OptimizeRx Corp

Previous wording

Overall, we employ a “land and expand” strategy focused on growing our existing customer base and generating greater and more consistent revenues in part through a continued shift in our business model toward enterprise level engagements, while also broadening our platform with innovative proprietary virtual communication solutions such as our patented Micro-Neighborhood Targeting and our AI-powered DAAP, which uses sophisticated machine-learning algorithms to find the best audiences in the correct channels at the right time.

Current wording

Overall, we employ a “land and expand” strategy focused on growing our existing customer base and generating greater and more consistent revenues in part through a continued shift in our business model toward enterprise level engagements, while also broadening our platform with innovative proprietary virtual communication solutions such as our patented Micro-Neighborhood Targeting and our AI-powered Dynamic Audience Activation Platform (“DAAP”), which uses sophisticated machine-learning algorithms to find the best audiences in the correct channels at the right time.

Previous wording

Unfavorable conditions in the economy may negatively affect the growth of our business and our results of operations. For example, macroeconomic events including rising inflation and the U.S. Federal Reserve raising interest rates have led to economic uncertainty in the recent past, and threats of multinational tariffs and retaliatory tariffs provide uncertainty as to heightened inflation in the domestic markets in the next twelve months. In addition, high levels of employee turnover across the pharmaceutical industry as well as a fewer number of U.S. drug approvals could create additional uncertainty within our target customer markets. Historically, during periods of economic uncertainty and downturns, businesses may slow spending, which may impact our business and our customers’ businesses. Adverse changes in demand could impact our business, collection of accounts receivable and our expected cash flow generation, which may adversely impact our financial condition and results of operations.

Current wording

Unfavorable conditions in the economy may negatively affect the growth of our business and our results of operations. For example, macroeconomic events including rising inflation and interest rates have led to economic uncertainty in the recent past, and threats of multinational tariffs and retaliatory tariffs provide uncertainty as to heightened inflation in the domestic markets. In addition, high levels of employee turnover across the pharmaceutical industry as well as a fewer number of U.S. drug approvals could create additional uncertainty within our target customer markets. Historically, during periods of economic uncertainty and downturns, businesses may slow spending, which may impact our business and our customers’ businesses. Adverse changes in demand could impact our business, collection of accounts receivable and our expected cash flow generation, which may adversely impact our financial condition and results of operations.

Previous wording

Net revenue retention. Net revenue retention is a comparison of revenue generated from all customers in the previous twelve-month period to total revenue generated from the same customers in the following twelve-month period (i.e., excludes new customer relationships for the most recent twelve-month period). The Company uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers. Net revenue retention for the period ending March 31, 2024, benefited from revenue related to the acquisition of Medicx Health, as the acquisition was not consummated during the prior year period. This benefit did not exist in the period ending March 31, 2025 which made for a more challenging year over year comparison.

Current wording

Net revenue retention. Net revenue retention is a comparison of revenue generated from all customers in the previous twelve-month period to total revenue generated from the same customers in the following twelve-month period (i.e., excludes new customer relationships for the most recent twelve-month period). The Company uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers. Net revenue for the period ending June 30, 2024 benefited from the timing of the Medicx Health acquisition, which was consummated on October 12, 2023, as its comparator period (the trailing twelve months ended June 30, 2023) did not have any Medicx Health related revenue. The period ended June 30, 2025 did not have the same magnitude of inorganic benefit from the Medicx Health acquisition; however, the Company still retained a 121% net revenue retention in the period as a result of strong organic growth from existing customers.

Previous wording

Results of Operations for the Three Months Ended March 31, 2025 and 2024

Current wording

Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

Previous wording

Our net revenue increased 11% to $21,928 for the three months ended March 31, 2025 from $19,690 from the same period in 2024. The increase in net revenue was a result of the growth of DTC and DAAP related sales.

Current wording

Our net revenue increased 55% to $29,195 for the three months ended June 30, 2025 from $18,812 from the same period in 2024. Our net revenue increased 33% to $51,123 for the six months ended June 30, 2025 from $38,502 from the same period in 2024. The increase in net revenue was a result of the growth of DTC and DAAP related sales.

Previous wording

Our cost of revenues, composed primarily of revenue-share expense paid to our channel partners increased for the three months ended March 31, 2025 to $8,584 compared to $7,486 for the same period of 2024. Our cost of revenues as a percentage of revenue increased to approximately 39% for the three months ended March 31, 2025 from approximately 38% for the three months ended March 31, 2024. This increase in cost of revenues as a percentage of revenues was a primarily result of solution and channel partner mix.

Current wording

Our cost of revenues, composed primarily of revenue-share expense paid to our channel partners, increased for the three months ended June 30, 2025 to $10,560 compared to $7,108 for the same period of 2024. Our cost of revenues as a percentage of revenue decreased to approximately 36% for the three months ended June 30, 2025 from approximately 38% for the three months ended June 30, 2024. Our cost of revenues increased for the six months ended June 30, 2025 to

Previous wording

Our gross margin, which is the difference between our revenues and our cost of revenues, divided by our revenues, decreased for the three months ended March 31, 2025 compared to the same period of 2024, primarily due to product and channel partner mix.

Current wording

Our gross margin, which is the difference between our revenues and our cost of revenues, divided by our revenues, increased for the three months ended June 30, 2025 and the six months ended June 30, 2025 compared to the same periods of 2024, primarily due to product and channel partner mix. Further, the increase in revenue year over year diluted the effect of certain fixed cost of sales on gross margin.

Previous wording

Operating expenses decreased to approximately $15,458 for the three months ended March 31, 2025 from approximately $17,233 for the same period in 2024, a decrease of approximately 10%. The detail by major category is reflected in the next table (in thousands).

Current wording

Operating expenses remained consistent, slightly decreasing to $15,446 for the three months ended June 30, 2025 from $15,453 for the same period in 2024. For six months ended June 30, 2025, operating expenses decreased to $30,904 from $32,685 for the six months ended June 30, 2024, a decrease of approximately 5%. The detail by major category is reflected in the table below (in thousands).

Previous wording

Stock-based compensation decreased to $1,558 for the three months ended March 31, 2025 from $3,024 for the three months ended March 31, 2024. The decrease was a result of the lower grant date fair value of awards due to declines in the Company’s stock price as well as a decrease in the quantity of awards vesting.

Current wording

Stock-based compensation decreased to $1,488 for the three months ended June 30, 2025 from $2,903 for the three months ended June 30, 2024, and decreased to $3,046 for the six months ended June 30, 2025 from $5,926 for the six months ended June 30, 2024. The decrease in both periods was a result of the lower grant date fair value of awards due to declines in the Company’s stock price as well as a decrease in the quantity of awards granted. Further, the prior year expense included significant costs associated with grants to the prior CEO which were forfeited as of December 31, 2024.

Previous wording

Depreciation and amortization increased to $1,094 for the three months ended March 31, 2025 from $1,067 for the three months ended March 31, 2024. The increase was a result of the additional amortization associated with capitalized labor for internal software development.

Current wording

Depreciation and amortization increased to $1,074 for the three months ended June 30, 2025 from $1,073 for the three months ended June 30, 2024, and increased to $2,168 for the six months ended June 30, 2025 from $2,140 for the six months ended June 30, 2024. The increase in both periods was a result of the additional amortization associated with capitalized labor for internal software development.

Previous wording

Interest expense decreased to $1,297 for the three months ended March 31, 2025 from $1,546 for the three months ended March 31, 2024 and represents interest charges on our Term Loan, together with the amortization of the related issuance costs. The decrease is primarily a result of the decrease in the interest rate on the Term Loan and a lower average principal balance for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.

Current wording

Interest expense increased to $1,603 for the three months ended June 30, 2025 from $1,528 for the three months ended June 30, 2024, and decreased to $2,899 for the six months ended June 30, 2025 from $3,074 for the six months ended June 30, 2024. Interest expense represents interest charges on our Term Loan, together with the amortization of the related issuance costs. The increase is primarily a result of the higher effective interest rate due to the voluntary prepayments of principal on the Term Loan resulting in an interest penalty for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024. The decrease is primarily a result of the decrease in the interest rate on the Term Loan and a lower average principal balance for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024

Previous wording

Income tax benefit was approximately $1,085, or an effective rate of 33.0%, for the three months ended March 31, 2025. Income tax expense was approximately $344, or an effective rate of 5.2%, for the three months ended March 31, 2024. For further information, see Part I, Item I. Financial Statements; Note 12 — Income Taxes in the Condensed Consolidated Financial Statements.

Current wording

Income tax expense was $181, or an effective rate of 10.6%, and income tax benefit was $904, or an effective rate of (57.5)% for the three and six months ended June 30, 2025, respectively. Income tax benefit was approximately $1,088, or an effective rate of 21.4%, and $744, or an effective rate of 6.4% for the three and six months ended June 30, 2024, respectively. For further information, see Part I, Item I. Financial Statements; Note 13 — Income Taxes in the Condensed Consolidated Financial Statements.

Previous wording

We had a net loss of approximately $(2,199) for the three months ended March 31, 2025, as compared to a net loss of approximately $(6,899) during the same period in 2024. The reasons and specific components associated with the change are discussed above.

Current wording

We had a net income of approximately $1,532 for the three months ended June 30, 2025, as compared to a net loss of approximately $(4,008) during the three months ended June 30, 2024 and a net loss of approximately $(667) for the six months ended June 30, 2025 as compared to $(10,908) for the six months ended June 30, 2024. The reasons and specific components associated with the change are discussed above.

Previous wording

Historically, our primary sources of liquidity have been cash receipts from customers and proceeds from equity offerings. In addition, on October 11, 2023, the Company entered into a Term loan of $40.0 million in order to partially fund the acquisition of Medicx Health. As of March 31, 2025, the total principal balance outstanding on the Term loan was approximately $33.8 million and we were in compliance with all of the financial covenants of the Term loan.

Current wording

Historically, our primary sources of liquidity have been cash receipts from customers and proceeds from equity offerings. In addition, on October 11, 2023, the Company entered into a Term Loan of $40,000 in order to partially fund the acquisition of Medicx Health. As of June 30, 2025, the total principal balance outstanding on the Term Loan was approximately $29,290 and we were in compliance with all of the financial covenants of the Term Loan.

Previous wording

As of March 31, 2025, we had total current assets of approximately $51.7 million, compared with current liabilities of approximately $18.4 million, resulting in working capital of approximately $33.3 million and a current ratio of approximately 2.8 to 1. This represents a decrease from our working capital of approximately $35.3 million and an increase from the current ratio of 3.0 to 1 at December 31, 2024.

Current wording

As of June 30, 2025, we had total current assets of approximately $54,080, compared with current liabilities of approximately $21,057, resulting in working capital of approximately $33,023 and a current ratio of approximately 2.6 to 1. This represents a decrease from our working capital of approximately $35,317 and an increase from the current ratio of 3.0 to 1 at December 31, 2024.

Previous wording

We believe that funds generated from operations, together with existing cash, will be sufficient to finance our current operations and meet our obligations under the Term loan for the next twelve (12) months. In addition, we believe we can generate the cash needed to operate beyond the next 12 months from operations. However, we may seek additional debt, equity financing, or lines of credit to supplement cash from operations to fund acquisitions or strategic partner relationships, make capital expenditures, and satisfy working capital needs.

Current wording

We believe that funds generated from operations, together with existing cash, will be sufficient to finance our current operations and meet our obligations under the Term Loan for the next twelve (12) months. In addition, we believe we can generate the cash needed to operate beyond the next 12 months from operations. However, we may seek additional debt, equity financing, or lines of credit to supplement cash from operations to fund acquisitions or strategic partner relationships, make capital expenditures, and satisfy working capital needs. We currently have an effective shelf registration statement, which allows us to issue, from time to time, up to $75,000,000 of any combination of our common stock, preferred stock, debt securities, warrants, or units.

Previous wording

Following is a table with summary data from the condensed consolidated statements of cash flows for the three months ended March 31, 2025 and 2024, as presented (in thousands).

Current wording

Following is a table with summary data from the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024, as presented (in thousands).

Previous wording

Our operating activities provided $3,864 during the three months ended March 31, 2025, compared with $2,118 in the same period in 2024. The net increase in net cash provided by operating activities was mainly attributable to a $4,700 decrease in net loss. This was partially offset by a $1,466 decrease in noncash expense related to stock based compensation, a $881 decrease in cash flows from accounts receivable and a $754 decrease in cash flows from taxes receivable and payable.

Current wording

Our operating activities provided $8,425 during the six months ended June 30, 2025, compared with $2,900 in the same period in 2024. The net increase in net cash provided by operating activities was mainly attributable to a $10,241 decrease in net loss. This was partially offset by a $2,880 decrease in noncash expense related to stock based compensation, a $926 decrease in cash flows from accounts payable and a $870 decrease in cash flows from deferred revenue.

Previous wording

Investing activities used $84 for the three months ended March 31, 2025, compared with $153 in the same period in 2024. The decrease in net cash used in investing activities was mainly attributed to capitalization of internally developed software.

Current wording

Investing activities used $128 during the six months ended June 30, 2025, compared with $238 in the same period in 2024. The decrease in net cash used in investing activities was mainly attributed to a decrease in capitalization of internally developed software.

Previous wording

Financing activities used $587 during the three months ended March 31, 2025, compared with $640 in the same period in 2024. The decrease in net cash used for financing activities was primarily related to the decrease in payments of withholding taxes on behalf of employees vesting in restricted stock units.

Current wording

Financing activities used $5,092 during the six months ended June 30, 2025, compared with $1,555 in the same period in 2024. The increase in net cash used for financing activities was primarily related to the increase in repayments of long-term debt partially offset by a decrease in payments of withholding taxes on behalf of employees vesting in restricted stock units.

Previous wording

We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Estimates and assumptions have been made in determining the allowance for credit losses, carrying value of assets, fair values assigned to acquired long-lived assets, depreciable and amortizable lives of tangible and intangible assets, the carrying value of liabilities, the valuation allowance for deferred tax assets, the timing of revenue recognition and related revenue-share expenses, and inputs used in the calculation of stock-based compensation. Actual results could differ from those estimates and assumptions.

Current wording

We prepare our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires the use of estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from those estimates and assumptions. The following areas all require the use of subjective or complex judgments, estimates or assumptions: the allowance for credit losses, carrying value of assets, fair values assigned to acquired long-lived assets, depreciable and amortizable lives of tangible and intangible assets, the carrying value of liabilities, the valuation allowance for deferred tax assets, the timing of revenue recognition and related revenue-share expenses, and inputs used in the calculation of stock-based compensation.

Previous wording

From time to time, the Company enters into arrangements with channel partners to acquire minimum amounts of media, data or messaging capabilities. As of March 31, 2025, the Company had commitments with channel partners for future minimum payments of $16.6 million that will be reflected in cost of revenues during the remainder of 2025 and years from 2026 through 2029. See Part I, Item 2. Financial Statements; Note 11 – Commitments and Contingencies.

Current wording

From time to time, the Company enters into arrangements with channel partners to acquire minimum amounts of media, data or messaging capabilities. As of June 30, 2025, the Company had commitments with channel partners for future minimum payments of $13,071 that will be reflected in cost of revenues during the remainder of 2025 and years from 2026 through 2029. See Part I, Item 2. Financial Statements; Note 12 – Commitments and Contingencies.