OptimizeRx Corp Q4 FY2024 earnings call

• Steve Silvestro emphasizes focusing on customer centricity, having completed an extensive strategic review, and beating 2024 financial guidance with revenue at $92.1 million and adjusted EBITDA at $11.7 million.
• Leverages the largest EHR prescription network in the country and a unique omnichannel technology platform to connect pharma manufacturers, physicians, and patients. Addresses pharma challenges like script abandonment, interoperability, and shift to specialty medications.
• Achieves strong brand engagement with ROI over 10:1 on HCP marketing spend and 25% average script lift in 6-month programs. Top five customers averaged over $9 million in revenue in 2024.
• Plans to convert DAAP customers to a subscription-based model to establish recurring revenue, drive operating leverage, and work towards becoming a Rule of 40 company.

Fourth quarter revenue was $32.3 million, an increase of 14% from $28.4 million in the same period of 2023. Gross margin expanded from 62.9% in Q4 2023 to 68.2% in Q4 2024, driven by a favorable solution and channel partner mix. In 2024, the top five customers averaged over $9 million in revenue. Average revenue for top 20 pharmaceutical manufacturers was $2.9 million, a 22% increase year-over-year. Net revenue retention rate improved to 121% from 105% in the prior trailing 12-month period. Revenue per FTE was $701,000, up from $586,000 in the 12 months ended December 31, 2023.

• Expect to drive substantial operating leverage and build a more predictable business, converting DAAP customers to a subscription model. Guided to at least $12 million in adjusted EBITDA, with Q1/Q2 typically low and then ramp up. Seasonality in revenue with Q4 being the biggest quarter, accounting for 30%-40% of revenue.
• Targets 100% net revenue retention in 2025, with a focus on conservatism and under-promise over-deliver.

• External factors like FDA approvals and government regulation in Washington, D.C. (e.g., number of drug approvals impacting pharma portfolio health).
• Competition, dependence on a concentrated group of customers, cybersecurity incidents disrupting operations, and ability to keep pace with evolving technology.

Q: Jared Haase asks about customer centricity strategy and transitioning to subscription-based revenue.

A: Steve Silvestro states focusing on making it easy to do business with clients, driving good results, and moving the data component of DAAP to a subscription model. Ed Stelmakh adds it's the data portion of DAAP deals being pushed to a subscription model for more predictable revenue.

Q: Anderson Schock inquires about gross margin expansion and future expectations.

A: Ed Stelmakh says gross margin expansion is driven by product mix, particularly DAAP-related revenue with higher margin profile. Andrew D'Silva mentions margins should be in the high 50s to mid-60s, with Q4 being a seasonal high.

Q: Constantine Davides asks about timeframe to become a Rule of 40 company and 2025 guidance seasonality.

A: Edward Stelmakh says it's a 3-5 year journey, combining top-line growth and EBITDA expansion. Andrew D'Silva provides seasonal revenue expectations: Q1 15%-20%, Q2 20%-23%, Q3 25%-30%, Q4 30%-40%.

Q: Richard Baldry discusses baseline growth expectations and external factors.

A: Steve Silvestro and Ed Stelmakh mention being optimistic but conservative, with focus on under-promise over-deliver. Edward Stelmakh notes watching FDA approvals as a key external factor.

Q: Eric Martinuzzi asks about Medicx business transition from managed service.

A: Steve Silvestro states the transition from managed service is complete, with the audience component of Medicx growing nicely and being high margin.

Q: Jeff Garro asks about margin outlook and competitive environment.

A: Edward Stelmakh mentions gross margin in low to mid-60% range increasing with mix. Steve Silvestro talks about competitive advantage with combined HCP and DTC capabilities and proprietary network.