OptimizeRx Corporation (NASDAQ:OPRX) Q4 2019 Earnings Conference Call February 27, 2020 4:30 PM ET Company Participants William Febbo - CEO Douglas Baker - CFO Stephen Silvestro - Chief Commercial Officer Miriam Paramore - President Conference Call Participants Ryan Daniels - William Blair & Company Andrew D'Silva - B. Riley FBR, Inc. Eric Martinuzzi - Lake Street Capital Markets Richard Baldry - ROTH Capital Partners Josh Goldberg - G2 Investment Partners Management Harvey Poppel - Poptech, LP Operator Goo ...

OptimizeRx Corporation (NASDAQ:OPRX) Q3 2019 Earnings Conference Call November 5, 2019 4:30 PM ET Company Participants William Febbo - CEO Stephen Silvestro - CCO Miriam Paramore - President Doug Baker - CFO Conference Call Participants Andrew D'Silva - B. Riley FBR Richard Baldry - ROTH Capital Ryan Daniels - William Blair Bruce Goldfarb - Lake Street Capital Markets Josh Goldberg - G2 Operator Good afternoon, and thank you for joining us today to discuss OptimizeRx Corp. Third Quarter Ended September 30, ...

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents OptimizeRx Corporation's unaudited condensed consolidated financial statements, detailing its financial position, performance, and cash flows for specified periods [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Provides a snapshot of the company's assets, liabilities, and equity at specific dates | Metric | Sep 30, 2019 (Unaudited) | Dec 31, 2018 | Change (2019 vs 2018) | | :-------------------------- | :----------------------- | :----------- | :-------------------- | | **ASSETS** | | | | | Cash and cash equivalents | $29,759,967 | $8,914,034 | +234% | | Total Current Assets | $37,891,534 | $15,732,021 | +141% | | Total Assets | $48,553,731 | $25,054,578 | +94% | | **LIABILITIES & EQUITY** | | | | | Total Current Liabilities | $5,410,141 | $4,231,133 | +28% | | Total Liabilities | $7,418,342 | $6,596,133 | +12% | | Total Stockholders' Equity | $41,135,389 | $18,458,445 | +123% | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Details the company's revenues, expenses, and net income or loss over specific periods | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | Change (YoY) | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (YoY) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------- | :-------------------------- | :-------------------------- | :----------- | | Net Revenue | $5,002,767 | $5,415,384 | -7.6% | $17,218,492 | $14,627,094 | +17.7% | | Gross Margin | $3,021,624 | $3,146,416 | -4.0% | $10,966,726 | $8,113,284 | +35.2% | | Income (Loss) From Operations | $(1,987,310) | $223,178 | N/A (loss from income) | $(1,375,101) | $305,579 | N/A (loss from income) | | Net Income (Loss) | $(1,570,942) | $244,928 | N/A (loss from income) | $(1,157,796) | $336,258 | N/A (loss from income) | | Basic EPS | $(0.11) | $0.02 | N/A (loss from income) | $(0.09) | $0.03 | N/A (loss from income) | | Diluted EPS | $(0.11) | $0.02 | N/A (loss from income) | $(0.09) | $0.03 | N/A (loss from income) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Outlines changes in the company's equity components, including common stock and accumulated deficit, over specific periods Changes in Stockholders' Equity (Jan 1 - Sep 30, 2019) | Metric | Balance Jan 1, 2019 | Public Offering (net) | Stock Options Exercised | Stock-based Comp. Expense | Net Loss | Balance Sep 30, 2019 | | :-------------------------------- | :------------------ | :-------------------- | :---------------------- | :------------------------ | :------- | :------------------- | | Common Stock Shares | 12,038,618 | 1,769,275 | 210,949 | - | - | 14,173,850 | | Common Stock Amount | $12,039 | $1,769 | $210 | - | - | $14,174 | | Additional Paid-in Capital | $48,725,211 | $21,302,057 | $764,211 | $1,407,938 | - | $72,561,045 | | Accumulated Deficit | $(30,278,805) | - | - | - | $(1,157,796) | $(31,439,830) | | Total Stockholders' Equity | $18,458,445 | $21,303,826 | $764,319 | $1,407,938 | $(1,157,796) | $41,135,389 | - The company completed a public offering of common shares for cash, net of offering costs, raising **$21,303,826** during the nine months ended September 30, 2019[15](index=15&type=chunk)[35](index=35&type=chunk) - A reverse stock split (1-for-3) was implemented effective May 14, 2018, in connection with the Nasdaq Capital Market listing, with fractional shares rounded up[40](index=40&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights | Cash Flow Activity | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | Change (YoY) | | :-------------------------------- | :-------------------------- | :-------------------------- | :----------- | | Net (loss) income | $(1,157,796) | $336,258 | N/A (loss from income) | | Net Cash Used in Operating Activities | $(160,859) | $(140,206) | -14.7% | | Net Cash Used in Investing Activities | $(1,061,457) | $(79,782) | -1231% | | Net Cash Provided by Financing Activities | $22,068,249 | $8,620,417 | +156% | | Net Increase in Cash and Cash Equivalents | $20,845,933 | $8,400,429 | +148% | | Cash and Cash Equivalents - End of Period | $29,759,967 | $13,523,002 | +120% | - Significant non-cash activities for 2019 include intangible asset additions in accounts payable (**$500,000**) and lease liabilities from right-of-use assets (**$672,809**)[19](index=19&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures for the financial statements, covering business, accounting standards, equity, compensation, contingencies, EPS, and subsequent events - The financial statements are unaudited and prepared according to SEC rules, with all necessary adjustments made for fair presentation, and should be read in conjunction with the 2018 Form 10-K[22](index=22&type=chunk)[23](index=23&type=chunk) - Results for the three and nine months ended September 30, 2019, are not necessarily indicative of full-year results[24](index=24&type=chunk) [NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION](index=10&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) Describes OptimizeRx Corporation's business as a digital health messaging provider and the basis of financial statement presentation - OptimizeRx Corporation is a leading provider of digital health messaging via electronic health records (EHRs), connecting pharmaceutical companies with healthcare providers and patients[21](index=21&type=chunk) - The company's cloud-based solution supports patient medication adherence by offering real-time access to financial assistance, prior authorization, education, and clinical information to over half a million healthcare providers[21](index=21&type=chunk) [NOTE 2 – NEW ACCOUNTING STANDARDS](index=10&type=section&id=NOTE%202%20%E2%80%93%20NEW%20ACCOUNTING%20STANDARDS) Details the adoption of new lease accounting guidance and the evaluation of other upcoming accounting standards - Effective January 1, 2019, the company adopted new lease accounting guidance (ASU 2016-13) using the modified retrospective method, recognizing operating leases on the balance sheet as right-of-use assets and lease liabilities[25](index=25&type=chunk)[28](index=28&type=chunk) - Upon adoption, approximately **$462,000** of right-of-use assets and **$465,000** of lease-related liabilities were recorded, with a cumulative-effect adjustment to accumulated deficit[29](index=29&type=chunk) Lease Cost Components | Lease Cost Component | 3 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2019 | | :------------------- | :-------------------------- | :-------------------------- | | Operating lease cost | $33,868 | $98,043 | | Short-term lease cost | $11,771 | $30,663 | | Total lease cost | $45,639 | $128,706 | - The company is currently evaluating the impact of ASU 2016-13 (Credit Losses), ASU 2017-04 (Goodwill Impairment), and ASU 2018-13 (Fair Value Measurement Disclosure) which become effective in 2020[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) [NOTE 3 – STOCKHOLDERS' EQUITY](index=12&type=section&id=NOTE%203%20%E2%80%93%20STOCKHOLDERS%27%20EQUITY) Explains changes in stockholders' equity, including public offerings, stock option exercises, and a reverse stock split - In Q2 2019, the company issued **1,769,275** common shares in an underwritten public offering, generating net proceeds of **$21.3 million** after **$1.7 million** in issuance costs[35](index=35&type=chunk) - In Q2 2018, **1,666,669** common shares were issued in a private transaction, yielding net proceeds of **$8.16 million** after **$0.84 million** in costs[36](index=36&type=chunk) - Shares were issued for stock option exercises and as compensation to independent directors throughout 2019 and 2018[37](index=37&type=chunk)[39](index=39&type=chunk) - A 1-for-3 reverse stock split was implemented on May 14, 2018, for Nasdaq listing, resulting in **908** additional shares due to rounding[40](index=40&type=chunk) [NOTE 4 – STOCK BASED COMPENSATION](index=13&type=section&id=NOTE%204%20%E2%80%93%20STOCK%20BASED%20COMPENSATION) Details stock-based compensation expenses and remaining unvested amounts for options and restricted stock awards Stock-Based Compensation Expense | Compensation Type | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :---------------- | :-------------------------- | :-------------------------- | | Stock options | $1,329,713 | $878,768 | | Restricted stock awards | $78,225 | $364,008 | - As of September 30, 2019, there is **$1,462,423** of remaining expense for unvested options (weighted average remaining period < 1 year) and **$1,513,475** for unvested restricted stock awards (**140,000** shares)[43](index=43&type=chunk)[44](index=44&type=chunk) [NOTE 5 – CONTINGENCIES](index=13&type=section&id=NOTE%205%20%E2%80%93%20CONTINGENCIES) States that the company is not currently involved in any material legal proceedings - The company is not currently involved in any material legal proceedings[45](index=45&type=chunk) [NOTE 6 – (LOSS) EARNINGS PER SHARE](index=14&type=section&id=NOTE%206%20%E2%80%93%20%28LOSS%29%20EARNINGS%20PER%20SHARE) Presents the calculation of basic and diluted earnings per share, noting anti-dilutive effects for losses Earnings Per Share Calculation | Metric | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net (loss) income | $(1,570,942) | $244,928 | $(1,157,796) | $336,258 | | Basic Weighted Average Shares | 14,146,489 | 11,755,500 | 12,996,590 | 10,840,584 | | Diluted Weighted Average Shares | 14,146,489 | 12,921,768 | 12,996,590 | 11,776,754 | | Basic (Loss) Earnings Per Share | $(0.11) | $0.02 | $(0.09) | $0.03 | | Diluted (Loss) Earnings Per Share | $(0.11) | $0.02 | $(0.09) | $0.03 | - No diluted EPS calculation was included for 2019 as the effect would be anti-dilutive due to the net loss[48](index=48&type=chunk) [NOTE 7 – SUBSEQUENT EVENTS](index=14&type=section&id=NOTE%207%20%E2%80%93%20SUBSEQUENT%20EVENTS) Discloses significant events occurring after the reporting period, including the acquisition of RMDY Health - In October 2019, the company acquired RMDY Health, a provider of collaborative digital therapeutics SaaS solutions, for **$16.0 million** (subject to working capital adjustments)[49](index=49&type=chunk) - The RMDY Health acquisition involved an initial cash payment of **$8.7 million** and a portion of the purchase price (**$5.9 million**) payable in **382,893** common shares to be issued in November 2019[49](index=49&type=chunk)[50](index=50&type=chunk) - Additional earnout payments up to **$30.0 million** may be due in future years based on RMDY product revenues in 2020 and 2021[50](index=50&type=chunk) - RMDY Health's operating results are not included in the Q3 2019 financial statements, and a preliminary purchase price allocation or pro forma financial information is impractical to disclose at this time[52](index=52&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of financial condition and results of operations for the three and nine months ended September 30, 2019, highlighting performance, liquidity, and critical accounting policies - The company's revenues for the nine months ended September 30, 2019, increased by **18%** to **$17.2 million**, driven by growth in clinical and brand messaging products[58](index=58&type=chunk)[59](index=59&type=chunk) - Revenues for the three months ended September 30, 2019, decreased by **8%** to **$5.0 million**, primarily due to a decline in financial messaging product revenue as two high-volume brands from 2018 were not active in 2019[58](index=58&type=chunk)[59](index=59&type=chunk) - Gross margins improved in both the three and nine-month periods of 2019 due to product mix and a focus on reducing revenue share costs and higher-margin products, with an expectation to maintain at least **60%** quarterly gross margins[60](index=60&type=chunk)[61](index=61&type=chunk)[62](index=62&type=chunk) - Operating expenses significantly increased in 2019 due to strategic hires, increased research and development, expanded marketing activities, higher professional fees related to Nasdaq listing and acquisitions, and acquisition-related costs for RMDY Health[63](index=63&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk)[68](index=68&type=chunk)[69](index=69&type=chunk) - The company reported a net loss of **$1.57 million** for the three months and **$1.16 million** for the nine months ended September 30, 2019, compared to net income in the prior year periods, primarily due to increased growth-related expenses offsetting improved gross margins[74](index=74&type=chunk) - Working capital improved significantly to **$32.5 million** (current ratio **7.0:1**) as of September 30, 2019, from **$11.5 million** (current ratio **3.7:1**) at December 31, 2018[76](index=76&type=chunk) - The company does not anticipate needing to raise additional capital for operating purposes in the next 12 months but may seek capital for potential acquisitions or strategic partnerships[80](index=80&type=chunk) [Overview](index=16&type=section&id=Overview) Provides a high-level summary of the company's strategic direction, growth expectations, and key achievements - The company expects continued strong growth from its legacy and new solutions, and evolving network, driven by an increasing client base[57](index=57&type=chunk) - Key highlights include **18%** revenue growth for the nine months ended Sep 30, 2019, **$21.3 million** in net equity raised, the acquisition of RMDY Health in October 2019, and a three-year exclusive agreement with NewCrop[58](index=58&type=chunk) [Results of Operations for the Three and Nine Months Ended September 30, 2019 and 2018](index=17&type=section&id=Results%20of%20Operations%20for%20the%20Three%20and%20Nine%20Months%20Ended%20September%2030%2C%202019%20and%202018) Analyzes the company's financial performance, including revenues, costs, gross margin, and operating expenses, for the specified periods [Revenues](index=17&type=section&id=Revenues) Examines net revenue performance and the factors influencing changes for the three and nine-month periods Net Revenue Performance | Period | Net Revenue (2019) | Net Revenue (2018) | YoY Change | | :-------------------- | :----------------- | :----------------- | :--------- | | 9 Months Ended Sep 30 | $17.2 million | $14.6 million | +18% | | 3 Months Ended Sep 30 | $5.0 million | $5.4 million | -8% | - Nine-month revenue increase was due to higher sales in clinical and brand messaging products from new channel partners[59](index=59&type=chunk) - Three-month revenue decrease was due to a decline in financial messaging, as two high-volume brands from 2018 shifted funds or were no longer active[59](index=59&type=chunk) [Cost of Revenues](index=17&type=section&id=Cost%20of%20Revenues) Analyzes the cost of revenues and its percentage of net revenue, highlighting factors impacting changes Cost of Revenues Percentage | Period | Cost of Revenues % (2019) | Cost of Revenues % (2018) | Change (pp) | | :-------------------- | :------------------------ | :------------------------ | :---------- | | 3 Months Ended Sep 30 | 39.6% | 41.9% | -2.3 pp | | 9 Months Ended Sep 30 | 36.3% | 44.5% | -8.2 pp | - The decline in cost of revenue percentage was attributed to product mix and a strategic focus on reducing revenue share contracts and prioritizing higher-margin products[60](index=60&type=chunk) [Gross Margin](index=17&type=section&id=Gross%20Margin) Discusses gross margin performance and the strategic factors contributing to its improvement Gross Margin Percentage | Period | Gross Margin % (2019) | Gross Margin % (2018) | Change (pp) | | :-------------------- | :-------------------- | :-------------------- | :---------- | | 3 Months Ended Sep 30 | 60.4% | 58.1% | +2.3 pp | | 9 Months Ended Sep 30 | 63.7% | 55.5% | +8.2 pp | - Gross margins improved in both periods due to the reasons mentioned in cost of revenues, with an expectation to maintain at least **60%** quarterly gross margins for the rest of the year[62](index=62&type=chunk) [Operating Expenses](index=17&type=section&id=Operating%20Expenses) Details the components and changes in operating expenses, including salaries, R&D, and acquisition costs Operating Expenses by Category | Expense Category | 3 Months Ended Sep 30, 2019 | 3 Months Ended Sep 30, 2018 | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Total Operating Expense | $5,008,934 | $2,923,238 | $12,341,827 | $7,807,705 | | Salaries, Wages, & Benefits | $1,882,433 | $1,381,237 | $5,672,775 | $3,898,222 | | Stock-based compensation | $590,244 | $708,163 | $1,769,720 | $1,721,985 | | Professional Fees | $201,878 | $51,807 | $576,509 | $231,206 | | Acquisition Related Costs | $323,406 | $45,580 | $323,406 | $45,580 | | Research, Development, and Maintenance | $1,034,281 | $114,604 | $1,432,390 | $439,916 | | Advertising and Promotion | $137,276 | $106,920 | $491,989 | $225,648 | | Depreciation and Amortization | $320,055 | $54,473 | $745,927 | $163,418 | - Significant increases in operating expenses were driven by new hires (Chief Commercial Officer, VPs of sales, marketing, strategy, controller, financial analyst, CareSpeak employees), increased R&D for new offerings, and expanded marketing activities including physician surveys and industry conferences[65](index=65&type=chunk)[66](index=66&type=chunk)[67](index=67&type=chunk) - Professional fees rose due to the Nasdaq Capital Market move, increased market capitalization, and the CareSpeak acquisition, requiring a Sarbanes Oxley audit opinion on internal controls and third-party valuations[68](index=68&type=chunk) - Acquisition-related costs increased in 2019 due to the larger and more complex RMDY Health transaction compared to CareSpeak Communications in 2018[69](index=69&type=chunk) - Depreciation and amortization increased primarily due to amortizable assets acquired from CareSpeak Communications[70](index=70&type=chunk) - The decrease in the fair value of contingent consideration relates to the CareSpeak acquisition, reflecting adjustments to future revenue projections[71](index=71&type=chunk) - Operating expenses are expected to continue at or slightly above 2019 levels as the company expands, but human resource costs are not expected to increase as rapidly as revenues[73](index=73&type=chunk) [Net Income (Loss)](index=19&type=section&id=Net%20Income%20%28Loss%29) Analyzes the company's net income or loss and the primary drivers behind its performance Net Income (Loss) Performance | Period | Net Income (Loss) (2019) | Net Income (Loss) (2018) | | :-------------------- | :----------------------- | :----------------------- | | 3 Months Ended Sep 30 | $(1,570,942) | $244,928 | | 9 Months Ended Sep 30 | $(1,157,796) | $336,258 | - The shift from net income to net loss in 2019 was primarily due to increased growth-related expenses, which offset the improved gross margins[74](index=74&type=chunk) [Liquidity and Capital Resources](index=20&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's financial liquidity, working capital, cash flow, and future capital needs Liquidity and Working Capital | Metric | Sep 30, 2019 | Dec 31, 2018 | Change | | :-------------------- | :----------- | :----------- | :------- | | Total Current Assets | $37.9 million | $15.7 million | +141% | | Total Current Liabilities | $5.4 million | $4.2 million | +28% | | Working Capital | $32.5 million | $11.5 million | +183% | | Current Ratio | 7.0 to 1 | 3.7 to 1 | +89% | Cash Flow Summary | Cash Flow Activity | 9 Months Ended Sep 30, 2019 | 9 Months Ended Sep 30, 2018 | | :-------------------------------- | :-------------------------- | :-------------------------- | | Net Cash Used in Operating Activities | $(161,000) | $(140,000) | | Net Cash Used in Investing Activities | $(1.06 million) | $(79,782) | | Net Cash Provided by Financing Activities | $22.1 million | $8.6 million | - Investing activities in 2019 included **$1.0 million** for a perpetual software license (total cost **$1.5 million**, with **$500,000** in accounts payable)[78](index=78&type=chunk) - The company used approximately **$9.0 million** of cash in October 2019 for the RMDY Health acquisition, leaving approximately **$20 million** for operations and potential future acquisitions[80](index=80&type=chunk) - No additional capital is anticipated for operating purposes in the next 12 months, but opportunities for acquisitions or strategic partnerships may require further capital[80](index=80&type=chunk) [Critical Accounting Policies](index=20&type=section&id=Critical%20Accounting%20Policies) Identifies the key accounting policies requiring significant judgment and estimation in financial reporting - Critical accounting policies include revenue recognition, calculation of revenue share expense, stock-based compensation, capitalization and amortization of intangible assets, impairment of assets, and fair value of contingent purchase price payable[81](index=81&type=chunk) [Recently Issued Accounting Pronouncements](index=21&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) Discusses the company's evaluation of new accounting standards effective in 2020 - The company is evaluating the impact of ASU 2016-13 (Credit Losses), ASU 2017-04 (Goodwill Impairment), and ASU 2018-13 (Fair Value Measurement Disclosure), all effective for the company on January 1, 2020[83](index=83&type=chunk)[84](index=84&type=chunk)[85](index=85&type=chunk) [Off Balance Sheet Arrangements](index=21&type=section&id=Off%20Balance%20Sheet%20Arrangements) Confirms the absence of any off-balance sheet arrangements as of the reporting date - As of September 30, 2019, there were no off-balance sheet arrangements[86](index=86&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is not required to provide disclosures regarding quantitative and qualitative information about market risk for this reporting period - The registrant is not required to provide information on market risk for this Item[87](index=87&type=chunk) [Item 4. Controls and Procedures](index=22&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective due to material weaknesses in internal control over financial reporting, with remediation efforts underway - As of September 30, 2019, disclosure controls and procedures were not effective due to material weaknesses in internal control over financial reporting[89](index=89&type=chunk) - Identified material weaknesses include inadequate segregation of duties and insufficient information technology reporting systems for accurate financial reporting under US GAAP and SEC guidelines[90](index=90&type=chunk) - Remediation efforts in 2019 included hiring two additional accounting personnel to address segregation of duties and implementing new accounting software in August to resolve IT issues[91](index=91&type=chunk) - A thorough assessment of the new system and associated controls is expected by the end of Q4, with management acknowledging that control systems provide reasonable, not absolute, assurance[91](index=91&type=chunk)[93](index=93&type=chunk) [PART II – OTHER INFORMATION](index=23&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=23&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material pending legal proceedings, nor is it aware of any such proceedings involving its officers, directors, or significant shareholders - The company is not a party to any material pending legal proceedings[96](index=96&type=chunk) [Item 1A. Risk Factors](index=23&type=section&id=Item%201A.%20Risk%20Factors) For a comprehensive discussion of risk factors, readers are directed to the company's Annual Report on Form 10-K for 2018 - Risk factors are included in the Annual Report on Form 10-K for 2018[97](index=97&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details unregistered sales of common shares to independent directors and from stock option exercises in Q3 2019 under specific Securities Act exemptions - In September 2019, **8,336** common shares were issued to independent directors[98](index=98&type=chunk) - During the three months ended September 30, 2019, **48,775** shares were issued due to stock option exercises[98](index=98&type=chunk) - These securities were issued under Section 4(2) and/or Rule 506 of the Securities Act, with investors intending to acquire for investment and no general solicitation[99](index=99&type=chunk) [Item 3. Defaults Upon Senior Securities](index=23&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities - No defaults upon senior securities were reported[100](index=100&type=chunk) [Item 4. Mine Safety Disclosure](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosure) This item is not applicable to the company - This item is not applicable (N/A)[100](index=100&type=chunk) [Item 5. Other Information](index=23&type=section&id=Item%205.%20Other%20Information) No other material information was disclosed under this item - No other information was reported[100](index=100&type=chunk) [Item 6. Exhibits](index=23&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL financial statements - Exhibits include CEO and CFO certifications (31.1, 31.2, 32.1) and XBRL formatted financial statements (101)[100](index=100&type=chunk)

N a s d a q : O P R X C O R P O R A T E P R E S E N T A T I O N S e p t e m b e r 2 0 1 9 Nasdaq:OPRX Important Cautions Regarding Forward Looking Statements This presentation has been prepared by OptimizeRx Corporation ("we," "us," "our," "OptimizeRx" or the "Company") and is made for informational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy securities, nor shall there be any sale of any securities in any state or jurisdiction in which such offer, solicitatio ...

OptimizeRx Corporation (NASDAQ:OPRX) Q2 2019 Earnings Conference Call August 7, 2019 4:30 PM ET Company Participants William Febbo - Chief Executive Officer Stephen Silvestro - Chief Commercial Officer Miriam Paramore - President Doug Baker - Chief Financial Officer Conference Call Participants Ryan Daniels - William Blair Andrew D’Silva - B. Riley FBR Richard Baldry - ROTH Capital Eric Martinuzzi - Lake Street Harvey Poppel - Poptech Operator Good afternoon and thank you for joining us today to discuss Opt ...

PART I – FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for OptimizeRx Corporation as of June 30, 2019, and for the three and six-month periods then ended, including balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with accompanying notes detailing accounting policies and specific financial activities [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2019, shows a significant increase in total assets to $49.6 million from $25.1 million at year-end 2018, primarily driven by a substantial rise in cash and cash equivalents, with total liabilities increasing to $7.7 million and stockholders' equity growing to $41.9 million, reflecting proceeds from a recent stock offering Condensed Consolidated Balance Sheet Highlights (as of June 30, 2019 vs. Dec 31, 2018) | Account | June 30, 2019 ($) | December 31, 2018 ($) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $30,536,420 | $8,914,034 | | Total Current Assets | $38,588,492 | $15,732,021 | | Total Assets | $49,637,104 | $25,054,578 | | **Liabilities & Equity** | | | | Total Current Liabilities | $5,672,437 | $4,231,133 | | Total Liabilities | $7,727,341 | $6,596,133 | | Total Stockholders' Equity | $41,909,763 | $18,458,445 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) The company reported significant growth in revenue and net income for both the three and six months ended June 30, 2019, compared to the same periods in 2018, with net revenue for the second quarter increasing by 37% year-over-year, leading to a net income of $406,617 Statement of Operations Summary (Unaudited) | Metric | Q2 2019 ($) | Q2 2018 ($) | Six Months 2019 ($) | Six Months 2018 ($) | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $7,006,291 | $5,099,474 | $12,215,725 | $9,211,710 | | Gross Margin | $4,319,148 | $2,862,723 | $7,945,102 | $4,966,868 | | Income from Operations | $480,043 | $273,597 | $612,208 | $82,401 | | Net Income | $406,617 | $280,509 | $413,146 | $91,330 | | Diluted EPS | $0.03 | $0.02 | $0.03 | $0.01 | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Stockholders' equity increased from $18.5 million at the beginning of 2019 to $41.9 million by June 30, 2019, primarily driven by a public offering of common stock which raised net proceeds of $21.3 million, supplemented by stock option exercises and net income - A public offering of **1,769,275 common shares** resulted in net proceeds of **$21.3 million** during the second quarter of 2019[15](index=15&type=chunk) - Total stockholders' equity grew from **$18,458,445** on January 1, 2019, to **$41,909,763** on June 30, 2019[15](index=15&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2019, cash and cash equivalents increased by $21.6 million, primarily due to $21.9 million in net cash from financing activities, mainly from a stock offering, and $0.8 million from operating activities, offset by $1.05 million used in investing activities Cash Flow Summary for the Six Months Ended June 30 | Cash Flow Activity | 2019 ($) | 2018 ($) | | :--- | :--- | :--- | | Net Cash from Operating Activities | $808,200 | ($1,218,859) | | Net Cash used in Investing Activities | ($1,047,739) | ($69,244) | | Net Cash from Financing Activities | $21,861,925 | $8,169,394 | | **Net Increase in Cash** | **$21,622,386** | **$6,881,291** | | **Cash at End of Period** | **$30,536,420** | **$12,003,864** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes provide context to the financial statements, detailing the nature of the business as a digital health messaging provider, the basis of presentation, adoption of new accounting standards for leases, details on stockholders' equity transactions including a major stock offering, stock-based compensation expenses, and earnings per share calculations - The company is a leading provider of digital health messaging via electronic health records (EHRs), connecting pharmaceutical companies with over **half a million healthcare providers**[22](index=22&type=chunk) - Effective January 1, 2019, the company adopted a new lease accounting standard, recognizing right-of-use assets of approximately **$462,000** and lease liabilities of **$465,000** on the balance sheet[26](index=26&type=chunk)[30](index=30&type=chunk) - In Q2 2019, the company issued **1,769,275 shares** of common stock in an underwritten primary offering, raising gross proceeds of **$23.0 million** and net proceeds of **$21.3 million**[36](index=36&type=chunk) - Stock-based compensation expense for the first six months of 2019 was **$907,109** for options and **$31,290** for restricted stock awards[43](index=43&type=chunk)[44](index=44&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a 37% revenue increase in Q2 2019 and a 33% increase for the first six months, driven by messaging products, with gross margins improving due to a favorable product mix and better revenue share contracts, and operating expenses rising primarily from increased headcount to support growth, leading to consistent profitability and significantly strengthened liquidity through a $21.3 million net equity raise, positioning it for potential acquisitions and continued expansion [Results of Operations](index=15&type=section&id=Results%20of%20Operations) For the three and six months ended June 30, 2019, revenues grew 37% and 33% respectively, driven by messaging products, with gross margin improving to 61.6% for the quarter, up from 56.1% in the prior year, due to a better product mix and cost management, and operating expenses increasing significantly, mainly from higher salaries and benefits related to new hires to support growth, consequently, net income rose to $407,000 for the quarter Revenue Growth (YoY) | Period | 2019 Revenue ($ millions) | 2018 Revenue ($ millions) | Growth (%) | | :--- | :--- | :--- | :--- | | Three Months Ended June 30 | $7.0 million | $5.1 million | 37% | | Six Months Ended June 30 | $12.2 million | $9.2 million | 33% | Gross Margin Percentage Improvement | Period | 2019 (%) | 2018 (%) | | :--- | :--- | :--- | | Three Months Ended June 30 | 61.6% | 56.1% | | Six Months Ended June 30 | 65.0% | 54.0% | - Operating expenses increased from **$2.6 million** in Q2 2018 to **$3.8 million** in Q2 2019, primarily due to increased salaries, wages, and benefits from hiring a Chief Commercial Officer, four VPs of sales, and 10 employees from the CareSpeak acquisition[58](index=58&type=chunk)[60](index=60&type=chunk) - Net income for Q2 2019 was **$407,000**, compared to **$281,000** in Q2 2018, demonstrating consistent profitability[67](index=67&type=chunk) [Liquidity and Capital Resources](index=18&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2019, the company's liquidity position significantly improved, with working capital of $32.9 million and a current ratio of 6.8 to 1, largely due to net proceeds of $21.9 million from financing activities, including a common stock offering, and operating activities generating $808,000 in cash, a reversal from the cash used in the prior year, with management not anticipating needing to raise additional capital in the **next 12 months** for regular operations but remaining open to it for strategic M&A opportunities Liquidity Metrics | Metric | June 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Working Capital | $32.9 million | $11.5 million | | Current Ratio | 6.8 to 1 | 3.7 to 1 | - Net cash provided by financing activities was approximately **$21.9 million** for the first six months of 2019, primarily from an offering of common stock[72](index=72&type=chunk) - The company does not anticipate needing to raise additional capital in the **next 12 months** but remains open to it for strategic opportunities like acquisitions[73](index=73&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=19&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that it is not required to provide the information for this item - As a smaller reporting company, OptimizeRx is not required to provide quantitative and qualitative disclosures about market risk[80](index=80&type=chunk) [Controls and Procedures](index=20&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of June 30, 2019, the company's disclosure controls and procedures were **not effective** due to existing material weaknesses in internal control over financial reporting, including inadequate segregation of duties and insufficient IT reporting systems, with the company taking remedial steps such as hiring additional accounting staff and implementing new accounting software, expected to be fully operational in Q3 2019 - Management concluded that disclosure controls and procedures were **not effective** as of June 30, 2019[82](index=82&type=chunk) - Material weaknesses identified include: (i) **inadequate segregation of duties** and (ii) **inadequate information technology reporting systems**[83](index=83&type=chunk) - Remediation efforts include hiring an additional person in the accounting department and implementing new accounting software, expected to be complete in **Q3 2019**[84](index=84&type=chunk) PART II – OTHER INFORMATION [Legal Proceedings](index=21&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is **not involved in any material pending legal proceedings** - The company is **not involved in any material pending legal proceedings**[89](index=89&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A%3A%20Risk%20Factors) The company refers to the risk factors previously disclosed in its Annual Report on Form 10-K for the year 2018 - For a discussion of risk factors, the report refers to the company's **2018 Annual Report on Form 10-K**[90](index=90&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=21&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section discloses the issuance of unregistered securities during the quarter, specifically 8,336 shares to independent directors as part of their compensation plan and 60,295 shares upon the exercise of stock options in June 2019, made pursuant to Section 4(2) of the Securities Act - In Q2 2019, the company issued **8,336 shares** to independent directors and **60,295 shares** from the exercise of stock options[92](index=92&type=chunk) - These securities were issued as unregistered securities under **Section 4(2) of the Securities Act** and/or **Rule 506**[93](index=93&type=chunk) [Exhibits](index=21&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, which include certifications by the CEO and CFO as required by the Sarbanes-Oxley Act of 2002, and XBRL data files - Filed exhibits include CEO and CFO certifications pursuant to **Sections 302 and 906 of the Sarbanes-Oxley Act**[94](index=94&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2019 ☐ Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from __________ to __________ Commission File Number: 001-38543 OptimizeRx Corporation (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 ☐ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ________ Commission file number: 001-38543 OptimizeRx Corporation (Exact name of registrant as specified in its charter) Nevada 26-1265381 (State or other jurisdiction of incor ...