OptimizeRx Corp Q2 FY2022 Earnings Call

Good afternoon, everyone. Thank you for joining OptimizeRx's Second Quarter Fiscal 2022 Earnings Discussion. With us today is the Chief Executive Officer, OptimizeRx, William Febbo. He is joined by the company's Chief Financial Officer, Ed Stelmakh; Chief Commercial Officer, Steve Silvestro; General Counsel and Chief Compliance Officer; Marion Odence-Ford; and Senior Vice President of Corporate Finance, Andrew D'Silva. 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, with that, I'd like to turn the call over to OptimizeRx CEO, William Febbo. Sir, please go ahead.

Thank you, operator. Good afternoon to all, and I hope you've had a good start to the summer season with friends and family. As it relates to today's earnings release, while we continue to report strong KPIs as a measurement of long-term execution and growth potential, we have experienced some short-term headwinds as reflected in our quarterly results. While growth slowed considerably in Q2, we are confident that we have made the necessary investments, which will yield profitable growth while sustaining a competitive differentiation. Based on the first half results, we are adjusting our forecasted revenue growth down to approximately 10% at the high-end of our range for the year. While this is below where we expected to be this year, we believe it is primarily a timing issue related to some of the issues I will discuss in detail. Our 2022 challenges are closely tied to three macro factors. Significant year-over-year reduction in FDA drug approvals impacting the timing of new product launches, higher turnover of decision-makers within pharma on the back-end of COVID-19, and a longer sales cycle for larger technology spend opportunities that need internal alignment and approvals and routine periodic legal and regulatory reassessments of commercial tactics. To be more specific about the aforementioned causes, we saw delays in several very large enterprise deals as a result of timing around brand launch dates. We believe a lot of this is tied to bandwidth issues at the FDA as they have seen substantial employee turnover in recent months, which has resulted in a novel new drug approval decreasing by over 40% when compared to 2021. While these events were not expected, timing disruptions across healthcare do occur. However, these contracts were known, very much in play and are expected to be material contributors to future revenue and position us with brands very early in their life cycle. Secondly, we are noticing that as we become further embedded in pharma's commercial ecosystem, we have been successfully structuring larger, more complex programs for our customers. The closing of these deals is taking longer to complete as they involve more than one decision-maker and further rounds of review and assessment as part of our customers' internal procurement policy. However, these technology-enabled opportunities are multi-million dollar categories per brand. In addition, we see these opportunities across multiple brands where strong ROI has already been demonstrated. While changes in our historical deal velocity can impact the cadence at which revenue flows through our P&L, we believe the breadth and scope of these deals would represent a transformative shift for OPRX and will make us more relevant to our customers. This is in line with what other companies that have broken through and become a strategic commercial partner to pharma have experienced along their growth journeys. Nevertheless, the $10 billion in digital industry spending that we are selling into remains very much intact and continues to expand. While the deal timelines have extended to longer periods, they do not affect our win rate. A recent McKinsey article referred to the health services and technology sector as a long-term growth story driven by a rapid adoption of data and advanced analytics and software, driving innovation across several areas where OptimizeRx has made substantial investments and offers competitive technology solutions to our clients. We have noticed the flood of recent digital solutions that, while lacking platform scalability and integration capabilities, have certainly muddied the competitive landscape. However, we at OptimizeRx are playing for the long game and are working with our clients to become the clear choice for the future. Lastly, we view this as a long-term positive for OPRX, is the fact that several deals in the pipeline have been delayed due to key people turnover at several of our large customers. While this has delayed some of our existing deals as these brands bring in new decision-makers, this additional time will help us cross-sell more products in our suite to customers who weren't firmly embedded with us historically, thus broadening our potential base of revenues. While we believe the current environment is transitory, we believe it is prudent to adjust expectations given the changing landscape. In looking at overall performance of the company, we continue to perform strongly through the lens of OPRX's long-term land-and-expand strategy. We can count on 95% of the industry's top 20 pharma manufacturers as our customers and remain positive regarding the net revenue retention. Client ROI, which is based on a look back at studies over the last year and covered dozens of brands across 12 manufacturers, also remains high against their spend. These are all indicators that the platform remains both strong and highly beneficial for our clients. We continue to make significant progress in advancing our RWE solution into the market and recently had a third-party review completed for our largest deal to date, which showed an ROI that is more than twice what our customers typically look for from their investments, despite having a much larger than typical contract size. We believe this elevates our relevancy with our client base, brings us closer to them strategically and separates us from the pack in terms of the digital offerings at the point of care. We also renewed one of the original RWE deals announced last year after a really strong program performance and are currently in discussions with that manufacturer to expand our solution to all the brands in the oncology portfolio. This client represents a top 20 pharma and the expansion across brands would represent our largest engagement to date. While moving up in deal size creates challenges that we did not experience when dealing with much smaller dollar amounts, it is where we need to be to drive the most value and showcase the scalable and beneficial platform we have developed. This puts OPRX squarely in the strategic partner spot, which is something we've been working on for several years. We hope to announce this type of relationship within the second half of the year, and we believe others will follow. Meanwhile, we're extremely encouraged by the recent progress we have made expanding our reach outside of the point of care. To start, we have completed the tech tuck-in of EvinceMed through which we acquired an industry-leading technology and a small team, which evolves our solution for specialty medications to further benefit doctors and patients, while greatly helping our client base. This additional technology starts to build out the connectivity with hubs, specialty pharmacies and retail pharmacies. This ultimately expands our total addressable market and revenue growth potential while increasing our reach across the patient journey. We have been talking about this for some time, and it's great to see it start to come together in a way that will affect the top line, bottom line and ultimately help the relationship between doctors and patients. McKinsey recently shared their view that the growth in specialty drug spending is driving the forecasted 5% compound annual growth rate from 2021 to 2025, and this vertical integration moves OPRX squarely at the intersection of specialty workflow and distribution. In a similar vein, we recently established two partnerships. In June, we announced an exclusive partnership with Equals 5, which substantially expands the breadth of our platform as Equals 5 is the only healthcare provider solution providing targeted physician engagement across social media platforms. This partnership enables us to bring our novel approach to leveraging real-world evidence to engage healthcare providers on social platforms. This exciting new platform extension gives our pharma clients the ability to touch up to 84% of the prioritized healthcare providers on the social media platforms they utilize with specific content. Finally, we recently closed a partnership with Cooler Screens, which extends our reach to patients at the point of dispense at retail pharmacies, starting with Walgreens. We are just getting started in retail and specialty pharmacy, but as we have spoken about, it's a priority so we can be available in all areas of the patient's journey to help them start and stay on therapy. And with that, I'd like to turn the call over to our CFO and COO, Ed Stelmakh, who will walk us through the financial details for Q2. Ed?

Thanks, Will, and good afternoon, everyone. As with all our calls, a press release was issued with the results of our second quarter ended June 30, 2022. A copy is available for you and may be downloaded from the Investor Relations section of our website. Additional information can be obtained through our forthcoming 10-Q, which will be filed later today. Turning to our financial results for the period. Our revenue for the quarter was $14 million, an increase of 3% over the $13.6 million from the same period in 2021. And our gross margin increased from 59% in the quarter ended June 30, 2021, to 64% in the quarter ended June 30, 2022, as a result of solution and network partner mix. As we highlighted in our previous earnings call, there has been an increase in the percentage of activity flowing through channels with more favorable economics compared to a year ago. Given the macro environment we've already highlighted, we are updating our guidance for 2022, which now calls for revenue to come in between $62 million and $68 million. On a more positive note, we are updating our full year gross margin range from 57% to 60% to 59% and 62%, due to a favorable solutions mix and channel partner momentum, which we have built in the first half of 2022, and we expect to carry through the rest of the year. Our operating expenses increased from $7.7 million for the three months ended June 30, 2021, to $12.9 million during the second quarter of 2022. This increase in expense is primarily due to the investment in and expansion of the OptimizeRx team to enable future growth, which also includes our acquisition of EvinceMed, which closed in April. Providing more color around our year-over-year increase in operating expenses, nearly two-thirds of the $5.2 million total increase was tied to non-cash expenses, with the remaining amounts related to the full-year impact of 2021 hires and the EvinceMed acquisition. We expect our cash-based operating expense run rate for the remaining quarters of the year to stay relatively consistent with the second quarter of 2022. We had a net loss of $3.9 million or $0.21 per basic and fully diluted share for the three months ended June 30, 2022, as compared to a net income of $0.4 million during the same period in 2021. On a non-GAAP basis, our net income for the second quarter of 2022 was $0.7 million or $0.04 per basic and fully diluted share outstanding, as compared to a non-GAAP net income of $1.8 million or $0.10 per basic and fully diluted share outstanding in the same year-ago period. We will continue to be fiscally prudent in our approach to investing for profitable growth. Now turning to our balance sheet. Cash and cash equivalents totaled $87.4 million on June 30, 2022, compared to $84.7 million on December 31, 2021. We generated $4.4 million in cash flow from operations for the first six months of the year and $0.3 million during the second quarter. We believe our strong balance sheet and cash flow favorably positions us to further expand our business solution offerings and drive profitable growth. Now I would like to turn to the company's KPIs that we introduced this past February to provide transparency, as well as quantifiable metrics that can be used to continue to communicate our story as our business grows and matures. Our average revenue per top 20 pharmaceutical manufacturer stayed relatively flat year-over-year at $2.4 million for the second quarter, despite adding two new top 20 customers over the last 12 months, which are still early in the relationship lifecycle with us. As a result, we continue to gain ground with now 19 of the top 20 largest pharma companies in the world, which again represents the lion's share of the industry's commercial spending. In addition, our ability to create tangible value for our clients as well as growing demand for our solutions is reflected in our net revenue retention rate of 113% for the second quarter of 2022. Our operating model continues to demonstrate significant capability for leverageable growth with revenues per employee at $661,000 for the second quarter of 2022. This puts us firmly ahead of the technology industry average, which is currently under $500,000 per full-time equivalent and highlights the strength of our operating model and the quality of the team we have built. We will continue to report on these KPIs on a regular basis throughout the year to ensure open and transparent communication with our shareholders. And now, with that, I would like to turn the call back over to Will. Will?

Thank you, Ed. Operator, now let's move to Q&A.

Our first question comes from the line of Ryan Daniels with William Blair.

Will, maybe one for you. I appreciate the detail on the three factors that are impacting the outlook. I'm curious if you can go into a little more nuance into the relative magnitude of each of those three as it relates to the outlook.

We've made a significant shift towards specialty products for the reasons we've discussed, particularly because marketing expenditures are moving in that direction. Launch delays are common in our industry, and since our focus is on specialty products, many of these delays will impact that segment. The positive aspect is that we are engaging with the right clients, though there is a slight delay in obtaining approvals. However, we expect these approvals to come through, as both the pharmaceutical companies and the FDA are motivated to expedite the process, given that these medications have a direct impact on patients' lives. This shift was somewhat abrupt, and because we concentrated our efforts on the medications where we have established relationships, there has been some disruption. Nonetheless, strategically, it's crucial to remain focused on specialty products as that is where marketing investments are directed, and it's where our network is concentrated. The value we offer to clients is strongest in this area. There is extensive communication and effort to collaborate with clients during these times, and we believe that the issues we're facing are primarily linked to timing rather than foundational problems.

Given the impact, do you have contract agreements in place to be one of their digital marketing partners when they launch? Is that your range?

Yes. We have Master Service Agreements with all of the top 19 pharmaceutical manufacturers, and we're consistently working with most of their brands. These projects are definitely part of the pipeline we're overseeing, and we have an exceptional team managing them. They are included in our backlog and pipeline, and it's quite exciting. It's never ideal to disappoint in a quarter; we recognize that. However, just before this call, I was speaking with a client about discussions involving multiple brands. If I hadn't noticed significant interaction with clients, I would be worried; we might have chosen different words. But we're seeing a lot of engagement and meaningful partnership discussions, which take more time but are more substantial and provide greater long-term value.

You mentioned that the procurement process is taking a bit longer as some contracts become larger, which is likely connected to this issue. Is there anything that can be done to standardize the procurement process, or is it mainly due to the complex medical legal review involved with clients? Additionally, as more of these programs are launched, I assume it becomes easier to initiate them in the future since the initial medical legal review has already been conducted. Does that seem accurate?

Yes, that's a reasonable perspective. It becomes more manageable as the legal teams become more efficient. It's important to remember that there is a lot of turnover in virtually every industry, especially in healthcare, where specific expertise is in high demand. So, it does improve on the legal front. Moreover, the fact that they are pursuing larger projects and ensuring proper legal review is a positive sign. It can be frustrating since the process often takes longer than expected, but once you complete it, you're set, and they become partners. And that partnership is crucial. We have essentially carved out a niche market here alongside maybe one or two others. What I’ve observed is that the pharmaceutical industry is catching up. Back in 2020, we saw everyone attending meetings, and in 2021, there was a lot of experimentation and various solutions emerging in the market. Now, the pharmaceutical companies are pausing to assess who can scale, who has the right platform, and whose measurement methods are clear. They are deepening their legal reviews, which is a positive development for us.

Our next question is from the line of Joy Zhang with SVB Securities.

Just a follow-up on an earlier question. Can you give us a sense of, given that the novel drug approvals is a headwind, how much of your business is related to new drug launches versus engagements with existing brands?

Yes. Steve, do you want to take that one?

Yes, happy to, Will. I think that I don't have an exact percentage basis for you of launch brand versus in-line brands. But what I can tell you is that when launch brands are delayed, in-line brand budgets are pulled back or paused for a period of time, and when those delays occur, it basically pauses the marketing spend until things are sort of moving in the right direction in terms of new launches. And franchises, meaning therapeutic areas are managing portfolios of assets and looking at assets that are currently in-line, that are approaching LOE, assets that are about to launch. And so they're managing that budget over one or two or three different assets. So I think the pause not only impacted launch brands; it has also impacted in-line brands' ability to continue to secure funding. And that was really the genesis of the challenge. But to answer your question more directly, I would say probably somewhere in the vicinity of 20 to 30% launch brands, balance in-line brands. Those are rough estimates, but that's directionally correct.

Got it. That's super helpful. And I guess digging a little deeper into the FY '22 guidance, can you just talk to what kind of contract launch expectations are baked in? Do you expect to recover revenues from all of the delayed contracts? Or are you sort of factoring potential delays in the second half as well?

Sure. I'll start, but I'll pass it over to Ed or Andy for the details on the statistics. We're being cautious in our approach. We've discussed potential opportunities, and we believe they are still present. Although disruptions occur, ultimately everyone needs to resume their operations, and product launches will begin again. The current indicators in our portfolio are significant and greatly benefit patients. We are proceeding with caution; this is our first year providing guidance. It's unfortunate to face a disruption, but that's the situation we are in. Andy and Ed, could you provide more specific insights on what we can expect regarding guidance?

Joy, this is Ed. Yes. So basically, just to compare what we saw Q1 when we initially gave guidance to where we are now. So initial guidance was based on about a 50% line of sight kind of sold and in the bank forward of revenues. And what we see today, we probably are looking at about 80% to 85%. So ample surplus comparisons for you. And we are being pretty conservative, as Will said, on any kind of upsells or buy-ups in Q4. So we're trying to kind of be mindful of what we saw this quarter and baking that into our current kind of the forecast for the year.

Our next question is from the line of Sean Dodge with RBC Capital Markets.

Yes. Maybe Ed, I just want to make sure I heard that last answer correctly. So your guidance, I think you said initially assumed a 50% coverage on the range. And now with the revision, you're baking in about 85% coverage, so you've got visibility on 85% of what you need to hit that target versus 50% that you had previously. Did I get that right?

Yes, that's correct.

Will, you mentioned some macro factors that have been issues. Can you share more specifically about the sales pipeline? Has it been affected at all by these factors? Is it still stable or growing, or is it just taking longer to convert?

Yes, that's exactly it. It's still solid, no relationships. This is not tied to us dropping the ball or a failed relationship or anything like that. We've got high client satisfaction. And it's literally some launch delays, some decision delays just given some turnover by clients. And as they get bigger, you do go up in the decision tree, and that does take time. When you're looking at multi-million dollar deals and you're connected to the franchise Senior Executive, it's a career decision, right? So everything is scrutinized more. Good news is, we've got the team; we're at that table, both Ed and I and Steve and Marion are frequently at that table. And that's a good thing. That just shows that pharma is actually taking this seriously; it's not just a nice to have tactic, but it is a true channel of communication with doctors and patients at the point of care. And you have to remember, it's hard to hear this through not hitting our number, but we are one of the few that can do this at scale in the market. And they know that now, pharma knows that. And so I would imagine we'll get back to our drumbeat of growth as we get through this. And I think it's going to get really exciting.

Our next question comes from the line of Eric Martinuzzi with Lake Street.

Yes. I was wondering if there were any issues in the installed base. I know you highlighted the three major issues, but I'm flashing back to the last time we had this sort of shortfall. Thankfully, it was several years ago. But at that time, there were issues with, I think, a drug coming off branded and going generic was one issue. And the brand pulled in the spend that didn't originally planned. And then another issue was an M&A transaction that sort of froze spending for both clients while they went through the integration of the two brands. So anything along those lines?

Eric, it's Will. No, these are the issues that we outlined. We've got a really good base and no M&A, as you've seen from the market. As we've talked about, no patent cliff issues in the year. It's really a bigger spend taking longer, some launch delays and decision-maker shifts at our client base. But no, net-net, nothing like in 2019 Q3; this is more macro. And frankly, for us, as a team, while macro is frustrating, we're just kind of putting our heads down and building through it. We've got the balance sheet to build through it. We've got even off what we would call our budget, still cash flow positive, still profitable, still highly relevant. So yes, internally, the team is very positive. We're moving past Q2, focused on getting back to growth. But no, none of these surprise patent or M&A disruptions.

Okay. And then it sounds like the team remains in place. There's not going to be any headcount moves here given the operating expense roughly in line for Q3 and Q4. Are you elsewhere in the business? Any focus on discretionary spending to optimize profitability? Or any other things non-personnel-related expense side?

Nothing. No drama. We've always been really good at managing the money. And I would say now we have a more robust finance team, just more people with Ed's leadership. But yes, we plan to scrutinize what we need to. But again, we are a growth company; there are a lot of opportunities. I think with the market correction through the first half of the year, there are even more opportunities for us. So yes, we'll watch the money, but no dramatic changes, just be vigilant like we always are.

And then, last question for me. It's never too early to be thinking about FY '23. Assuming we are able to achieve that kind of higher end of growth that you talked about, that 10% growth in 2022. What's your outlook for acceleration from that in 2023?

I believe it will be significant based on our discussions. When I mentioned earlier that we should be able to grow this business by 20% to 30% each year, we've only had one year where we didn't achieve that, and this year would be the second unless we excel. However, I don't anticipate that for 2023; I expect better growth.

Our next question comes from the line of Marc Wiesenberger with B. Riley Securities.

From a high level, can you talk about the types of assumptions and maybe expectations that are embedded in your agreements that might impact customer ROIs and how they could differ across brands and customers? And kind of how do we think maybe about that factoring into any brand attrition, if at all? And also, do any of your deals have kind of performance incentives that could provide upside?

Sure, Marc. Steve, do you want to start with that? And I'll add after you.

Yes, Marc, thank you for the question. Essentially, these return on investments are analyzed using testing control methods. We have a standard testing control batch that compares the platform's deployment locations with those where it is not, assessing the behavior of physicians who receive the messages against those who do not. There are certainly more complexities involved, but that provides a high-level overview. The return on investments are conducted by an independent third party, verified, and then reported back to the customer. We collaborate with the customer to establish the methodology beforehand, which we both agree upon. The third party measures this, and we review the findings together with the customer. So far, there have been no disruptions with any of the return on investments we've received; all of them have been positive, as Will mentioned earlier on the call. The most recent ones have had a significant positive impact, and client satisfaction appears to be increasing, which is encouraging. The components considered in the return on investment calculations include familiar factors like the program's cost, duration, metrics we observe, messages, and other influences, alongside the recipients' behavior. Nothing unusual there. The positive shift reflects an improvement in the programs' effectiveness in reaching physicians. As we run these programs over a longer period, we're noticing consistent improvement in return on investment. This likely indicates that our algorithms are being refined, the programs are advancing, and we are making fewer adjustments over time as we gain insights to enhance their effectiveness. That's what I would like to share regarding the return on investment.

Appreciate that. And then I'm wondering, do you have a sense of how patient cohorts drive revenue across your business? And I guess, specifically related to age and type of insurance of the patient, because in the third quarter of last year, you announced an agreement with a top five pharma company related to a real-world evidence affordability initiative. And with the impending legislation that caps out-of-pocket Medicare costs, how will that impact your real-world evidence offering? And how important is that component, I guess, within the overall real-world evidence solution?

Yes, I'll begin and then pass it to Steve. The area where we are seeing significant impact for our clients is at the enterprise level. It involves multiple solutions. While financial messaging is often a part of it, our primary focus is on creating a cohesive patient journey. This includes raising awareness, assisting with prescribing decisions, and maintaining contact with the patient through their cell phone to help them navigate side effects and address affordability concerns, as you mentioned, while also addressing behavioral and comprehension issues. Steve, perhaps you can elaborate on that specific program without mentioning any names. Overall, we offer a much more comprehensive solution set, which is a key differentiator. This is also why our returns on investment continually improve, as we achieve more touchpoints throughout the patient journey involving healthcare providers, doctors, and patients — a challenge to accomplish at scale. Before I pass it to Steve, I want to highlight that when discussing ROI, pharmaceutical companies note these high returns and often question whether they can achieve similar results at scale. They want reassurance that spending $20 million will yield comparable ROI. This is where we can stand out and establish ourselves as a commercial and strategic partner. We're beginning to see this shift with several clients, though it can take time, those relationships are significantly more impactful. So, I'll now turn it over to Steve to discuss that particular project as a reference.

Yes. What you’re referring to is the downward pricing pressure in the Medicare market. Most of our work primarily involves commercially insured patients, which are subject to stricter regulations regarding marketing to Medicare patients, and there is no marketing allowed for Medicaid patients. Thus, the majority of our focus is on commercially insured patients. There are some Medicare programs that have received special dispensations, but generally, it’s mainly about commercially insured individuals. Regarding Medicare patients, the pricing pressure will likely lead to a greater emphasis on volume. Pharmaceutical companies will need to maintain their pricing levels for every prescription written, which means they’ll need to increase their business in those areas to keep profitability on track. The approach to Medicare patients cannot remain casual in the face of pricing pressures; they will need to ensure they capture every eligible patient for the appropriate therapies. This was not a necessity in the past, so watching this dynamic change will be interesting. However, this situation does not affect our operations, as we work across various franchises and reimbursement models. In fact, it may create more opportunities for us because companies will need to innovate further. This aligns with the insights from the McKinsey article, indicating that in environments with downward pricing pressure, innovation becomes crucial for increased efficiency in how they engage with providers.

Got it. Very helpful. And then just a final question for me. If you could discuss the economics related to the Equals 5 deal, and how we should consider potential capacity constraints and return on investment in that channel. As you start to progress beyond the point of care in the EHR, at least gradually for now, does this social offering present any opportunities for direct-to-consumer initiatives in the future?

I will start and then pass it over to Steve. What we have stated is that we want to be present wherever doctors and patients are digitally. Our goal is to be the preferred partner for pharma companies without disrupting care or being intrusive. Instead, we aim to facilitate better care and help patients begin therapy. I am really excited about some of the new channels we are engaging with. You'll notice the term omnichannel being used to describe multiple touchpoints, and the more access we have, the easier it becomes for our clients to invest with us in a manner that connects to the patient journey. Steve, perhaps you can address the second part of that. However, what excites me the most is particularly the Equals 5 partnership.

Thanks, Will. I don't think that it will be a DTC play, Marc. It really is focused on healthcare providers. And the sort of driving engine around that is the ability to look at specific healthcare providers in different environments, so social happens to be even more site-specific environment and to be able to report back on how those healthcare providers engage with content. And I think that's sort of a critical element of being able to measure whether or not these campaigns are actually working and whether or not the technology that you're deploying is having a result coming back to the discussion around ROI. So I don't think Equals 5 or the social environment is a DTC environment, although plenty of people, plenty of manufacturers advertise through Facebook and other mediums, and they use that as a DTC. That's not really our strategy here; our strategy really is focused on the healthcare provider. However, having said that, the Cooler Screens effort is a direct-to-consumer effort, and that is right at point of dispense. So when the patient goes in, picks up their script at the pharmacy, they're getting the fill, there's an opportunity to continue to educate and work on the DTC side. So you did mention the Cooler Screens, but that's actually the DTC after that.

The next question is from the line of Jeff Garro with Piper Sandler.

I want to ask about the large deals and how we should think about timing. More specifically, thinking about the timing between FDA approval and launch and then utilization of your services and whether the implementation period might be any longer than typically for some of these larger, more complex and tech-enabled deals.

Yes. That's a great question. Because we are so connected with our clients, we are actually addressing many of these issues in real-time with the assumption that they will be approved. I would say the kickoff period is no longer than what we usually experience. In fact, when we develop some of these algorithms for our real-world data solution, a significant amount of work is completed before the launch. We are optimistic that we can initiate these processes even more quickly and then refine the algorithm using updates for message delivery. However, we do not expect the timing to be any longer, nor do we anticipate any changes in our close rate.

Great. That's super helpful. And then one more for me on the guidance. Just curious how the revised revenue guide, whether it still assumes the typical Q4 seasonality. And you mentioned some conservatism on kind of incremental buy-ups. And so that kind of leads into the question of just visibility into year-end budget flushes from your top 20 pharma clients?

Yes. Look, it's early to talk buy-ups. You generally start to get rumblings of that at the end of Q3, early Q4. But generally, when you see any kind of slow or pullback, there is then more pressure to do more in the back half of the year because of the use-it-or-lose-it budget structures, right? So too early to tell, but again, conservative range, but I would think it's more of a buy-up atmosphere than in previous years, at least more than last year. Thank you, everyone, for joining us on the call today. While we always push ourselves to grow faster and do not like the disruption of our historical growth rates due to launch delays, enterprise deal sizes and client turnover, the disruptions are temporary and in no way change our positioning or opportunity within the vast white space that we continue to sell into, which currently estimates a pharma digital TAM that is greater than $10 billion annually. We have an amazing team, are profitable with positive cash flow and offer highly relevant solutions to our clients and partners. We encourage all our stakeholders to focus on the future and not view this disruption as permanent. Our expanded offerings remain very much in demand, and we have the opportunity now to cross-pollinate additional brands as a result of leadership moves within the existing franchises that we service. We are fully confident in our platform offerings, which remain best-in-class, while our expansive point-of-care network remains unrivaled in growing. This competitive moat puts us in a different class as we continue to move the needle with regard to addressing the challenges around patient access, adherence and affordability right at the point of care and point of dispense. Equally important, we are continuing to build on a novel solution set with offerings that connect other stakeholders such as manufacturing reps with healthcare providers, enhance provider communications outside of the electronic health record and allow clients to stay with the patient throughout their complete care journey. We continue to have a strong balance sheet and war chest that allows us to prudently explore innovative M&A opportunities. With the first half market correction in our sector, we are seeing a significant increase in the level of strategic opportunities, which could further drive value to all our stakeholders. We look forward to seeing everyone again at the various investor conferences coming up and on our next update call in November. Stay healthy.

Thank you, sir. Before we conclude today's call, I would like to provide the company's safe harbor statement that includes important cautions regarding forward-looking statements made during today's call. 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. The words anticipate, estimate, expect, possible and seeking and similar expressions identify forward-looking statements; they may speak only to the date that such statements were made. Such forward-looking statements in this call include statements regarding the 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'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 effects of government regulation, competition, and other material risks. Risks and uncertainties to which 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, 2021. This form is available on the company's website and on the SEC website at sec.gov. Before we end today's teleconference, 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 the 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 your lines. Thank you.