	)		$	(0.10	)
Weighted average shares outstanding:
Diluted		18,358,543				16,992,100				18,213,922				17,043,793

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
		2024				2023				2024				2023
Net loss	$	(4,008	)		$	(4,128	)		$	(10,908	)		$	(10,493	)
Depreciation and amortization		1,073				465				2,140				929
Expense (benefit) from income taxes		(1,088	)			33				(744	)			66
Stock-based compensation		2,903				3,503				5,926				7,884
Severance expenses		241				—				660				—
Acquisition expenses		—				—				243				—
Other Income		(75	)			—				(75	)			—
Interest (income) expense, net		1,422				(721	)			2,949				(1,386	)
Adjusted EBITDA	$	468			$	(848	)		$	191			$	(3,000	)

FAQ

What were OptimizeRx's Q2 2024 revenue results?

OptimizeRx reported Q2 2024 revenue of $18.8 million, a 36% increase year-over-year.

How did OptimizeRx's gross profit perform in Q2 2024?

OptimizeRx's gross profit increased 50% to $11.7 million in Q2 2024.

What was OptimizeRx's net income in Q2 2024?

OptimizeRx reported a GAAP net loss of $(4.0) million and a non-GAAP net income of $0.3 million in Q2 2024.

What was OptimizeRx's Adjusted EBITDA for Q2 2024?

Adjusted EBITDA for Q2 2024 was $0.5 million, up from $(0.8) million in the previous year.

What guidance did OptimizeRx provide for 2024?

OptimizeRx reiterated its 2024 guidance, expecting revenue of at least $100 million and Adjusted EBITDA of $11 million.

How many DAAP deals did OptimizeRx secure in Q2 2024?

OptimizeRx secured eight DAAP deals during Q2 2024.

What was the impact of the delayed DAAP deal on OptimizeRx's revenue?

A delayed $6 million multi-brand DAAP program affected OptimizeRx's Q2 2024 revenue expectations.