Q2 2024 OptimizeRx Corp Earnings Call
John Williams: And Hattaway Yeah. Hear what I say. No comment. No comment. No comment. No comment. No comment. No comment. No comment. There is no debate! That's enough for today. It's been a long, deep, night. I wish you all a great weekend. If you enjoyed the movie, come back every Friday. I'll see you next Wednesday. When it's time for Star Wars.... Star Wars! This is John Williams. Thanks for watching Star Wars.
John Williams: Phil Christopher checks on Christopher Thank you for watching, don't forget to sub and hit the bell
Speaker Change: Please stand by. Your program is about to begin. If you need audio assistance during today's program, please press star zero.
Operator: Good afternoon, everyone, and thank you for joining OPTIMIZERx's second quarter fiscal 2024 earnings call. With us today is the Chief Executive Officer of OPTIMIZERx, William Febbo. He is joined by Chief Financial Officer, Ed Stelmakh, President, Steve Silvestro, General Counsel, Marion Odence, Ford, and Senior Vice President of Corporate Finance, Andrew DiSilva. At the conclusion of today's earnings call, I will provide some important cautions regarding the four forward-looking statements made by management during today's call.
Speaker Change: Good afternoon, everyone, and thank you for joining OPTIMIZERx's second quarter fiscal 2024 earnings call.
Speaker Change: With us today is the Chief Executive Officer of OPTIMIZERx, William Febbo. He is joined by Chief Financial Officer Ed Stelmakh, President Steve Silvestro, General Counsel Marion Odence Ford, and Senior Vice President of Corporate Finance Andrew DeSilva.
Speaker Change: At the conclusion of today's earnings call, I will provide some important cautions regarding the forward-looking statements made by management during today's call. 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 and in the investors section of the company's website. Now I'd like to turn the call over to OPTIMIZERx CEO , William Febbo. Sir, please go ahead.
Operator: 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 and in the investor section of the company's website. Now, I'd like to turn the call over to OPTIMIZERx CEO William Febbo. Sir, please go ahead.
William Febbo: Thank you, Operator, and good afternoon to everyone joining today's second quarter 2021 earnings call. While we welcome 36% of your revenue gross positive cash flow from operations and a beat for adjusted EBITDA, we sell short on revenue expectations and consensus mid-boy. This was primarily a result of a timing issue.
William Febbo: Thank you, operator. Good afternoon to everyone joining today's second quarter 2024 earnings call.
Speaker Change: While we welcome 36% year-over-year revenue growth, positive cash flow from operations, and a feed for adjusted EBITDA, we fell short on revenue expectations and consensus midpoint.
William Febbo: It was one of our largest GAP deals to date. We are having success in converting our debt, and pipeline into closed deals, however, because that's a new innovative solution in the market. There are additional pools that the farm of customer level required to close out all the items that would allow us to take the revenue into the quarter.
Speaker Change: This was primarily a result of a timing issue. It was one of our largest DAP deals to date.
Speaker Change: We are having success in converting our DAP pipeline into closed deals. However, because DAP is 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 into the quarter.
William Febbo: We were working hard with our client to get everything documented, but we didn't get it there before the end of the quarter. That said, we are building momentum with our clients and partners who have embraced our DAP solution and proprietary network. And this is getting us closer to being pharma's preferred partner for brand marketing. As you know, farming as an industry runs all new commercial tactics through internal multi-functional approvals, particularly for multi-million dollar deals, and we need these additional approvals to close.
Speaker Change: We were working hard with our client.
Speaker Change: to get everything documented, but we didn't get it there before the end of the quarter.
Speaker Change: That said, we are building momentum with our clients and partners that have embraced our DAP solution and proprietary network, and this is getting us closer to being PhRMA's preferred partner for brand marketing.
Speaker Change: As you're aware, Pharma, as an industry, runs all new commercial tactics through internal multifunctional approvals, particularly for multi-million dollar deals, and we needed these additional approvals to close.
William Febbo: In this particular instance, one of our longest-standing clients committed to moving forward with approximately $6 million in multi-brand DAP printcraft, with that we did to launch in Q224, and got slightly delayed in their internal approval process. This customer is now nearly complete with its approval process, and we expect full contract approvals to be completed in Q3 with conversion to revenue in the second half of 2024. I believe we would have surpassed consensus expectations on the top as well as the bottom had this timing shift not taken place.
Speaker Change: In this particular instance, one of our longest-standing clients committed to moving forward with approximately $6 million multi-brand DAP program that was due to launch in Q2-24.
Speaker Change: and got slightly delayed in their internal approval process.
Speaker Change: This customer is now nearly complete with its approval process and we expect full
Speaker Change: Contract approvals to be completed in Q3 with conversion to revenue in the second half of 2024.
Speaker Change: I believe we would have surpassed consensus expectations on the top as well as the bottom had this timing shift not taken place. But the great news is that we're moving forward and the size of the transaction illustrates the power of the DAP platform.
William Febbo: But the great news is that we're moving forward, and the size of the transaction illustrates the power of the staff platform. Our objective continues to remain very clear, to convert as many of the over 300 brands we currently support to DAP, and since the second half of 2023, we have made significant progress with this initiative and have seen tremendous momentum with our clients who want to convert to DAP. As the number of deals continues to grow, we have accumulated enough market pricing knowledge to establish a more consistent pricing mechanism as a way of making our revenue recognition less lumpy, stickier, and more consistent over time.
Speaker Change: Our objective continues to remain very clear.
Speaker Change: To convert as many of the over 300 brands we currently support to DAP, and since the second half of 2023, we have made significant progress with this initiative and have seen tremendous momentum with our clients who want to convert to DAP.
Speaker Change: As the number of deals continues to grow, we have accumulated enough market pricing knowledge to establish a more consistent pricing mechanism as a way of making our revenue recognition less lumpy, stickier, and more consistent over time.
William Febbo: We're in the process of rolling these out; these changes will be rolled out in Q3, as we continue our evolution as a strategic partner to the top foreign companies in the world. In fact, we've seen a material separation between our top three pharma clients with average revenue per client at $9.7 million versus our top 20 pharma clients with an average revenue of $2.7, which we believe is a testament to the value our top clients see in our solutions as they continue to award a larger share of their commercial wallet to optimize RF.
Speaker Change: We are in the process of rolling these out, these changes out, in Q3, as we continue along our evolution as a strategic partner to the top pharma companies in the world.
Speaker Change: In fact, we've seen a material separation between our top three pharma clients with average revenue per client at $9.7 million versus our top 20 pharma clients with an average revenue of $2.7 million.
Speaker Change: which we believe is a testament to the value our top clients see in our solutions as they continue to award larger share of their commercial wallet to optimize RX.
William Febbo: We are dealing with the timing issue; we are not seeing pullback from our clients on their spending in the second half of the year. Supported by an amazing team and a solid technology platform, Armada is being driven by our ability to address our clients' largest challenge, to find and engage brand-eligible patients seamlessly.
Speaker Change: We, while we are dealing with the timing issue, we are not seeing pullbacks from our clients on their spending in the second half of the year.
Speaker Change: Supported by an amazing team and a solid technology platform, our momentum is being driven by our ability to address our clients largest challenge, to find and engage brand eligible patients seamlessly.
William Febbo: It's not just about purchasing media; it's about precise targeting with machine learning and a compliance methodology that is delighting our clients and yielding positive ROI. We are seeing continued customer adoption as pharma is looking for partners with scalable solutions with both HCP and DTC reach. Interoperability across multiple points of care and the capability to accurately report insights back in a timely manner. Since the second half of 2023, we've seen accelerated success in converting the 300 plus brands that we support into doubt. In the first half of 2004, we closed 17 DAF deals, including 8 in the second quarter, building on the 24 deals we closed in the first 23.
Speaker Change: It's not just about purchasing media, it's about precise targeting with machine learning and a compliant methodology, which is delighting our clients and yielding positive ROIs to them.
Speaker Change: We are seeing continued customer adoption as pharma is looking for partners with scalable solutions with both HCP and DTC reach, interoperability across multiple points of care,
Speaker Change: and capability to accurately report insights back in a timely manner.
Speaker Change: Since the second half of 2023, we've seen accelerated success in converting the 300-plus brands that we support to DAP.
Speaker Change: In the first half of 24, we closed 17 DAP deals, including 8 in the second quarter, building on the 24 deals we closed in 23.
William Febbo: These deals are direct farming engagements, which generally are more sticky, enjoy a very high ROI, have a higher gross margin for our business, and continue to support a high annualized contract value of around 1.0. As we have said, tracking our ability to convert from tactical to DAP will provide a clear view of the longer-term growth potential of this business. Of note, we closed our first cross sell for the DTC side of the business into a DAP program and enhanced our overall commercial team and leadership as well as our approach to the second half for renewals, new launches, and year-end reallocations, not to mention all the planning for 2025 that takes place in the last four months of the year. We are ready with our best team to date.
Speaker Change: These deals are direct farm engagements which generally are more sticky, enjoy a very high ROI, have a higher gross margin for our business, and continue to support a higher annualized contract value of around $1 million.
Speaker Change: As we have said, tracking our ability to convert from tactical to DAP will provide a clear view of the longer-term growth potential of this business. Of note, we closed our first cross-sell for the DTC side of the business into a DAP program.
Speaker Change: and enhanced our overall commercial team and leadership as well as approach to the second half for renewals, new launches, and year-end reallocations, not to mention all the planning for 2025 that takes place in the last four months of the year. We are ready with our best team to date.
William Febbo: In addition, we have dozens of depth deals in our pipeline, and that previously 50% is coming from the DTC side of the business with numerous opportunities in late-stage negotiations. Optimize our X remains a leading company with combined technologies to both create dynamic audiences and execute messaging across a proprietary point care network for our client. We continue to see organic growth as the key driver of our business. The team is focused on executing against our hypothesis of driving more cross-selling to our DCC and HCP clients and continuing to fine-tune the platform to maximize its revenue potential.
Speaker Change: In addition, we have dozens of DAP deals in our pipeline, and as shared previously, approximately 50% is coming from the DTC side of the business, with numerous opportunities in late-stage negotiations.
Speaker Change: OPTIMIZERx remains a leading company with combined technologies to both create dynamic audiences and execute messaging across a proprietary point of care network for our clients.
Speaker Change: We continue to see organic growth as the key driver of our business. The team is focused on executing against our thesis of driving more cross-selling to our TTC and HCP clients and continuing to fine-tune the platform to maximize its revenue potential.
William Febbo: Given our traditional close rate and pipeline conversion, we have over an 80% view of our revenue guidance for the year at this point and have approximately $15 million GOGAT remaining for the second half of the year to fall within current expectations. We believe this is possible. We will keep everyone up to date as we go through the year. And with that, I would like to turn the call over to our CFO, Ed Stelmakh, who will walk us through our financial details.
Speaker Change: Given our traditional close rate and pipeline conversion, we have over an 80% view for our revenue guidance for the year at this point and have approximately $15 million go-get remaining for the second half of the year to fall within consensus current expectations. We believe this is possible.
Speaker Change: We will keep everyone up to date because we wrote through the year. And with that, I would like to turn the call over to our CFO at Stelmakh, we will walk us through our financial details.
Ed Stelmakh: Thanks for your willingness and good afternoon, everyone. Press releases will be issued with the financial results of our second quarter and June 30th, 2024, and a copy will be available for viewing, and maybe downloading, in the description section of our website, and it's an affirmation to be obtained through our force training. Thank you. Second Portal revenue came at 18.8 million, and an increase of 36% from the 13.8 million we recognized during the same period in 2020.
Speaker Change: Thanks, William, and good afternoon, everyone. A press release was issued with the financial results of our second quarter, and the June 30th, 2020-4, and it copies available for viewing, and may be downloaded in the best release in the section of our website.
Speaker Change: Additional information can be obtained through our forthcoming 10th view.
Speaker Change: Second quarter revenue came in at $18.8 million, an increase of 36% from the $13.8 million we recognized during the same period in 2023.
Ed Stelmakh: Grossmargin for the quarter if he is from 56.6% in the quarter ended June 28, 2023 to 62.2% in the quarter ended June 28, 2024. You're on your Grossmargin expansion, it's tied to higher-dap-related revenue, as well as a stable boat channel partner mix. Our operating expenses for the quarter ended June 30th, 2024, increased by $2.7 million year-over-year, largely due to the medic's postal position.
Speaker Change: Gross margin for the quarter increased from 56.6% in the quarter ended June 30, 2023, to 62.2% in the quarter ended June 30, 2024.
Speaker Change: Year-on-year gross margin expansion is tied to higher DAP-related revenue, as well as a favorable channel-partner mix.
Speaker Change: Our operating expenses for the quarter ended June 30, 2024, increased by $2.7 million year-over-year, largely due to the Medics' cost of position.
Ed Stelmakh: We had a net loss of 4 million or 22 cents per basic and fully diverse share, so the 3 months and June 38th, 2024, compared to a net loss of 4.1 million or 24 cents per basic and fully diverse share for the same 3 month period in 2023. On a non-gap basis, our net income for the second quarter of 2024 was $0.3 million or $0.02 for fully diluted share outspending. It is compared to a non-gap net loss of 0.2 million, or one cent, or fully the lure share outspending in the same year goal period.
Speaker Change: We had a net loss of $4 million, or $0.22, per basic and fully-valued share for the three months ending June 30, 2024.
Speaker Change: as compared to a net loss of $4.1 million or $0.24 per basic and fully delivered share for the same three-month period in 2023.
Speaker Change: On a non-theab basis, our net income for the second quarter of 2024 was 0.3 million or 2 cents for fully the lower share outstanding.
Speaker Change: as compared to a non-GAAP net loss of 0.2 million, or one cent, per fully delivered share of spending in the same year-ago period.
Ed Stelmakh: Adjusted EBITDA came in at $0.5 million gain for the second quarter of 2024, compared to a $0.8 million double loss during the second quarter of 2023. Operating cash flow came in at $2.9 million for the first half of 2024, and we ended the quarter with a $15 million cash balance, as compared to a $13.9 million balance on December 31, 2023. The remaining principal of our debt financing currently stands at $37.3 million.
Speaker Change: Adjusted EBITDA came in at $0.5 million gain for the second quarter of 2024 compared to a $0.8 million loss during the second quarter of 2023.
Speaker Change: Operating cash flow came in at $2.9 million for the first half of 2024, and we ended the quarter with a $15 million cash balance, as compared to a $13.9 million balance on December 31, 2023.
Speaker Change: The remaining principal of our debt financing currently stands at $37.3 million.
Ed Stelmakh: If you recall, to help fund the $84.5 million cash portion of last October's MedixHealth acquisition, the company took on a $40 million debt financing, and we paid off $2.7 million of principal through the second quarter of 2024. We continue to believe we're well funded to execute against the operational goals. Now, let's turn to our GPIs for the second quarter of 2024. Average revenue for the top 20 pharmaceutical manufacturers now stands at 2.7 million
Speaker Change: If you recall, to help fund the $84.5 million cash portion of last October's MedixHealth acquisition, the company took on a $40 million debt financing, and we paid off $2.7 million of principal through the second quarter of 2024.
Speaker Change: We continue to believe we are well-funded to execute against their operational goals.
Speaker Change: Now let's turn to our KPIs for second quarter of 2024.
Speaker Change: Average revenue per top 20 pharmaceutical manufacturers now stands at $2.7 million and we work with all of the top 20 largest pharma companies in the world.
Ed Stelmakh: And we work with all of the top 20 largest pharma companies in the world. The net revenue retention rate is showing improvement at 124%, up from 89% in Q2 2023. Meanwhile, revenue per FTE came in at $658,000, topping the $565,000 we posted in Q2 2023. We're encouraged by the continuing improvements in our KPIs as we move past external market challenges and return to growth and profitability as a leader in our state. And now, with that, I'll turn the call back over to Will.
Speaker Change: Net revenue retention rate is showing improvement at 124%, up from 89% in Q2 2023.
Speaker Change: Meanwhile, revenue per FTE came in at $658,000, topping the $565,000 we posted in Q2 2023.
Speaker Change: We are encouraged by the continuing improvement in our KPIs as we move past the external market challenges and return to growth and profitability as a leader in our space.
Speaker Change: And now with that, I'll turn the call back over to Will. Will?
William Febbo: Hey, operator, why don't we turn to Q&A? Thank you.
Will: Operator, why don't we turn to Q&A. Thank you.
Operator: Thank you. And at this time, if you'd like to ask a question, please press the star 1 on your telephone keypad. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. We'll pause for just a moment to allow those questions to enter the queue, and while we wait, we'll take our first question from Ryan Daniels on behalf of William. Do you know what I'm talking about?
Speaker Change: Thank you, and at this time, if you'd like to ask a question, please press the star 1 on your telephone keypads. You may remove yourself from the queue at any time by pressing star 2. Once again, that is star 1 to ask a question. We'll pause for just a moment to allow those questions to enter the queue.
Ryan Daniels: And while we wait, we'll take our first question from Ryan Daniels from William Blair.
William Febbo: Hey guys, thanks for taking the questions tonight. First one, maybe on the large client that was postponed. You didn't say it directly, but I assume that's stuck in medical legal review. Number one, and number two, was there anything unique about this relative to other customers or things like this client in the past that caused that? And what's the level of your conviction that this will certainly start up at least five at the end of the third quarter so that you can see some revenue recognition?
Ryan Daniels: Hey guys, thanks for taking the questions tonight.
Ryan Daniels: First one, maybe on the large climb that was postponed.
Ryan Daniels: You didn't say it directly, but I assume that's stuck in medical legal review, number one. And number two...
Speaker Change: was there anything unique about this relative to other customers or things that this client and the path that caused that and what's the level of your conviction that this will certainly start up at least five at the end of the third quarter so that you can see some revenue recognition.
William Febbo: Hey, Ryan, thanks. A good question. Yeah, we have complete conviction that it will start inside of Q3. The distinction here is how large it is. And, you know, obviously, that is just very telling against, you know, a scaling, the gap solution. And not so much a legal review, just process review. It's, you know, as Farmer gets his arms around language, around machine learning, and marketing; it's new, and that needs to be reviewed. But it's gone very well. Obviously, we wanted it to happen faster. We always do. But high conviction is very meaningful. And it's with our largest standing, our longest, last client, which we just, the team just gets really excited about.
Ryan Daniels: Hey Ryan, thanks. Good question. Yeah, we have complete conviction that it will start inside of Q3. The distinction here is how large it is and you know obviously that is just very telling against
Speaker Change: Outscaling the DAP solution. And not so much legal review, just process review.
Speaker Change: You know, as pharma gets their arms around language, around machine learning and marketing, it's new.
Ryan Daniels: And that needs to be reviewed. But it's it's it's gone very well. Obviously, we wanted it to happen faster. We always do. But high conviction.
Ryan Daniels: Very meaningful.
Ryan Daniels: and it's with our largest standing, our longest lasting client, which we just, the team just gets really excited about.
Ryan Daniels: Okay, that's very helpful color. And then if we think about the sales pipeline, maybe a few questions related to that, any change in regards to what you're seeing with the appetite for HCP versus DTC. I think the DAP pipeline was kind of 50-50 last quarter. And then, number two, I'm curious if you're also seeing more interest in goals, as you've kind of integrated two offerings and, you know, really have brought to market the first integrated model for traditional, traditional with point of care marketing.
Speaker Change: Okay. That's a very helpful color.
Speaker Change: If we think about the sales pipeline, maybe a few questions related to that, any change in regards to what you're seeing?
Speaker Change: with appetite for HCP versus DTC. I think that that pipeline was kind of 50-50 last quarter. And then number two, I'm curious if you're also seeing more interest in goals as you kind of integrate it to all things.
Speaker Change: really have brought to market the first integrated model for traditional digital media with point-of-care marketing.
Steve Silvestro: Yeah, happy to. They're right. Thanks for the questions.
Ryan Daniels: Yeah, Steve, you want to grab that one?
Steve: Yeah, happy to. Hey Ryan, thanks for the questions.
Steve: You know, we continue to see in the pipeline requests coming in now for opportunities to bid both on HCP and DTC connected activity, and I think that's something we're really excited about. We just participated in our third innovation
Steve: Platform with a top five client, where the goal of that platform, the goal of the event was innovative ways to connect ACP and DTC marketing to drive efficiency.
Speaker Change: And as you know, we had won the last couple that we were in with what we'd done with GAPS. So very excited to see that go forward. And we see that same activity level reflected in the pipeline. I think the demand from the market is very, very clear. And I think pharma has really wrapped their head around that.
Steve: Creating efficiencies of bringing those two together. I think what they don't know yet, and we're all sort of wading through it together as we go, is what execution looks like at scale.
Steve: And so we'll, you know, we'll have more to report back on that next time we speak. But as you heard from Will's prepared comments, we've already closed the first HCP DTC cross cell via DAP.
Speaker Change: So we're excited to now see how that goes and performs. And as with everything that we've seen in pharma, together and over the last 20 years of my career, they'll do something, test it. If it works well, they'll scale it. And that's consistent with what we've seen across the boards of business.
Ryan Daniels: Okay, and then, just in regards to the overlap with medics, I know maybe two or three quarters ago you indicated it was about a 20% overlap given the integration of the asset into your sales. Can you help us with data on how that's traded so we can view what's the actual upsell across a lot for Dundee, is there? Thanks.
Speaker Change: Okay, and then just in regards to the overlap with Medix, I know maybe two or three quarters ago you indicated it was about a 20% overlap. Given the integration of the asset in your sales, can you give us an update on how that's trended so we can view what the potential upsell, cross-sell opportunity is there? Thanks.
William Febbo: Yeah, I'd say there's been really good movement there. Relative to the closing of brands, as we've messaged, we expect a lot of that to really trigger in the second half. Because we're coming up, October will be the one year anniversary, everyone tells you that it takes a year, even though you hope it takes a month, and we've seen just great cooperation among the team, we've seen curiosity from the client, which drives meetings, and so I would say, come to three, we'll be able to quantify that relative to the 20%, I can't do that today, but all signs are positive that the groups are working as a group, and TN is a team, not as different groups, and we've done a good job with the training to make sure they feel they've got the skills and the resources to represent everything we do. Got it.
Speaker Change: Yeah, I'd say there's been really good movement there. Relative to the closing of brands as we've messaged, we expect a lot of that to really trigger in the second half.
Speaker Change: because we're coming up, October will be the one year anniversary, everyone tells you it takes a year, even though you hope it takes a month.
Speaker Change: and we've seen just great cooperation among the team. We've seen curiosity from the client, which drives meetings.
Speaker Change: So, I would say, come to three, we'll be able to quantify that relative to the 20% I can't do that today, but all signs are positive that
Speaker Change: The groups are working as a group and as a team, not as different groups, and we've done a good job with the training to make sure they feel they've got the skills and the resources to represent everything we do.
Ryan Daniels: All right, well, thanks for the questions, and again, I know it fell short given a timing issue, but given that it's just timing, I'll still say congratulations on the strong performance and the momentum you're seeing. Thanks.
Speaker Change: Got it. All right, well, thanks for the questions. And again, I know it fell short given a timing issue, but given that it's just timing, I'll still say congrats on the strong performance and the momentum you're seeing. Thanks.
Operator: And next, we'll go to Kyle Bowser with B. Reilly Securities.
Ryan Daniels: Thanks, Ryan. Thanks, Sean.
Speaker Change: And next we'll go to Kyle Bowser with B. Reilly Securities.
Kyle Bowser: Great, thanks for taking my questions. So just, well, I think you mentioned in the preparation of your marks that, in relation to your guidance, you've got about 80% visibility and revenues with 15 million to go. Can you maybe help put that into perspective? For example, you know, this time last year, how much incremental sales did you generate or, or, you know, maybe in another way, just trying to understand the kind of your conviction. Thank you. Yeah,
Kyle Bowser: Great, thanks for taking my questions. So just, Will, I think you mentioned in the prepared remarks that
Kyle Bowser: In relation to four-year guidance, you've got about 80% visibility in revenues with $15 million go-get. Can you maybe help put that into perspective?
Speaker Change: For example, you know, this time last year, how much incremental sales did you generate or you know, maybe in the other way, just trying to understand kind of your conviction here.
William Febbo: Yeah, so strong conviction. Otherwise, I wouldn't say it.
Speaker Change: Stronconviction, otherwise wouldn't say it. The last year was a little bit of an anomaly because we actually saw business turn up faster than we thought.
Speaker Change: But generally, we're between, you know, 75 and 85% at this point. So I feel good about where we are. You know, when you're scaling a new solution inside of a business,
Speaker Change: It's always, you know, there's always challenges like this, timing.
William Febbo: The last year was a little bit of an anomaly because we actually saw business turn up faster than we thought. But generally, we're between, you know, 75 and 85% at this point. So I feel good about where we are. You know, when you're scaling a new solution inside of a business, it's always, you know, there are always challenges like this timing. And also, we bought a company last year, right? And we expect them to start to show some nice growth in the second half, just based on some of the fine tuning we've done around the team, the messaging, and the training. So good, strong conviction, not atypical of where we are. Not tremendously better, either. Either I don't want to paint the wrong picture, but I feel good about it.
Speaker Change: And also, we bought a company last year, right? And we expect them to start to show.
Speaker Change: Some nice growth in the second half.
Speaker Change: just based on some of the fine-tuning we've done around the team, the messaging, and the training. So, good, strong conviction, not atypical of where we are, not tremendously better. Either, I don't want to paint the wrong picture, but feel good about it.
William Febbo: Got it, I appreciate that it was helpful. And then maybe two more questions. First, Steve Naldy and I know we're kind of on track for... Doing about 60% of total sales in the back half of the year, so any color you can provide on Q3, Q4, seasonality, and then you've talked about streamlining reporting and analysis to kind of engage with executives in the data analytics teams. Can you talk about improvements here and how that's kind of been paying off by either winning follow-on projects or referrals, etc.? Thank you.
Speaker Change: Got it, appreciate that helpful. And then maybe two more questions. First, see the melody and I know we're kind of on track for it.
Speaker Change: doing about 60% of total sales in the back half of the year. So any color you can provide on kind of Q3, Q4 seasonality. And then separately, you've talked about streamlining reporting and analysis to kind of engage with executives and the data analytics teams.
Speaker Change: Can you talk about improvements here and how that's kind of been paying off by either winning follow-on projects or referrals etc. Thank you.
Steve Silvestro: Sure. Let me start with that second one first, and then maybe Andy can talk about seasonality relative to the numbers.
Speaker Change: Sure, let me start with that second one first and then maybe Andy can talk to the seasonality relative to the numbers.
Steve Silvestro: On additional insights and automating insights, and, you know, that is what we've really focused on over the last year, fine-tuning data and reporting, because the industry has fully adopted what we're doing in this space at the point of care. And when they do that, they want every data point they can get, which is terrific. That's how they make their decisions.
Speaker Change: on the on on the additional insights and automating insights. And, you know, that is
Andy: What we've really focused on over the last year is fine-tuning data and reporting, because the industry really adopted fully what we're doing in this space at Point of Care. And when they do that, they want every data point they can get, which is terrific. That's how they make their decisions, and it's...
Steve Silvestro: And so we worked very hard to get to that point. In the process, we realized that, you know, 10 years doing something no one else has done gets you a lot of really unique skill sets and data, and as we invested in our team, the reporting team, the data stack, and data management, we realized that we actually have some really interesting proprietary insights. That is, those are early days; right now, we're focused on getting that to scale, getting DTC to grow, and bringing those two together as a combined value prop, and probably, you know, inside of RF PCs, and that's when we'll start to talk to clients about 25 relative to incremental insights. If it happens sooner, that'd be great, but we're not counting on it.
Speaker Change: And so we've worked very hard to get to that point.
Speaker Change: In that process, we realized that, you know, 10 years doing something no one else has done.
Speaker Change: gets you a lot of really unique skill set and data, and as we invested in our team, the reporting team and the data stack and data management, we realized that we actually have some really interesting proprietary insights.
Speaker Change: That is, those are early days right now we're focused on...
Speaker Change: You know, getting DAPT to scale, getting DTC to grow.
Speaker Change: and bring those two together as a combined value prop and probably...
Speaker Change: Inside of RFP season is when we'll start to talk to clients about 25 relative to incremental insights. If it happens sooner, that'd be great, but we're not counting on that.
unknown: K-U-R-V-E-R-A-L-I-T-Y-S-E-N-A-L-I-T-Y Yeah, yeah, as far as seasonality goes, roughly 25%, at most 30%, of our four-year revenue would be in the third quarter, and then the remainder would fall into the fourth. So yeah, that's pretty much the general cadence over the last few years.
Speaker Change: Yeah, you know what I'm talking about Edward Stelmakh.
Edward Stelmakh: Yeah, yeah, as far as seasonality goes, roughly 25% at max, 30% of our full year revenue would be in the third quarter, and then the remainder would fall into the fourth, so yeah, that's pretty much the general cadence over the last few years.
unknown: Got it. That's perfect. Well, thanks for taking my questions, and I'll jump back in queue.
Speaker Change: Episode 2
Speaker Change: Got it. That's perfect. Well, thanks for taking my questions, and I'll jump back in queue.
Operator: And next, we'll go to Max McAllis with Lake Street Capital. Please go ahead.
William Febbo: In the end, Edward Stelmakh, William Febbo, William Febbo, William Febbo,
Speaker Change: And next we'll go to Max McAllis with Lake Street Capital. Please go ahead.
Max McAllis: Hey, guys, thanks for taking my questions. If we're looking at the size of your DAP deals in the pipeline, so the $6 million DAP deal you mentioned this quarter, I mean, have you seen a material change, I guess, in the level or the size of DAP deals going forward in the pipeline? And then I guess on top of that, if we look at your top 20 customers, the top three are spending $9.7 million on average at $2.7 million. Have you seen that average creep up, I guess, going forward? Do you expect that to creep up going forward with the remaining $7.7 million? Thanks.
Max McAllis: Hey guys, thanks for taking my questions.
Speaker Change: If we're looking at the size of your DAF deals in the pipeline, so the $6 million dollar DAF deal you've mentioned this quarter, I mean have you seen material change I guess in the level of the size DAF deals going forward in the pipeline and then I guess on top of that if we look at your top 20 customers top three or spending 9.7 million in the average at 27 have you seen that average creep up I guess
Speaker Change: Going forward, do you expect that to creep up going forward with the remaining 17 pharmaceutical companies? Thanks.
William Febbo: So yeah, you know, it's interesting. I think the depth size is proportional to our tenure with clients, right? There's just more trust, more adoption, and they were some of the early adopters, so in those wood clearly fall in the top three, so it kind of answers both, we're seeing, and that's why we called it out, we're seeing, you know, quite a big difference between the top three, average, and our top 20, and you know, our job was pretty straightforward, you know, get the other 17 to do the same thing, and we're a much bigger business.
Speaker Change: So yeah, you know, it's interesting. I think the depth size is proportional to our tenure with clients, right? There's just more trust, more adoption.
Speaker Change: and they were some of the early adopters. So in those would clearly fall in the top three. So it kind of answers both. We're seeing, and that's why we called it out, we're seeing, you know, quite a big difference between the top three average.
Speaker Change: and our top 20.
Speaker Change: and, you know, our job was pretty straightforward, you know, get the other 17 to do the same thing and we're a much bigger business. So, you know, when we talk about converting our 300 plus brands to, you know, that's related.
Speaker Change: That is the mission. It's very straightforward. Steve, any other color you want to put on that relative to the process and how it's going?
William Febbo: I would just add that the $6 million was not for one single DAP deal; it was several deals. So with the same client, same multiple assets supporting in line. And then the other thing I would say is ACV continues to be either consistent or ticking up to max. And I think that was one of the questions that you asked.
Steve: Yeah, I would just add that the six million was not for one single DAP deal. It was several deals So with the same client same multiple assets that supporting in line
Max McAllis: And then the other thing I would say is ACV continues to be either consistent or ticking up, Max. And I think that was one of the questions that you asked. So it's very consistent and linear in terms of the progress that we're seeing. But what we're seeing, we're seeing an acceleration of interest.
Steve Silvestro: So it's very consistent and linear in terms of the progress that we're seeing. But what we're seeing is an acceleration of entry. And I think that's why, you know, you're hearing the positivity in our voice because of the acceleration of intros. And, as I said, it's pretty clear, we know what we need to do; we just need to be about. Good, good question.
Speaker Change: and I think that's, you know, you're hearing the positivity in our voice because of the acceleration of interest.
Speaker Change: and as well said it's pretty clear we know what we need to do, we just need to be about it so to speak.
Max McAllis: All right. Thanks, guys. That's it for me.
Speaker Change: Good questions.
Max McAllis: Alright, thanks guys. That's it for me.
Operator: And ladies and gentlemen, as a reminder, that is star number one for a question. We'll next go to Stephanie Davis with Barclays.
Speaker Change: And ladies and gentlemen, as our reminder that is star one for a question, we'll next go to Stephanie Davis with Barclays.
Speaker Change: Hey guys, this is Annika Zempie on First Step Me, thank you for taking our questions.
Annika Zempie: I was wondering if we could talk a little more about the cross-sales into the Medix customer base, and just more on how that's trended versus your expectations, and if you think you have adequate sales headcount to block and tackle all of these prospects, or if there are more investments as part of your forward strategy. Thank you.
Speaker Change: and Steve, do you want to grab that one?
Steve Silvestro: Thanks for the question. I think what we've seen is good integration and teamwork between the teams as far as approaching clients is concerned. We definitely are fully staffed right now. We hired several additional sales folks, which I think are reflected in the numbers that are from key competitors that Menic had that are sort of top performing businesses in the space. So we feel really good about the talent that is on board and working on behalf of the business.
Steve: Yeah, happy to it.
Steve: Thanks for the question. I think what we've seen is good integration and teamwork between the teams as far as approaching clients. We definitely are fully staffed right now. We've hired
Speaker Change: several additional sales folks which I think are reflected in the numbers that are from key competitors that Medix had that are sort of top performing businesses in the space.
Steve: So we feel really good about the talent that is on board and working on behalf of the business.
Steve: At this point, I think it really is just about focusing, and we've spent the first half of the year investing in getting those people on board, making sure that we were appropriately staffed, trained, etc. I think we'll start to see the fruits of that bear
Steve: in the second half. And so our confidence is very strong in the medics business performing well in the second half.
Steve Silvestro: As Will said, you know, we all want to microwave success when we first acquire something. It's never really as easy as we think it's going to be, in spite of our best efforts. So we continue to work on it. We've got great leadership on it, and we'll continue to chomp on it.
Steve: In terms of first-half performance...
Speaker Change: I think it's about where we expected it to be, maybe a little bit behind as well said.
Steve: You know, we all want to microwave success when we first acquire something. It's never really as easy as we think it's going to be.
Speaker Change: In spite of our best efforts, so we continue to work on it. We've got great leadership on it, and we'll continue to chop the wood.
Anna Kuzmpj: Got it, that's super helpful. Thank you.
Speaker Change: Got it. That's super helpful. Thank you. And then, just as a quick follow-up, so last quarter, you talked about, like, the macro stabilizing. And just curious, given, like, the recent volatility market, is this trend still intact, or if you have any sort of updated macro forecast to share?
Anna Kuzmpj: And then just as a quick follow up. So last quarter, you talked about the macro stabilizing. And just curious, given the recent volatility market, is this trend still intact? Or if you have any sort of updated macro forecast to share?
Speaker Change: Nothing more than we said in the prepared remarks just that we're not seeing a pullback.
Speaker Change: You know the the headwinds that we had a year ago are largely gone. FDA is cranking You know pharma is very focused on allocating funds to digital reach and measuring it make sure it's scalable and effective
Speaker Change: A, you know, we have an election coming up, I think, that will largely affect pharmaceutical spending, certainly, if we were, you know, all media only, you could argue there's sometimes a squeeze around that time, but we don't see that impacting our business.
William Febbo: Got it. Super helpful. Thanks, guys.
Anna Kuzmpj: Have a good day, Anna. Take care. Thank you, and I'd like-
Speaker Change: God, you're welcome, thank you guys.
Operator: Thank you, and I'd like to turn the call back to our speakers for any closing remarks.
Speaker Change: Have a good day, and take care
Speaker Change: Thank you and I'd like to turn the call back to our speakers for any closing remarks.
William Febbo: Terrific. Thank you, Operator, and thanks, everyone, for joining us today. While we needed to address the timing issue during the second quarter with our largest client buying more dApps, as a team, we're excited with the positive momentum and the impactful platform that we've built in this market. We're evolving to be a much stronger place than a year ago, and that's what motivates us as a team.
Speaker Change: Terrific. Thank you, operator, and thanks everyone for joining us today.
Speaker Change: While we needed to address the timing issue during the second quarter with our largest client buying more dApps, as a team, we're excited with the positive momentum and the impactful platform that we've built in this market.
Speaker Change: We're evolving to be a much stronger place than a year ago, and that's what motivates us as a team. Our collaboration with pharma manufacturers to reach healthcare professionals and patients is meaningful in the market.
William Febbo: Our collaboration with Pharma Manufacturers to reach healthcare professionals and patients is meaningful for them. Fueled by our innovative AI-generated models, proprietary data sets, and a decade of point of care experience. This market advantage helps us address and overcome many challenges. Today we profoundly offer, proudly offer, sorry, a comprehensive solution that integrates various components into an agile, powerful AI enabled commercialization strategy. These strategies effectively tackle crucial issues, such as brand awareness education, affordability, and the recruitment of hard-to-find patients.
Speaker Change: Fueled by our innovative AI-generated models, proprietary datasets, and a decade of point-of-care marketing.
Speaker Change: This market advantage helps us address and overcome many challenges. Today, we profoundly offer, proudly offer, sorry, a comprehensive solution.
Speaker Change: that integrate various components into agile, powerful AI enabled commercialization strategies.
Steve Silvestro: Steve, do you want to grab that one?
Speaker Change: These strategies effectively tackle crucial issues such as brand awareness, education, affordability, and the recruitment of hard-to-find patients.
William Febbo: These are daily challenges our clients, doctors, and patients face in the current healthcare environment, and we are thrilled to be part of that. Our dedication to supporting doctors and patients and aligning on quality of care is a driving force behind our team and our cult. We look forward to connecting with everyone at the upcoming investor events and our next earnings call. We will provide updates on our annual outlook if there are any changes to our current guidance.
Speaker Change: These are daily changes, challenges, our clients, doctors, and patients face in the current healthcare environment. And we're thrilled to be part of that solution.
Speaker Change: Our dedication to supporting doctors and patients and aligning on quality of care is a driving force behind our team and our culture.
Speaker Change: We look forward to connecting with everyone in the upcoming investor events and our next earnings call. We will provide updates on our annual outlook if there is any changes to our current guidance range. Thank you for your time and belief in the OPTIMIZERx team.
William Febbo: Thank you for your time and belief in OPTIMIZERx. Thank you, operator. Thank you, sir. Before we conclude today's call, I'd like to provide the company's safe harbor statement that includes important caution regarding forward-looking statements made during today's call, which may be contained forward-looking statements within the definition of section 27A and the Securities Act of 1933, as amended, and section 21E of the Securities Act of 1934, as
Operator: Before we conclude today's call, I'd 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 within the definition of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended. These forward-looking statements should not be used to make investment decisions.
Speaker Change: Thank you. Operator?
Speaker Change: Thank you, sir. Before we conclude today's call, I'd like to provide the company's safe harbor statement that includes important cautions regarding forward-looking statements made during today's call.
Speaker Change: Statements made by management during today's call may be contained forward-looking statements within the definition of Section 27A in the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended.
Operator: The words anticipate, estimate, expect, possible, and similar expressions identify forward-looking statements. They may speak only to the date that such statements are made, such forward-looking statements in 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. They also include management expectations for the rest of the year and adoption of the company's digital health platform.
Speaker Change: These forward-looking statements should not be used to make investment decisions, the words anticipate, estimate, expect possible.
Speaker Change: and Seeking and Similar Expressions Identify Forward-Looking Statements.
Speaker Change: They may speak only to the date that such statements are made, such forward-looking statements in this call include statements regarding estimates.
Speaker Change: Estimation of Total Addressable Market Size, Market Penetration, Revenue Growth,
Speaker Change: Gross Margin, Operating Expenses,
Speaker Change: Profitability, Cash Flow, Technology, Investments, Growth Opportunities, Acquisitions, Upcoming Announcements, and the Need for Raising Additional Capital. They also include the management's expectations for the rest of the year and adoption of the company's digital health platform.
Speaker Change: The company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.
Speaker Change: For Licking 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 these for Licking Statements.
Speaker Change: The risks and uncertainties to which forward-looking statements are subject to include, but are not limited to the effects of government regulation.
Speaker Change: Competition and Other Material Risks, Risks and Uncertainties to Which
Speaker Change: Forward-looking statements are subject to, could affect business and financial results, and are included in the company's annual report on Form 10-K for the quarter ended December 31, 2023.
Speaker Change: Its subsequent quarterly reports on Form 10-Q and its other filings with the Securities or Exchange Commissions. These forms and filings are available on the company's website and on the SEC website at sec.gov. 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 a year. Please refer to today's press release for replay instructions available via the company's website at www.optimizerx.com. Thank you for joining us today. This concludes today's conference. You may disconnect your lines.
Speaker Change: Hmm.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: Okay.
Steve Silvestro: And Steve, do you want to grab that one?
Anna Kuzmpj: Hey guys, this is Anna Kuzmpj on behalf of Stephanie. Thank you for taking our questions. I was wondering if we could talk a little more about the cross sales into the medics customer base and just more on how that's trended versus direct expectations and if you think you have adequate sales headcount to block and tackle all of these prospects or if there are more investments as part of your forward strategy. Thank you.
Operator: A few minutes later, David Grossman, Thomas Kelliher, Thomas Kelliher, Stelmakh, [inaudible]
William Febbo: Nothing more than we said in the prepared remarks, just that we're not seeing a pullback, you know, the headwinds that we had a year ago are largely gone. FDA's cranking, you know, all media only. You could argue there's sometimes a squeeze around that time, but we don't see that in our business.
William Febbo: So, you know, when we talk about converting our 300 plus brands to data-related, that's, that is the mission. It's very straightforward. Steve, any other color you want to put on that relative to the process and how it's going?
Steve Silvestro: At this point, I think it really is just about focusing, and we spent the first half of the year investing in getting those people on board and making sure that we were adequate. We staffed training, et cetera. I think we'll start to see the fruits of that bear in the second half. And so our confidence is very strong in the medical business. Performing well on the second. In terms of first half performance, you know, I think it's about where we expected it to be, maybe a little bit behind.
Steve Silvestro: You know, we continue to see pipeline requests coming in now for opportunities to bid both on HCP and DTC Connected Activity. I think that's something we're really excited about. We just participated in our third innovation platform with a top five client where the goal of that platform, the goal of the event, was innovative ways to connect HCP and DTC. And as you know, we won the last couple that we were in with what we did with that.
Operator: The company undertakes no obligation to publicly update or revise any forward looking statements, whether because of new information, further events, future events, or otherwise, because forward looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified.
Steve Silvestro: So, very excited to see that go forward. And we see that same activity level reflected in the pipeline. The demand from the market is very, very clear.
Steve Silvestro: And I think Farma has really wrapped their heads around creating efficiencies of bringing those two together. But I think what they don't know yet. And we're all sort of waiting through it together as we go about what execution might look like at scale rather. And so we'll, you know, we'll have more to report back on that next time we speak. But as you heard from Will's prepared comments, we've already closed the first HCP DTC Cross O via DAP.
Operator: Future events and actual results could differ materially from those set forth in contemplated by or underlying these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include but are not limited to the effects of government regulation, competition, and other material risks. The risks and uncertainties to which forward-looking statements are subject could affect business and financial results and are included in the company's annual report on Form 10K for the quarter ended December 31, 2023.
Steve Silvestro: So we're excited to now see how that goes and performs. And as with everything that we've seen in Farma, you know, together and over the last 20 years in my career, they'll do something, test it. If it works well, they'll scale it. And you know, that's consistent with what we've seen across them. Okay.
Operator: Its subsequent quarterly reports on Form 10K and its other filings with the security zirx change commissions. These reports and filings are available on the company's website and on the SEC website at SEC.gov. 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 and running through for a year. Please refer to today's press release for replay instructions available via the company's website at www.optimizedRX.