Item 1. Business
Item 1. Business
General
OptimizeRx is a digital health technology company
enabling care-focused engagement between life sciences organizations, healthcare providers, and patients at critical junctures throughout
the patient care journey. Connecting over 60% of U.S. healthcare providers and millions of their patients through an intelligent technology
platform embedded within a proprietary point-of-care network, OptimizeRx helps patients start and stay on their medications.
We are a Nevada corporation organized in September
2008. We conduct our operations through our wholly-owned subsidiaries, OptimizeRx Corporation, a Michigan corporation, CareSpeak Communications,
Inc., a New Jersey corporation, CareSpeak Communications, D.O.O., a controlled foreign corporation incorporated in Croatia, and Cyberdiet,
a controlled foreign corporation incorporated in Israel.
We employ a “land and expand” strategy
focused on growing our existing client base and generating greater and more consistent revenues in part through the continued shift in
our business model toward enterprise level engagements, while also broadening our platform with innovative proprietary solutions such
as our TelaRep™ virtual communication solution and our AI-powered real-world evidence solution which uses sophisticated proprietary
algorithms.
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Industry Background
Life sciences organizations face a challenging
commercial landscape. In recent years, they have met increased competition, shrinking market sizes, and inconsistent access to patients
and healthcare professionals - their most important customers. The majority of new drug approvals, 81%, are specialty medications, leading
to more complex diagnosis criteria, increased utilization management by healthcare payors, and lengthy wait times for patients to begin
treatment once care decisions are made.
As a result, life sciences organizations have
increasingly turned to technology solutions to support their commercial strategies. Spending on digital solutions to facilitate greater
access to their end markets accounts for one-third of their collective $30bn commercial spend in the United States (U.S.).
We believe significant opportunity exists to address
the unmet needs of life sciences organizations as they relate to digital solutions, including omni-channel access to health care professionals,
for complex commercial challenges.
2022 Company Highlights
1. Net revenue increased to a record $62. 5 million in 2022, a 2%
increase over 2021.
2. Achieved positive cash flow from operations of $10.7 million for
the year ended December 31, 2022.
3. Gross margins increased from 58% to 62%.
4. Repurchased 1,214,398 shares during 2022 at an average price of $16.49 per share.
5. Increased use of Real-World Data Artificial Intelligence (“RWD.AI”) solutions. Ended the year
with 6 RWD.AI deals.
6. Acquired the EvinceMed platform and related assets.
7. Published Company’s first Environmental, Social and Governance (“ESG”) Report.
8. Announced partnership with Equals 5, becoming the only source capable of delivering true omni-channel engagement
with HCPs, spanning web, social, and point-of-care messaging delivery modalities.
Principal Solutions
Historically, we primarily facilitated financial
messages to health care providers via their EHR and ePrescribe systems using the OptimizeRx proprietary network to solve the ever-increasing
communication barriers between pharmaceutical representatives and healthcare providers. Over time, as the demand for communication of
an increasing variety of different health information between life science companies, providers, and patients has risen, our platform
has expanded to encompass additional solutions that enable healthcare providers to access information for patients at the point of care.
These solutions include evidence-based physician engagement, point of care banner messaging, social network banner messaging, institutional
account-based banner messaging, innovative patient engagement services, and various accelerators to the therapy initiation workflow.
Our principal solutions can be summarized as follows:
Evidence-Based Physician Engagement
– Our evidence-based physician engagement solution uses predictive analytics via machine learning methods applied to real-world
data (RWD) to assist healthcare providers (HCPs) in identifying patients who may be qualified for specific therapies, raise awareness
of patient access pathways, and identify early indicators of non-adherence among patient populations. This RWD-enabled solution translates
into better support for providers as they look to make the best treatment decisions for their patients. This solution has a “patient-first”
focus, helping manufacturers identify which HCPs to engage by first identifying if they currently care for qualified patients, based on
where they are in their care journey and disease state. These Artificial Intelligence (“AI”) models provide our clients with
the most relevant targets and fuel the deployment of programs across our other solutions.
Point of Care Banner Messaging
– Our point of care banner messaging solution is utilized to deliver a variety of awareness (brand, therapeutic support,
affordability, HUB, and patient support program) and messaging within the clinical workflow which can be tailored to meet the needs
of each brand.
Social Network Banner Messaging
– This past year we expanded to provide exclusive access to deliver banner messaging to HCPs within their social network apps.
With extensive reach and granular reporting, this solution both expands the ability to reach more prescribers while adding to the mind
share we can capture throughout a care delivery day. Given these messages are targeted to specific HCPs, many of the same awareness messages
offered on the point of care banner solution are offered here as well.
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Institutional Account-based Banner Messaging
– Our Institutional Account-based Banner Messaging solution provides our clients access to delivering banner messaging online and
on the intranets of targeted health system accounts. This allows our clients to capture additional mind share while also reaching other
prescribers and support staff at key health systems or integrated delivery networks (IDNs).
Financial Messaging – Our
Financial Messaging solution has been enhanced by Patient Support Messaging at the point-of-care. This solution provides prescribers visibility
to branded copay offers and other patient support programs directly within their EHR and/or e-Prescribe system(s). It allows them to print,
digitally send directly to patients via SMS, and/or digitally send copay offer details electronically to the dispensing pharmacy. Our
solution addresses the fact that many healthcare systems and prescribers are looking for an easier, more effective way to increase affordable
access and adherence to their prescribed branded medications.
Patient Engagement – Our technology
solution provides digital messaging services through our cloud-based Mobile Health Messenger (“MHM”) Platform. We provide
interactive health messaging for improved medication adherence and care coordination. Our HIPAA-compliant, automated, mobile messaging
platform allows pharmaceutical manufactures and related entities to directly engage with patients to improve regimen compliance.
Therapy Initiation Workflow –
The therapy initiation workflow is a group of digital solutions focused on accelerating patient access to treatments where time-consuming
medical documentation is required of HCPs prior to pharmacies dispensing prescribed drugs. These solutions support the fast-growing area
of specialty medications. This technology enhancement allows life sciences companies to simplify therapy initiation by presenting HCPs
with a fully electronic option synchronizing enrollment, benefits verification, prior authorization, and patient support onboarding.
Sales and Marketing
We employ a sales team of over 19
pe ople, marketing our solutions to new and existing clients. Our sales team drives awareness of the increased value of our technology
stack as an enterprise platform, enhanced this year by the addition of the social channel, and momentum of our institutional/account-based
banner message solutions offering. Accordingly, our sales efforts are not directed merely at selling individual solutions, but more broadly
towards selling enterprise platform engagements with access to our full set of solutions across our network.
Our sales
and marketing organizations work closely together to cultivate customer relationships. We use a number of methods to market and promote
our solutions, including digital advertising, industry events, trade shows, conferences, media coverage, social media and email. We
released a physician survey of 100 physicians across five specialties, detailing the specialty landscape as it pertains to prescribing
pain points specialists experience. Additionally, we hosted our third annual Innovate4Outcomes event, partnering with Melinta Therapeutics,
bringing individuals together across healthcare verticals, including HCPs, commercial manufacturer representatives, and health tech. The
event focused on applying design thinking principles to contributing factors to Anti-Microbial Resistance, and was independently covered
in end-of-year trade publications for the first time.
Technology
To support our growth and provide maximum security,
scalability, and flexibility, all of our systems, including from acquisitions, are now hosted and integrated in the cloud. Our technology
development and systems management core team is in the U.S. and in Croatia, with contractors in India and Ukraine to provide bench depth,
rich skills experience, and business economies. The teams are organized into Centers of Excellence focused on Product Domains, Quality
Assurance, Information Security, Data Warehousing and Business Intelligence, Platform Services, and Internal Systems Support.
Systems enhancements in 2022 included upgrades
and documentation of processes and procedures and security implementation for ongoing Sarbanes Oxley, HIPAA, and customer assessments,
and in achieving Enterprise HITRUST Certification, as well as for other needs.
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Competition
Our platforms face competition from numerous other
companies, both in attracting users and in generating revenue from advertisers and sponsors. We compete for users with online services
and websites that provide savings on medications and healthcare products. Our messaging offerings compete for pharmaceutical budgets with
a variety of other forms of advertising and promotion.
Our platforms compete broadly in the highly competitive
pharmaceutical and life sciences digital marketing industry that is dominated by large well-known companies with established names, solid
market niches, wide arrays of product offerings and marketing networks. Many of our competitors have greater financial, technical, product
development, marketing and other resources than we do. These companies may be better known than we are and have more customers or users
than we do. As a result, many of these companies may respond more quickly to new or emerging technologies and standards and changes in
customer requirements. These companies may be able to invest more resources in research and development, strategic acquisitions, and sales
and marketing. The primary direct competitor in our financial messaging solution is ConnectiveRx. We generally compete on the basis of
several factors, including size of our network, quality of our service, our ability to target specific customer needs, and to a lesser
extent, price. For more information on risks relating to our competition, see Item 1A. Risk Factors.
Intellectual Property
We own patents important to our business, and
we expect to continue to file patent applications to protect our research and development investments in new products. As of December 31,
2022 we held 3 patents and several pending patent applications, including foreign counterpart patents and foreign applications. For the
United States, patents may last 20 years from the date of the patent’s filing, depending upon term adjustments made by the patent
office.
In addition, we hold trademarks in the United
States and other countries. As of December 31, 2022, OPTIMIZERx, OPTIMIZEMD, CareSpeak, DIETWATCH, Innovate4Outcomes, SPRx, SPx and TELAREP
are our registered trademarks. We also have several pending trademark applications.
We also have licenses to intellectual property for the use and sale
of certain of our solutions. In addition, we obtain other intellectual property rights and/or licenses used in connection with our business
when practical and appropriate. Historically, we have created intellectual property or obtained intellectual property through commercial
relationships and in connection with acquisitions.
Government Regulation
The healthcare industry and, in particular, our
customers and partners are subject to U.S. federal, state and local laws and regulations, including those governing fraud, abuse, privacy
and security. Many of these laws and regulations are complicated and how they might apply to us, our customers, our partners, or the specific
services and relationships we have with our customers and partners are not always well-defined. Our failure, or perceived failure, to
accurately apply, or comply with, these laws and regulations could subject us to significant fines and liability, result in reputational
harm, and adversely affect our business. Any new or amended laws or regulations that impose significant operational restrictions and compliance
requirements may negatively impact our business. See Item 1A. Risk Factors for more information on the impact of Government Regulations
on OptimizeRx.
Employees
As of December 31, 2022, we had 94 full-time
employees in the U.S, as well as 15 full-time employees in Croatia, and 1 part-time employee. None of our employees are represented by
a labor union or collective bargaining agreement with respect to their employment with us. The majority of our employees work remotely
and are geographically distributed across the United States and Croatia. We supplement our workforce with contractors in the United States
and internationally on an as-needed basis. We consider our relationship with our employees to be good and have not experienced any work
stoppages.We are dedicated to maintaining an environment where everyone feels valued, and we celebrate both the differences and similarities
among our people. We also believe that diversity in all areas, including cultural background, experience and thought, is essential in
making our Company stronger. Our Diversity, Equity & Inclusion Committee (DE&I) is actively engaged in improving our culture,
hiring practices and education. In 2022, we endeavored to uphold the Parity Pledge – a commitment made in 2021 to interview and
consider at least one qualified woman and underrepresented minority for every open role, VP or higher. In addition, the DE&I Committee
sponsored quarterly events in 2022, including “Celebrate Women’s History”, “Celebrate Diversity Month”, and “Hot
One’s Trivia Show.”
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We prioritize recruiting, retaining, and incentivizing
a highly qualified, diverse workforce. We pay our employees competitively and offer a broad range
of company-paid benefits, which we believe are competitive with others in our industry. Moreover, we believe our long-term incentives
are structured in a manner to provide time-based vesting schedules that are retentive and we incentivize selected employees through
the granting of stock-based awards for and cash-based performance bonus awards.
We have increased our focus on training and development
for our current employees. We offer learning and development opportunities and other resources to support our employees in achieving and
enhancing their development objectives. We equip our managers with the skills and tools to provide ongoing coaching and feedback so employees
can maximize their performance and potential, delivering success for the company and the employee.
Available Information
Our Internet address is www.optimizerx.com. The
information on the website is not and should not be considered part of this Form 10-K and is not incorporated by reference in this Form
10-K. The website is, and is only intended to be, for reference purposes only. We make available free of charge on or through our website
our Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and amendments to those reports filed
or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as
soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission
(the “SEC”). In addition, we will provide, at no cost, paper or electronic copies of our reports and other filings made with
the SEC. Requests should be directed to: Attention: Secretary, OptimizeRx Corporation, 400 Water Street, Suite 200, Rochester, MI 48307.