Earnings Call Transcript - OPRX Q1 2023

Operator, Operator

Good afternoon, everyone. And thank you for joining OptimizeRx’s First Quarter Fiscal 2023 Earnings Discussion. With us today is the Chief Executive Officer of OptimizeRx, Will Febbo. He is joined by company Chief Financial and Operating 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, some important cautions regarding the forward-looking statements made by management during today’s call will be provided. 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. In addition, management will discuss certain non-GAAP financial measures today that they believe aid in the understanding of the company’s financial results. A reconciliation to comparable GAAP financial measures can be found in today’s press release. Now I’d like to turn the call over to OptimizeRx CEO, Will Febbo. Sir, please go ahead.

Will Febbo, CEO

Thank you, Operator. Good afternoon, everyone. And thank you for joining our first quarter fiscal 2023 earnings call. Our first quarter results were in line with our expectations and revenue came in at $13 million, which was at the top end of our Q1 revenue guidance range of $11.5 million to $13 million. As a result, we are maintaining our full year revenue outlook, which calls for our topline to increase at least 10% year-over-year. We believe executing against our guidance will also result in year-over-year improvements to our KPIs by the end of 2023. While the macro environment hasn’t fully normalized, the industry trough appears to be behind us now and we continue to return to normalcy. This is the case despite the banking crisis that began to emerge at the end of Q1, and while there was some short-term disruption with our customer base as top-down focus moved towards understanding the potential macro overhang, that was short-lived. And by early in the second quarter, pharma gained comfort by the resolutions that were implemented to address the fallout. We are seeing modest improvements to tactical sales, which, if you recall, was the portion of our business that was most impacted by the transitory macro headwinds we’ve discussed. We expect this part of our business to continue to improve as the macros work themselves out and believe our reach, focus on accessing physicians across multiple landing pads and ability to efficiently scale, while being able to report back data provides us with a significant competitive edge. More importantly, our AI-Driven Real-World Data or RWD-AI offering continues to gain momentum and we are in late-stage discussions for multiple deals and continue to believe revenue from this solution will increase at least 100% year-over-year and approach 20% of our total revenue for 2023. Our RWD-AI pipeline is comprised of dozens of deals with a significant focus on the top 200 brands. We view the progress and the types of discussions we’re in as extremely positive for our growth, not just in 2023, but in the coming years as well. We believe this momentum is keeping us ahead of the pack as there are no other AI-driven in-workflow messaging solutions in the market. I’m extremely proud of our RWD-AI solutions as it truly showcases our ability to innovate and effectively differentiate ourselves, while driving actionable insights and better outcomes for pharma, HCPs, and patients. We are now in our second full year of having RWD-AI solution in the market and have seen several examples of significant expansion and growth. For example, one client scaled from pilot to now several live programs, representing our largest multiyear expansion to date of over $5 million. This expansion was unique in that it represented extending our solutions in three dimensions: disease, channel reach, and message type; very exciting. Operationally, our technology investments, partnerships, and tuck-in acquisitions have created a robust single-shop omni-channel offering, which has the ability to drive communications across multiple landing pads and is resulting in superior ROIs for the brands that we serve. We’ve also made tremendous progress in building our industry reputation and expanding awareness of our solutions. Recall, part of what makes our business model special is the fact that we continue to manage the largest in workflow point-of-care network in the United States and are able to deliver digital solutions via the connectivity to prescribers. To complement this, we have been expanding service offerings outside of the EHR, which we believe will result in us capturing a greater portion of the available industry white space in the coming quarters and years. Pharma is moving a greater portion of their more than $10 billion digital commercial spend towards omni-channel solutions, while looking for these solutions to deliver more impactful results, by not only identifying patients known to HCPs, but also pinpointing new patients for their therapy. We believe this bodes well for RWD-AI as smarter solutions are what pharma is looking for as they continue to reallocate legacy commercial dollars to digital. We believe early proof of this trend is clearly highlighted by the momentum we are seeing with RWD-AI, despite this being a newer offering with a higher price tag. RWD-AI has the added benefit of moving us from a tactical player with pharma to a bigger strategic partner where we can benefit from the top-down push by decision makers while obtaining stickier revenue streams with stronger margins and greater overall growth potential. As we mentioned in our last call, activity and outcome transparency requirements are continuing to gain importance at a rapid clip and this is an area in which we will be investing this year. We view pharma’s focus on relevant insights very positively, as it shows they are getting more serious within our space and are looking to quickly read out vendors with limited scale, as well as spray-and-pray campaigns. In fact, we believe these capabilities will increase our market share and total addressable market (TAM), as we are the only platform that has integrated physician level engagement data across EHRs, display and social media, which provides a significant advantage on our guiding engagement programs across multiple landing pads. By our estimates, the deeper insights that come from physician-level data reporting will be the new normal for our space. Moreover, the level of insights that can be derived from digital campaigns today is something that was previously unattainable, which is why pharma is embracing reporting in order to quickly catch up with the transformational best practices. And every day, we are witnessing the influence of insights from physician-level data reporting affect additional investment spend of our customers. This new motivation to invest is a clear sign that pharma is taking digital health more and more seriously, and is looking to establish standards as they continue to scale up investments in this space. Later this year, we expect to have completed an enhancement of our platform that allows for smart targeting through the use of AI on all programs, further enabling our customers’ ability to effectively and efficiently utilize more landing pads and generate stronger ROIs. This will further strengthen our platform, which, when coupled with our reach, capabilities and the over 10:1 ROI our customers obtain against their marketing spend, creates a significant moat for our business. Finally, during the quarter, we closed a multimillion dollar three-year agreement with a leading hub service company. Thus far, this is the largest deal of its kind for us and is tied to last year’s acquisition of EvinceMed. The engagement is focused on determining drug eligibility and affordability, and will help accelerate access to coverage and affordability information for pharma-sponsored patient support program. 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 Q1. Ed?

Ed Stelmakh, CFO and COO

Thanks, Will, and good afternoon, everyone. As with all our calls, a press release was issued with the results of our first quarter ended March 31, 2023. A copy is available for viewing 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 in the coming days. Turning to our financial results for the period. Our revenue for the quarter was $13 million, a slight decrease from $13.7 million recognized during the same period in 2022. The decrease in Q1 year-on-year revenues was due to the macro headwinds we have been communicating since they started to take hold in Q2 2022. Meanwhile, our gross margin decreased slightly from 59% in the quarter ended March 31, 2022, to 57.2% in the quarter ended March 31, 2023, slightly below the lower end of our annual gross margin range. The decrease was due to solution and channel partner mix. We continue to expect gross margin to come in between 58% and 62% in 2023. Our operating expenses increased from $11.9 million for the three months ended March 31, 2022, to $14.5 million for the same period in 2023, an increase of 22%. Nearly 50% of the increase was tied to higher stock-based compensation and the remaining increase was primarily due to the full year impact of a few 2022 hires and the EvinceMed acquisition, combined with annual merit increases and normalized bonus payouts for the year. We had a net loss of $6.4 million or $0.37 per basic and fully diluted share for the three months ended March 31, 2023, as compared to a net loss of $3.8 million during the same period in 2022. On a non-GAAP basis, net loss for the first quarter of 2023 was $1.6 million or $0.09 per basic and fully diluted shares outstanding, as compared to a non-GAAP net loss of $0.1 million or $0.01 per basic and fully diluted share in the same year-ago period. Operating cash flow was virtually breakeven and a material loss of $86,000 during the quarter, which was largely due to the timing of upfront payments to fund investments in our growing capabilities and expanded access. Our balance sheet remains strong with cash, cash equivalents, and short-term investments totaling $73.7 million on March 31, 2023, compared to $74.1 million on December 31, 2022. We are well capitalized to execute against our organic growth strategy and believe our balance sheet positions us to further expand our business solution offerings and drive profitable growth. We’re also continuously evaluating M&A opportunities that fit within our strategic priorities at more attractive valuations when compared to last year. In terms of our revenue outlook for the full year 2023, the company continues to expect revenue to increase at least 10% year-over-year. Now let’s turn to our KPIs for the first quarter 2023. Our average revenue per top 20 pharmaceutical manufacturer now stands at $2 million as of the first quarter of 2023. And we are working with 18 of the top 20 largest pharma companies in the world and 100% of the top 20 that don’t have the majority of their sales tied to COVID-19 vaccines. As a former pharma executive, I believe that this segment of the industry represents the largest opportunity for commercial digital solutions, and we continue to have a solid presence in this piece. Our net revenue retention rate declined to 86% due to the macroeconomic factors and the resulting impact on several client programs that we discussed in our prior calls. Revenues per FTE held steady at $605,000 and in line with what we reported last quarter. As a reminder, our KPIs are calculated on a 12-month rolling basis and are impacted by the dynamics of the headwinds from the previous year. As these headwinds subside, we expect our KPIs to show improvement. And now, with that, I would like to turn the call back over to Will. Will?

Will Febbo, CEO

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

Operator, Operator

Thank you. Your first question comes from Ryan Daniels with William Blair. Please go ahead.

Jared Haase, Analyst

Hey. Good afternoon. This is Jared Haase in for Ryan. Thanks for taking my questions. First one from us, we were just hoping to get some color regarding the Data Financial Assistance programs in pharma. I know there was a recent report highlighting some of the tension between pharma and payers and maybe some manufacturers starting to pull back these programs, which obviously can have an impact on patient access. So just curious if you could speak a little bit to what you’re seeing in the market overall? And then I guess just as a related point, could you maybe tie in sort of what percentage of your revenue comes from these programs today?

Will Febbo, CEO

Yeah. Hey, Jared. It’s Will. Good to hear your voice and I’ll hand it over to Ed in a second. We don’t break out revenue by solution, because we’re really moving towards that enterprise approach where it’s multiple solutions and multiple pieces, and they all have a relevant play in the patient journey. So we're not going to break that out. But it’s not a material percentage of our business. It hasn’t been, we’ve spoken to that over the last few years. It’s just a piece of the business that’s important. Basically, making affordability accessible will always be important. I think where it’s heading is it’s going to become more specific to specialty medications, where it really has the largest impact for the patient and the HCP to have a patient who’s adherent. But let me hand it over to Ed and then maybe Steve can kick in too.

Ed Stelmakh, CFO and COO

Thank you, Will. Jared, that's a great question. I agree with Will's comments; financial messaging has been decreasing as a portion of our overall business for some time. However, the trends are shifting as pharmaceutical companies focus on being more targeted with their financial messaging, particularly because copay programs need to be much more specific now. This presents a positive opportunity for our real-world evidence and AI solutions, which effectively help us guide patients at the appropriate times during their care. Steve, do you have anything to add?

Steve Silvestro, CCO

I would say, Jared, it's consistent with the shift from small molecule drugs to those major household brands and a movement toward specialty drugs. There is a transition from volume to value happening, and as a result, financial assistance programs need to adapt. While there has always been friction between payers and pharma, the changing dynamics in the marketplace and the ecosystem moving from small molecules to more biologics, as Ed pointed out, require changes in copay programs or financial assistance. As Ed mentioned, I think this ultimately benefits us because our focus on our technology with RWD-AI positions us well to take advantage of this shift. Thank you for the great question.

Jared Haase, Analyst

Got it. Yeah. That makes sense. And yeah, I can appreciate the ability to target is certainly a differentiator. So I guess just as a follow-up here. Will, I think you alluded to the sort of tactical sales that being kind of the area of the business that’s been most impacted by these transitory headwinds. I’m wondering how quickly can those sales come back? I mean do you feel like these budgets are largely set for the year at this point or do you think if we get maybe a little bit more stability that those types of things can maybe swing back in the second half of the year?

Will Febbo, CEO

Yeah. Absolutely. So on the tactical side, it is the one that can be dialed up and down the fastest, right? They’re largely going through media companies who are managing those budgets for pharma. Good news is we’ve worked with over 50 agencies. We work with, obviously, a lot of brands over the last year. So as the macro does get better, that’s the one they will dial up the fastest. So, yeah, we’re not calling that call yet, but that is the one that would be dialed up in the second half. The good news is we’re just seeing improvement in the first half and I think that’s largely due to some efforts we made last year to really double down on marketing and education of what we’re doing with the agencies and really being a partner that helps them differentiate with pharma, and we’re seeing very good early signs of that. So stand still hope for the second half.

Jared Haase, Analyst

Okay. Great. Appreciate all the color. Thanks.

Will Febbo, CEO

Thank you.

Operator, Operator

Your next question comes from Sean Dodge with RBC. Please go ahead.

Sean Dodge, Analyst

Thanks. Maybe, Will, just staying on tactical for a moment. Your comments there around that improving. Is there anything you can share to give us a sense of the magnitude of change there, maybe like pipeline for tactical, I guess, compared to Q4? How much has that progressed or grown?

Will Febbo, CEO

Well, Ed would get mad at me if I stray from our KPIs.

Ed Stelmakh, CFO and COO

Yeah.

Will Febbo, CEO

I’m not going to provide pipeline numbers. He is stronger than I am. However, we are noticing year-over-year improvements, with more active business already. Sean, as we've discussed, we really focused on training, marketing, hosting events, and speaking at conferences around August and September of last year, which significantly raised awareness within the agency sector. Overall, they are catching up; the pharmaceutical sector is aligning with digital, and we have communicated a clear message about how we can assist our clients in finding patients through healthcare provider access and enhancing script lift and return on investment.

Sean Dodge, Analyst

Okay. Great. And then on the guidance, it continues to imply a pretty steep revenue ramp into the back half of the year. Maybe is there any update you can share on visibility you have into that, I guess, as we progress deeper into the year, I’d imagine a greater proportion of that is now visible kind of via being under contract. Anything you can kind of share or quantify for us there?

Will Febbo, CEO

Sure. Ed, do you want to start?

Ed Stelmakh, CFO and COO

I can take that.

Will Febbo, CEO

Yeah. Sure.

Ed Stelmakh, CFO and COO

Yeah. So, hey, Sean, how are you? So right now, basically, we would typically see between, I would say, 55% to 70% of our backlog already signed and committed. And we’re tracking well within that range. So that gives us a nice kind of view on the back half of the year from where we sit today. So we really feel like it’s a pretty healthy backlog and looks pretty solid to at least meet our current guidance.

Sean Dodge, Analyst

Okay. The six RWD deals you all signed thus far, are those all up and running now or is there some expectation that those will begin to flow in Q2 and beyond that kind of help when we think about like the incremental kind of revenue cadence over the year?

Will Febbo, CEO

Yes, they are all active now. I believe a significant factor for the second half being more focused on growth is that, unlike the same time last year, we now have a strong pipeline for RWD-AI. This gives us greater confidence for the second half. Additionally, as you know, the second half typically shows higher performance. However, this year, we are relying a bit more on the growth than usual.

Sean Dodge, Analyst

Okay. Thanks again.

Will Febbo, CEO

Thanks, Sean. See you next week.

Operator, Operator

Your next question comes from Stephanie Davis with SVB. Please go ahead.

Stephanie Davis, Analyst

Thank you for taking my question. I know we've discussed the market extensively, but one of your competitors mentioned some delays in the pipeline with large pharmaceutical clients. I would like your perspective on what might be causing this trend beyond the macroeconomic factors.

Will Febbo, CEO

Sure. Well, Steve is in the thick of it. I’ll let him talk to sales cycle and elongation.

Steve Silvestro, CCO

Hey, Stephanie. It's nice to hear from you. I appreciate your question. We've noticed a bit of a pause due to the financial situation in the first quarter as we were assessing the circumstances. However, since then, we've experienced an uptick in our pipeline. The time it takes to close deals is decreasing, and our marketing team is working hard to launch programs more quickly now that the pause has lifted, which is encouraging to see. We're eager to understand how things will unfold after Q2 regarding sales cycles, but we're already aligning with our typical sales cycle patterns. I don't foresee any disruptions at this point. In fact, the sales cycle for some of our more advanced targeting products is also beginning to shorten as clients are eager to catch up. It's a very interesting situation. Great question.

Stephanie Davis, Analyst

So if you’re seeing the backdrop a little bit better and you announced a giant buyback authorization intra-quarter. Why are we not going to buy shares hand over this?

Will Febbo, CEO

Well, there are these things called blackout periods. We have to follow the rules. So we obviously believe in our stock and we have one authorized, and when we can, we will.

Stephanie Davis, Analyst

It’s in clause...

Will Febbo, CEO

Yeah. Absolutely…

Stephanie Davis, Analyst

Right.

Will Febbo, CEO

Yeah. But we were in a blackout period when we actually announced that, so.

Stephanie Davis, Analyst

Okay.

Will Febbo, CEO

Yeah. We have five days a quarter, as you know, and that was announced after that. So… I would just add, Stephanie, that I think the sales cycle for peers as they also are shifting to sort of bigger enterprise deals, this is just more decision-makers. That’s one aspect of it. The other thing is, when you’re doing something that may be close to another company that’s claiming they can do it, well, pharma wants to see if that’s true. And so sometimes that slows them down to test. We certainly saw that last year. We talked about it sort of cluttered market landscape. And as Steve said, we believe that’s going to declutter pretty quickly, because if you can’t measure it and you can’t present it transparently and show effectiveness, you’re going to fade pretty quickly.

Stephanie Davis, Analyst

Hey. Very helpful. Thank you.

Will Febbo, CEO

Sure.

Operator, Operator

Your next question comes from David Grossman with Stifel. Please go ahead.

David Grossman, Analyst

Thank you. I just wanted to go back to a couple of comments you made in your prepared remarks. One of those was that you said you were beginning to expand more aggressively outside the EHR. And I’m wondering, could you just elaborate on what you’re doing and strategically what you’re trying to accomplish?

Will Febbo, CEO

Absolutely. Hey, Dave. It’s Will. So when you think about where we are within our client base and how we track to the patient journey and helping them stay connected to that patient journey via HCP access. Doctors are not just on their EHR all day, right? They’re on their cell phones. They’re in care team technology meetings. There are a lot of different touchpoints. They’re using telehealth depending on the therapeutic area. So from our perspective, because we’re a tech company and we know how to API really well, it makes sense to go beyond EHR as a landing pad. And so when we sit down with our clients, we can show them a much more holistic plan around HCP access. And the key piece to this is you have to do all that while being transparent on physician level data. So, Steve, maybe you want to add to that a little bit, but I think that’s the rationale and the early signs are that it’s a pretty good strategy; clients are responding pretty well to that.

Steve Silvestro, CCO

Yeah. Hey, David. I think you highlighted it well. I mean it’s essentially meeting the physicians where they’re at. And the key differentiating point for us is the ability to report back physician-level data in terms of those interactions. So unlike sort of generalized endemic website advertisements, the ability to provide back PLD and show at a physician level, what’s going on, I think is going to be the key differentiator for us. And as you heard from, Will, it’s not just in the EHR that we can do that, but it’s every other platform that we’re looking at in making that a focal point. So it’s going to give us a key differentiating point from anybody in our peer set, frankly.

David Grossman, Analyst

One topic that has emerged in the digital advertising sector, particularly in media buying, is the potential influence of generative AI. This is currently a significant trend in the media landscape. Given this context, I’d like to know how much you’ve considered its effect on your business, how it might be advantageous for you, and where it could pose risks if competitors adopt it ahead of you.

Will Febbo, CEO

We’ve been actively implementing machine learning for the past two and a half years through RWD-AI. We already have revenue generated from it in our pipeline, which demonstrates that it’s not just a future possibility for improving our company’s efficiency; it has already made a positive impact. As mentioned earlier, we’re positioning our platform to support any brand and any campaign size across the entire network. This is significant because, in the marketing space, transparency and sophistication are increasing, and to prevent commoditization, innovation is essential. We have focused heavily on this in recent years, and I believe this will be a defining characteristic of our company. We are ahead of our competitors in this regard. I recently spent two days with our team of data scientists, and I can assure you that this innovation is deeply ingrained in our company culture. I’ve observed other companies using similar technologies for various applications, and these tools are becoming more effective quickly. I’m not overly concerned about faster or smarter competitors emerging because they aren’t integrated into the workflow. As we've discussed, electronic health records are already crowded with users who aren't seeking additional solutions. Therefore, I believe we are well-positioned to be their partner, providing innovative solutions for doctors and patients.

David Grossman, Analyst

But have the use cases for the RWE product, if you look back to the first couple of deals you signed a year ago or so and what you’re doing now, has there been any big change?

Will Febbo, CEO

They are incredibly effective, Dave. We are identifying patients that our clients might not have found otherwise, who need the medications available. This has a significant impact on outcomes for patients, doctors, and, of course, our clients. It's really energizing for us because we have a smarter message backed by solid, patent-pending intel. We are dedicated to developing this further and expect to share more cases, but we have already discussed one in our prepared remarks.

David Grossman, Analyst

Right. And just one financial question maybe for Ed. It looks like stock-based comps stayed relatively flat, but your GAAP operating expenses sequentially, I think, went up quite more than we would have expected. So I’m just trying to think through, given what’s going on with the topline, what’s going on in the operating expense, maybe these are expenses that are just fixed costs. But I was just surprised at how much the expenses went up sequentially?

Ed Stelmakh, CFO and COO

On the operating expense side, if you look at the cash compensation, there are a few factors to consider. First, you’re correct that compensation has increased due to merit increases, and we made very few hires last year. We also adjusted our bonuses for this year; since we missed our targets last year, we paid out full bonuses, so now we have reset the bonuses for this year back to 100%. Additionally, the increase is driven by investments aimed at expanding our channel footprint and enhancing our reporting capabilities. As you analyze the operating expense run rate, you can anticipate a slight increase in the following quarters, not in the millions but around $100,000 per quarter to support those necessary initiatives.

David Grossman, Analyst

So you would expect a sequential increase in the balance of the year?

Ed Stelmakh, CFO and COO

Yes. But we also expect growth in the topline.

David Grossman, Analyst

Right. Very good. All right. Thanks very much. Appreciate it.

Ed Stelmakh, CFO and COO

Yeah.

Operator, Operator

Your next question comes from Neil Chatterji with B. Riley. Please go ahead.

Neil Chatterji, Analyst

Hey, guys. Good afternoon and thanks for taking the questions. Maybe just first, just curious if you could just give us maybe more color on that, I guess, the smart targeting enhancement you were talking about for the platform?

Will Febbo, CEO

Well, so we’ve been talking about RWD-AI for a while. Why don’t I let Steve, why don’t you give just a quick overview of really the simple message to why this works for doctors, clients, and patients.

Steve Silvestro, CCO

Sure. What we are doing allows us to analyze individual patient profiles across the U.S. patient ecosystem. We have a data intake function and a machine learning platform that helps us thoroughly examine that data to identify potential candidates for specific therapies. Additionally, we have an execution function that enables us to engage with healthcare providers regarding their patient panels. This integration of data analysis, candidate identification, and execution is what sets our business apart. Unlike other companies that focus solely on analytics or execution, our business connects all three aspects seamlessly, allowing us to efficiently find, identify, and implement solutions. This streamlined approach is what makes it effective and scalable.

Neil Chatterji, Analyst

Got it. Okay. I might have misinterpreted that. So there’s not something new for later this year.

Steve Silvestro, CCO

No. No.

Will Febbo, CEO

That's right. Go ahead, Steve.

Neil Chatterji, Analyst

Got it.

Steve Silvestro, CCO

No.

Will Febbo, CEO

I was just going to say, it’s just expanding it to be available to our entire network for all brands that we work with. So just a more sophisticated trigger mechanism, which gives better targeting and better ROI.

Neil Chatterji, Analyst

Thanks for the clarification. I have a follow-up regarding the hub service agreement you received. I'm interested in understanding the expected impact from that.

Will Febbo, CEO

It’s about $1 million a year distributed fairly evenly each year, and that’s for one brand and one hub. It’s clear how that could scale effectively, and we’re proud of that achievement. The team performed exceptionally well, and we have a solution that can significantly assist the hubs and, consequently, the patients. These programs focus on patient assistance regarding eligibility and affordability. It’s the right opportunity at the right time, and we got involved early enough to ensure readiness. We’re very excited about this and will keep everyone informed about other initiatives we manage to implement.

Neil Chatterji, Analyst

Great. Thanks. That’s it for me.

Will Febbo, CEO

Thanks, Neil.

Operator, Operator

Your next question comes from Max Michaels with Lake Street Capital Markets. Please go ahead.

Max Michaels, Analyst

Hey, guys. Thanks for taking my question. I know last quarter conference call you had mentioned that you weren’t seeing any major investments in the first half of the year. I’m wondering now that we approach the midpoint of 2023, if that thought process has changed at all?

Will Febbo, CEO

Yeah. Max, would you mean investments from the client’s perspective or investments from pharma?

Max Michaels, Analyst

I mean, with a healthy balance sheet, it could be technology improvement, M&A, if you’re seeing anything out in the market, just more broader investment, I guess?

Will Febbo, CEO

Yeah. Sure. So, as Ed said, we are very actively looking at M&A targets. We think through this year, valuations will be more achievable for someone in our size and situation. Obviously, we’ll be highly selective in that process, but have several really great active discussions going on. We’re investing in ourselves. We’re really good at that. We’ve got unbelievably good ROI when we invest in ourselves; probably our best ROI to date. So we continue to invest in reporting, in best-in-class technology and then, obviously, solution expansion. And if you think of, Max, our growth drivers, it’s land and expand with the client, it adds additional solutions or improvements so we can maintain price or improve price and then reach more physicians or patients wherever they are. So we’re investing in all three of those.

Max Michaels, Analyst

All right. That’s it for me guys. Thanks.

Will Febbo, CEO

Thank you. Have a good night.

Operator, Operator

There are no further questions at this time. Please proceed.

Will Febbo, CEO

Thanks, Operator. Once again, thank you, everyone, for joining us on our update call this afternoon. We continue to work through the opportunities before us with the expectation that growth will come in the coming quarters. We are maintaining our focus on product execution to continue to deliver superior ROIs on behalf of our customers, which has and will continue to pay dividends as we execute against the opportunity within the vast white space that we continue to sell into. Our valuation doesn’t effectively represent the current value of our company and I believe we can provide venture-type returns off our current trading price as we execute against the opportunity at hand. As a result, we intend to set up our trading plan for our recently authorized share repurchase program once our next trading window opens. I want to remind everyone of our key strengths, which we expect will continue to propel OPRX’s story in 2023 and beyond. We have the largest in workflow network in the U.S. that reaches more than 60% of the active prescribers. Our landing pads outside the EHR, substantially increased our prescriber reach and enable us to build cutting-edge solutions. Finally, our AI enablement, which identifies HCPs whose patients are most in need of our customer’s resources and therapies is catching a toehold and we believe favorably positions us to grow for the foreseeable future. We are firmly positioned to execute against our 2023 financial and operational goals, which we believe will be bolstered by our strong balance sheet, which is something I’m very proud of, given the current capital markets backdrop. As such, we look forward to making a positive impact across our pharma, prescriber, and patient stakeholder base for years to come. Thanks again for joining us on our call today, and we look forward to everyone joining us at the upcoming conferences in our next earnings call.

Operator, Operator

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 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. 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, and upcoming announcements. They 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 and contemplated by or underlying these forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, the effect of government regulation, competition 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 quarter ended December 31, 2022. This Form is available on the company’s website and on the SEC website at sec.gov. Before we end today’s conference, I would like to remind everyone that this call will be available for replay via webcast-only starting later this evening, running through for a year. Please refer to today’s press release for replay instructions available via the company’s website at www.optimizerx.com. Thank you for joining us today. This concludes today’s conference call. You may now disconnect your lines.