FORM 10-K For the fiscal year ended December 31, 2023 For the transition period from _________ to ________ (Exact name of registrant as specified in its charter) 02453 (ZipCode) Title of each class Trading Symbol Name of each exchange on which registered Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by th ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 | Nevada | 001-38543 | 26-1265381 | | --- | --- | --- | | (State or other jurisdiction | (Commission File Number) | (IRS Employer | | of incorporation) | | Identification No.) | ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) 260 Charles Street, Suite 302, Waltham, MA 02453 (Address of principal executiv ...

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 September 30, 2023 (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.) 260 Charles Street, Suite 302 Waltham, MA 02453 ☐ Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934 For the t ...

Financial Data and Key Metrics Changes - Q3 2023 revenue reached $16.3 million, an 8% increase from $15.1 million in Q3 2022, marking a record third quarter for the company [5][21] - Gross margin decreased slightly from 62.4% in Q3 2022 to 60% in Q3 2023, attributed to solution and channel partner mix [21] - Net loss for Q3 2023 was $2.9 million, or $0.17 per share, compared to a net loss of $3.5 million in the same period in 2022 [22] - Adjusted EBITDA for Q3 2023 was $9.9 million, effectively flat year-over-year [22] - Operating cash flow was positive at $1.5 million for the quarter, with cash and short-term investments totaling $63.5 million as of September 30, 2023 [23] Business Line Data and Key Metrics Changes - The company reported 16 total RWD deals for the year, exceeding the original expectation of approximately 10 deals, indicating strong client adoption [6] - Average revenue for the top 20 pharmaceutical manufacturers was $2.1 million, with a net revenue retention rate improving to 93% from 89% in Q2 2023 [26][27] - Medicx, acquired for $95 million, is expected to enhance the company's revenue streams, particularly in patient marketing [24][15] Market Data and Key Metrics Changes - The company is experiencing a normalization of macro headwinds that had previously impacted the industry, leading to improved client engagement and investment [8][44] - The acquisition of Medicx is anticipated to expand the company's omnichannel reach beyond HCPs to patients, enhancing marketing capabilities [14][15] Company Strategy and Development Direction - The company is focused on enhancing its Dynamic Audience Activation Platform (DAAP) to integrate AI capabilities, improving pharmaceutical marketing solutions [10][11] - The acquisition of Medicx is seen as a strategic move to unlock value for customers and expand market opportunities, with expectations of significant revenue growth [19][120] - The company aims to maintain a strong focus on the top 20 pharmaceutical manufacturers while also exploring opportunities in the broader market [111] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's momentum heading into 2024, citing a positive response from clients and a strong renewal rate [8][12] - The company anticipates revenue for 2023 to be between $68 million and $70 million, with preliminary guidance for 2024 set at a minimum of $110 million [6][25] - Management noted that the recent enhancements and acquisitions position the company well to address challenges faced by clients in the healthcare system [118][120] Other Important Information - The company has completed over half of its planned cost reductions, with full benefits expected to be realized in 2024 [19][72] - The Medicx acquisition is expected to be accretive to earnings, contributing to revenue growth and profitability [120] Q&A Session All Questions and Answers Question: Can you share expected revenue contribution from Medicx for 2024? - Management indicated it is too early to provide specific figures but expressed confidence in the integration and growth potential [31][35] Question: What is the average size of new deals? - The average deal size remains in the $1 million to $2 million range, with expectations for growth as the company scales its offerings [36][37] Question: What drove the better-than-expected results in Q3? - The outperformance was attributed to the successful implementation of DAAP and increased client engagement [41][42] Question: How are clients responding to the competitive landscape? - Clients are returning after experimenting with other vendors, primarily due to the company's proven ROI and effective measurement capabilities [53][54] Question: How does the Medicx acquisition impact decision-making at the brand level? - The decision-making process involves both HCP and patient marketing leads, with the company now positioned to engage both sides effectively [60][70] Question: What is the expected impact of cost-cutting measures in 2024? - Cost reductions are expected to be fully realized in 2024, contributing to improved adjusted EBITDA margins [72]

PART I – FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201%3A%20Financial%20Statements) This section presents OptimizeRx Corporation's unaudited condensed consolidated financial statements as of June 30, 2023, highlighting decreases in cash and total assets, a slight revenue decline, and an increased net loss. [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2023, total assets decreased to $121.3 million from $134.7 million, driven by reduced cash, while liabilities and stockholders' equity also declined Condensed Consolidated Balance Sheet Highlights (Unaudited) | Account | June 30, 2023 (USD) | December 31, 2022 (USD) | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $9,808,330 | $18,208,685 | | Total current assets | $85,074,023 | $98,576,635 | | Total Assets | $121,324,874 | $134,651,185 | | **Liabilities & Equity** | | | | Total current liabilities | $5,509,715 | $8,395,876 | | Total Liabilities | $5,509,715 | $8,540,408 | | Total Stockholders' Equity | $115,815,159 | $126,110,777 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For the three and six months ended June 30, 2023, net revenues slightly decreased, leading to a widened net loss of $4.2 million for the quarter and $10.6 million for the six-month period Statement of Operations Summary (Unaudited) | Metric | Q2 2023 (USD) | Q2 2022 (USD) | H1 2023 (USD) | H1 2022 (USD) | | :--- | :--- | :--- | :--- | :--- | | Net Revenue | $13,818,166 | $13,978,665 | $26,821,076 | $27,710,195 | | Gross Profit | $7,825,021 | $8,989,949 | $15,258,310 | $17,091,621 | | Loss from Operations | ($4,881,868) | ($3,908,530) | ($11,945,054) | ($7,669,632) | | Net Loss | ($4,161,449) | ($3,884,714) | ($10,559,163) | ($7,645,812) | | Loss Per Share (diluted) | ($0.24) | ($0.21) | ($0.62) | ($0.42) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, operating activities used $2.5 million in cash, a reversal from the prior year, with overall cash and equivalents decreasing by $8.4 million due to financing activities Cash Flow Summary for the Six Months Ended June 30 (Unaudited) | Activity | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | Net Cash (Used in) / Provided by Operating Activities | ($2,454,489) | $4,388,372 | | Net Cash Provided by / (Used in) Investing Activities | $1,674,215 | ($2,186,592) | | Net Cash (Used in) / Provided by Financing Activities | ($7,620,081) | $509,420 | | **Net (Decrease) / Increase in Cash** | **($8,400,355)** | **$2,711,200** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail the company's digital health platform business, revenue recognition policies, a $15 million share repurchase program, and $7.9 million in stock-based compensation for the first half of 2023 - The company is a digital health technology company connecting life sciences organizations, healthcare providers, and patients, with a network reaching over **60% of U.S. healthcare providers**[21](index=21&type=chunk) - The majority of revenue is recognized over time as solutions are provided. For the six months ended June 30, 2023, **$25.6 million was recognized over time**, while **$1.2 million was recognized at a point in time**[32](index=32&type=chunk)[33](index=33&type=chunk) - In March 2023, the Board authorized a new share repurchase program for up to **$15 million**. During Q2 2023, **526,999 shares were repurchased for $7.5 million**[46](index=46&type=chunk) - Stock-based compensation expense for the six months ended June 30, 2023, was **$7.9 million** (**$3.1 million for options**, **$4.8 million for RSUs**)[48](index=48&type=chunk)[50](index=50&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses a 3% revenue decrease for H1 2023, attributing it to non-core business shortfalls and macroeconomic pressures, leading to a gross margin decline and increased operating expenses, despite strong liquidity [Overview](index=18&type=section&id=Overview) The company operates a digital health technology platform, employing a "land and expand" strategy and leveraging AI, while facing revenue concentration risk with approximately 100 pharmaceutical clients - The company employs a **'land and expand' strategy**, focusing on growing its existing client base and shifting towards enterprise-level engagements[73](index=73&type=chunk) - Management is focused on optimizing its solution portfolio and leveraging its **AI-powered real-world data solution** to derive additional revenue[73](index=73&type=chunk) - Revenue is concentrated among approximately **100 pharmaceutical companies**, making the loss of a large customer a significant risk[74](index=74&type=chunk) [Key Performance Indicators](index=19&type=section&id=Key%20Performance%20Indicators) Key performance indicators for the twelve months ending June 30, 2023, showed declines in net revenue retention to 89% and average revenue per top 20 pharma manufacturer, attributed to macroeconomic factors Key Performance Indicators (Rolling Twelve Months Ended June 30) | Indicator | 2023 | 2022 | | :--- | :--- | :--- | | Average revenue per top 20 pharma manufacturer (USD) | $1,972,308 | $2,452,836 | | Percent of top 20 pharma manufacturers that are customers (%) | 90% | 90% | | Percent of total revenue from top 20 pharma manufacturers (%) | 58% | 69% | | Net revenue retention (%) | 89% | 113% | | Revenue per average full-time employee (USD) | $559,646 | $661,319 | - The decline in KPIs such as net revenue retention and average revenue per top manufacturer is attributed to macroeconomic factors that slowed customer spending and prolonged sales cycles[79](index=79&type=chunk)[82](index=82&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) For the six months ended June 30, 2023, net revenue decreased 3% to $26.8 million, gross margin fell due to increased cost of revenues, and operating expenses rose 10%, widening the net loss to $10.6 million Results of Operations for the Six Months Ended June 30 | Metric | 2023 (USD) | 2022 (USD) | | :--- | :--- | :--- | | Net Revenue | $26,821,076 | $27,710,195 | | Gross Profit | $15,258,310 | $17,091,621 | | Gross Margin % | 56.9% | 61.7% | | Total Operating Expenses | $27,203,364 | $24,761,253 | | Net Loss | ($10,559,163) | ($7,645,812) | - The decrease in revenue was primarily due to a shortfall in certain non-core business lines and longer than expected medical, legal, and regulatory reviews, pushing revenue into the second half of the year[87](index=87&type=chunk) - The increase in cost of revenue as a percentage of revenue was a result of solution and channel mix, with a decrease in activity flowing through lower-cost channels[88](index=88&type=chunk)[89](index=89&type=chunk) - The increase in operating expenses was mostly due to a rise in other general and administrative expenses, resulting from an increase in headcount and other investments to support growth initiatives[92](index=92&type=chunk) [Liquidity and Capital Resources](index=23&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2023, the company had $79.6 million in working capital, but experienced a $2.5 million net cash outflow from operations, primarily due to net loss and stock repurchases - As of June 30, 2023, the company had working capital of approximately **$79.6 million** and a current ratio of **15.4 to 1**[94](index=94&type=chunk) - Net cash used in operating activities was **$2.5 million** for H1 2023, compared to **$4.4 million provided in H1 2022**[96](index=96&type=chunk) - Cash used for financing activities was **$7.6 million**, mostly related to a **$7.5 million stock repurchase program**[98](index=98&type=chunk) - The company has commitments for future minimum payments of **$13.3 million** related to revenue sharing agreements, which will be reflected in cost of revenues from 2023 through 2025[102](index=102&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is noted as not applicable - Not applicable[103](index=103&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management concluded that as of June 30, 2023, disclosure controls and procedures were not effective due to a material weakness in internal controls over financial reporting, for which a remediation plan is underway - Management concluded that as of the end of the reporting period, disclosure controls and procedures were **not effective** at a reasonable assurance level[105](index=105&type=chunk) - The ineffectiveness is due to a **material weakness in internal controls over financial reporting** disclosed in the 2022 Annual Report on Form 10-K[105](index=105&type=chunk) - A remediation plan is underway, which involves requiring **SOC-1, Type 2 reports** from third-party service organizations or conducting direct evaluations of their controls[107](index=107&type=chunk)[110](index=110&type=chunk) PART II — OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201%3A%20Legal%20Proceedings) The company reports that it is not currently a party to any material pending legal proceedings - The company is **not a party to any material pending legal proceeding**[112](index=112&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A%3A%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - There have been **no material changes in risk factors** from those reported in the Annual Report on Form 10-K for the year ended December 31, 2022[113](index=113&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=26&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase activity, including the March 2023 authorization of a $15 million program and the repurchase of 526,000 shares for $7.5 million in Q2 2023 - On March 14, 2023, the Board of Directors authorized the repurchase of up to **$15 million** of the Company's outstanding common stock, expiring March 12, 2024[114](index=114&type=chunk) Issuer Purchases of Equity Securities (Q2 2023) | Period | Total Number of Shares Purchased | Average Price Paid per Share (USD) | Maximum Dollar Value Remaining for Purchase (USD) | | :--- | :--- | :--- | :--- | | 4/1/23 - 4/30/23 | — | $— | $15,000,000 | | 5/1/23 - 5/31/23 | 132,000 | $13.15 | $13,267,253 | | 6/1/23 - 6/30/23 | 394,000 | $14.65 | $7,488,116 | [Exhibits](index=27&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL data files - Exhibits filed include **CEO/CFO certifications** pursuant to Sarbanes-Oxley Act Sections 302 and 906, and **Inline XBRL documents**[117](index=117&type=chunk)

PART I – FINANCIAL INFORMATION [Item 1: Financial Statements (unaudited)](index=4&type=section&id=Item%201%3A%20Financial%20Statements%20%28unaudited%29) This section presents the unaudited condensed consolidated financial statements for OptimizeRx Corporation for the three months ended March 31, 2023 and 2022, including the balance sheets, statements of operations, changes in stockholders' equity, and cash flows, along with their accompanying notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (as of March 31, 2023 vs. December 31, 2022) | Metric | March 31, 2023 | December 31, 2022 | | :-------------------------------- | :------------- | :---------------- | | **Assets** | | | | Total Current Assets | $95,881,440 | $98,576,635 | | Total Assets | $131,692,540 | $134,651,185 | | **Liabilities & Stockholders' Equity** | | | | Total Current Liabilities | $7,605,541 | $8,395,876 | | Total Liabilities | $7,728,768 | $8,540,408 | | Total Stockholders' Equity | $123,963,772 | $126,110,777 | [Condensed Consolidated Statements of Operations](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Condensed Consolidated Statements of Operations (Three Months Ended March 31, 2023 vs. 2022) | Metric | March 31, 2023 | March 31, 2022 | Change (YoY) | | :------------------------------------------------ | :------------- | :------------- | :----------- | | Net Revenue | $13,002,910 | $13,731,530 | -5.3% | | Cost of Revenues | $5,569,621 | $5,629,858 | -1.1% | | Gross Profit | $7,433,289 | $8,101,672 | -8.2% | | Operating Expenses | $14,496,475 | $11,862,773 | +22.2% | | Loss from Operations | $(7,063,186) | $(3,761,101) | +87.8% | | Interest Income | $665,472 | $3 | N/A | | Net Loss | $(6,397,714) | $(3,761,098) | +70.1% | | Loss per Share – Basic & Diluted | $(0.37) | $(0.21) | +76.2% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) Changes in Stockholders' Equity (Three Months Ended March 31, 2023) | Item | Amount | | :-------------------------- | :------------- | | Balance January 1, 2023 | $126,110,777 | | Stock based compensation | $4,380,503 | | Issuance of common stock | $(129,800) | | Net loss | $(6,397,714) | | Balance March 31, 2023 | $123,963,772 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, 2023 vs. 2022) | Activity | March 31, 2023 | March 31, 2022 | | :------------------------------------------ | :------------- | :------------- | | Net cash (used in) / provided by operating activities | $(86,330) | $4,080,244 | | Net cash used in investing activities | $(1,548,894) | $(65,751) | | Net cash (used in) / provided by financing activities | $(129,794) | $258,128 | | Net (decrease) / increase in cash and cash equivalents | $(1,765,018) | $4,272,621 | | Cash and cash equivalents - End of Period | $16,443,667 | $88,954,391 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION](index=9&type=section&id=NOTE%201%20%E2%80%93%20NATURE%20OF%20BUSINESS%20AND%20BASIS%20OF%20PRESENTATION) - OptimizeRx Corporation is a digital health technology company that facilitates care-focused engagement between life sciences organizations, healthcare providers, and patients, connecting over **60% of U.S. healthcare providers**[21](index=21&type=chunk) [NOTE 2 – NEW ACCOUNTING STANDARDS](index=9&type=section&id=NOTE%202%20%E2%80%93%20NEW%20ACCOUNTING%20STANDARDS) - The adoption of ASU Topic 2021-08 (Business Combinations) effective January 1, 2023, did not materially affect the company's financial position, results of operations, or cash flows[25](index=25&type=chunk) [NOTE 3 – CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS](index=9&type=section&id=NOTE%203%20%E2%80%93%20CASH%2C%20CASH%20EQUIVALENTS%20AND%20SHORT-TERM%20INVESTMENTS) Held-to-Maturity United States' Treasury Bills | Date | Amount | | :---------------- | :------------- | | March 31, 2023 | $57.3 million | | December 31, 2022 | $55.9 million | Maturity dates for these investments are between April 2023 and June 2023 [NOTE 4 – REVENUES](index=9&type=section&id=NOTE%204%20%E2%80%93%20REVENUES) Deferred Revenue Activity (Quarter Ended March 31, 2023) | Item | Amount | | :---------------------- | :------------- | | Balance January 1, 2023 | $164,309 | | Revenue recognized | $(8,778,893) | | Amount collected | $9,349,724 | | Balance March 31, 2023 | $735,140 | Disaggregation of Revenue (Three Months Ended March 31, 2023 vs. 2022) | Revenue Type | March 31, 2023 | March 31, 2022 | | :-------------------------- | :------------- | :------------- | | Recognized over time | $12,423,100 | $12,902,664 | | Recognized at a point in time | $579,810 | $828,867 | | Total Revenue | $13,002,910 | $13,731,530 | [NOTE 5 – LEASES](index=10&type=section&id=NOTE%205%20%E2%80%93%20LEASES) Lease Cost Components (Three Months Ended March 31, 2023 vs. 2022) | Lease Type | March 31, 2023 | March 31, 2022 | | :------------------ | :------------- | :------------- | | Operating lease cost | $24,696 | $28,023 | | Short-term lease cost | $8,063 | $8,092 | | Total lease cost | $32,759 | $36,115 | Future Minimum Lease Payments (as of March 31, 2023) | Year | Amount | | :--- | :------------- | | 2023 | $73,860 | | 2024 | $80,253 | | 2025 | $70,224 | | Total | $224,337 | | Less: discount | $11,823 | | Total lease liabilities | $212,514 | - The weighted average remaining lease term for operating leases is **2.5 years**, with a weighted average discount rate of **4.5%** as of March 31, 2023[35](index=35&type=chunk) [NOTE 6 – STOCKHOLDERS' EQUITY](index=11&type=section&id=NOTE%206%20%E2%80%93%20STOCKHOLDERS%27%20EQUITY) Common Stock Outstanding (Net of Treasury Shares) | Date | Shares | | :---------------- | :------------- | | March 31, 2023 | 17,117,113 | | December 31, 2022 | 17,074,173 | Common Stock Issuance from Option Exercise | Period | Shares Issued | Proceeds | | :-------------------------------- | :------------ | :------------- | | Three months ended March 31, 2023 | 9,668 | $40,606 | | Three months ended March 31, 2022 | 28,006 | $258,128 | - The Board authorized a new share repurchase program of up to **$15 million** during the quarter ended March 31, 2023, but no shares were repurchased under this program in the period[40](index=40&type=chunk) - In 2022, the company repurchased **1,214,398 shares** for **$20,021,830**[41](index=41&type=chunk) [NOTE 7 – STOCK BASED COMPENSATION](index=12&type=section&id=NOTE%207%20%E2%80%93%20STOCK%20BASED%20COMPENSATION) Stock-Based Compensation Expense (Three Months Ended March 31, 2023 vs. 2022) | Type | March 31, 2023 | March 31, 2022 | | :------------------ | :------------- | :------------- | | Stock Options | $1,466,694 | $905,744 | | Restricted Stock Units | $2,913,809 | $2,268,354 | | Total | $4,380,503 | $3,174,098 | - Remaining expense for unvested options is **$11,021,446** over **1.91 years**, and for restricted stock units is **$14,830,343** over **1.9 years**[42](index=42&type=chunk)[44](index=44&type=chunk) [NOTE 8 – EARNINGS (LOSS) PER SHARE](index=12&type=section&id=NOTE%208%20%E2%80%93%20EARNINGS%20%28LOSS%29%20PER%20SHARE) Net Loss Per Share (Three Months Ended March 31, 2023 vs. 2022) | Metric | March 31, 2023 | March 31, 2022 | | :------------------------------------------------ | :------------- | :------------- | | Net Loss | $(6,397,714) | $(3,761,098) | | Weighted Average Shares Outstanding (Basic & Diluted) | 17,094,676 | 17,878,068 | | Net Loss Per Share (Basic & Diluted) | $(0.37) | $(0.21) | - Diluted EPS calculation was anti-dilutive for both periods, excluding **93,804 potentially issuable shares** in 2023 and **298,697** in 2022[51](index=51&type=chunk) [NOTE 9 – CONTINGENCIES](index=13&type=section&id=NOTE%209%20%E2%80%93%20CONTINGENCIES) - The Company is not currently involved in any material legal proceedings[52](index=52&type=chunk) [NOTE 10 – INCOME TAXES](index=13&type=section&id=NOTE%2010%20%E2%80%93%20INCOME%20TAXES) - No federal income tax expense or benefit was recorded due to net operating loss carry-forwards of approximately **$21.5 million** as of December 31, 2022, and a valuation allowance against net deferred tax assets[53](index=53&type=chunk) [NOTE 11 – SUBSEQUENT EVENTS](index=13&type=section&id=NOTE%2011%20%E2%80%93%20SUBSEQUENT%20EVENTS) - On April 18, 2023, Mr. Febbo forfeited his 2021 equity grant, and subsequently received a new grant of options and restricted stock units valued at **$2.5 million**, to be accounted for as a modification under ASC 718[54](index=54&type=chunk) - From April 1 to May 7, 2023, **10,595 shares** of common stock were issued due to the vesting of restricted stock units[55](index=55&type=chunk) [Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=15&type=section&id=Item%202%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance and condition for the three months ended March 31, 2023, highlighting a decrease in net revenue and an increase in net loss, primarily due to macroeconomic pressures and increased operating expenses, also discussing business strategy, key performance indicators, liquidity, and critical accounting estimates [Forward-Looking Statements](index=15&type=section&id=Forward-Looking%20Statements) - The report contains forward-looking statements subject to risks and uncertainties, including seasonal trends, technology scaling, customer support, customer concentration, regulatory compliance, competition, and macroeconomic factors[57](index=57&type=chunk)[58](index=58&type=chunk) [Overview](index=15&type=section&id=Overview) - OptimizeRx is a digital health technology company connecting life sciences, healthcare providers, and patients to improve medication adherence, expanding beyond financial messages to include brand messaging, therapeutic support, and patient engagement services[61](index=61&type=chunk)[62](index=62&type=chunk) - The company employs a 'land and expand' strategy, focusing on growing existing client bases, shifting towards enterprise-level engagements, and broadening its platform with solutions like TelaRep™ and AI-powered real-world data[63](index=63&type=chunk) - Revenue is concentrated among approximately **100 pharmaceutical companies**, with a risk of negative impact from the loss of larger customers[64](index=64&type=chunk) [Seasonality](index=16&type=section&id=Seasonality) - The pharmaceutical brand marketing industry experiences seasonal trends, with the fourth quarter typically having the largest marketing allocation and the first quarter reflecting lower activity and revenue[65](index=65&type=chunk) [Impact of Macroeconomic Events](index=16&type=section&id=Impact%20of%20Macroeconomic%20Events) - Macroeconomic events such as rising inflation and interest rates, high employee turnover in the pharmaceutical industry, and fewer U.S. drug approvals have led to economic uncertainty, potentially impacting business growth and customer spending[66](index=66&type=chunk) [Key Performance Indicators](index=16&type=section&id=Key%20Performance%20Indicators) - The definition of 'top 20 pharmaceutical manufacturers' has been updated based on Fierce Pharma's 2022 revenue list, with prior periods restated for comparison[67](index=67&type=chunk) Key Performance Indicators (Rolling Twelve Months Ended March 31) | Metric | 2023 | 2022 | Change | | :---------------------------------------------------- | :----------- | :----------- | :----- | | Average revenue per top 20 pharmaceutical manufacturer | $1,993,755 | $2,614,054 | -23.8% | | Percent of top 20 pharmaceutical manufacturers that are customers | 90% | 90% | 0% | | Percent of total revenue attributable to top 20 pharmaceutical manufacturers | 58% | 74% | -16% | | Net revenue retention | 86% | 124% | -38% | | Revenue per average full-time employee | $605,113 | $733,275 | -17.5% | - Decreases in average revenue per top 20 pharmaceutical manufacturer and net revenue retention are attributed to macroeconomic factors causing customers to slow spending and prolong sales cycles[69](index=69&type=chunk)[73](index=73&type=chunk) - Revenue from non-top 20 pharmaceutical manufacturers increased faster than overall revenue, leading to a decrease in the percentage of total revenue from top 20 manufacturers[72](index=72&type=chunk) - Revenue per average full-time employee declined due to slower revenue growth and a higher average number of FTEs[74](index=74&type=chunk) [Results of Operations for the Three Months Ended March 31, 2023 and 2022](index=18&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202023%20and%202022) Consolidated Statements of Operations Summary (Three Months Ended March 31, 2023 vs. 2022) | Metric | 2023 (in thousands) | % of Net Revenue | 2022 (in thousands) | % of Net Revenue | | :-------------------------------- | :------------------ | :--------------- | :------------------ | :--------------- | | Net revenue | $13,003 | 100.0% | $13,732 | 100.0% | | Cost of revenues | $5,570 | 42.8% | $5,630 | 41.0% | | Gross profit | $7,433 | 57.2% | $8,102 | 59.0% | | Operating expenses | $14,496 | 111.5% | $11,863 | 86.4% | | Loss from operations | $(7,063) | (54.3)% | $(3,761) | (27.4)% | | Other income | $665 | 5.1% | $0 | 0.0% | | Loss before provision for income taxes | $(6,398) | (49.2)% | $(3,761) | (27.4)% | | Net loss | $(6,398) | (49.2)% | $(3,761) | (27.4)% | - Net revenue decreased by **5%** to **$13.0 million**, primarily due to macroeconomic pressures affecting customers[77](index=77&type=chunk) - Cost of revenues remained consistent at **$5.6 million**, but increased as a percentage of revenue to **42.8%** (from 41.0%) due to solution and channel mix[78](index=78&type=chunk) - Gross margin decreased due to a lower percentage of activity flowing through lower-cost channels[79](index=79&type=chunk) - Operating expenses increased by **22%** to **$14.5 million**, driven mainly by a rise in non-cash stock-based compensation and other general and administrative expenses due to increased headcount and growth investments[80](index=80&type=chunk)[81](index=81&type=chunk) - Net loss increased to **$6.4 million** from **$3.8 million** in the prior year, reflecting the discussed revenue decrease and expense increases[82](index=82&type=chunk) [Liquidity and Capital Resources](index=19&type=section&id=Liquidity%20and%20Capital%20Resources) Summary Cash Flow Data (Three Months Ended March 31, 2023 vs. 2022) | Activity | March 31, 2023 | March 31, 2022 | | :------------------------------------------ | :------------- | :------------- | | Net cash (used in) / provided by operating activities | $(86,330) | $4,080,244 | | Net cash used in investing activities | $(1,548,894) | $(65,751) | | Net cash (used in) / provided by financing activities | $(129,794) | $258,128 | | Net (decrease) / increase in cash and cash equivalents | $(1,765,018) | $4,272,621 | - Working capital decreased to **$88.3 million** (current ratio **13:1**) at March 31, 2023, from **$90.2 million** (current ratio **11.7:1**) at December 31, 2022, primarily due to timing of prepaid services and investment in reporting infrastructure[83](index=83&type=chunk) - Operating activities used **$0.1 million** cash in Q1 2023, a significant shift from **$4.1 million** provided in Q1 2022, despite noncash expenses and working capital from receivables offsetting the net loss[85](index=85&type=chunk) - Investing activities used **$1.5 million**, mainly due to **$56.9 million** in treasury bill purchases (offset by **$55.6 million** redemptions) to earn higher interest[86](index=86&type=chunk) - Financing activities used **$0.1 million**, primarily for employee withholding taxes on restricted stock units, partially offset by stock option exercise proceeds[87](index=87&type=chunk) - Management believes current funds and operations will be sufficient for the next 12 months, but may seek additional financing for acquisitions or capital expenditures[88](index=88&type=chunk) [Critical Accounting Estimates](index=20&type=section&id=Critical%20Accounting%20Estimates) - The company's critical accounting estimates are consistent with those described in its 2022 Annual Report on Form 10-K[89](index=89&type=chunk) [Recently Issued Accounting Pronouncements](index=20&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) - The adoption of ASU Topic 2021-08 (Business Combinations) on January 1, 2023, had no material effect on the company's financial statements[90](index=90&type=chunk) [Off Balance Sheet Arrangements](index=21&type=section&id=Off%20Balance%20Sheet%20Arrangements) - As of March 31, 2023, the Company has commitments for future minimum payments of **$14.9 million** for messaging capabilities through 2025, which will be reflected in cost of revenues[91](index=91&type=chunk) [Item 3: Quantitative and Qualitative Disclosures About Market Risk](index=21&type=section&id=Item%203%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there are no material quantitative or qualitative disclosures about market risk applicable to the company - The company has no applicable quantitative and qualitative disclosures about market risk[92](index=92&type=chunk) [Item 4: Controls and Procedures](index=21&type=section&id=Item%204%3A%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were not effective as of March 31, 2023, due to a previously disclosed material weakness in internal controls over financial reporting, with remediation efforts underway focusing on obtaining SOC-1, Type 2 reports from third-party service organizations or conducting direct evaluations - Disclosure controls and procedures were deemed **not effective** as of March 31, 2023, due to a material weakness in internal controls over financial reporting, as disclosed in the 2022 Annual Report on Form 10-K[94](index=94&type=chunk) - Management believes the consolidated financial statements fairly present the financial condition, results of operations, and cash flows due to additional analysis and procedures performed to address the material weakness[95](index=95&type=chunk) - Remediation plans include requiring SOC-1, Type 2 reports from third-party service organizations or directly evaluating their control environments through inquiry and substantive testing[96](index=96&type=chunk)[99](index=99&type=chunk) - No other material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[97](index=97&type=chunk) PART II — OTHER INFORMATION [Item 1: Legal Proceedings](index=23&type=section&id=Item%201%3A%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The Company is not a party to any material pending legal proceeding[102](index=102&type=chunk) [Item 1A: Risk Factors](index=23&type=section&id=Item%201A%3A%20Risk%20Factors) There have been no material changes to the risk factors previously reported in the company's Annual Report on Form 10-K for the year ended December 31, 2022 - No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2022[103](index=103&type=chunk) [Item 2: Unregistered Sales of Equity Securities and Use of Proceeds](index=23&type=section&id=Item%202%3A%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board authorized a new share repurchase program of up to $15 million on March 14, 2023, expiring by March 12, 2024, with no shares repurchased under this program during the quarter ended March 31, 2023 - The Board authorized a new share repurchase program of up to **$15 million** on March 14, 2023, with an expiration date of March 12, 2024[104](index=104&type=chunk) - No shares were repurchased under this program during the quarter ended March 31, 2023[105](index=105&type=chunk) [Item 3: Defaults Upon Senior Securities](index=23&type=section&id=Item%203%3A%20Defaults%20Upon%20Senior%20Securities) There were no defaults upon senior securities during the reporting period - No defaults upon senior securities occurred[106](index=106&type=chunk) [Item 4: Mine Safety Disclosure](index=23&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosure) This item is not applicable to the company - Mine Safety Disclosure is not applicable to the company[107](index=107&type=chunk) [Item 5: Other Information](index=23&type=section&id=Item%205%3A%20Other%20Information) No other information is reported in this section - No other information is reported[108](index=108&type=chunk) [Item 6: Exhibits](index=23&type=section&id=Item%206%3A%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including corporate bylaws, executive severance plans, employment agreements, and certifications - Exhibits include Third Amended and Restated Bylaws, Executive Severance Plan, Fourth Addendum to Employment Agreement with William J. Febbo, and various certifications (CEO, CFO) as per Sarbanes-Oxley Act[109](index=109&type=chunk)

Financial Data and Key Metrics Changes - Revenue for Q1 2023 was $13 million, slightly down from $13.7 million in Q1 2022, attributed to macro headwinds [48] - Gross margin decreased from 59% in Q1 2022 to 57.2% in Q1 2023, slightly below the lower end of the annual gross margin range [22] - Net loss for Q1 2023 was $6.4 million or $0.37 per share, compared to a net loss of $3.8 million in Q1 2022 [23] - Cash, cash equivalents, and short-term investments totaled $73.7 million as of March 31, 2023, down from $74.1 million at the end of 2022 [24] - Net revenue retention rate declined to 86% due to macroeconomic factors [53] Business Line Data and Key Metrics Changes - Average revenue per top 20 pharmaceutical manufacturer stood at $2 million as of Q1 2023, with the company working with 18 of the top 20 [25] - The RWD-AI offering is expected to increase at least 100% year-over-year and approach 20% of total revenue for 2023 [41] - Operating expenses increased from $11.9 million in Q1 2022 to $14.5 million in Q1 2023, a 22% increase [49] Market Data and Key Metrics Changes - The company noted a shift in pharma spending towards omnichannel solutions, with over $10 billion in digital commercial spend being reallocated [17] - The engagement focus is on determining drug eligibility and affordability, which is expected to enhance access to coverage information for pharma-sponsored patient support programs [10] Company Strategy and Development Direction - The company is enhancing its platform for smart targeting using AI, which is expected to improve customer engagement and ROI [9] - The focus is on expanding service offerings outside of EHR to capture a greater portion of the available industry white space [43] - The company aims to position itself as a strategic partner for pharma, moving from tactical to more integrated solutions [44] Management's Comments on Operating Environment and Future Outlook - Management indicated that the macro environment is returning to normalcy despite recent banking crises, with pharma gaining comfort in the resolutions implemented [14] - The company expects to maintain its full-year revenue outlook, projecting at least a 10% year-over-year increase [40] - Management expressed confidence in the growth potential of the RWD-AI solutions, highlighting significant deal discussions and expansions [15][41] Other Important Information - The company is continuously evaluating M&A opportunities that align with its strategic priorities [51] - The management emphasized the importance of transparency in reporting and the need for pharma to establish standards as they scale investments in digital health [19] Q&A Session Summary Question: Insights on Data Financial Assistance programs in pharma - Management noted that financial messaging has been declining but is becoming more targeted, which benefits their RWD-AI solutions [31][32] Question: Recovery timeline for tactical sales impacted by macro headwinds - Management indicated that tactical sales can be adjusted quickly and are expected to improve as the macro environment stabilizes [34] Question: Magnitude of change in tactical sales pipeline compared to Q4 - Management refrained from providing specific pipeline numbers but noted increased business activity year-over-year [37] Question: Visibility into revenue guidance for the second half of the year - Management confirmed a healthy backlog and expressed confidence in meeting current guidance [67] Question: Impact of expanding outside EHR on strategy - Management highlighted the importance of meeting physicians where they are and the ability to report back physician-level data as key differentiators [95][116] Question: Thoughts on generative AI's impact on the business - Management acknowledged the trend but emphasized that they have been implementing machine learning through RWD-AI for the past two and a half years [117] Question: Expected impact from the hub service agreement - Management indicated that the agreement is expected to enhance their capabilities in patient assistance programs [108]

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, 2022 ☐ 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 ...

Financial Data and Key Metrics Changes - The reported revenue for Q4 2022 was $19.7 million, a decrease of 3% from $20.3 million in the same period in 2021 [33] - The company expects a revenue increase of at least 10% year-over-year for the full year of 2023, with Q1 revenue guidance between $11.5 million and $13 million [13][49] - Gross margin for Q4 increased from 61% to 63%, with full-year 2023 gross margin guidance between 58% and 62% [8][33] Business Line Data and Key Metrics Changes - The average revenue for the top 20 pharmaceutical manufacturers declined nearly 14% year-over-year to $2.1 million due to extended deal closing timelines and higher turnover rates [13] - The net revenue retention rate declined to 90% due to macroeconomic factors impacting client programs [14] Market Data and Key Metrics Changes - The company reported a net loss of $325,000 in Q4 2022 compared to a net income of approximately $623,000 in Q4 2021 [10] - Cash flow from operations was $10.7 million for 2022, with $2.8 million generated in Q4 [11] Company Strategy and Development Direction - The company is following a land-and-expand strategy, focusing on delivering superior ROI, which remains above a 10:1 ratio [7] - The company aims to capture a greater portion of the available industry white space over the next three to five years, with total industry digital spend exceeding $10 billion [24][25] - The strategic positioning is expected to yield significant dividends over the next three to five years, with revenue projected to increase to multiples of current levels [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the backlog being stronger than in previous years, indicating a potential for at least 10% growth [19][20] - The competitive landscape is crowded, but the company believes it has a unique data set and strong client response due to its integrated solutions [22][26] - Management acknowledged macroeconomic headwinds but noted positive trends since mid-2022, taking a conservative approach to guidance [49][52] Other Important Information - The company repurchased 1.2 million shares at an average price of $16.49, reducing total outstanding shares by nearly 7% [12] - Operating expenses increased to approximately $13.3 million in Q4 2022, primarily due to stock-based compensation and the EvinceMed acquisition [9][34] Q&A Session Summary Question: What is the revenue outlook for the year? - Management expects a drop in revenue of about 11% year-over-year in Q1 but anticipates 10% growth for the full year, with a stronger backlog [1][19] Question: How much of the growth is contracted versus needing to be won? - Typically, the company has 40% to 60% visibility for the rest of the year, which supports the 10% growth target [3] Question: What are the impacts of competition on specific products? - The competitive environment has increased, elongating the sales cycle, but the company believes its unique offerings will prevail [5][21] Question: What is the management's view on pharma's engagement with digital solutions? - There is a positive trend in pharma's engagement with digital solutions, with a focus on ROI and the need for effective communication with healthcare providers [39][42] Question: What are the expectations for the RWE pipeline? - The RWE pipeline contains several dozen deals, primarily from existing clients looking to upgrade, indicating a robust growth opportunity [69][70]

Technology Solutions For Life Sciences at the Point-of-Care Corporate Presentation Physician Awareness Digital Therapy Initiation Patient Adherence Our Mission At OptimizeRx ― we are building a more informed and empowered healthcare community by developing new technology solutions that help people start and stay on life-impacting therapies. Growth Leaders | Growth Drivers EXPERIENCE 20+ Leading Health Services and Financial Businesses `) Med Panel Will Febbo Chief Executive Officer Ed Stelmakh Chief Financi ...