OptimizeRx Corp Q4 FY2020 Earnings Call

Good afternoon, and thank you for joining us today to discuss OptimizeRx Corporation's Fourth Quarter and full year ended December 31, 2020. With us today is the Company's Chief Executive Officer of OptimizeRx, William Febbo; and the Company President and Chief Strategy Officer, Miriam Paramore. They are joined by Chief Financial Officer, Doug Baker; and Chief Commercial Officer, Stephen Silvestro. Following their remarks today, we'll open the call to questions. Before we conclude the call today, I'll provide some important cautions regarding the forward-looking statements made by management during today’s call. I'd like to remind everyone that today's call is being recorded and will be made available for telephone replay via instructions in today's press release 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.

Thank you, Greg. Good afternoon, everyone. Thanks for joining us today. We are achieving record numbers, which is great, and everyone's welcome. I'd like to begin once again expressing our gratitude for the countless healthcare professionals across the country who have continued to work tirelessly and selflessly in battling the pandemic and keeping us all safe. And who are now leading the charge in administering the vaccine to the most vulnerable and those on the front lines as they work their way to the general population. Over the past year, the pandemic has clearly accelerated the shift towards digital health by both physicians and patients, especially for physicians looking to keep their operations going and adapt to the new widespread challenges of delayed treatments. According to a recent study done by the American Medical Association, nearly 90% of doctors in the U.S. see significant advantages in using digital tools to engage with and treat patients. Moreover, over half of the physicians in the study say they're looking for more access to clinically relevant data and workflow improvements at the point-of-care where they're treating their patients. If there is any silver lining around the pandemic, it would be how the compelling and important benefits from the adoption of telehealth, and especially the digital health solutions, like we provide have been accelerated by at least five to ten years. As one of the first major movers in the point-of-care digital health space, we've been able to reap the benefits of this industry transformation, as well as be a leader in setting the highest standards for reaching physicians and patients in a way that supports decision-making around care. This includes delivering the most innovative solutions that better support patients and healthcare providers with affordability, access, and adherence. While the shift was already well underway before the pandemic, as evidenced by growth over the last few years, we are now witnessing an even more astonishing acceleration towards digital solutions. This has transformed and vastly expanded our total addressable market. In fact, in Q4, we more than doubled our top line while generating positive GAAP net income. This was largely a result of strong organic revenue growth. We see this combination of organic growth and innovation for solutions will drive us forward in 2021 and beyond. We also practice what we preach. That is, we have continued to drive our own internal digital transformation as a company. Earlier last year, we restructured our organization to align with what McKinsey refers to as the digital factory or DF model. This model has been shown to bring products to market faster, do more with existing resources, and create a dramatically reimagined experience for clients. It can also reduce tech development costs by a third, and most importantly, attract the great talent required to compete in a digital world, and boy, did that pay off last year. Powered by our own digital transformation, we successfully broadened our platform to encompass more solutions that enabled doctors to garner access to important information for their patients at the point-of-care. We are now at the right place at the right time, facilitating critical and timely communication between life science companies, physicians, and patients. Our results also reflect how we have made great strides with innovation during the pandemic, particularly with the launch of TelaRep, our new virtual communication solution. This cloud-based solution enables providers to reach the right pharma contact from within their EHR workflow with just one click, helping clear the communication gap created by limited face-to-face interaction due to COVID. In fact, last December, PM360 Magazine recognized TelaRep as one of the most innovative solutions for Life Sciences; we are very proud of that. In addition to existing solutions in the platform, we are now leveraging real-world data to deliver real-time information at the point-of-care with our new AI-powered real-world evidence solution. Our sophisticated proprietary algorithms that power the solution also enable us to derive additional revenue from our existing network. Over the last year, we've continued to shift our business model toward enterprise-level engagements with recurring revenue streams by leveraging the trust we built with our clients over the last several years. Client renewal rates at the end of 2020 reached an all-time high, all the while adding 60 new brands to our platform. We've also found that we can help to digitally commercialize new products for pharma at a time when face-to-face sales are virtually impossible. That is no visiting reps, industry conferences, or in-person presentations. This supports an ever-expanding available market and tremendous growth opportunities. Our solutions are now providing essential communication pathways for pharma to connect with physicians and patients through the patient journey with a focus on affordability, access, and adherence. Our digital health footprint continues to expand with more pharma clients onboarding onto our platform and we are working relentlessly to steward health data in ways that can effectively yield better outcomes for all the stakeholders, especially for the millions of patients who are connected to us. Now before I go further, I'd like to turn the call over to our CFO, Doug Baker, who will walk us through the financial details for the fourth quarter and year. Doug?

Thanks, Will, and good afternoon, everyone. Earlier today, we issued a press release with the results of our fourth quarter and full year ended December 31, 2020. The copy is available for viewing and may be downloaded from the investor relations section of our website. We expect to file our Form 10-K with our full results in the second week of March. Now, turning to our financial results for the fourth quarter and full year 2020. Our revenue for the quarter was a record $16.4 million, which was up 123% compared to the same year-ago quarter. Our revenue for the full year increased 76% to $43.3 million, driven almost entirely from organic growth of our corporate solutions and patient engagement. Gross margin for the fourth quarter totaled $8.6 million, which was nearly double that of a year ago. Gross margin for the full year was $24.1 million up from $15.4 million in 2018. For the quarter, our gross margin percentage came in at 52.4% versus 60.6% a year ago. For the full year, it was 55.7% versus 62.8% in 2019. This lower percentage in Q4, which impacted the full year as well, was the result of our solution mix. Much of the incremental business that came in Q4 was related to lower margin solutions that were very easy to launch and fulfill in short time periods. Even though our gross margin was lower, this incremental business almost all falls to the bottom line, which demonstrates the leverage in our model. Looking ahead, we expect our margins to remain in the 56% to 58% range in 2021. Our operating expenses increased to $7.2 million in the fourth quarter of 2020 compared to $6.8 million in the same year-ago period. This is almost all the result of variable expenses associated with the added revenue. However, even though our revenue is over 100% for the quarter, operating expenses were up less than 10%, once again demonstrating the substantial leverage of our model. Operating expenses for the full year of 2020 increased to $26.2 million, compared with $19.1 million. The increase in operating expenses in both periods was largely due to the scaling up of our operations to support continued customer and solution growth, including additional staffing as well as a full-year impact of the acquisition we made in late 2019. GAAP net income for the fourth quarter of 2020 was $1.4 million or $0.08 per fully diluted share, compared to a net loss of $2 million or $0.14 per share in the same year-ago period. Net loss for the full year of 2020 totaled $2.2 million or $0.15 per share, which improved by about $900,000 from a net loss of $3.1 million or $0.23 per share in 2019. Our Non-GAAP net income in the fourth quarter of 2020 was $2.7 million or $0.16 per fully diluted share, which compares to the non-GAAP net loss of $400,000 or $0.03 per share in the same year-ago period. Non-GAAP net income for the full year of 2020 was $3.2 million or $0.20 per share, compared to non-GAAP net income of $900,000 or $0.07 per fully diluted share in 2019. Now, turning to our balance sheet, cash and cash equivalents totaled $10.5 million at December 31 compared to $12 million on September 30, 2020. Earlier this month, we raised $71 million in an equity offering. We plan to use these funds to further expand our business and accelerate revenue growth. Our receivables are very high quality because of our customer base. We continue to pay regularly and predictably, and our day sales outstanding continues to be constant. We remain debt-free and do not anticipate needing to raise additional capital in the near future, either for operating purposes or to fund our growth. That wraps up the discussion of our financial results. Now I'd like to turn the call back over to Will. Will?

Thanks, Doug. Today more than ever OptimizeRx is evolving into the nation's critical communication platform for patients, physicians, and life science companies. It's a bold statement, but we're really living it. Like no other digital health platform in the market, we deliver important information in real-time at the point-of-care right when clinical decisions are being made. We have access to tens of millions of patients and most physicians, as well as the technology compliance and operational support to continue to play a major role in the ever-evolving digital health market. Our partnerships with EHR and e-prescribing companies enable us to augment that physician workflow with actionable insights by providing additional real-time critical information to clinicians who are dealing every day with complex healthcare scenarios. We can improve the patient and physician experience and ultimately treatment outcomes. As Doug mentioned, over the last year, we've continued to expand our team in preparation for the growth opportunities ahead. We've enhanced our leadership team across financial, legal compliance, and strategic planning to help us unlock more reach into our client base. Recently, Angelo Campano joined us in November of 2020 as our new Senior Vice President and Principal of Agency Channels. His experience with developing partnerships that bring digital touch points together at the point-of-care greatly complements our mission of helping Life Sciences be present through that care journey. You might have noticed in the press release we saw Angelo's name in M&M's 40 under 40, and it's just a positive thing for our company. Perhaps not surprising, we are seeing immediate results from his efforts that will positively impact our growth. We've had a great start to the year and remain focused on key growth drivers of land and expand within our clients, selling our platform solutions across brands, and connecting more doctors to more patients. We see our real-world evidence solution accelerating all of this by a factor that works for everyone involved. We are, however, very much looking at enhancing our reach to certain therapeutic areas of additional patient populations. We continue to be focused on unlocking access to patients, and we are channel partners as a differentiator with the patient engagement solutions. The funds from our recent equity raise will be used to invest in our current platform, fund continued innovation, open additional M&A opportunities, and further solidify our market dominance in this space. It was clear from those who participated in the raise that our story is very understandable, defensible, and scalable, all while still being very early in our evolution. In 2021, we expect to see a continued favorable shift to higher margin recurring revenue, enterprise deals, and we believe our pipeline growth has been driven by a permanent shift to more digital enablement. We have 46 enterprise engagements in our pipeline as we start 2021, valued at more than $50 million, a significant increase over this time last year, and we expect that to continue to grow this year. This breaks down to about 31 potential deals valued at up to half a million, 11 up to $3 million, and four at $3 million or over. This does not include several that have already closed in all of the above ranges, including the $3 million plus deals. It's safe to say our shift away from tactical towards enterprise engagement is being very well received by our clients. For all those prospective engagements, we expect to realize our traditional annual closing rate of between 35% and 50% over the course of the year. All of this represents great progress. When factoring in the year-end buying and year-end buyer potential, we see another year of strong growth ahead. As we continue to invest in innovation and enhance the scalability of our technology and commercial teams, we believe we have the momentum, at least aspirationally, to reach a $100 million revenue run rate with the clients, network, and team we have today. Deloitte recognized OptimizeRx as one of the top 500 fastest-growing companies in North America, and we expect to remain on that list. Now with that, we'd like to open up to your questions. Greg.

Thank you very much, sir. All right, and first, from William Blair, we have Ryan Daniels. Please go ahead.

Yes, thank you for taking the questions and congrats on the strong performances here. Will, you talked a little bit about the need to drive more preventive care going forward because of lapses that occurred during COVID? And people avoiding offices or office shutdowns? Can you talk a little bit more about your patient engagement platform and some of the things you can do to help doctors generate that revenue stream? Number one? And then number two, as that revenue stream comes in, does that also have a multiplier effect on your core messaging business? Because they’re in the office and the doctors will start receiving some of the marketing branding campaigns as well?

Sure, yeah. Hey, Ryan, thanks for the question. The first part, we strategically decided that you really have to look at the benefit to the ultimate beneficiary of everything we're doing, which is the patient. As everyone knows, about two years ago, we, through two acquisitions, bought the technology that enabled us to connect directly to the mobile, but frankly, to deliver content to patients in any way they want. And while that's a crowded space, we liked it because we were one of the only ones that had such a broad network of physicians. The unlock here potentially, which is a tool to facilitate fewer meetings between doctor and patient, is the ability for a doctor to enable a patient right in the workflow to join an adherence or compliance program, which helps the patient understand their medication treatment, both emotionally and intellectually. It also helps them afford it because we can attach any kind of savings that is available for that same communication. It’s right on the mobile. So that answers a little bit of your second part of the question. Aside from just the unlock, we feel is coming. The other piece of it is it drives some of our core messaging solutions that physicians enable today in just another format, which helps patients afford their medications, which is obviously a very large issue in the market, especially with many people being disrupted from work. That's even more important today than it was a year ago.

Okay, that's helpful color. And then your work thing you highlighted via press release, into the quarter, and then in your comments is kind of your investments you've made in artificial intelligence and machine learning. I'm curious if you can talk a little bit more about how that actually changes the deployment of your solutions, then integrates into the physician workflow to kind of make it a smarter technology for both your patients and your provider partners?

Yes, I'll start, and then I'll have Steve jump in because he's really driving this effort. But if you think about what we've been doing today, the triggers were fairly straightforward. You know, disease code, some search functionality around the patient. But there's just so much more data available today from a real-world-based evidence, which allows you to be smarter in how you message and what creates the message. So where we may have had one trigger, maybe two, we may have four or five now that allow us to deliver the right information to the doctor at the right time based on the profile of that patient they're seeing. It's something that our clients have been looking at our web for years for training, drug marketing, messaging, but rarely have they been able to use it to actually directly connect to point-of-care in a way that doesn't require someone to remember something. Henceforth, the machine learning algorithm. But Steve, maybe you can give a little more color from the client perspective on that.

Yes, I think you did a good job there. Hi, Ryan, good to hear from you. The only thing that I would add to what Will has already said is that what this allows us to do is to plug into the broad ecosystem of these massive real-world evidence databases. We had an announcement on Komodo, there will be some other subsequent announcements pending. Obviously, we've got a partnership with Asana; they've got a great repository of data as well. What happens essentially is we have access to patient records that are longitudinal and historic in nature, and that will be refreshed real-time. The algorithms can train on that history at the patient level and down to the physician level, allowing them to begin to be predictive in nature. So we can start to understand that a patient is tracking toward a positive diabetes diagnosis, and we can be proactive in messaging that physician, helping them understand that they should contemplate or think about wanting certain tests, etc., to intervene and help that patient in different ways. This connects back to the question you asked previously about patient engagement linking this in there and also helps in a preventative way. It essentially connects us to the broader ecosystem, and as Will said, it's a force multiplier around messaging because our messages have been limited up until this point to whatever we could see inside the ecosystem of connection that we have. Now it's the entire healthcare record across multiple repositories of data with these elements.

Very helpful color. And maybe last one for me, just thinking about the $180 million of pipeline opportunity. It's a strengthened close rate to move towards digital marketing for manufacturers, in general. Obviously, the right opportunity for you to capitalize on. Can you talk a little bit more about what you anticipate from SG&A spend perspective in 2021, particularly regarding sales and marketing investments, whether it’s direct sales force, or just other digital or brand marketing capabilities for the organization to grow and drive awareness of your offering? Thank you.

Yes, thanks, Ryan. I think as people digest what they're seeing in Q4, I want to mention two things. One, this company clearly has tremendous leverage in SG&A. Given that we don't generate content, we are a tech company. We facilitate connections through our network. You should not expect heavy growth in SG&A as we continue to scale the business. We will selectively add in areas that make sense like we did before. When you're growing like this and you're in the right place at the right time, you can be highly selective with people, so we really feel honored to have that position and are able to get some terrific people on board. So you should not expect dramatic growth; instead, you should expect continued leverage as we scale through the year. Great, thank you, and congrats again.

All right. Moving on, our next question is going to come from Andrew D'Silva with B. Riley Securities.

Thanks for taking my questions and congrats on the progress. A lot of my questions have been touched on, but just to start, obviously, the fourth quarter saw a very significant increase in just a seasonal spend across your platform. I’d be very interested if you could just discuss what you learned as it relates to your platform's ability to scale. Just based on that, and then maybe you could just tie that in with a little bit more color on how that translates to the operating leverage that you're seeing, and talks about how that looks going forward?

Thanks, Andy. Yes, I've been in the pharma world for over 20 years. Steve has as well, and you just know, in Q4, there's always a magic that comes your way. The fear is that magic is something you can't do, right? Because that's just very frustrating. One of the reasons I love this business so much is we can turn on a dime and react to our client's needs on really important matters, taking real clinical messaging, financial assistance, patient engagement, and enabling it very quickly based on activity, a point of care. Q4 was an example of good buy-up; manufacturers saw higher buy-up than we traditionally see. I think we can safely say there was excess budget because of some of the lack of spending on direct visits and conferences, but the good news is we were able to capture every dollar that we were asked to. As you can see in the P&L as Doug referenced in his section, the leverage screams through. So that will hold through as we go forward. This is not something we have to stop, build, adjust, or call our partners; it's very simple. Obvisouly, we've been working hard as we've been growing to make sure the team is right, the tech is scalable, and is compliant and secure. So I'm feeling really good about that leverage.

Hey, pretty useful color. I'm really interested in your insight into the pipeline. Just curious if the cadence from RFPs coming in and contracts being awarded is following what's historically been seen, or if you expect to see upcycle RFPs and contract awards come in similar to what you saw last year?

I'll say a little bit and then pass it to Steve. There’s always seasonality with pharma as they start and build up, looking at the first half and can see a bigger second half traditionally. We have seen a stronger start this year, which is great. I think that's a testament to the enterprise type deals we have, our renewal rates, the team, and the operational team. Just the account managers are exceptional, being very connected to both clients and anyone that supports the clients. I see a similar profile to last year, just with more business. Steve, do you want to add anything?

Well, I think that’s right. One of the other pieces that we've seen accelerating business for us is that our pharma clients are pivoting a little from using physical reps in the field and are looking for different ways to reach physicians. I think you probably saw the Pfizer announcement, and there will be similar announcements that follow. There are broad sweeping layoffs or reductions that are happening, and of course, those funds are being redeployed. That is also strengthening the case for our business because we do have the ability, as Will has said, to reach the physicians that pharma wants to speak to and to communicate those messages in real-time, which is essentially better than placing a physical representative in front of the physician. It's less disruptive, it's more organic and germane to what they do. Of course, with TelaRep, if they still need to speak to a physician, they can just hit the button to reach back out and speak with the rep. So I think that's also helping to accelerate our growth.

That's a great point. I wasn't necessarily thinking about that, but it's useful context. But nonetheless, and then the last question I have is related to the $180 million plus pipeline numbers that you noted in the prepared remarks. Is that net of contracts already awarded, or is that a gross or cumulative number?

That is net.

Okay, great. Well, thank you very much. It's very useful context, and the best of luck going forward.

Thanks so much. Thanks, Andy.

Moving on from Lake Street, we have Eric Martinuzzi.

Hey, my congratulations on Q4 as well. I want to dive into the Q4 gross margins that are 52.4%. It was certainly below what I was modeling, and I know you said it was due to the change in solution mix. I know in years past sometimes in Q4, you are either re-upping or trying to win new distribution business. Does that have anything to do with it, or is it really more product choices?

Yes, it's all about the solution mix. The beautiful thing about our business is that you're hearing this theme; it's just the leverage. We're not concerned about the gross margin, how to manage it; it is a lot of it will be driven off activity. We still feel over time that it continues to improve. If there is ever a chance to bring in the revenue and execute it for our clients, as needed, we will do that. What you saw in Q4 was a heavy ask around some of the legacy solutions and legacy partnerships which have a higher rep share.

Okay. Is this something you talked about — Q4 seasonality. Is that something we should just anticipate in our model? So if you're telling us gross margins are going to be 56 to 58 over the course of the year, should we just naturally be anticipating sort of that — I don't want to call it budget launch; you have a better term for it? Is that just kind of modeling for buying in Q4 again longer within that?

Yes, I think you can take the ranges we gave annually. Plus or minus 1% or 2% either way is not going to be material. If it’s going up, that's great for everyone; if they're going down, that means the top is growing. I think just taking that sort of directional guidance or aspirational guidance towards that range is plenty for models, both for you and investment community.

Okay, and speaking of aspirations, I noticed you didn't give us a year in which you're going to have $100 million in revenue. So we've got a potential revenue of $100 million. I just wanted to dive into that you have talked about a shift to more subscription type revenue or current tax revenue in this year; where do you see that $100 million in revenue? What percentage is subscription?

Oh, that's a good question. I mean, I would think we're at least half if not more in terms of enterprise; we call that enterprise. Right? That's the contracted nature for 12 months, very recurring, and I think that would be our goal. Yes, we don't give guidance, so we don't put a date on it. What’s more important is that we have the team to get there. Aside from maybe a few select hires, we have good infrastructure in place to achieve that.

Okay, the last one is for Doug on the operating expense side. I thought OpEx was going to be a little bit higher in Q4; it turned out to be, I think he came in at $7.2. What should we be thinking about either for full year or Q1 if you want to focus on the near term here as far as operating there?

If we look at the full year, absent us deciding to make some larger investments in growth, you should see less than 10% — no more than 10% growth in OpEx. You could even see some declines in Q1 from the $7.2 because there are a little bit of relationships in revenue.

Okay, so just a lot of housekeeping out in here. The share count we should be using for Q1 given the raise? Can you give me a cheat sheet there?

You could add somewhere around 16.8 million, something like that.

Okay. Congrats again. Thanks for taking my question.

Thanks, Eric.

All right, moving on from RBC Capital Markets, we have Sean Dodge.

Hey, good afternoon. This is Thomas coming in for Sean. Thanks for taking the question. Just kind of going back to revenue growth, a lot of momentum here. Is there any way to unpack how much of a tailwind COVID was for you in 2020? Or even in 2021? I guess, kind of when we look ahead, is there any sense you can give us in terms of a more sustainable, longer-range trajectory curve?

Yes, we've talked a lot a little bit in Q3. We didn't feel like we saw any revenue after Q3 from COVID. We saw a lot of internal referrals, exploration, but clients tend not to move quickly on these initiatives that digested in Q4. I'd say we saw a couple of million in additional buy-up from excess budget. Moving forward, we have big expectations to keep growing this business. I've always said, there's a 25% to 30% growth potential, which is achievable, and we feel like we're not doing our job if we're not achieving that. We don't give guidance, but given all these factors we’ve mentioned, we’re really embedded well with the clients, there’s tons of whitespace, and we’ve got the solution set critical to meet client needs.

Yes, that's very helpful, thank you. One more on physician reach. You mentioned integrations now helping you get to 60% of doctors. Is that kind of a fully penetrated number there, or are there kind of more EHR platforms you can add to get to an even higher proportion? Are you feeling closer to that kind of 90% daily EHR usage that you referenced?

Yes, for us, as we shifted largely to specialty medications, which are smaller populations harder to reach both physician and patient, it's less of a volume game. For us, it's really fine-tuning the network and identifying areas where if we added reach, it would immediately add revenue and provide solutions for our clients. So we're really focused on that; we're not focused on the big numbers. There are plenty of EHR systems that we're not fully integrated into, and of course, we work on those every day. The important takeaway is that we're not reliant upon that. If you see analysis come through, focus on therapeutic areas, because that represents a bigger unlock for revenue potential.

That makes sense. Very helpful. Thank you, and congrats on the quarter.

Thank you.

All right, and then moving on, ladies and gentlemen, from Venture Capital, we have Brandon Austin as our next question.

Hey, well, how you doing, guys?

Hey, Brandon.

Good to hear it, man. I know you guys don't guide, so I want to sort of work around what you guys have put out there. So in terms of your sales breakdown right now, roughly how much of your quarterly revenue at this point is enterprise SaaS recurring versus messaging? What kind of run rate are you guys running right now as the sort of bunch everything that isn't volume dependent?

Yes, it's a good question. It's a fair question where we'll be able to dive into that a little bit better based on reporting Q1 right, because we'll have had a lot of conversion by then we can look at percentages. But it's around 50%. It’s right now based on last year. It makes sense for our clients; why would they do this? It’s multiple solutions. So it takes them working with maybe a few other providers that just work with us. This one measurement tends to be in terms of ROI, which is exponentially better when you just have more outreach to the same patient and physician populations through one platform, which can also help track prescription behavior. I would expect it to remain there for a while and hopefully tip heavier as we get more and more people onboard.

Right. And if I look at 2019, I would assume that it was less than 50% at that point because this has not completely – so basically, the enterprise SaaS non-messaging, non-volume independent part of the business is clearly growing over 100%? Is that safe to say?

That part? Yes, that’s safe to say. But it’s not 100% pure, bill monthly. There is still a volume dependency in some of this. I expect it to move that way more and more over time, so that’s the only thing I’d carve out from that statement.

And the point is, if I’m trying to sort of interpret your pipeline, your pipeline comments, your $180 million in the enterprise — is that $50 million? Is that when you're not talking about the pipeline enterprise, is that all additive to the current run rate of enterprise sales right now? Like if you guys executed on $50 million of enterprise, all $50 obviously, well, but all $50 million of enterprise sales, would that be additive to your current run rate? Or does your current levels include like, is that pipeline include renewals or something?

No, it's not additive. It's unique. It's the full year again; it's not additive.

It's not, sorry. So sorry, when you say it's not…?

The run rate is part of that.

Right. But in terms of the pipeline, so this is included as part of the pipeline?

Yes, it is. That, okay. It includes its $50 right now of enterprise.

Right, but if you closed on $180 of pipeline, your revenues, your current run rate of revenues would go up something less than $180. Is that maybe a good way of framing? Would it be closed $180, then your revenue would be whatever you did last year plus $180?

No, no. It would be — it doesn’t go on top of a run rate. It’s the total going after for the year.

Total not going after for the year. Okay, great. A lot of great context here. I signed up to speak to one of our conferences in the near future, so I’ll follow up there. Perfect.

Talk to you soon. Thanks. Yeah. Thank you.

All right, moving on from Poptech, LP we have Harvey Poppel. Please go ahead.

Yes. Well, great job. Congratulations. As you know, we've been solid for many, many years, and this has really been a blowout quarter. I just want to make sure that I've got this right; you just reported numbers that were actually higher than what you pre-announced only a month ago. In other words, you went from $16 to $16.4 million in terms of fourth quarter revenue, and your pipeline went from $170 million to $180 million. That's up about 6% just in one month. Is that have I got it right?

That is right. It also includes us closing some business. We won’t tell you what it is, but that certainly means there was probably greater than a 6% increase in the pipeline.

Alright, getting back to this; I didn't know you've had a number of questions on this. But I'm going to come at it from a different direction; to interpret the pipeline and try to understand its ultimate effect on revenue. If one were to simply take 35% to 50% and multiply by 180, you get 63 and 90. Is that implied the range of revenue that you might be able to achieve this year? Or is there something about the $180 million that takes us out much further?

Yes, we talked about that in Q3. The pipeline is generally an 18-month view. It’s not apples to apples. There is a little bit of spillover into 2022, so you need to factor that in — probably give a bit to that maybe for the six months into next year.

Okay. Lastly, on the new cash that you've been able to raise, you've mentioned that M&A is part of that. Is there a sense of in your M&A strategy at this point whether that's earmarked to just one or two large deals, or is it more likely to be a whole series of much smaller deals?

I'll start and then I'll ask Miriam to chime in because she’s going to be running point for us on that effort. We feel very sufficient with technology; sort of startup technology add-ins, and if we're going to do something, we want to have it be substantial and accretive inside our guardrails just because of the effort that it takes to do those. But Miriam, why don’t you add a little bit of color to that if you don’t mind?

Okay, sure. Hi, Harvey. We have a number of opportunities that we're looking at, and it is as easy to buy, or as easy or as hard to buy something big as it is to buy something small. So without knowing because a little bit of it’s opportunistic, and everything is timing, as you know. We think we've got a good filtering process; we've got a number of opportunities we're looking at. We've got some that we've kind of pointed out, but I think we prefer something a little more substantial without that. Nobody has a crystal ball or anything, but we certainly don't need to buy anything that's infrastructure-related, or that improves our test base because we're really pretty solid there. Anything that's innovative, that's additive, we want to look at.

Great, thanks. Thanks a lot. I’ll step aside. Congratulations.

Thanks, Harvey.

All right. And then moving on, we have Ron coming up next.

Good afternoon.

Good afternoon, Mr. Chass.

Somebody already — you commented about a $100 million aspirational goal. That's not aspirational for 2021, right? I mean, that's it; you don't want to do that in 2021?

Oh, no way, why would I? No, why would I want to do that? We absolutely have the team to do it. We've got the reach to do it. We have clients who have plenty of appetite to do it. But I would never commit to that. This is really, I think, to give our investors and future investors just a glimpse that one, this is really early; two, we've got the current infrastructure to get there. We all want it to happen faster. We’re pretty aggressive, but we can see we've got the team to do it, which is really exciting.

So given the market and customers, this is still early innings.

Oh, yeah. Steve can comment, but I think this — we’re seeing really good adoption. It wasn't the early believer cell anymore, even pre-pandemic. Post-pandemic, you've had massive internal referrals for us, just more awareness. In the corporate setting, the digital enablement, we all use Zoom a lot; that trickles into marketing. Doctors and patients are just more attuned to using technology to help maintain their practice, or patients just manage their lives.

Sure, Ron. I mean, part of the graph that you see in the numbers we’ve talked about, obviously, new brands is critical, but incremental gains in enterprise is clients that might have already been on the platform scaling up to other solutions towards point. There’s tremendous interest, it’s very early, but there’s tremendous whitespace for us to go out and continue to capture.

Okay. One other aspect of growth is the number of EHRs and HCPs. Can you comment on that at all?

I think we've covered a lot of it. I think the key is focusing in on specialty therapeutic areas, like oncology, which will dominate the marketing spend for a decade. So we're really focused on that at this point. It's fine-tuning. It’s not a volume game, but we have plenty of capacity in our existing network. So when we talk about whitespace on the brand side, we can also say the same thing on the reach to physicians. Our partners through this change have great opportunities in telehealth and all sorts of services. This atmosphere for collaboration and patient channels is exceptional; we do a great job being collaborative and innovative with them. So expect some good things there this year.

Thank you for your efforts. Keep grinding.

Thanks, Ron. We will.

All right, folks. Moving on, the last question we have in the queue is from Sid Kapoor with Silver Mount Capital.

Good afternoon. I have two quick questions. First, is it accurate to say that patient engagement is a primary driver of ROI for pharmaceutical companies? Is that what's causing customers to shift from a certain model to enterprise contracts? My second question is regarding your serviceable addressable market. Do you think this extends beyond branded patented drugs? How do you view this in terms of patented versus non-patented drugs? Thank you.

Sure, sure Sid, good to hear you. I would not say that patient engagement is driving by itself the shift to enterprise deals. Just to remind everyone, when we decided to focus on the patient journey two years ago and reach key touchpoints to connect with patients and doctors on behalf of our clients, patient engagement is certainly critical, and it's one we can all relate to as people, patients, and consumers of healthcare. The awareness around the amount of drugs coming to market and the complexity of interactions between those drugs, whether branded or generic, has significantly increased. What’s really driving enterprise is, one, it's just easier to buy more from the same company. Two, we have more touchpoints than anyone in the market regarding getting information inside the workflow at point-of-care for doctors and find a way to help patients understand and afford their medication. So it's not the sole driver, but it's a piece of the shift we strategically made. Relative to TAM, in total global market brands, brand is the majority. Companies like GoodRx and RxSense help people get discounts on any product, which increases transparency and awareness. On some level, we thus need to balance with this consumerism trend. We are largely a B2B type company, but any awareness at the consumer level causes awareness for what we do. I believe it, along with the expansion of telehealth has largely increased our total available market.

Thanks. Well, actually, I have a couple more offline, but thanks very much.

Great. Have a good night.

All right. At this time, it does look like that concludes our question and answer session. I'd now like to turn the call back over to Mr. Febbo. Please go ahead, sir.

Well, thank you for joining the call today. We hope your main takeaway from our discussion is the understanding of our ability to generate tremendous value for shareholders and everyone involved. This is thanks to our strong organic growth, sustainable competitive advantage, and favorable market timing. Beyond all the numbers, we hope you appreciate that we continue to foster a unique culture, one dedicated to doing something truly valuable, which will make a difference in people's lives from patients to physicians and beyond. We do not provide guidance as an early-stage public company, especially in this current environment. But given everything you've heard today, we hope you're optimistic as we navigate this transformative period. Now with that, let's wrap up the call. Goodnight. Thanks, Greg.

All right, 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. Statements made by management during today's call may contain forward-looking statements within the definition of Section 27A in the Securities Act of 1933, and amended then, excuse me Section 21E at the Securities Act of 1934 as amended. These forward-looking statements should not be used to make investment decisions. The words anticipate, estimate, expect, possible, seeking, 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 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 or quantified. 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 to include but are not limited to the effect of government regulation, competition, and other material risks, which are included in the company's annual report on Form 10-K for the fiscal year ended December 31, 2019. This form is available on the company's website and on the SEC website. Before we end today's conference, I would like to remind everyone that this call will be available for replay starting later this evening, running through March 17. Please refer to today's press release for dial and replay instructions available via the company's website at www.optimizerx.com. Thank you for joining us today. This concludes today's conference call. You may now disconnect.