Good afternoon, everyone, and thank you for joining OptimizeRx's second quarter fiscal 2025 earnings conference call. We have with us today Chief Executive Officer Steve Silvestro. He is joined by Chief Financial Officer Ed Stelmack, Chief Legal Officer Marion Odensford, and Senior Vice President of Corporate Finance Andrew De Silva. At the conclusion of today's call, I will provide some important cautions regarding the forward-looking statements made by management during today's call. The company will also be discussing certain non-GAAP finance measures, which it believes are useful in evaluating the company's operating results. A reconciliation of such non-GAAP financial measures is included in the earnings release the company issued this afternoon, as well as in the investor relations section of the company's website. I would like to remind everyone that today's call is being recorded and will be made available for replay as an audio recording of this conference call on the Investor Relations section of the company's website. Now, I would like to turn the call over to OptimizeRx CEO Steve Silvestro. Mr. Silvestro, please go ahead.

Thank you, Operator, and good afternoon to everyone joining today's second quarter 2025 call. Overall, we had a strong second quarter of 2025 with results ahead of both consensus estimates and our internal expectations. Recent momentum has continued with Q2 revenues increasing 55% year-over-year to $29.2 million, with adjusted EBITDA coming in at $5.8 million, an improvement of over $5 million year-over-year. Moreover, our contracted revenue continues to increase to more than 30% year-over-year, which positions us favorably in the second half of 2025. I believe this is a clear indicator that our focus on operational excellence while ensuring we delight our customers and forge stronger relationships with valued business partners is bearing fruit. Before moving on, I want to take a moment and thank our market-leading team. We deeply appreciate the dedication and hard work of everyone at OptimizeRx as we We navigate an increasingly complex, dynamic, and still-emerging digital pharma marketing place. The industry is undergoing a significant shift, and our products and services are poised to fundamentally reshape how pharmaceutical companies, patients, and prescribers engage. Our mission-driven culture not only fuels this transformation, but also positions us to attract, retain, and strengthen the critical relationships a leading technology company needs to be a trusted and enduring partner. With that said, I'm happy to say we are increasing our guidance for the year and are looking for revenue to come in between $104 million and $108 million, with adjusted EBITDA to be between $14.5 million and $17.5 million. Moreover, while it's still very early, initial indications for 2026 appear promising. As a result, we feel comfortable with consensus current revenue and adjusted EBITDA projections for 2026, and we will give formal guidance as we get deeper into the 2026 RFP process. In addition, we paid down $4.5 million of principal during the second quarter, which was $4 million above our debt payment schedule. At this time, given the free cash flow we're seeing in our business, we intend on paying down our debt at an accelerated rate and don't believe we'll need to access the equity capital markets for the foreseeable future. As you can see, we certainly believe that we're hitting our stride. Our disciplined cost management and sharp cross-selling strategies, rooted in helping customers optimize budget allocation to drive script lift, are fueling strong momentum heading into the second half of 2025 and beyond. Our strong second quarter and first half results clearly show that the rule of 40 performance is no longer a distant goal. It's firmly within our sights. Perhaps most notably, average revenue over the last 12 months for our largest five customers now stands at over $11 million average. We believe OptimizerX is uniquely positioned to drive meaningful value creation and deliver sustainable long-term shareholder growth. Powered by one of the nation's largest point-of-care networks, we enable pharmaceutical manufacturers to reach healthcare providers directly when it matters most. Building on this powerful foundation, we've integrated a purpose-built, omnichannel technology platform featuring advanced patient-finding tools like DAP and micro-neighborhood targeting that are redefining how pharmaceutical companies, physicians, and patients connect, communicate, and act. This innovative approach is not only transforming engagement across the healthcare ecosystem, but also helping to improve patient outcomes. These advantages provide us with a durable and defensible competitive moat. With unmatched access to both the point-of-care and direct-to-consumer channels, we believe we are uniquely positioned in the market as the only player capable of engaging providers and patients at scale. This strategic positioning has enabled us to build the industry's most comprehensive and integrated solution set, allowing us to serve a broad range of customer needs across the full product lifecycle, drive deeper customer relationships, and capture a greater share of long-term value. As mentioned on previous calls, as our business continues to evolve, a key focus for the company will be drawing greater attention to our reach and scalability while positioning ourselves as a strategic partner in addressing some of the most critical commercialization challenges facing pharma today. These include improving brand visibility, reducing script abandonment, enhancing interoperability, and supporting the growing shift toward more complex and costly specialty medications. I'm confident that success in these areas, combined with the strong performance we are already delivering through the solutions that deliver high ROIs and strong script lift, will drive significant shareholder value over time. Moreover, this momentum will position us to capture greater market share while also expanding the overall size of pharma's multibillion-dollar digital spend. Our customers remain deeply embedded within our ecosystem of offerings, and it remains our goal to help them stay present through the patient care journey across the integrated HCP and DTC business. And with that, I'd like to turn the call over to our CFO, Ed Stelmack, who will walk us through the financial details. Ed?

Thanks, Steve, and good afternoon, everyone. A press release was issued with the financial results of our second quarter ended June 30, 2025. A copy is available for viewing and may be downloaded from the Investor Relations section of our website, and additional information can be obtained through our forthcoming 10Q. Second quarter revenue was $29.2 million, an increase of 55% from the $18.8 million we recognized during the same period in 2024. Gross margin for the quarter increased from 62.2% in the quarter ended June 30, 2024, to 63.8% in the quarter ended June 30, 2025. Year-on-year gross margin expansion is tied to a favorable product mix, economies of scale, as well as a favorable channel partner mix. Our operating expenses for the quarter ended June 30th, 2025, were essentially flat year-over-year at $15.4 million, despite the significant revenue growth we showed. We had a net income of $1.5 million, or $0.08, per basic and fully delivered share for the three months ended June 30th, 2025. as compared to a net loss of $4 million, or $0.22 cents, per basic and fully diluted share for the same three-month period in 2024. On a non-GAAP basis, our net income for the second quarter of 2025 was $4.5 million, or $0.24 cents, per fully diluted share outstanding, as compared to a non-GAAP net income of $0.3 million or $0.02 per fully diluted share outstanding in the same year-ago period. Our adjusted EBITDA came in at $5.8 million for the second quarter of 2025 compared to $0.5 million during the second quarter of 2024. Operating cash flow was $8.4 million for the first half of 2025, and we ended the quarter with a $16.6 million cash balance, as compared to $13.4 million on December 31st, 2024. The remaining principal on our debt financing currently stands at $29.3 million, and we paid $4.5 million in principal during the quarter, which was $4 million ahead of our payment schedule. At this time, we intend to deploy at least a portion of our free cash flow to pay down the principal on our loan faster, as we look to continuously lower our cost of capital. With that said, we continue to believe that our healthy balance sheet will help us execute against our operational goals. Now, let's turn to our KPIs for the second quarter of 2025. Average revenue per top 20 pharmaceutical manufacturer now stands at $3.1 million. Net revenue retention rate remained strong at 121%. Meanwhile, revenue per FTE came in at $767,000, topping the $658,000 we posted in Q2, 2024. We are encouraged by the continuing improvement in our KPIs as we continue to execute against their strategy of driving profitable growth as a leader in our space.

Now with that, I'll turn the call back over to Steve. Steve?

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

Certainly. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster. Our first question comes from Richard Baldry with Roth Capital. Please go ahead.

Thanks. Congrats on an incredible quarter. So many things to ask. I'll try to narrow it, but But last quarter, you talked about your typical revenue cadence being 15% to 20% in Q1, 20% to 23% in Q2. If we look at what you've now done in the first half and used those cadences, you know, revenues will come in sharply above even your increased guidance, be closer to $128 million if you use the midpoints. Can you talk about whether there's any one-time in Q2, any outliers there that we need to pull away to make that cadence sort of more normalized or how do we think about that given the extraordinary upside you just did on the revenue number and earnings for that matter?

Hey, Rich, thanks for the question. Great to hear your voice. We did have in the first half of 2025 a little bit of managed service revenue still in the revenues. And so what we're guiding to on the full year we think is, you know, again, conservative but achievable. We're going to continue to hit that drumbeat of conservatism, but not, you know, not sandbagging, but being conservative. So, second half, I think we feel comfortable with our updated guidance. Ed, Andy, anything you'd add?

Yeah, I'll add a little bit to that. Yeah, so, as Steve said, first half definitely had a little bit of managed service revenue that was above our expectation uh just so you know managed service revenue uh typically is contracted for three to six months in duration and it is something that comes a little bit as a surprise to us in terms of any upside or any extensions to existing contracts so we typically don't forecast it in our numbers and what you saw in q2 is kind of exactly that phenomenon where we were surprised by a little bit higher managed service revenue than we had in Q1. But currently, we don't expect that to continue into the second half.

Got it. Then on the cost side, OPEX is basically flat despite revenues up 33% sequentially. At some point, that can't be sustainable. How do we think about OPEX in the second half?

Yeah, thanks. I think what we're trying to show in the model there, what we are showing in the model is operating leverage-rich. So, you know, we made some pretty significant investments in the back half of last year and really in Q1 of this year to operationalize more of our technology. Part of what you're seeing on the OPEX there is, you know, a lack of need to add more bodies to drive revenue. I think we are, right now, we've got the team that we need well above what we're currently looking at for 2025.

So, I don't expect that you'll see OPEX growing uh going into the back half of the year although you know a need may come up but we feel pretty good about the opex number just to add a little bit a little more cover uh yeah so basically we are accruing for uh you know our current uh forecasted uh range as far as bonuses and variable comp so there's no kind of true up in the back back end of the year so i would agree with steve that uh you can expect roughly the same uh run rate in the second half as in the first half Okay, then I'm trying to make this mean my last one.

But the ARPU of your top 20 grew pretty strongly, but at the same time, they're a smaller percent of total revenue, so fell from 66 to 59. So it argues that, you know, the rest of your non-top 20 revenues are growing faster. You know, is that a function of faster logo ads, do you think?

Or is it a function of the ARPU for those non-top 20 growing at an even faster pace? yeah it's really a function of those under the top 20 starting to grow a little bit faster i mean we had i think we shared broadly on the last call we had a couple of sort of mid-size or smaller accounts start to join the ranks of some of the bigger larger top 10 that we've been mentioning which we think we've been very encouraged by that so the growth in the mid-cap and small businesses is is accelerating and we think that's going to continue to happen. So it's not that the top 10 is doing worse. In fact, the average revenue per top 10 continues to improve off of what we shared last time. So we're feeling pretty confident going into the back half. Great, great question. Thank you.

Yeah, so I always think I'm last, but let's do one last one. So if I did a rule of 40 on the quarter, I get 20% adjusted EBITDA on 55% growth for 75 and at some point that's almost a ludicrous number so again yeah do you feel like the the opex side needs to kind of grow at all quicker to keep up to to this pace or i know it's a digital and scalable business but it's it's it's sort of hard to grow this fast sometimes without having to invest in the business yeah ed i'll let you i'll let you comment on that one again sure yeah Yeah, look, I mean, as we said, it's a one-quarter phenomenon right now.

We're not projecting anything near that growth rate for the year. I can tell you internally, we don't feel overly stretched or stressed by this kind of growth rate at all. So if it continues to grow, even at half that rate, we feel like we're well-staffed and equipped to handle the growth rate. up to a certain point, obviously. It's not going to last forever, but certainly in the foreseeable future.

All right. I'll leave it there. Congrats on an amazing quarter.

Thank you. Thanks, Rich. Appreciate all the support.

Our next question comes from Eric Martin-Nulzi with Lake Street. Please go ahead.

Yeah. I wanted to dive in on the contracted revenue being up 30% year on year. What can you tell us about the types of revenue that are contracted here? Are these pointed at the B2C? Are they at practitioners? The length of the campaigns? Are we talking, you know, a 60-day spend, a six-month spend?

Hey, Eric. Great to hear from you. I'll give a little bit of voiceover and then have Ed and Andy chime in too. But contracted revenue right now is following the exact same product mix that it has in the past. So it's a blend of HCP and DTC business. Both businesses growing at really solid rates, I think, at this point in terms of revenue lines. We are seeing good growth in our audiences. So our DAP business continues to grow at probably an outsized pace, which is good for us. We're not breaking apart. As you know, DTC and HCP revenue, we treat it as one business now. So not going to break that apart. But in terms of the quality of revenues, quality of contracted revenues specifically, it's as good as it's been. And we're feeling strong going into the back half. In terms of length of contracts, it's the same as it's been in the past. So nothing to report there in terms of multi-year yet, although we're working on trying to lengthen those contract terms. Ed, anything you'd add?

Yeah, no, I would just add that it's a broad-based ramp-up in contracted revenues, faster than I've seen since I've been here. So certainly to me, it's a nice signal of adoption and appetite for what we bring to the market, certainly in the current year.

When you say broad-based, you're talking about both top 20 and below top 20? Is that what you mean?

Yeah, as you can see, you know, you've got top five growing nicely, top 20, and then beyond that, and, you know, since we don't disclose the actual mix underneath the hood, both HTTP and HTC side of the business are performing really well.

Got it. Thanks for taking my question.

Good to hear from Eric.

Our next question comes from Anderson Schalk with B. Riley Securities. Please go ahead.

Hi, thank you for taking the questions, and congrats on a really impressive quarter. So I guess, could we just talk about the reduction in top 20 pharma revenue concentration? Are there better contract economics with mid-tier pharma companies, and maybe do you have a target mix for this?

Yeah. Andy, why don't we have you take that question?

Yeah, I think it's just a function of efficiencies being taking place at smaller-cap companies. So they're looking to save wallets and increase the ability to market efficiently since they have less dollars to be able to spend. So our technology is starting to be more proven. And so we're just seeing them start to adopt at a faster rate. But keep in mind, there's a lot more logos from the 20 to 100 mark than they're in the top 20. So while the dollars are less per logo, typically, they are growing at a fast rate and starting off at a smaller base, if that makes sense.

Okay, that's helpful. And then on the last call, you reported 5% of projected annual revenue converted to the DAP subscription contracts. I guess what percent of your revenue is now subscription-based, and how should we think about the gross margin trajectory for the back half of the year as DAP subscription revenue continues to scale?

So, Ed, why don't you take that one? Yeah, so again, we don't break it out, but the 5% number currently still is valid. And right now we have kind of a pipeline line of sight to about 10% for the year, assuming the pipeline closes and converts.

Okay, got it.

Thank you for taking the questions, and congrats again on the quarter. Thank you. Thanks, Anderson.

The next question comes from David Grossman with CFA Financial. Phil, please go ahead.

Thank you. Good afternoon, guys. Just a couple of quick follow-up questions here to maybe some things that were asked. I think last quarter, Steve, you gave us a metric in terms of your visibility on the year at the end of March compared to what was the end of March last year. Can you do the same for us, you know, for the end of the June quarter?

Yeah, thanks, David. It's good to hear from you. Yeah. You know, we're not going to we're not going to give a number on contracted revenue other than to say at this point we're 30 percent or better than we were same time last year. So, you know, I think we're pretty confident being able to share that. We're going to stop sharing an actual contracted revenue number. And you know that we're not sharing. We haven't been sharing a pipeline number throughout the year this year. So I would say what we shared with you last time still valid. just think of that growing at a 30% clip or better, and that's kind of where things are.

Got it. And in terms of, you know, your year is always so back and weighted in the fourth quarter. Does that improved visibility reflect the outperformance in the second quarter, or does it give us better visibility on the fourth quarter?

That's a great question. It gives us better visibility on the fourth quarter, So I think we feel more comfortable, which is why we've increased guidance and given a better view into what we think the full year is going to look like. What we don't have currently baked into our visibility is really the buy-up seasonality that we've seen in this business year over year in the fourth quarter, David. So we've not included that in the forecast or the guidance. And I think that's in line with our general sort of conservatism that we're going with here. So if you're, and I know you know this business intimately, so we've not added any number for the fourth quarter into anything that we've shared, nor will we.

And, you know, I think you and Ed mentioned, you know, managed services, you know, and, you know, we all know the episodic nature of that and unpredictability. So, if you look at the outperformance and revenue in the quarter, how much of that was managed services versus other, you know, areas of the business?

Yeah, we don't break it out, but I wouldn't look at it as in the quarter. I would look at it as in the first half. There's still some opportunistic managed service revenue coming in. We've taken that into account and what we've shared for the second half in terms of our restating and projection on the guidance, the increase. And so what's reflected in our increased guidance takes that into account. Ed, I don't know if there's anything else you'd want to say on that.

Yeah, I mean, it's clearly material, right? But material to an extent of changing the phasing or skewing the phasing of our revenue burn through the year. But certainly not material enough to be the vast majority or even the majority of our business. So it's certainly a number that's meaningful. but I would look at it as the key driver of Q2 performance.

Got it, and just one other follow-up on the operating expenses. I know you said flat in dollars, the balance of the year. Is there anything you can help us to understand as we think about, I mean, you did say you were comfortable with the revenue. I think I heard you right. You said revenue and margin for next year and consensus. How do you want us to think about the leverage in the business, you know, going forward? Any kind of signposts you can give us would be helpful. Ed, why don't you take that?

Yeah, so I would say, you know, this year from an OPEX perspective is relatively big. So I would kind of utilize what you're seeing right now as a run read. Going into the next year, I would apply the typical merit increases, variable account increases that come along with a growing business. As far as major investments are concerned, I think we can run this business with roughly the same headcount, probably to $150 million in top line or thereabouts. So any additional investments would be more kind of strategically oriented. that probably have to do with either investments in additional channels or, you know, technology expansion to continue to expand their portfolio of solutions.

And those will be capitalized.

All right, great. I guess, you know, the only other question really is a higher-level one. Just, you know, what you're seeing out of pharma, you know, it's been all over the board in terms of their results this quarter. You know, they've got some regulatory headwinds they're dealing with. You know, is there any kind of flow through that you're seeing one way or another, you know, as you kind of talk to some of your larger pharma clients? Or is this all just kind of business as usual for the most part? Thanks, David.

I mean, we're definitely seeing that pharma is more focused on efficient ways of driving revenue. And I think they're still digesting what's going on in the general regulatory environment, also with the White House and some of the potential changes there, so that the focus we're seeing there is looking for efficient ways to continue to communicate with patients and physicians and drive revenue and scripts. And we're lucky that we're in a good strategic position in terms of driving revenue in a very efficient and cost-effective way at scale with reach. And so what we're also seeing is as they're evaluating other players that are in the marketplace, when those players have a lower reach, less reach than we might, or are less accurate, can't prove out revenue, they don't have the ability to provide reporting or insights, pharma is very quickly moving past those businesses and moving on to businesses that can provide them the data and the analytics that they need to continue to invest. And so that's kind of a macro trend we're seeing across the board in digital, and you can kind of see it in all the businesses that you guys follow. You'll start to see it more and more prominently.

All right, guys. Thanks again. Thank you.

Our next question comes from Jeff Garrow with Stevens Inc. Please go ahead.

Yeah, good afternoon. Thanks for taking the questions. Maybe follow up on the last one on the macro environment and those trends that you discuss. Curious how much that's potentially leading to any pull forward of spend given the potential uncertainty looming around some of those topics and then how those different trends that you discussed are impacting the early field that you're getting on the selling season. It sounds like there's still a bit of energy and positive trend and indication, at least towards optimized Rx, but we'd love to hear more on how the environment impacted Q2 in the first half in terms of pull forward and then how it's impacting the go forward view for your customers.

Thanks, Jeff. Yeah, we're not seeing any pull forward right now in terms of revenue that's coming in. We are seeing a willingness to engage in conversations a little bit earlier and make plans for the back half earlier, which I think is good. But our contracted revenue is very smooth in terms of what we would anticipate for the year. So not a traditional kind of spend the money now because we don't know what's going to be there in the back half. We're not seeing any signs of that. And our commercial team continues to report back that second half they feel is steady, as we've shared, as you've heard from Ed, myself, and Andy. So nothing on the pull forward. Regarding the second part of your question around investment or looking at companies like OPRX, I think the most important thing they're looking for is the ability to continue to connect with doctors and with patients in a digital way that's efficient. And we are still one of the only players out there that can do it. We are arguably the only player that can really do it at scale across DTC and HCP. And I think they're starting to realize the economies of scale sit within this business. And so that's why you're seeing a longer term investment being made, I think, in the business.

Andy, you're tracking this very closely too let me put it over to you and have you add any color that you'd like no i i think you really hit the nail on the head there steve um i don't think there's much of a pull forward at this point in time um i think prom is really engaged with the digital channels and i really think what's going on right now if you're seeing them move to higher roi more efficient channels and there is some you know just risks with general trends from the new administration. But I think that's more affecting legacy ways of commercializing the business and is actually resulting in companies leaning forward more into digital.

Excellent. Thanks for taking the questions, guys. I appreciate it. Congrats again.

Yeah, thank you.

Thanks, Justin. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Steve Silvestro for any closing remarks. Thanks.

Thank you, Operator, and thank you all for joining us today. We're excited to be building our strong operational and financial momentum. Our foundation at OPRX is solid, and we're confident in the path ahead. What you heard today makes us confident in our abilities to hit our short-term and long-term targets, and I remain very enthusiastic about the future of our business. We look forward to speaking with you again on our next call and meeting many of you in the upcoming investor conferences and 101s prior to the next earnings call. Have a wonderful evening, everybody. Thank you.

Thank you, Mr. Sylvester. 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 and 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 are made. Forward-looking statements in this call include statements regarding our growth plans, plans for shareholder value creation, becoming a rule of 40 company, transitioning to a subscription-based model, achieving our goal to help patients stay present throughout the patient care journey across our integrated HCP and DTC business, initiatives being implemented by new administration, cost management, targeted upselling, estimated 2025 revenue and adjusted EBITDA ranges, estimation of total addressable market size, market penetration, technology, investments, growth opportunities, acquisitions, and upcoming announcements. statements. Forward-looking statements also include the management's expectations for the rest of the year. 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, dependence on a concentrated group of customers, cybersecurity incidents that could disrupt operations, the ability to keep pace with growing and evolving technology, the ability to maintain contracts with electronic prescription platforms and electronic health records, networks, and other material risks. Risks and uncertainties to which forward-looking statements are subject could affect business and financial results are included in the company's annual report on Form 10-K for the year-ended December 31, 2024, and in other filings the company has made and may make with the SEC in the future. These filings, when made, are available on the company's website and on the SEC website at sec.gov. Before we attend today's conference, I would like to remind everyone that an audio recording of this conference call will be available for replay starting later this evening, running through for a year on the Investors section of the company's website. Thank you for joining us today. This concludes today's conference call. You may now disconnect your lines.