GlobeNewswire Inc | Aug 5, 2020 04:01PM EDT

August 05, 2020

ROCHESTER, Mich., Aug. 05, 2020 (GLOBE NEWSWIRE) -- OptimizeRx Corp. (Nasdaq: OPRX), a leading provider of digital health solutions for life science companies, physicians and patients, reported results for the second quarter and six months ended June 30, 2020. Quarterly and first half comparisons are to the same year-ago period.

Financial Highlights

-- Revenue increased 25% to a record $8.8 million in second quarter of 2020, first half of 2020 up 34% to a record $16.4 million. -- Gross profit increased 19% to $5.1 million in the second quarter of 2020. -- Cash and cash equivalents totaled $14.1 million at June 30, 2020. -- Closed additional enterprise deals, bringing total value of enterprise-level engagements to $21 million in annualized revenue. -- Accelerated growth expected in second half of 2020.

Q2 2020 Operational Highlights

-- Finalized a new partnership that expands the companys digital communication platform by more than 300 health systems and 125,000 healthcare providers that use the market-leading Epic and Cerner electronic health records systems (EHRs). -- Launched TelaRep for on-demand virtual consults that support physicians treating patients with complex diseases in COVID-19 world. -- True Womens Health launched a new mobile app powered by OptimizeRxs RMDY digital health tools that enables the clinic to use telehealth to treat patients nationwide with personalized health and wellness programs during the COVID-19 pandemic. -- Recognized as one of The Americas' 500 Fastest-Growing Companies by The Financial Times. -- Chief commercial officer, Stephen Silvestro, was honored with the 2020 PM360 ELITE 100 Award for his organizational leadership and positive impact on the healthcare industry. -- Hosted new webinar series featuring industry thought leaders covering a range of topics around using digital health technology to improve patient care, engagement and outcomes.

Q2 2020 Financial Summary

Total revenue in the second quarter of 2020 increased 25% to a record $8.8 million versus $7.0 million in the same year-ago quarter. The quarterly increase was due to increased sales of messaging solutions.

Gross margin decreased to 58.6% in the second quarter of 2020 from 61.6% in the year-ago quarter. The decrease was due to an unusually favorable product mix in the year-ago period that had a high percentage of launch assistance services and other nonrecurring revenue that was not subject to revenue share expense. The company expects its gross margin to improve on a quarter-over-quarter basis for the balance of the year, with a target of 63% for 2020.

Operating expenses totaled $6.2 million, up from $3.8 million in the same year-ago quarter. The increase was related to the company building a stronger base for future growth by expanding its product line, building out its sales organization, and integrating two acquisitions over the last 21 months.

Net loss on a GAAP basis in the second quarter of 2020 was $1.1 million or $(0.07) per share, as compared to a net income of $407,000 or $0.03 per share in the year-ago quarter.

Non-GAAP net income for the second quarter of 2020 was $254,000 or $0.02 per share, compared to non-GAAP net income of $1.3 million or $0.09 per diluted share in the same year-ago period (see definition of these non-GAAP measures and reconciliation to GAAP, below).

While the company expects to return to GAAP profitabilityas its revenue grows, expenses related to investments in growth initiatives or non-cash chargescould result in a loss in any given quarter. Given the opportunity at hand as discussed below, the company is focused on top-line growth while maintaining a strong balance sheet.

Cash and cash equivalents totaled $14.1 million at June 30, 2020, as compared to $15.2 million at March 31, 2020. The decrease was due to an earnout payment related to the CareSpeak acquisition based on the achievement of revenue goals for 2019. Excluding the earning out payment, the company was cash flow positive for the quarter. The company has continued to operate debt-free and expects to be cash-flow positive for the remainder of the year.

Management Commentary

In Q2, we generated another record topline along with sequential margin improvement, said OptimizeRx CEO William Febbo. For the first half of the year, which is traditionally our slowest, we grew at a faster pace than anticipated at 34%, and our closing ratio exceeded 50%.

During the quarter, we expanded our digital health platform with greater reach into Epic and Cerner, and we secured revenue from new solutions born out of our Innovation Lab. Our performance also benefited from the fine-tuning our patient engagement market strategy at a time when demand has never been greater due to the COVID-19 pandemic.

In all, we beat our internal goals across the board as we continued to build a highly impactful digital communications platform that is situated between all the major stakeholders--a nationwide network helping doctors, patients and industry improve adherence and affordability.

As COVID-19 continues to disrupt the traditional pathways of communication between industry, doctors and patients due to the drop in office visits and widespread transition to virtual care, OptimizeRx has emerged with optimal solutions that improve these essential lines of communication.

Weve also been working to enhance our corporate governance and we recently welcomed to our board Greg Wasson, the former president and CEO of Walgreens Boots Alliance. Gregs many years of experience building Walgreens into a Fortune 50 company with global reach makes him an exceptionally valuable and timely addition to our board, and particularly as we look to enhance patient connectivity at the point-of-dispense.

We have built meaningful physician reach over the years, and with some measure of exclusivity, by integrating our platform into the leading EHR and e-prescribe systems. Today we reach 60% of the ambulatory market. That is, where most prescribing occurs. Now we have another great opportunity to improve care by integrating with pharmacies at the point-of-dispense.

We are seeing great traction with our clients on multiple levels. We are deeply entrenched in our client base as we work with 45% of the top 20 brands by revenue with continued interest from the remaining 55%.

This powerful position reflects the trust weve gained with our clients at a time when digital communication is absolutely needed, and it is supporting our continued shift to a SaaS-based, recurring revenue model. We recently secured two new SaaS-based enterprise-level deals, bringing to total the value of our enterprise-level engagements to $21 million in annualized revenue.

Most of our growth this year has been organic, as our pharma clients increasingly recognize that addressing the point of care is critical to an effective marketing strategy. Our newer solutions, like patient engagement, hub enrollment and TelaRep, are all generating interest and beginning to generate revenue within our client base. We see these helping to drive growth this year and even stronger growth next year. We came in ahead of our internal budget for the first half and now expect to far exceed our earlier goals for the second, keeping us on pace for another year of record growth and market expansion.

Conference Call

OptimizeRx management will host the presentation, followed by a question and answer period.

Date: Wednesday, August 5, 2020Time: 4:30 p.m. Eastern time (1:30 p.m. Pacific time)Toll-free dial-in number: 1-866-248-8441International dial-in number: 1-323-289-6576Conference ID: 1161129

Please call the conference telephone number five minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact CMA at 1-949-432-7566.

A replay of the call will be available after 7:30 p.m. Eastern time on the same day through August 26, 2020, as well as available for replay via the Investors section of the OptimizeRx website at optimizerx.com/investors.

Toll-free replay number: 1-844-512-2921International replay number: 1-412-317-6671Replay ID: 1161129

Definition and Use of Non-GAAP Financial MeasuresThis earnings release includes a presentation of non-GAAP net income (loss) and non-GAAP earnings (loss) per share or non-GAAP EPS, both of which are non-GAAP financial measures.

The company defines non-GAAP net income (loss) as GAAP net income (loss) with an adjustment to add back depreciation, amortization, non-cash lease expense, stock-based compensation, acquisition expenses, income or loss related to the fair value of contingent consideration, and deferred income taxes. Non-GAAP EPS is defined as non-GAAP net income (loss) divided by the number of weighted average shares outstanding on a basic and diluted basis. The company has provided non-GAAP financial measures to aid investors in better understanding its performance. Management believes that these non-GAAP financial measures provide additional insight into the operations and cashflow of the company.

Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a companys non-cash operating expenses, management believes that providing non-GAAP financial measures that excludes non-cash expenses allows for meaningful comparisons between the companys core business operating results and those of other companies, as well as provides an important tool for financial and operational decision making and for evaluating the companys own core business operating results over different periods of time.

The companys non-GAAP net income (loss) and non-GAAP EPS measures may not provide information that is directly comparable to that provided by other companies in the companys industry, as other companies in the industry may calculate such non-GAAP financial results differently. The companys non-GAAP net income (loss) and non-GAAP EPS are not measurements of financial performance under GAAP and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. The company does not consider these non-GAAP measures to be substitutes for or superior to the information provided by its GAAP financial results.

The table, Reconciliation of non-GAAP to GAAP Financial Measures, included below, provides a reconciliation of non-GAAP net income (loss) and non-GAAP EPS for the three months and six months periods ended June 30, 2020 and 2019.

About OptimizeRxOptimizeRx Corporation (NASDAQ: OPRX) is a digital health company that facilitates communication at the point-of-care among all stakeholders in healthcare. Primarily focused on life science and payer clients, its suite of digital and mobile SaaS-based solutions enables affordability, patient adherence and care management. OptimizeRxs network reaches more than 60% of U.S. ambulatory providers, delivering therapeutic support on specialty medications and patient financial assistance directly within a providers workflow through leading electronic health platforms. OptimizeRxs fully integrated platform supports the real-time exchange of information, improving provider knowledge and patient engagement, and ultimately leading to healthier outcomes.

For more information, follow the company onTwitter,LinkedInor visitwww.optimizerx.com.

Important Cautions Regarding Forward Looking StatementsThis press release contains forward-looking statements within the definition of Section 27A of the Securities Act of 1933, as amended, and such as in section 21E of the Securities Act of 1934, as amended. These forward-looking statements should not be used to make an investment decision. The words 'estimate,' 'possible' and 'seeking' and similar expressions identify forward-looking statements, which speak only as to the date the statement was made. 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 the 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.

Company Contact Doug Baker, CFOTel (248) 651-6568 x807 dbaker@optimizerx.com

Media Contact Maira Alejandra, Media Relations ManagerTel (754) 245-7070 malejandra@optimizerx.com

Investor Relations Contact Ron Both or Grant StudeCMA Investor RelationsTel (949) 432-7557 oprx@cma.team

OPTIMIZERx CORPORATIONCONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

June30, December31, 2020 2019 ASSETS Current Assets Cash and cash equivalents $ 14,114,294 $ 18,852,680 Accounts receivable, net 10,805,191 7,418,025 Prepaid expenses 2,701,249 871,043 Total Current Assets 27,620,734 27,141,748 Property and equipment, net 156,550 176,014 Other Assets Goodwill 14,740,031 14,740,031 Technology assets, net 5,722,762 6,238,453 Patent rights, net 2,442,409 2,550,587 Other intangible assets, net 4,835,327 5,151,102 Right of use assets, net 503,506 559,863 Other assets and deposits 35,943 80,727 Total Other Assets 28,279,978 29,320,763 TOTAL ASSETS $ 56,057,262 $ 56,638,525 LIABILITIES AND STOCKHOLDERS? EQUITY Current Liabilities Accounts payable ? trade $ 496,742 $ 492,995 Accrued expenses 2,044,335 1,800,635 Revenue share payable 3,496,489 1,618,438 Current portion of lease obligations 119,512 115.431 Current portion of contingent purchase 5,360,812 1,500,000 price payableDeferred revenue 648,692 580,014 Total Current Liabilities 12,166,582 6,107,513 Non-current Liabilities Lease obligations, net of current portion 387,654 448,753 Contingent purchase price payable, net of - 5,220,000 current portionTotal Non-current Liabilities 387,654 5,668,753 Total Liabilities 12,554,236 11,776,266 Commitments and contingencies - - Stockholders? Equity Preferred stock, $0.001 par value,10,000,000 shares authorized, no issued and - - outstanding at June 30, 2020 or December31, 2019Common stock, $0.001 par value, 500,000,000shares authorized, 14,752,600 and14,600,579 shares issued and outstanding at 14,753 14,601 June 30, 2020 and December 31, 2019,respectivelyAdditional paid-in-capital 80,194,282 78,272,268 Accumulated deficit (36,706,009 ) (33,424,610 )Total Stockholders? Equity 43,503,026 44,862,259 TOTAL LIABILITIES AND STOCKHOLDERS? EQUITY $ 56,057,262 $ 56,638,525

OPTIMIZERx CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(UNAUDITED)

For the Three Months Ended For the Six Months Ended June 30, June 30, 2020 2019 2020 2019 NET REVENUE $ 8,783,230 $ 7,006,291 $ 16,367,832 $ 12,215,725 COST OF 3,639,016 2,687,143 6,880,779 4,270,623 REVENUESGROSS MARGIN 5,144,214 4,319,148 9,487,053 7,945,102 OPERATING 6,200,027 3,839,105 12,802,118 7,332,894 EXPENSESINCOME (LOSS)FROM (1,055,813 ) 480,043 (3,315,065 ) 612,208 OPERATIONS OTHER INCOME (EXPENSE)Interest 8,345 33,574 63,666 55,938 incomeChange inFair Value of (30,000 ) (107,000 ) (30,000 ) (255,000 )ContingentConsideration TOTAL OTHERINCOME (21,655 ) (73,426 ) 33,666 (199,062 )(EXPENSE) INCOME(LOSS)BEFORE (1,077,468 ) 406,617 (3,281,399 ) 413,146 PROVISION FORINCOME TAXES PROVISION FOR - - - - INCOME TAXESNET INCOME $ (1,077,468 ) $ 406,617 $ (3,281,399 ) $ 413,146 (LOSS) WEIGHTEDAVERGE SHARES OUTSTANDINGBASIC 14,667,216 12,743,379 14,638,359 12,412,442 DILUTED 14,667,216 13,806,761 14,638,359 13,467,562 EARNINGS(LOSS) PER SHAREBASIC $ (0.07 ) $ 0.03 $ (0.22 ) $ 0.03 DILUTED $ (0.07 ) $ 0.03 $ (0.22 ) $ 0.03

OPTIMIZERx CORPORATIONCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

For the Six Months Ended June 30, 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ (3,281,399 ) $ 413,146 Adjustments to reconcile net income tonet cash provided by (used in) operating activities:Depreciation, amortization, and 1,040,463 425,873 non-cash lease expenseStock-based compensation 1,435,156 938,399 Stock issued for board services 200,027 241,077 Provision for loss on accounts 40,000 - receivableChange in fair value of contingent 30,000 255,000 considerationChanges in: Accounts receivable (3.427,166 ) (966,658 )Prepaid expenses and other assets (1,785,422 ) (202,036 )Accounts payable 3,747 785 Revenue share payable 1,878,051 55,824 Accrued expenses and other liabilities 186,682 (511,976 )Deferred revenue 68,678 158,766 NET CASH PROVIDED BY (USED IN) (3,611,183 ) 808,200 OPERATING ACTIVITIES CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment (24,998 ) (47,739 )Purchase of intangible assets - (1,000,000 )NET CASH USED IN INVESTING ACTIVITIES (24,998 ) (1,047,739 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock, 286,983 21,163,636 net of commission costsExpenses related to issuance cost of - (301,711 )common stockPayment of contingent consideration (1,389,188 ) - NET CASH PROVIDED BY (USED IN) (1,102,205 ) 21,861,925 FINANCING ACTIVITIESNET INCREASE IN CASH AND CASH (4,738,386 ) 21,622,386 EQUIVALENTSCASH AND CASH EQUIVALENTS - BEGINNING 18,852,680 8,914,034 OF PERIODCASH AND CASH EQUIVALENTS - END OF $ 14,114,294 $ 30,536,420 PERIOD SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ - $ - Cash paid for income taxes $ - $ - Intangible asset additions included in $ - $ 500,000 accounts payableNon-cash effect of cumulative $ - $ 3,229 adjustments to accumulated deficitLease liabilities arising from right of $ - $ 672,809 use assets

OPTIMIZERx CORPORATIONReconciliation of non-GAAP to GAAP Financial Measures(Unaudited)

FortheThree Months Forthe Six Months EndedJune 30, Ended June 30, 2020 2019 2020 2019Net income $ (1,077,468 ) $ 406,617 $ (3,281,398 ) $ 413,146(loss)Depreciation,amortization 520,794 235,571 1,040,463 425,817and non-cashlease expenseStock-based 780,670 543,866 1,635,182 1,179,476compensationIncome orloss relatedto the fair 30,000 107,000 30,000 255,000value ofcontingentconsiderationNon-GAAP net $ 253,996 $ 1,293,054 $ (575,753 ) $ 2,273,439income (loss) Non-GAAP netincome (loss) per shareBasic $ 0.02 $ 0.10 $ (0.04 ) $ 0.18Diluted $ 0.02 $ 0.09 $ ( 0.04 ) $ 0.17Weightedaverage sharesoutstanding:Basic 14,667,216 12,743,379 14,638,359 12,412,442Diluted 15,626,367 13,806,761 14,638,359 13,467,562