Q2 2022 OPTIMIZERx Corp Earnings Call
[music].
Good afternoon, everyone and thank you for joining optimize Rx is second quarter of fiscal 2022 earnings discussion.
With us today is the Chief Executive Officer optimize Rx William said, though he is joined by the company's Chief Financial Officer, Ed Stelmach.
<unk> commercial officer, Steve So that's true General Counsel and Chief compliance Officer, Marianne <unk> Senior Vice President of corporate Finance Andrew Desilva.
At the conclusion of today's earnings call I'll 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. Only instructions are included in today's press release any investors section of the company's website.
Now with that I'd like to turn the call over to optimize our ex CEO William Hello, Sir. Please go ahead.
Thank you operator, good afternoon to all and I hope you've had a good start to the summer season, we're trying to do.
Yeah.
As it relates to today's earnings release, while we continue to report strong kpis as a measurement of long term execution and growth potential we have experienced some short term headwinds as reflected in our quarterly results.
While growth slowed considerably in Q2, we are confident that we have made the necessary investments, which will yield profitable growth, while sustaining our competitive differentiation.
Based on first half results, we are adjusting our forecasted revenue growth down to approximately 10% at the high end of our range for the year. While this is below where we expect it to be this year. We believe it is primarily a timing issue related to some of the issues I will discuss in detail.
2022 challenges are closely tied to three macro factors significant year over year reduction in FDA drug approvals impacting timing.
Launches higher turnover of decision makers and farm on the back end of COVID-19, and a longer sales cycle for larger technology spend opportunities that need internal alignment and approvals and routine periodic legal and regulatory assessments of commercial tactics.
To be more specific about the aforementioned causes we saw delays in several very large enterprise deals as a result of timing around brand launch dates.
We believe a lot of this is tied to bandwidth issues at the FDA.
They have seen substantial employee turnover in recent months, which has resulted in a novel new drug approval decreasing by over 40% when compared to 2021.
While these events were not expected timing disruptions across health care and do occur. However, these contracts remain very much in play and are expected to be material contributors to future revenue and position us with brands very early in their lifecycle.
Secondly, we are noticing that as we become further embedded in pharmacy commercial ecosystem, we have been successfully structuring larger more complex programs for our customers.
Closing of these deals is taking longer to complete as they involve more than one decision maker and further rounds of review and assessment as part of our customers' internal procurement policy.
However, these technology enabled opportunities are multibillion dollar categories per brand. In addition, we see these opportunities across multiple brands were strong ROI has already been demonstrated.
While changes in our historical deal velocity can impact the cadence at which revenue flows through our P&L.
We believe the breadth and scope of these deals would represent a transformative shift for OPI Rex and will make us more relevant to our customers.
This is in line with what other companies have had broken through and become a strategic commercial partner to pharma have experienced along their growth journeys. Nevertheless, the $10 billion in digital industry spend that we are selling into remains very much intact and continues to expand.
While the deal timelines have extended to longer periods, they do not affect our win rate.
Recent Mckinsey article referred to health services and technology sectors. The long term growth story, driven by rapid adoption of data and advanced analytics and software driving innovation across several areas, where optimize Rx has made substantial investments and offers competitive technology solutions to our clients.
We have noticed a flood of recent digital solutions that while lacking platform scalability and integration capabilities. It.
It is certainly muddied the competitive landscape however.
We at optimize our eggs are playing for the long game and are working with our clients to become the clear choice for the future.
Lastly, and we view this as a long term positive for <unk> X is the fact that several deals in the pipeline had been delayed as a result of keep people turnover at several of our large customers.
This has delayed some of our existing deals.
As these brands bring in new decision makers.
This additional time will help us cross sell more products in our suite to customers, who weren't firmly embedded with us historically, thus broadening our potential base of revenues. While we believe the current environment is transitory. We believe it is prudent to adjust expectations given the changing landscape.
Looking at overall performance of the company, we continue to perform strongly through the lens of hope your Rx as long term land and expand strategy.
Can count 94% of the industry's top 20 pharma manufacturers as our customers and remain positive with regard to the net revenue retention.
Client ROI, which is based on a look back at studies over the last year and cover dozens of brands across 12 manufacturers also remains high against their spend.
These are all indicators that the platform remains strong and highly beneficial for our clients.
We continue to make significant progress in advancing our <unk> solution into the market and recently had third party reviews completed for our largest deal to date, which showed an ROI that is more than twice what our customers typically look for from their investments despite having a much larger than typical contract size. We believe this.
<unk> elevates, our relevancy with our client base brings us closer to them strategically and separates us from the pack in terms of the digital offerings at point of care.
We also renewed one of the original the RW deals announced last year. After a really strong program performance and are currently in discussions with that manufacturer to expand our solution to all the brands in the oncology portfolio. This client represents a top 20 pharma and the expansion of cross brands would represent our largest engagements.
While moving up in deal size creates challenges that we did not experience in dealing with much smaller dollar amounts. It is where we need to be to drive the most value and showcase the scalable and beneficial platform we have developed.
This puts opioid squarely in the strategic partner spot, which is something we've been working on for several years.
We hope to announce this type of relationship within the second half of the year and we believe others will follow.
Meanwhile, we're extremely encouraged by the recent progress we've made expanding our reach outside of the point of care to start we have completed the tech tuck in or event Smith through which we acquired in industry, leading technology and a small team which involves our solution for specialty medications to further benefit doctors and patients while greatly helping.
Our client base. This additional technology starts to build out the connectivity with hub specialty pharmacies and retail pharmacies. This ultimately expands our Tam and revenue growth potential while increasing our reach across the patient journey.
We have been talking about this for some time and it's great to see it start to come together in a way, which will affect topline bottomline and ultimately help the relationship between doctors and patients.
Mckinsey recently shared their view that the growth in specialty drug spend is driving the forecasted 5% CAGR from 2021 to 2025 and net and that this vertical integration moves opioids squarely at the intersection of specialty workflow and distribution.
In a similar vein. We recently established two partnerships in June we announced exclusive partnership with equals five which substantially experience the breadth of our platform as equal five is the only health care provider HCP level solution, providing targeted physician engagement across social media platforms. This partnership and.
Tables us to bring our novel approach to leveraging real world evidence to engage hsp's on social platforms. This exciting new platform extension gives our pharma clients the ability to touch up to 84% of the prioritized hcp's on the social media platforms, they utilized with specific content.
Finally, we recently closed a partnership with cooler screens, which extends our reach to patients at the point of defense at retail pharmacies, starting with Walgreens.
We're just getting started in retail and specialty pharmacy, but as we have spoken about it as a priority. So we can be available in all areas of the patient's journey to help them start and stay on therapy.
And with that I'd like to turn the call over to our CFO and COO, Ed Stelmach, who will walk us through the financial details for Q2.
Yeah.
Thanks will and good afternoon, everyone.
And what I'll call a press release was issued when there is north of our second quarter ended June <unk> 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 10-Q.
Which will be filed later today.
Turning to our financial results for the period, our revenue for the quarter was $14 million, an increase of 3% or $13 6 million from the same period in 2021.
Gross margin increased from 59% in the quarter ended June 32021.
With 64% quarter ended June 30.
2022.
As a result of solution and network partner mix.
As we highlighted in our previous earnings call. There has been an increase in the percentage of activity flowing through channels with more favorable economics, when compared to a year ago.
Given the macro environment, we have already highlighted.
We're updating our guidance for 2022, which now calls for revenue to come in between.
62 and $68 million.
On a more positive note we are updating our full year gross margin range from 57% to 60%.
<unk> 59, and 62% due to a favorable solutions mix.
And channel partner momentum.
Which we haven't built in the first half of 2022.
To carry through the rest of the year.
Our operating expenses increased from $7 7 million for the.
Three months ended June 32021.
The $12 9 million during the second quarter of 2022.
This increase in expenses, primarily due to the investment in an expansion of the optimizer Rex team.
To enable future growth, which also includes our acquisition of <unk>.
Proposed in April .
Providing more color around our year over year increase in Opex.
Nearly two thirds of the $5 2 million total increase was tied to non cash expenses.
But the remaining amounts related to the full year impact of 'twenty or 'twenty, one tires in the event the medical Division.
We expect our cash based opex run rate for the remaining quarters of the year.
To stay relatively consistent with second quarter of 2022.
Okay.
We had a net loss of $3 9 million or 21 cents per basic and fully diluted share.
For the three months ended June 32022.
As compared to a net income.
<unk> 4 million during the same period.
2021.
On a non-GAAP basis, our net income for the second quarter of 2022 was <unk> 7 million or four cents per basic and fully diluted share of pending.
This compares to a non-GAAP net income of $1 8 million.
Or 10 cents per basic and fully diluted shares outstanding in the same year ago period.
We will continue to be fiscally prudent in our approach to investing for profitable growth.
Now turning to our balance sheet.
Cash and cash equivalents.
They just $7 4 million on June 30 of 2022.
Compared to $4 7 million on December 31st 2021.
And we generated $4 4 million in cash flow from operations.
For the first six months of the year.
And point 3 million during the second quarter.
We believe our strong balance sheet and cash flow favorable favorably positions us to further expand our business solution offerings and.
And drive profitable growth.
Now I would now like to turn to the company's Kpis that we introduced this past February to provide transparency as.
As long as quantifiable metrics that can be used to continue to communicate our story if their business grows and matures.
Our average revenue per top 20 pharmaceutical manufacturer.
Stayed relatively flat year over year at $2 4 million for the second quarter.
By adding two new top 20 customers over the last 12 months, which are still early in their relationships lifecycle with us.
As a result, we continued to gain ground with now in 19 of the top 20 largest pharma companies in the world, which.
Which again represents the lion's share of the industry's commercial spending.
In addition, our ability to create tangible value for our clients as well as growing demand for our solutions.
As reflected in our net revenue retention rate of 113% for the second quarter of 2022.
Our operating model continues to demonstrate significant capability for leveraging will growth.
With revenues per employee at $661000 for the second quarter of 2022.
This puts us firmly ahead of the technology industry back average.
It is currently under 500000 per FTE.
And highlights the strength of our operating model and the quality of the team and capabilities.
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.
<unk>.
Thank you Ed operator, now, let's move to Q&A.
Thank you.
If you'd like to ask a question. Please press star one from your telephone keypad and a confirmation tone will indicate your line is in the question queue.
You May press star two if you'd like to move your question from the queue.
So we're using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions. Thank you.
Thank you and our first question comes from the line of Ryan Daniels with William Blair. Please proceed with your question.
Hey, guys. Thanks for taking the questions will maybe one for you I appreciate the detail on the three factors that are impacting.
Impacting the outlook I'm curious if you can go into a little more nuance into the relative magnitude of each of those three as it relates to the outlook.
Yeah.
Hey, Ron Yeah. Thanks, Thanks for calling in.
Well as you know we've made a big shift over to specialty and wood and we did that for the reasons, we've outlined which is there they are meaningful.
The marketing spend is shifting that way and so.
When you in particular, you see launch delays that does happen in this business and when your specialty focused a lot of those launches are gonna be specialty so.
Good news is we're talking to the to the right clients and it was a little bit of a bottleneck on those approvals.
But once those are through and we feel like they will be through obviously farmers very incentive to get those completed and so as the FDA frankly, because these are all medications really impact patients' lives.
Yeah it.
It was rather sudden and.
Because we focused our time and effort on those medications, where we have the longest relationship with them.
Yes, we saw some disruption there.
But strategically it's absolutely imperative to stay focused on it because it is where the marketing dollars will go. It is what our network is focused on and frankly the value prop that proposition that we bring to the clients is strongest there so a.
A lot of communication going on and a lot of effort to work with the client through those and as we say we think it's largely a timing issue not foundational issue.
And so with those in particular, if that's the biggest impact do you actually have contract agreements for when they launch that you will be one of their digital marketing partners.
A range.
Yes, I mean keep in mind, we have msas with all of the top 19 pharmaceutical manufacturers and we've got steady work going with.
The majority of the brands within those manufacturers so.
Absolutely. These are included there part of the pipeline, we're managing and we've got an amazing team on that so.
Absolutely they are in the flow in our backlog so to speak and pipeline.
And.
It's actually pretty exciting I mean, it's never good to disappoint in a quarter.
We can recognize that however.
Just.
Our before this call I am on with our clients talking about multi brand discussions. So if I if I didn't see a lot of the direct interactivity with the clients.
I would be concerned I'd, probably we would have used different language, but because we're seeing a lot of engagement a lot of discussion real partnership type discussions those do take longer but they are bigger and stickier and they'll bring a lot more value long term.
Okay.
That's helpful color and then you.
You mentioned, the procurement, taking a little bit longer to with some of these contracts get bigger and it's probably somewhat related to this but is there number one anything you can do to standardize the procurement process or is it really just complex medical legal review of clients number one and then number two.
<unk>.
Yes, the follow on there would be as they do more of these programs I assume it gets easier in the future to launch because you've kind of gone through that med legal review. So it's that initial hurdle that might create an air pocket versus an.
Ongoing issue is that fair.
That's very fair it does get easier as the legal departments get.
Up to speed keep in mind, there is turnover across the board pretty much in every business right just given the economy.
And jobs practice, particularly in health care, if you've got some expertise here and youre in demand. So yes. So the it does scale with comfort on the legal side.
And frankly, the fact that they're looking at these bigger engagements and bringing in the right. Legal review is also a positive it's frustrating because it always takes longer than you think it should but once you get through your through.
And and then their partners and frankly, you need that right remember. This this is a business we really created a space here with maybe one or two others in the space and what I'm seeing as farmers really catching up to it we had talked about 2020, everyone showing up at meetings in 2021, a lot of trying.
Really a big saturation actually a lot of different solutions coming to the market and farmers now sitting back and looking and saying, Okay, who can scale, who has the platform whose measurement is transparent.
Do a deeper dive on the legal because they always do and the fact that theyre doing all those things with us as it is a positive.
I agree okay very helpful color. Thanks.
Thanks, Brian .
Our next question is from the line of Joy Zhang with SBB Securities. Please proceed with your questions.
Hey, guys. Thanks for taking my question.
Follow up to that.
Your question.
Can you give us a sense of you know given that the Nova trial approach.
As a headwind how much of your business that's related to.
Rocket launches in person okay.
Right Brian .
Yes, Steve do you want to take that one.
Yes, happy to well Hey, Julie good thanks for the question.
I think that.
Don't have an exact percentage basis for you.
Launch brands versus inline brands, but what I can tell you is that.
When we launch brands are delayed in line brand budgets are pulled back or paused for a period of time and when those delays occur basically.
The marketing spend until things are sort of moving in the right direction in terms of in terms of new launches and franchises. Many therapeutic areas are managing portfolios of assets and looking at.
Assets that are currently in line that are approaching <unk>.
Assets that are about to launch and so they are managing that budget over one or two or three different assets. So I think the pause not only impacted launch friends that are impacted in line brands the ability to continue to secure funding.
And that was that was really the genesis of the challenge but.
To answer your question more directly I would say probably somewhere in the vicinity of 20, 30% launch brands.
On balance in line brands those are rough estimates, but that's directionally correct.
Got it that's super helpful.
And I guess going a little deeper into the FY 'twenty two guidance can you just talk to what kind of you know contract launch expectations will stay strong.
Are you expecting a recovery in terms of all of the delayed contracts or any sort of thoughts around potential delays in the second half as well.
Sure So I'll start, but I'll hand, it over to Randy on the stats around that but look we're obviously being conservative we think.
We've talked about white space in upside in.
We feel like that's all still there and.
These disruptions happen, but at the end of the day everyone's got to get back to business and lunches start to roll again.
<unk>.
The indications that are that are in our mix are really relevant and help patients quite a bit so.
We do we do it we're being conservative.
Last year, we had on guidance, it's terrible to have a disruption but.
It's what we have now and in India, maybe you can talk to specifically sort of what we can see and break that apart a little bit.
As it relates to that.
<unk>.
Yeah, Hey, George This is Ed, yes, so basically just to compare.
You're still okay.
Q1 slip.
<unk> guidance, where we are now.
Initial guidance wouldn't be it's been about a 50% line of sight.
And in the bank forward.
Revenues.
And where we sit today, we're probably looking at about 80% to 85% so apples to apples comparison for you.
And we are being pretty conservative as well.
Ted on any kind of upsell as our biopsy Q4.
So we're trying to kind of be mindful of what you saw this quarter and are committed to our current.
Kind of a forecast for the year.
Yes.
Got it that's super helpful. Thank you.
Sure.
Thanks Chuck.
Our next question is from the line of Sean Dodge with RBC capital markets. Please proceed with your questions.
Yes. Thanks, good afternoon, maybe I just want to make sure I heard that last answer.
Correctly. So your guidance I think you said initially assumed up 50% coverage on the range and now with the revision you're baking in about 85%, 85% currency, you've got visibility on 85% of what you need to hit that target versus 50% that you had previously.
I get that right, yes, that's correct.
Okay great.
Yes.
So will you talked about the macro factors that have been issued is there any anything you can share kind of more specifically about the sales pipeline.
Been affected at all given these or is that still stable or growing and it's just as simple as it is taking longer to get things converted out of it.
Yeah, that's exactly it.
Still solid no relationships. This is not tied to us dropping the ball or.
A failed relationship or anything like that we've got high client satisfaction.
And it literally some launch delay.
Some.
The decision to delay just given some turnover of clients.
And as they get bigger.
Do you do go up.
The decision tree and that does take time.
When you're when you're looking at multimillion dollar deals and you're connected to the franchise.
Senior executive it's a career decision right. So everything is scrutinized more.
Good news is we've got the team are at that table.
Both Ed and I and Steve are frequent and Marion frequently at that table.
And that's a good thing that just shows that pharma is actually taking this seriously. It's not just a nice to have tactic, but it is a true channel of communication with doctors and patients at point of care.
And you have to remember.
It's hard to hear this through.
Not hitting our number but we are one of the few that can do it at scale in the market and and they know that now pharma knows that and so I would imagine we'll get back to our drumbeat of growth as we get through this and I think it's going to get really excited.
Okay.
That's helpful. Thanks, a lot thanks Ed.
Sure sounds great.
Our next question comes from the line of Eric Martin with Lake Street. Please proceed with your question.
Yes, I was wondering if there is any issues.
Store base.
You highlighted the three major issues, but kind.
Im flashing back to the last time, we had this sort of shortfall.
Thankfully it was several years ago, but at that time, there were issues with the <unk>.
Drug coming off branded and going generic was one issue and they the brand pulled in the spend that had it originally planned and then another issue was an M&A transaction that sort of froze spending for both clients while they went through the.
Integration of the two.
The two brands so anything along those lines.
Hey, Eric as well no. This is the these are the issues that we outlined we've got a really good base and.
No no M&A as you've seen from the market.
As we've talked about no patent cliff issues in year.
It's really a bigger spend taking longer so some launch delays and decisionmaker shifts at our client base.
Net net nothing nothing like in 2019 Q3.
This is this is more macro and and frankly for us as a team.
While macro is frustrating.
We just kind of putting our heads down.
Building through it we've got the balance sheet to build through it we've got even even off of what we would call our budget still.
Still cash flow positive still profitable still highly relevant so yes internally teams very positive we're moving past Q2 focused on getting back to growth, but no. None of these surprise patent or M&A disruptions.
Okay and then.
Sounds like the team remains in place or it's not going to be any.
Any head count moves here given the operating expense roughly in line for Q3 and Q4 are you elsewhere in the business.
Focused on discretionary spending.
To.
So as to optimize profitability or any other things non personnel related.
Syed.
Nothing no drama.
We've always been really good at managing the money.
And I would say now we haven't even a more robust finance team just more people.
Ed with Ed's leadership, but yes, we plan to scrutinize, what we need to but again, we are a growth company. There's a lot of opportunities I think.
With the with the market correction through the first half of the year.
Theres, even more opportunities for us so.
Yes, we will watch the money, but nothing no no dramatic changes just be vigilant likely like we always are.
Mhm.
Last question for me.
Never too early to be thinking about FY 'twenty three assuming we are able to achieve that kind of the higher end of growth that you talked about the 10% growth in 2022, what's your what's your outlook for acceleration from that in 2023.
<unk>.
Yeah, I think I think it'll be considerable based on the conversations we're having.
I think when I said it way back when.
We should be able to grow this business, 20%, 30% every year.
I think there's only been one year, where we didn't do that.
And this year would be a second unless we can surpass it.
But I wouldn't expect that for 2023, I would expect better growth.
Got it thanks for taking my questions.
Thanks, Eric.
Sure.
Our next question comes from the line of Mark Weisenberger with B Riley Securities. Please proceed with your questions.
Thank you. Good afternoon appreciate you taking the questions.
From a high level can you talk about the types of assumptions and maybe expectations that are embedded in your agreements that might impact customer rois and how they could differ across brands and customers and and kind of how do we think maybe about that factoring into any brand attrition if at all in and also do you have any.
Of your deals have kind of performance incentives that could provide upside.
Sure Mark Steve do you want to start with that and I'll add after you.
Yeah, Hey, Mark Thanks for the question.
So basically these rois are operated testing control format. So you have got.
Standard testing control Botch looking at where the platform is deployed versus where it's not and measuring the hate script script lift behavior with the physicians that are receiving the messages versus not.
Obviously, much more intricate than that but sort of giving you a high level quick notes.
The Rois are done by a third party. They are validated and then sent back to the customer so we.
We work with the customer and when we're setting up the methodology. There is an agreed upon methodology those are measured by the third party and in the customer receives them in sort.
Walks through it together right to date, we've had no disruption in any of the Rois that has come back they've all been positive with both shared earlier on the call.
Last few that we've received have been significantly.
Yeah.
Tactful and I think the client satisfaction is going up which is great to see the things that come into play and an ROI calculation of the things that you are familiar with so it's just the cost basis of the program at the time that it runs at Endo, the physicians that see messaging et cetera, then.
The behavior on the other side, so nothing abnormal there.
I think the increases that the efficacy of the programs and reaching the doctors is improving and I think as we run the programs longer we're seeing the rois get better and better and I think that speaks to the algorithms being trained the program is getting better as tweaking them over time, as we learn things and make them more effective.
That is.
That's what I would say about the ROI.
I appreciate it. Thank you and then I'm wondering do you have a sense of how patient cohorts drive revenue across your business and I guess, specifically related to age in and type of insurance of the patient because in the third quarter of last year you announced.
An agreement with a top five pharma company related to our real world evidence affordability initiatives and with the impending legislation that caps out of pocket Medicare costs, how will that impact your real world evidence offering and how important is that component I guess within.
The overall real world evidence solution.
Yeah, I'll start and then hand, it over to Steve, but the the business that that's really.
Making a big difference for our clients is at enterprise level right Mark So it's multiple solutions our lead horse is not.
What was financial messaging, although it's usually part of it.
It's really designed at that sort of cohesive patient journey, where you're building awareness you're connected to the prescribing decisions and then and then you stay with that patient.
On their cell phone. So you can help them understand the side effects and deal with affordability.
As you referenced and and.
And help with behavioral and understanding issues so Steve.
Steve maybe you can talk to that particular program without names but.
Yes, it's it's a it's a much more comprehensive solution set which again is the differentiator. It's also why our Rois contingently go up because you're ultimately just getting more touch points through that patient journey with the HCP the doctor and the patient.
Which is very hard to do at scale.
And before I hand, it over to Steve just to remember Mark can you talk about ROI.
Part of what pharma is looking at is they see these high rois and everyone talks of IRI game and then they say okay, but can you do this at scale can you reach can I spend $20 million with you and you get that similar ROI and that's that's where you make a big difference and become a commercial partner strategic partner and we're starting to see that one.
A couple of our clients.
And those take a little longer but they are much more meaningful so I'll hand, it over to Steve on that particular project.
Paul.
Yes.
Thanks, Paul Hey, Mark Thanks for the follow up question.
I think what youre, referring to specifically is sort of a downward pricing pressure in the Medicare space and one thing that I would say to you is that most of the work that we do vertical with a pharma engages and is commercially insured patients.
A much more strict regulation that governs.
Marketing to Medicare patients.
And there is no marketing to Medicaid patients and so the vast majority of what we do is around commercially insured oriented patients now there are a couple of Medicare programs.
Our approved which for which special dispensations had been allowed in those manufacturers who have gotten those special dispensations.
But for the most part it's commercially insured and then what I would say to you even around the sort of Medicare patients as the downward pressure ultimately is going to is going to force more of a focus on volume because pharma will be constrained.
To essentially get the same price capture that they've had in every script thats been written and sort of maintain the same sort of level of trajectory on the.
Profitability side, they're going to need to do more business.
In those areas.
Luxury of sort of.
Being I don't want to say lacks that musical, but taking kind of a nonchalant approach to Medicare patients that's not going to work. If there is more pricing pressure there will be to focus on capturing every single patient that is eligible for a specific therapy, where it's appropriate.
And they have they've had the luxury of not needing to do that in the past so it'll be interesting to see the dynamic change there of course, neither one of those really impacts what as will said, what we're doing because we're operating across franchises across reimbursement vehicles and.
And in most cases, it actually represents more opportunity for us because now theyre going to need to innovate more and you sort of referenced that Mckinsey article can be talked about it several times, but in these downward pricing pressure environments more innovation comes to play because they need to be more efficient in the way that they're approaching providers.
Got it very helpful. And then just a final one for me if you could talk about the economics, a little bit associated with the equal five deal and should we think about and how should we think about maybe capacity constraints in ROI in that channel and as Youre moving beyond the point of care in the EHR at least very increments.
Italy right now does this social offerings provide any potential for DTC opportunities down the line. Thank you.
I'll start and again hand, it to Steve.
What what what we've stated is we want to be wherever doctors and patients are digitally right. That's we want to be that person for that company for pharma and we wanted to do it in a way that doesn't disrupt scare disrupt lives.
Be intrusive, but rather just helped facilitate better care and patient starts stay on therapy. So.
I'm really excited about some of these other channels, we're reaching out to youll start to see the term omnichannel.
Which is used to reference multiple touch points.
The more we can get access to the easier it is for our clients spend more with us and do it in a holistic way connected to a patient journey. So.
Steve maybe you can talk to the second part of that but.
I think that's what's really exciting to me about in particular, the equals five partnership.
Yeah.
Thanks Ross.
Don't think that it will be.
<unk> play Mark.
Really is focused on hcp's.
And the sort of the driving engine around that if your ability to look at specific Cpus in different environments. So social happens between five environment. Thank you.
To be able to report back on how how does HCP is engaged with content and I think that's sort of a critical element of being able to measure whether or not these campaigns are actually working and whether or not the technology that you're deploying as having a result coming back to the discussion on ROI. So I don't I don't think equals five of the social environment has it been PC environment.
Although plenty of people plenty of manufacturers advertise through Facebook and other mediums and they use that as a BDC that's not really our strategy here in Australia is really is focused on management team. However, having said that the cooler screens effort is a DTC effort and that is right at point of dispense. So when the patient goes then picks up their screen.
At the pharmacy, there getting the sale there is an opportunity to continue to educate and work on the BBC. So you.
You didn't mention the core screens, but thats actually the DTC.
Africa.
I appreciate that clarification and thanks for the color. Thank you.
Thanks Mark.
The next question is from the line of Jeff Garro Piper Sandler. Please proceed with your questions.
Hi, good afternoon, thanks for taking the question.
I wanted to ask about the large deals and how we should think about the timing more specifically thinking about the timing between FDA approval and launch and then utilization of your services.
And whether the.
Implementation period might be any longer than typically for some of these larger more complex and tech enabled deal.
Yeah, Great question so.
We're very because we are so ingrained with the clients, we're actually working a lot at a lot of these things real time.
Because the assumption is they will be approved.
So I would say the kickoff time is no longer than your typical.
Start start and go.
Matter of fact, when we start to build some of these algorithms around our WD solution a lot of the heavy lifting is done prior to launch so.
We're hopeful we can get those going even faster.
Ed.
And then <unk>.
The updates to fine tune the algorithm for delivery of the message.
But no.
We're not expecting them to be any longer nor are we expecting our close rate to change.
Great that's super helpful.
One more for me on the guidance just curious how the.
The revised revenue guide, whether it's still assumes the typical <unk> seasonality.
Mentioned, some conservatism on kind of incremental buy ups and so that kind of leads into the question of just visibility into year end budget flushes from your top 20 pharma client.
Yeah look it's early to talk by ups, you generally start to get rumblings of that the end of Q3 early Q4.
But generally when you see any kind of slow or pullback. There is then.
More pressure to do more in the back half of the year because of the use it or lose it budget structures right. So.
Too early to tell but.
Again conservative range, but would think it's more of a buy up atmosphere than in previous years at least more than last year.
Got it thanks again.
Have a good one.
Thank you we've reached end of our question and answer session I will turn the floor back to management for closing remarks.
Thank you everyone for joining us on the call today, while we always push ourselves to grow faster and do not like the disruption of our historical growth rates due to launch delays enterprise deal sizes and client turnover. The disruptions are temporary and in no way changed our positioning or opportunity within the vast white space that we continue.
To sell into which currently estimates a pharma digital Tam that is greater than $10 billion annually.
We have an amazing team are profitable with positive cash flow and offer highly relevant solutions to our clients and partners.
We encourage all of our stakeholders stakeholders to focus on the future and not view this disruption is permanent.
Our expanded offerings remains very much in demand and we have the opportunity now to cross pollinate additional brands as a result of leadership moves within the existing franchises that we service we're fully confident in our platform offerings, which remained best in class, while our expensive point of care network remains unrivaled and growing.
This competitive mode puts us in a different class as we continue to move the needle with regard to addressing the challenges around patient access adherence and affordability right at point of care endpoint of defense equally important we are continuing to build on a novel solution set with offerings that connect other stakeholders such as Manny.
Factoring reps with health care providers enhance provider communications outside of the electronic health record and allow clients to stay with the patients throughout their complete care journey.
We continue to have a strong balance sheet and war chest that allows us to prudently explore innovative M&A opportunities with the first half market correction in our sector. We are seeing a significant increase in the level of strategic opportunities, which could further drive value to all our stakeholders. We look forward to seeing everyone again at the various industrial.
Conferences coming up and on our next update call in November stay healthy.
Thank you Sir before we conclude today's call I would like to provide the company's safe Harbor statement that includes important cautions regarding forward looking statements made during today's call.
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Thank you for joining US today. This concludes today's conference call. You may now disconnect your lines. Thank you.