Q3 2023 OptimizeRx Corp Earnings Call
Good morning, everyone and thank you for joining optimize our exit third quarter of fiscal 2023 earnings discussion.
With us today is the chief Executive officer of optimized Arctic William Febrile.
He is joined by Chief Financial Officer, Ed Stelmach, President, Steve So the restaurant General Counsel Martin Oh, Dan Ford.
And senior Vice President of corporate Finance, Andrew de Silva.
At the conclusion of today's earnings call I will provide some important cautious.
Regarding the forward looking statements made by the management during today's call.
I would like to remind everyone that today's call is being recorded.
And there'll be a wheel.
For a replay via webcast only instructions are included in today's press release and in the investors section of the company's appetite now.
Now I would like to turn the call over to optimize the Arctic CEO William Febrile sub.
Please go ahead.
Good afternoon. Thank you for joining our third quarter earnings call I'm pleased to note that Q3 has been an exciting fiscal and operational turning point or optimize all right.
As noted in today's press release, the quarters financial results came in better than initially expected with revenue growing 8% year over year to $16 3 million, which is a record third quarter for the company.
The improvement was driven by strong organic growth in messaging led by our DAP and yet, but all said our total RWD deals for the year. Now stands 16 ahead of our original 2023 expectation of approximately 10 deals and a clear sign of client adoption.
We're also increasing our guidance for 2023 and introducing preliminary guidance for 2024.
Ed will go into more detail, but for 'twenty three we're now looking for revenue to come in between 68 and $70 million with an adjusted EBITDA between three and $4 million.
$63 million to $65 million of the 2023 revenue guidance expected come through optimize our business and the remainder is expect expected to come through our acquisition of <unk>.
2024, we believe our revenue will be at least $110 million with an adjusted EBITDA margin of at least 10%.
Before we go further I want to thank the optimize Rx team for their tireless commitment to continuous effort put into advancing our mission.
In recent years, our efforts have created one of the most scalable industry solutions available to pharmaceutical marketers Directionally. This is no easy feat as optimize our action results have come about through the shifting sands of both the industry changes as well as the early adoption of advanced that's related to the digital shift.
Which is permanently altered the way pharma patients and prescribers to gauge engage with one another.
Okay.
That being said, we're seeing very encouraging momentum heading into the end of the year and going into 2024.
The macro headwinds that we identified last year have begun to normalize. Moreover, our clients that it started initial pilot programs with companies that had newly entered the space over the last 12 to 18 months are now completing the measurement of these programs and as we expected have learned that these solutions are not scalable.
And are beginning to drive back our way.
Progress here is pacing ahead of what we anticipated, which is best evidenced by the strong GAAP or our WD momentum we've seen during the second half of 2023. These deals by their nature are larger stickier and more strategically targeted making us more relevant partner with our client base.
In September we unveiled a significant enhancement to our omni channel healthcare engagement platform. This new AI directed capability unites point of care and traditional digital media to provide a comprehensive solution for pharmaceutical marketing.
This announcement was the culmination of years of learning how to integrate AI and to optimize our axis customer use cases.
Subsequently transforming our HCP engagement platform along the way.
The new AI driven platform expands on our patent pending HCP engagement technology.
So now include social web display channel and CRM alerts, which create more efficiencies directly with salesforce.
With this development optimize Rx has renamed the HCP engagement platform, the dynamic audio audience activation platform or <unk> for short.
The merger of our former RWD AI capability with our full omni channel network and new proprietary physician engagement dataset.
The new DAP solution advances, our land and expand strategy, enabling clients to gain maximum market penetration through scaling of outreach in real time across the company's network of over 2 million hcp's across multiple major digital media channels.
And a point of care of your electric Health Records Ehr's E prescribing and the telehealth platforms.
GAAP helps our clients find patients best suited for their medications.
As noted in multiple independent studies. This is one of the top challenges in today's specialty medication driven market.
In a recent engagement the company reported a 19% script lift among AI identified HCP being relevant patients, including her early impact physicians, who had historically high script writing behaviors.
In other words, we helped our clients grow their business by enabling alignment of HCP and patient awareness with clinical decisions are being made.
Customers, who have been exposed to adapt quickly become our strongest advocates and this success is quickly moving us up the decision maker hierarchy with our larger customers. This is increasing our visibility cross functionally and across brands and we currently have 100% renewal rate.
Given the improving macro environment and the recent customer traction we're seeing with the DAP.
We believe last month's acquisition of medics was perfect timing both business lines are showing growth are seeing significant client engagement and we are moving forward as planned on executing against the numerous technological and operational synergies we mapped out during the due diligence period.
The transaction further expands our omnichannel reach beyond hep's to patients, while adding multiple channels. We haven't accessed previously which includes streaming and connected T D as well as various digital channels, such as play audio online video and mobile among others.
<unk> technology has not only proven but profitable and we are transforming our organization into the most comprehensive health care marketing platform in the nation.
As we highlighted last month, the majority of medics revenues similar to that of O. P. Rx is generated through the world's largest pharmaceutical manufacturer, but focused on patient marketing, where optimize Iraq has historically focused on a new piece.
The combination provides us significant unlock for brands within this pharma customer base by seamlessly connecting the brand's patient and H P marketing team.
I believe this aligns strongly with our land and expand strategy and enables significant upselling and cross selling opportunities particular win the cup. When you couple. This fact that over 80% of the brands our respective companies support do not overlap.
We've already seen success combined team and secured our first cross sell deal with a top five pharma manufacturer and have numerous others deal right.
With the closing of the Med ex acquisition, we have expanded our executive team with the addition of Medicine's President Theresa Greco who is now our new Chief commercial officer. He will lead the commercial strategy and execution for the company and report directly to Steve Sylvester.
As a result, Steve has been promoted to president and will lead all aspects of corporate strategy and daily business manager.
This will be a very natural transition for both Steve and the company Dave's leadership style, there's always an extended organizationally and in my eyes. This is a testament to this commitment strategically positioning us with our customers and partners, which has been transformative to our go to market over the last four years.
Finally, I'd like to give an update on our cost cutting measures I'm happy to report. We're ahead of schedule and we have already completed over half of our planned cost reductions and have identified the remaining cuts and are in the final stages of executing against our objectives.
While some of this benefit will be seen in 'twenty three.
The full benefits of these cost cuts will be seen in our P&L in 2024.
We believe we turned a significant corner since the start of the second half of the year and have incredible mentum going into 2024 and with that I'd like to turn the call over to our CFO, Ed Stelmach, who will walk us through the financial details for Q3 as well as the meta transaction yet.
Thanks Hello.
And with all of our call. The press release was issued but there's always the third quarter ended September 30th going into 'twenty three.
Copies are available for viewing and may be downloaded from the Investor Relations section.
Of our web site.
Additional information can be obtained through our forthcoming 10-Q.
Third quarter revenue was $16 3 million, an increase of 8% pinpoint one the lesser generated in the same periods in 2022.
Meanwhile, our gross margin decreased slightly to four.
4% in the quarter ended September 30 of 2022.
60% and quarter ended December 31.
23.
The claims being waters me loosen.
Loosen and channel partner mix.
We're encouraged by the quarter over quarter improvement in gross margin.
It reflects the increase in business associated with that.
Our operating expenses remained relatively consistent year over year and came in at $13 4 million for the three months ended September 30.
Okay.
We had a net loss of 2.9 million are still making sense.
Basic and fully diluted share for the three months ended September 32000.
23, as compared to a net loss point 5 million during the same period in 2022.
On a non-GAAP basis net income for the third quarter was $1 6 million or nine cents.
For 40 days.
This compares to a non-GAAP net income of $1 3 million or seven cents per fully diluted share in the same year ago period.
Meanwhile, our adjusted EBITDA came in at one 9 million for the quarter and was effectively flat year over year.
Operating cash flow came in at a positive 1.5 million for the quarter.
We ended the quarter with a strong balance sheet and cash and short term investments.
Fixing the viewpoint 5 million at September 30 of 'twenty three.
Compared to $74 1 million at December 31st 2022.
The majority of the decline was due to our share repurchase program.
We bought back 526999, just kind of.
Seven 5 million.
Subsequent to the quarter's end required medics were 95 million.
The gas portion of the transaction was approximately $84 5 million and was funded through cash on our balance sheet as well as what do you mean in Bella and debt financing.
We currently have over $13 million in the bank and believe we're well funded to execute against the upper east nobles.
We remain confident in our walk down growth outlook and are happy to say, we're increasing our guidance for 2020 three.
And are now expecting revenue to come in between $68 million.
And adjusted EBITDA between three and $4 million.
And there isn't a preliminary 20th when your full guidance for revenue is expected to be at least 110 million.
With an adjusted EBITDA margin of at least 10%.
We will have more details to share once they get through the RFP season.
Early indicators are very encouraging as we're bringing our combined value prop to the market.
Now, let's turn to the third quarter of 'twenty to 'twenty three we should have largely stabilized and have started to show improvement when compared to the prior quarter.
Average revenue puts out.
Let me cyclical manufacturer now stand at $2.1 million. If there continues to work with 18 of the top 20 largest pharma companies in the world.
And 100% of the top 10.
Many of them don't have the majority of their stay it was tied to COVID-19 vaccines.
Net revenue retention rate is showing improvement at 93% up from 89% in Q2, 'twenty or 'twenty three.
Meanwhile, revenue per FTE came in at 571000 560000 as opposed to in Q2 'twenty to 'twenty three.
It's also worth mentioning that medics at the net revenue retention rate of 130%.
And average revenue per revenue per FTE.
Are you kind of 51000.
We're encouraged by the continuing improvement in our Kpis is there more capacity external market challenges.
And returning to growth and profitability as a leader in our space.
Now with that I'd like to turn the call back over to will well.
Thank you operator.
Let's move to Q&A.
Okay.
Thank you.
Ladies and gentlemen, we will now be conducting a question and answer session.
If you would like to ask a question. Please press star and one on your telephone keypad.
Confirmation tone will indicate your line is in the question queue.
You May press star two if you'd like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Ladies and gentlemen, we will wait for a moment, while we poll for questions.
Our first question is from Sean Dodge with RBC capital markets. Please go ahead.
Hey, Good morning. This is Thomas color on for Sean Thanks for taking my questions and congrats on the strong results.
Oh on the preliminary 24 outlook.
For somewhat of a bridge from 23 are you all able to share kind of any of the expected revenue contribution for medics or any sort of general growth rate assumptions that are kind of embedded within that.
And then maybe just generally anything you can share around the visibility on the low end of that that range. Thanks.
You are talking about 24, Tom that's your question not twenty-three yep, okay preliminary.
Yeah, It's a little early that's why we set up to 110 and up to EBITDA of 10% you know we just did.
Did the full integration of all of them a few weeks ago. So I want to get our hands around that more get a sense of RFP season in full swing.
And also how the year's going to end with open contracts into the next year.
But feels fairly encouraged feel like we'll be able to do that early in the year next year and you want to add anything to that.
I think about it.
Yeah, I mean, well I forget throughout the season of the year, we'll get you a lot more details around the visibility.
Alright understood. Okay, and then did you all have seen that's quite a few new deals recently.
How should we think about the average size of those are those still sort of hovering in that one to 2 million I think on an annualized basis, and then I guess, how might that average sort of change, but if we think about a combined offering with medics kind of in the future.
Yeah.
Tom Hey, this is Steve.
The deals are still in the same range that $1 million to $2 million range, although what we're seeing is.
On the deals that are renewing that had been in place. The the scale is larger simply because they are finding more patients. So it's tied to the dynamic audience finding more patients over time, so that dual happens, which means every time, we renew the deal it's not starting from zero.
<unk> patient base, so as we as we March on into 'twenty, four Youll see that deal size trickle up northward and then with the addition of medics. What that does is enables direct to patient communication. In addition to direct to H C. P. Communication. So it's the other side of that of that transaction between the HCP and patient. So you could think.
But as you know almost a near double overtime as we start the communications.
Between both sides.
Yeah.
Alright, great I appreciate the color congrats again.
You got it thanks, Tom So you had a shot.
Okay.
Thank you.
Our next question is from Janet Husky with William Blair. Please go ahead.
Yeah. Good morning, guys. This is Jared on for Ryan Daniels.
Thank you for taking my questions you will maybe for you you're nice to see the rebound in the performance after last quarters. So maybe a two part question on some of the recent trends I guess number one.
So if you could speak to the differences in how the quarter ended up versus the preliminary release that you gave them in October I think he came in about $1 million ahead of that original preliminary outlook. So would love to hear any specifics around that and then second part here you know, it's nice to hear the macro headwinds are alleviating for you guys.
Would be curious to hear a bit more of what you're seeing with the client base, maybe what's driving that underlying improvement because it seems like others. In this space are certainly still calling out some of those headwinds with farmers that had been in place last year pulling orders. So would love to just get any more specific details as to what you're seeing on that side of things. Thanks.
Yeah sure no problem. So on the on the first question around coming in beyond release, all attributed to that and successfully pulling through many more deals than anticipated.
Towards the end of the quarter and getting that are that work done inside of the quarter. We got more work done than we thought we would which is good it shows starting to show scale. There are really thrilled on the client reaction I.
I think we've we're finally hitting that tipping point, where clients understand the value.
Enough of them have tried it we have 100% renewal rate on it.
We've done a spectacular job marketing it a real thought leadership, we had people on the team up on stages talking about you know real world. Examples of why this is a powerful tool and it was presented in a way I have to call out the marketing team Justice ocular presentation of information that was digested under.
Until acted on.
I also will say that we internally one of our clients, which you can't disclose we were able to win awards and recognition around an innovative solution, which is that basically.
And that got us in year dollars that was not anticipated and so again hats off to the team and the gang.
Steve anything to add on that from a client perspective, no I think you've covered it I mean it.
I would say in terms of headwinds, which was the second part of your question was the market headwinds are still there in terms of prevailing issues in the industry. Although we've highlighted some of the stuff that we've seen subside.
The more important thing to probably no cure is to put punctuation around the fact that our return on investment measurements have happened and so you know we've been clear that we would start to see those who were over promising under delivering in the competitive landscape just start to get shifted out of the market that definitely happened in the firm.
Half of this year and so now in Q3, we're starting to see investment come back based on the fact that we have delivered an honest R. O Y and are a proven partner and I think that's a real key indication for scale going into the second half of the year and into 'twenty four.
Yeah, I'd say I'd, just add to the the headwinds we have seen a normalization on the FDA approval rate to back to 'twenty one.
I think given the economy the turnover rate in general you know if you track length and you can see people are jumping around a lot less.
And all of those things where headwinds and and you know there are as Steve said, there are still headwinds for a lot of firms and you know if you're if you're a boater all depends where your boat is with them. When you have the headwinds. So I think we're in a good place where in that in that harbor, where we have something that's needed. It works and we're starting to see that come back really happy to see it.
Okay, Great I think that that all makes sense and nice to hear that good execution on the marketing side of things as well.
One quick follow up and this is sort of a related question to the first one just around 2020 for visibility.
Given some of the moving parts here with the acquisition and some of the changes that you've made on the product side can you just level set with us as we think about the pro forma business in 2020 for that $110 million.
So target how much of that is sort of a pure transactional or value based revenue stream and how much of it is more of a.
Scripture end revenue recognized over time, where you would have kind of a backlog of visibility going into next year.
Well, we were we're not changing our business there will still be you know the architectural fees and transaction fees related to that programs or our tactical programs.
So we are we're not SaaS business right.
Hum.
But what we are is a highly recurring revenue rate.
Cuz, what we do works and it's been tried and true and it has scale and I think ultimately that's what's going to make the difference here and you've seen it in other companies out there that are three or four years ahead of us. Once you can prove that be reliable get the data back to the clients have the measurement in place and the compliance in place and basically do what you say say.
What you do constantly then farm it really starts to invest in you.
Right.
So we don't we don't foresee a substantial shift in the P&L model and but we do expect to have a better visibility one of the things we liked about medics when they go into the year again, not going to comment on it now, but as we get into Q1, we will so they just had more visibility on their ear.
Given the increase in DAP and some of these wins that we're seeing three and Q4 will.
We'll have better visibility as well so the two will come together nicely.
And ultimately if you think of that size business now we've got lots of seats at the table and as we've mentioned there is fairly limited overlap and that just gives us a lot of opportunity to go in land and expand.
And it seems pretty fired up about that.
Okay.
Okay, perfect and congrats again on the momentum and I'll go ahead and hop back in the queue.
Thanks. Thanks.
Thank you.
Our next question is from David Grossman with Stifel. Please go ahead.
Hi, good morning, Thank you I.
I wanted to go back to the comments that were made it about.
Clients coming back you know after you know kind of experimenting with some other vendors in the marketplace. Okay.
Can you, perhaps just drill down a little bit into that maybe give us some data points that would maybe help.
Help us better understand that dynamic and then when they do come back you know, what's the cadence of spending when they come back.
David Hey, good to hear your voice this is Steve.
I mean just.
And I went to sleep.
So to give you some.
G data points as you said I mean, they're there you know the experimentation was around return on investment and so it takes a couple of quarters for clients to be able to run programs measure them see how effective they were what the impact was and then make a subsequent decision I think in most cases those decisions are being made in a couple of things one is the reach and the.
Execution. The other is the ability to report back on what actually happened, we called out in the industry.
Level data for the HCP side, you know there's a there are other DTC components for measurement universally what we're hearing is that other competitors ability to measure effectively accurately and timely is really lacking and so for brands that's problematic because the measurement of the first half determines and dictates.
The amount of spend they have for the second half and so when you know when a competitor didn't deliver on what they.
Articulated they would in the first half it actually caused the brand to lose funds for marketing in the second half of the year, which is a big problem.
And so that's that's the pivot back and that's what you're seeing they know that our solution is really tried and true. They know that we've delivered a consistent return on investment actually the return on investments have improved with the addition of that because the audiences or dynamics of real time.
And they've seen that and that's really what I think has contributed to that scale from two deals to 16 very rapidly and all of the 100 per cent renewals that you've heard will state earlier.
So Steve then that the funding will.
Have you shifted to do that quickly in the sense that you know, they're not satisfied with the results.
Can ship that funding immediately to you to spend in the back half of the year is that pretty much all of it.
Yeah.
<unk> works I wouldn't say I wouldn't I would caution you to to say they can shift it immediately like a buy up it's not a buy up scenario okay.
What it is is a strategic decision to pivot away from someone who can't deliver on the reporting meaning they can't measure the programs. They have no ability to tell whether or not their spend was effective over to a solution where they know they're going to have a solid reporting capability by the end of the year and the deliberate backup to their senior management, Here's what we spent here's what our return on it.
<unk> was and here's what we're plugging in for 24 and right now as you know David everybody's in the middle of brand planning season. So it couldn't be more critical to have accurate reports that project 24, and the potential for them to you know to have success as they're building their budget. So that those migrations are happening.
Got it great. Thanks for that that's actually really helpful thing for for no problem out.
And then your second question is back to the the medics.
And then you know it sounds like there's some.
Pretty exciting opportunities now that you're operating as a combined company.
And maybe if you could just explain a little more detail just.
How the decision, making works and their model versus you know what I mean decision, making at the brand. So for example are we leveraging the same types of contacts or the difference.
And also maybe explain a little bit about their channels versus your channels and.
And how they compare and contrast, how that impacts the growth of the business going forward.
Okay I'll I'll. This is well I'll start on the channels and I'll hand, it over to Steve on the first part of the question.
Yeah, so because of their focus exclusively on the consumer or the patient.
And where they come across content digitally right. So think digital T V think social.
<unk> screens and pharmacies screens in waiting rooms wherever they will be.
We know we basically can target content. The content is is like us it's generated by agencies for pharma goes to same approval process, it's more consumer oriented.
And they've done a spectacular job so our models they they have a cost in their P&L to the partnerships.
And and then they have a team that measure that effectiveness and manages it again like us they do not generate any content. So again, the true Tech play Tech enablement of helping pharma connect directly to consumers.
And what we love about this is we've been as you know David we've been working on the consumer side.
For a while.
We haven't we haven't figured it out right.
We met this company and saw how well they did and thought Okay channel partnership enable we know that we know that kind of business, we really like that kind of business. They can measure it is.
True connectivity, we know that's a key variable and they also have a patent on the process, which as we'll get into in subsequent quarters will be very relevant relative to the.
Our reliance on the cookie going downward away into next year and 25. So I think we're gonna have a competitive advantage there so.
Think about what farmers dealing with it's very hard to get to the consumer. It always has been a challenge adherence is one of the largest challenge as they have but our hope is we will be messaging to the doctors, we really messing to the patients and then the two come together you get a higher outcome you gotta. He's got a good communication path between the two which just means the patients more likely to start in <unk>.
Hey on therapy.
Let me hand, it over to Steve relative to the first part yeah.
Yeah.
I mean, some of the synergy that we saw immediately in terms of revenue potential was medics sort of a jewel in the crown of the <unk> business is the audience creation component. So there they're using a methodology very similar to ours. That's tech enabled to create the audiences of patients that they want to subsequently target message.
What we've done on our side, but as you know with that is we've done that seem creation of audiences, but its dynamic meaning it's real time, it's refreshing on a real time basis, so, bringing those two methodologies of audience creation together with disparate execution execution capabilities.
Capabilities is really the on the unlock in the business and so I think that's where we see it on the pharma side. The DTC spend so the patient marketing dollars generally a four to five times that of the C. P C.
See that you know, we're getting that growth back now on the HCP front, we're encouraged by the capability and the and the opportunity we see on the DTC front and as you heard will say really now we're communicating a closed loop fashion, meaning we're communicating from the same audience structure technology to the H C P to the patient.
And then measuring the transaction between those individuals' feedback with it enables us to optimize them you know the communication going forward and again in real time. So I think it's really an exciting time for the business on the product front, the marketing front and the revenue potential growth is really exciting.
And just to be clear, Steve. So are the decision makers on the D. T C versus D. G P side within the brand or the different infrastructure dancing game organization are different.
It's so within a brand you've got an H C. P marketing lead and you've got a patient marketing lead both report generally to the P&L owner of the brand.
And so you are at a high level as you know we've been dealing mostly with brand managers not H C. P marketers and that's been a deliberate choice on the optimize our ex front.
Obviously the growth on that.
The good news is that's the same decision maker that would make the decision on the patient front, albeit they've got to get in a patient to patient marketing spot, but it's those three folks that you want to engage in the conversation.
Got it and just one sorry to ask one more question here, but just for Ed just on the cost side I think I think maybe will you had said that you were halfway through the cuts.
Dimension at all what kind of cost tailwind, we have 24 versus 23.
Yes, so as Bill said, where and when a halfway done with the cost cutting initiatives. We've got the rest of it figured out and are well on its way to be pulled through this year.
So I mean, it's it's all baked into our current projections for next year, so the guidance of being at the 10% or better adjusted EBITDA.
Uh huh.
Got it.
Hey, guys. Thanks again.
Thanks, David Thanks, David.
Thank you.
Our next question is from the line of Neil Chatterji with B Riley. Please go ahead.
Yeah.
Good morning, guys. Thanks for taking the questions.
Like a lot of mine were already asked but just in terms of gross margins. You know we saw some improvement there in the quarter. Maybe just you know how should we think about gross margins kind of closing out the year and then into 'twenty four post.
The acquisition.
Yeah, So we because of the and Neil good to hear your voice because of the pick up on the DAP, which has hum.
Contextual work upfront we.
We had a nice positive impact on gross margin, we should see that through the end of the year.
And.
And I would say we will we will stay within our you know current ranges on gross margin just because at this stage when we're starting to see growth come back you know, it's going to be important to do what the clients need.
But if we if we look at the seasonality I think youre going to see a very similar trend will have a lot started going into Q1, which is great.
And we'll probably start more in Q2 on an new new clients to come out of the RFP season.
But really happy with the improvement to the to the to the range. We're in with gross margin and obviously see it drops right down.
We also think on on and medics should have a positive impact as well, but we're still it's still early on that one.
Got it and you might've answered my follow up but just in terms of the seasonality of the business I mean, just given the growing that pipeline and antibiotics acquisition and you know how should we think about that in terms of you know is that in line with historic seasonality or would that perhaps has changed a little bit next year.
Yeah, I think Andy can give you the percentages by quarter, we're going to probably stick with seasonality just because pharma operates that way.
We obviously hope to do better than that but let's it's probably safer for modeling to keep the seasonality and do you want to share the percentages just to have them on records.
Yeah, I would say just roughly 35% to 40% of the business will be in the first half of the year and 60% to 65% of the business will be in the second half of the year and I think that's a fair way to think about in 2024, we're still getting our hands around the acquisition, but they seem to fall fairly similar cadence as well.
Yeah.
Great that's it for me thanks.
Thanks Neil.
Thank you.
Our next question is from the line of ethnic Matson Nosy with Lake Street. Please go ahead.
Yes wanted to tease out the medics Rev.
Revenue for 2023 here I think when you talked about it on the acquisition that it was about a $37 million business growing.
Better than 20% what is implied in 2023 or revenue from medics.
On a full year basis.
And then do you want to take that one I can say yeah.
So it just gave.
Gave a 65 million.
On a full year projection would be coming from Optimizer X.
The rest is basically the Q4 impact of medicine acquisition.
The new 60 at this time.
Yeah.
Yeah.
$5 million so thank you for.
Right I was asking what was standalone metrics for the 12 months 2023.
Okay, Oh stand alone.
Are we we're not going to.
Yeah, but not doing go ahead at near full carve out guidance yeah.
Yeah.
Yeah.
So basically the Q4 impact is what I just mentioned, but we're not going to.
Reported them too and then just separately going forward, we plan to combine the two and basically operate as one company.
Okay and then.
Regarding the competitors sort of is there.
Are they being turned off completely is there a scaled back that's happening and then secondarily why are they is it a situation where the you know.
And measurable ROI or is it just not scalable enough to meet the demands of the brands.
I'll take that one yeah, it's it's a little bit of both Eric I mean outside.
Outside of Us and connective as you know, there's not really a meaningful marketing network out there right now so it's really just onesie twosies. So the scale is an issue scaled many reach of physicians.
Marketers are deciding.
To go with people just got a proper network because they get a much broader reach so every time they deploy a program. It just it just simplifies things for them and then in terms of measurement. If they don't have the ability to actually deliver that physician level data, which is the ultimate success metric of the.
Of the of the campaigns that Theyre running.
Don't have an ability to justify the investment going forward and they found that to be a huge problem, but we invested Luckily we had the foresight to beginning of really the end of middle of end to middle of last year to invest and double down on the physician level data exercise.
And that's enabled us to be able to report back to these brands and an accurate timely way.
On how the programs are going and also to partner with other companies that do measurement that are third party independent providers.
You know to validate the findings that we're providing.
Got it.
And then one last one for you a housekeeping item here post the close of medics.
It was kind of the.
Post closing cash balance and then what share count post close.
Yes, so the post close cash balance like we said, we have about $30 million in the bank.
A number of shares I mean I have to ask can you talk about that one.
Just under $18 million.
Okay.
Got it thanks.
Thanks, Eric.
Thank you.
Our next question is from the line of Richard Baldry with Roth Capital Partners. Please go ahead.
Thanks.
Curious your early initial takeaways, it's probably been pretty brief about how it's affecting the acquisitions affecting your RFP season. There's two schools of thought right you want less noise to just have things run smoother gather would be it looks like you'd be a bigger more important combined entity. So how quick can farmer react.
The fact that you are now a unified company do you think have you seen any even anecdotal evidence that that's been helpful or do you think the real benefit I'll, probably come next year, when they've had a year of seeing sort of side by side integrated in and your win rates changed a S. P.
Thanks.
Rich, it's Steve Great to hear your voice glad you're on.
It's interesting the immediate the minute the announcement came out we get sort of an immediate response of Hey. This is great guys what does it mean and.
And so there's already a pretty good groundswell of interest coming in during the RFP season to connect these two solutions and to deploy them together in the marketplace I think the market sees the synergy that we see and why we executed the acquisition will take a little bit of time, I think to scale it going into 2024, but.
Having said that you.
Will mentioned earlier, a couple of the wins that we've had both.
Both of those wins included both the H C P side, and the patient side, meaning the medic side being connected and using the DAC model to drive the messaging across the ecosystem. So some early wins that are meaningful and sizeable and really exciting and I think a good tell tale to what 'twenty 'twenty four will look like yeah and rich.
This is will just add to that you know that we've cut our teeth on patient right. So our clients already think of us as someone who can help them engage with patients that are highly engaging level with SMS and adherence type work. So a lot of the rfps and that process you have to check a bunch of boxes and one of those boxes.
Patients. So just keep in mind that everything we've been checking for the last three or four months is included patient now we.
We didn't have anywhere near this capability and now we do so yeah I agree with everything Steve said I just wanted to put on that it isn't a completely new thing for our clients to think of us for patients.
And just wondering if you wanted a clarification really quickly sorry, I said are on the share count it's actually just under $17 million at just under 18 million.
Great, Thanks, and even better.
And just when I think about the metrics you'd kind of call out and focus on you talked a lot about top 20 pharma or somewhere close to 60% of revenues. When you put the two companies together and let's say you know one plus one equals two on a revenue side.
Does it become far more cost effective to really go after that next.
And the top 100, because you can drive a better or pull out of that does it come more sales efficient to to kind of dig into that middle market a more attractive. However, you want to think about it. Thanks.
Thanks, Rich I'll start and Steve can add you know I think still most of the money.
Right at the top of any partners with them with a lot of the others to supply the commercial and marketing.
Thanks, but because of that and because of the way. It's designed to there will be a day when we have turnkey solutions for one product companies, because they're not gonna be able to afford the traditional models.
They're not even as effective and so I would say in the short term our focus is absolutely. The top 20 top 30 manufacturers top 200 brands, especially our focused specialty medications.
But there is a day, where we'll be able to have a model for companies that can't afford what the top 20 can afford but they need it.
And we have some of those clients today that actually use our solution to drive their business and they only work with us.
You can't use names, but its been highly effective now.
Now that will have more scale, Steve and his team can put that together.
I think you covered it I mean, you know two of them two of those DAP deals are outside of the top 20, rich just to give you an idea and actually what they decided to do was replace their sales force to a large degree with the execution of the deployment of the DAP model, It's just way more efficient from a cost perspective.
Great. Thanks.
Yeah. Thanks rich.
Yes.
Thank you.
As there are no further questions I would now hand, the conference over to William J Federal CEO for closing comments.
Thank you operator, and thank you everyone for joining us this morning.
I'm sure you can sense, our excitement and see our positive momentum from the second half of 2023 and into 2024.
As I say internally we are back.
Back.
As we move forward in our financial and operational planning for 2024, we are transitioning into a new year on firm ground, having significantly enhanced our reach with H C piece and patients enabled by proprietary AI models, the headwinds have largely subsided and we now offer a very focused.
In holistic solution that pulls everything together powerful agile solutions that solve pressing everyday challenges such as brand awareness adherence access affordability and onboarding hard to find patients for H C piece.
These are the challenges our clients doctors and patients face in today's health care system, and we are thrilled to be play our part.
The medics transaction, not only positioned to optimize Rx to profitably expand our market opportunity.
So further enhancing our position as a leading player in the digital farmer marketing landscape by meaningful expand meaningfully expanding our channels and reach to unlock value for our customers.
Moreover, the transaction is accretive to earnings as medics is highly profitable company and is expected to contribute meaningfully to revenue revenue growth EBITDA and earnings per share.
On a combined basis revenues are expected to surpass $100 million, while generating significant profitability and cash flow.
We will be working hard to finish the year strong conduct multiple non deal roadshows and continue to fine tune our focus to maximize impact.
Five years ago this month.
We rang the NASDAQ Bell as part of our uplift from the OTC and today, we will do so again at the close of the markets.
It has been an exciting journey up to this point.
Just getting started as it relates to scale with our clients that combined with actually helping doctors and patients align on care is what motivates us as a team.
And with that thank you for your time and I look forward to discussing the full year in our Q4 earnings call have a great rest of your day everyone. Thank you operator.
Thank you so 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.
Statements made by management during today's call may contain forward looking statements, but the definition of section 27, a and the Securities Act of 1933 as amended and section 21 E of the Securities Act of 1930 full has amended.
These forward looking statements should not be used to make.
Investment decisions the words anticipate estimate expect.
Possible and seeking and similar expressions I didn't fight forward looking statements.
They may speak only to the date that such statements Amit.
Such forward looking statements and this call include statements regarding estimation of total addressable market size market penetration revenue growth gross margin operating expenses profitability cash flow technology investments growth opportunities acquisitions upcoming announcements.
And the need for raising additional capital.
Also include the management's expectations for the rest of the year and adoption of the company's digital health platform.
The company undertakes no obligation to publicly update or revise any forward looking statements, whether because of new information future events or otherwise.
Forward looking statements are inherently subject to risks and uncertainties some of which cannot be predicted all quantified.
Future events and actual results could differ materially from those set forth and contemplated by our underlying these forward looking statements.
The risks and uncertainties to which forward looking statements are subject to include but are not limited to the effects of government regulations competition and I don't want to be real risk.
Risks and uncertainties to which forward looking statements are subject.
To could affect business and financial results are included in the company's annual report on Form 10-K for the quarter ended 31 December.
2022.
Form is available on the company's website and on the S. E. C website at SEC Doc G O V.
Before we end today's conference I would like to remind everyone that this call will be available for replay via webcast only starting later this evening.
Running through for you.
Please refer to today's press release for replay instructions available via the company's website at Www Dot optimized Rx dot com.
Thank you for joining US today. This concludes today's conference call you may now disconnect your lines.
Uh huh.
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