What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-15 compared with 2023-03-10 · 449 added, 333 removed, 43 unchanged (95% of the section changed)

Management’s Discussion and Analysis

of Financial Condition and Results of Operations

We are 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.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

are 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 two million U.S.

healthcare providers and millions

of their patients through an intelligent omnichannel technology platform embedded within a proprietary point-of-care network, as well

as mass digital communications channels, OptimizeRx helps life sciences organizations engage and support their customers.

Historically, our revenue was generated primarily

through the facilitation of 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 that have

presented in the rapidly changing healthcare industry.

Over time, as the demand for communication of an increasing variety of different

health information between life science companies, providers, and patients continued to rise, 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 brand messaging,

therapeutic support messaging, brand support, and innovative patient engagement services, all of which now make up a significant portion

of our total revenue.

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 to derive additional revenue from our existing network.

In addition, we have continued to expand our team in preparation for

future growth aspirations, which may be supplemented with future acquisitions and other strategic collaborations and investments.

strategy for driving revenue growth is also expected to work in tandem with our efforts to increase margin and profitability using the

aforementioned recurring revenue models that have inherently higher margins.

Because the pharmaceutical industry is dominated by large companies

with multiple brands, our revenue is concentrated in a relatively small number of companies.

We have approximately 100 pharmaceutical

companies as customers, and our revenues are concentrated in these customers.

Loss of one of more of our larger customers could have a

negative impact on our operating results.

Our top five customers represented 39% of our revenue for the year ended December 31, 2022.

In each of 2022 and 2021, we had one customer that each represented more than 10% of our revenues.

In general, the pharmaceutical brand marketing

industry experiences seasonal trends that affect the vast majority of participants in the pharmaceutical digital marketing industry.

pharmaceutical companies allocate the largest portion of their brand marketing to the fourth quarter of the calendar year.

the first quarter tends to reflect lower activity levels and lower revenue, with gradual increases in the following quarters.

expect these seasonality trends to continue and our ability to effectively manage our resources in anticipation of these trends may affect

our operating results.

Impact of Macroeconomic Events

Unfavorable conditions in the economy may

negatively affect the growth of our business and our results of operations.

For example, macroeconomic events including the COVID-19

pandemic, rising inflation and the U.S.

through the facilitation of various types of messages to health care providers via their EHR systems and ERx platforms using the OptimizeRx

proprietary network to solve the ever-increasing communication barriers between pharmaceutical representatives and healthcare providers

that have presented in the rapidly changing healthcare industry.

Over time, as the demand for communication of an increasing variety of

different health information between life science companies, providers, and patients continued to rise, our platform has evolved to provide

Audience Development and Audience Creation and Media Execution across numerous different messaging types that leverage our technology

platform and media distribution channels.

In addition, the October 2023 acquisition of Medicx Health provided the Company with a significant

footprint for direct-to-consumer healthcare marketing.

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 virtual communication solutions such as our AI-powered

DAAP, expanding on previous iterations of the RWD.AI technology, which uses sophisticated machine-learning algorithms to find the best

audiences in the correct channels at the right time.

Our strategy for driving revenue growth is also expected to work in tandem with our

efforts to increase margin and profitability as revenue drivers such as DAAP have inherently higher margins than most other messaging

solutions we offer.

Concentration

the pharmaceutical industry is dominated by large companies with multiple brands, our revenue is concentrated in a relatively small number

of companies.

We have approximately 100 pharmaceutical companies as customers, and our revenues are concentrated in these customers.

Loss of one of more of our larger customers could have a negative impact on our operating results.

Our top five customers represented

approximately 44% and 39% of our revenue for the years ended December 31, 2023 and December 31, 2022, respectively.

of 2023 and 2022, we had one customer that each represented more than 10% of our revenues.

general, the pharmaceutical brand marketing industry experiences seasonal trends that affect the vast majority of participants in the

pharmaceutical digital marketing industry.

Many pharmaceutical companies allocate the largest portion of their brand marketing to the

fourth quarter of the calendar year.

As a result, the first quarter tends to reflect lower activity levels and lower revenue, with gradual

increases in the following quarters.

We generally expect these seasonality trends to continue and our ability to effectively manage our

resources in anticipation of these trends may affect our operating results.

of Macroeconomic Events

conditions in the economy may negatively affect the growth of our business and our results of operations.

For example, macroeconomic

events including rising inflation and the U.S.

Federal Reserve raising interest rates have led to economic uncertainty.

In addition, high

levels of employee turnover across the pharmaceutical industry as well as fewer number of U.S.

drug approvals could create

additional certainty within our target customer markets.

Historically, during periods of economic uncertainty and downturns,

businesses may slow spending, which may impact our business and our customers’ businesses.

Adverse changes in demand could

impact our business, collection of accounts receivable and our expected cash flow generation, which may adversely impact our

financial condition and results of operations.

Key Performance Indicators

We monitor the following key performance indicators

to help us evaluate our business, measure our performance, identify trends affecting our business and make strategic decisions.

high levels of employee turnover across the pharmaceutical industry as well as a fewer number of U.S.

drug approvals could create additional

uncertainty within our target customer markets.

Historically, during periods of economic uncertainty and downturns, businesses may slow

spending, which may impact our business and our customers’ businesses.

Adverse changes in demand could impact our business, collection

of accounts receivable and our expected cash flow generation, which may adversely impact our financial condition and results of operations.

Performance Indicators

monitor the following key performance indicators to help us evaluate our business, measure our performance, identify trends affecting

our business and make strategic decisions.

We have updated the definition of “top 20 pharmaceutical manufacturers” in our

key performance indicators to be based upon Fierce Pharma’s most updated list of “The top 20 pharma companies by 2022

We previously used “The top 20 pharma companies by 2020 revenue”.

As a result of this change, prior periods

have been restated for comparative purposes.

Average revenue per top 20 pharmaceutical manufacturer.

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and believe it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

decrease in the average in 2022 as compared to 2021 is primarily the result of the convergence of numerous macroeconomic factors that

resulted in our customers slowing their rate of spend, particularly for large and/or new implementations, which we believe prolonged sales

cycles with the top 20 pharmaceutical manufacturers that were existing customers.

Twelve Months Ended

Average revenue per top 20 pharmaceutical manufacturer

Percent of top 20 pharmaceutical manufacturers

that are customers.

Percent of top 20 pharmaceutical manufacturers that are customers is calculated by taking the number of revenue

generating customers that are pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2020

revenue” over the last 12 months, which is then divided by 20—which is the number of pharmaceutical manufacturers included

in the aforementioned list.

The Company uses this metric to monitor its progress in penetrating key customers within its largest customer

vertical and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

The decrease in 2022 was due to the Company not supporting programs for a smaller revenue customer from 2021 in 2022.

Twelve Months Ended

Percent of top 20 pharmaceutical manufacturers that are customers

Percent of total revenue attributable to top

20 pharmaceutical manufacturers.

Percent of total revenue attributable to top 20 pharmaceutical manufacturers is calculated by taking

the total revenue the company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma

companies by 2020 revenue” over the last twelve months, divided by our consolidated revenue over the same period.

The Company uses

this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and

believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

from customers that aren’t top 20 pharmaceutical manufacturers increased faster than our overall revenue, decreasing the percentage of

our overall revenues from top 20 pharmaceutical manufacturers.

Twelve Months Ended

Percent of total revenue attributable to top 20 pharmaceutical manufacturers

Net revenue retention.

Net revenue retention

is a comparison of revenue generated from all customers in the previous twelve-month period to total revenue generated from the same customers

in the following twelve-month period (i.e., excludes new customer relationships for the most recent twelve-month period).

uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with

a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers.

The retention rate in 2022

decreased due to the convergence of numerous macroeconomic factors that resulted in our customers slowing their rate of spend, particularly

for large and/or new implementations, which we believe prolonged sales cycles.

Twelve Months Ended

increase in the average in 2023 as compared to 2022 is primarily the result of stronger DAAP related revenue streams and the Company’s

October 2023 acquisition of Medicx Health, which added to 2023 revenues and was not included in the 2022 amounts.

Average revenue per top 20 pharmaceutical

of top 20 pharmaceutical manufacturers that are customers.

Percent of top 20 pharmaceutical manufacturers that are customers is calculated

by taking the number of revenue generating customers that are pharmaceutical manufacturers listed in Fierce Pharma’s “The

top 20 pharma companies by 2022 revenue” over the last 12 months, which is then divided by 20 - which is the number of pharmaceutical

manufacturers included in the aforementioned list.

The Company uses this metric to monitor its progress in penetrating key customers

within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating

this important customer segment.

Percent of top 20 pharmaceutical

manufacturers that are customers

of total revenue attributable to top 20 pharmaceutical manufacturers.

Percent of total revenue attributable to top 20 pharmaceutical

manufacturers is calculated by taking the total revenue the company recognized through pharmaceutical manufacturers listed in Fierce

Pharma’s “The top 20 pharma companies by 2022 revenue” over the last twelve months, divided by our consolidated revenue

over the same period.

The Company uses this metric to monitor its progress in “landing and expanding” with key customers

within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating

this important customer segment.

Our revenue from customers that aren’t top 20 pharmaceutical manufacturers stayed relatively consistent

year over year.

Percent of total revenue attributable

to top 20 pharmaceutical manufacturers

revenue retention.

Net revenue retention is a comparison of revenue generated from all customers in the previous twelve-month period

to total revenue generated from the same customers in the following twelve-month period (i.e., excludes new customer relationships for

the most recent twelve-month period).

The Company uses this metric to monitor its ability to improve its penetration with existing customers

and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with

existing customers.

The retention rate in 2023 increased due to stronger DAAP related revenue streams from existing clients and the Company’s

2023 acquisition of Medicx Health.

Net revenue retention

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to scale efficiently over time and believes the metric provides investors with a way to chart our productivity and scalability.

rate per employee declined year over year due to slower revenue growth and a higher average number of FTEs over the last 12 month period.

Twelve Months Ended

rate per employee stayed relatively consistent year over year.

Revenue per average full-time employee

Results of Operations for the Years Ended December

31, 2022 and 2021

The following table sets forth, for the periods

indicated, the dollar value and percentage of total return represented by certain items in our consolidated statements of operations:

of Operations for the Years Ended December 31, 2023 and 2022

following table sets forth, for the periods indicated, the dollar value and percentage of total return represented by certain items in

our consolidated statements of operations:

Years Ended December 31,

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Operating expenses

Income (loss) from operations

Income (loss) before provision for income taxes

Loss from operations

Loss before provision for income taxes

Income tax benefit

Net income (loss)

and percentage of total revenue information may not add due to rounding

1 unchanged sentence

for the year ended December 31, 2023 from $62.5 million for the year ended December 31, 2022.

This increase resulted from increases

in sales of our access solutions.

Cost of Revenues

Our total cost of revenues, composed

primarily of revenue share expense paid to our network partners, decreased in the year ended December 31, 2022 compared to the

year ended December 31, 2021.

Our cost of revenues as a percentage of revenue decreased to approximately 38% in the year ended

December 31, 2022 from approximately 42% in the year ended December 31, 2021.

This decrease in our cost of revenues as a

percentage of revenue resulted primarily due to favorable solution and channel partner mix and increases in the type of services we

provide that are not subject to revenue share.

Our gross margin, which is the difference between

our revenues and our cost of revenues, increased from 2021 to 2022 as a result of solution mix.

In general, during 2022, there was an

increase in the percentage of activity flowing through our lower cost channels compared with 2021.

Additionally, revenue increases in

our access solutions includes a much higher percentage of program design, which carries a higher margin than the delivery of the actual

In addition, our gross margin percentage increased to 62% in 2022 from 58% in 2021 for the reasons discussed above in the cost

of revenues section.

Operating Expenses

Operating expenses increased to $51.3 million

Of the 15% increase, 7.3% resulted

from the acquisition of Medicx Health, in October, with the remaining increase due to stronger DAAP related sales.

Our total cost of revenues, composed primarily

of revenue-share expense paid to our network partners, increased in the year ended December 31, 2023, compared to the year ended

December 31, 2022.

Our cost of revenues as a percentage of revenue increased to approximately 40% in the year ended December 31,

2023, from approximately 38% in the year ended December 31, 2022.

This increase in our cost of revenues as a percentage of revenue

resulted primarily due to an unfavorable channel partner mix.

gross margin, which is the difference between our revenues and our cost of revenues, increased from 2022 to 2023 but our gross margin

percentage decreased to 60.0% in 2023 from 62% in 2022 We had higher revenues in 2023, which increased gross margin but during 2023,

there was a decrease in the percentage of activity flowing through our lower cost channels compared with 2022.

Total operating expenses increased to $69.3 million

for the year ended December 31, 2023, from $51.3 million for the year ended December 31, 2022, an increase of approximately

The increase in sales, general and administrative expense was $5.8 million.

The detail by major category is reflected in the table

Years Ended December 31

The increase includes approximately $6.7 million, related to impairment charges, approximately $4.5 million of transaction costs

associated with the purchase of Medicx Health, and a loss on the disposal of a business of $2.1 million.

detail by major category is reflected in the table below.

(in thousands)

Stock-based compensation

Depreciation and amortization

Impairment charges

Loss on disposal of a business

Transaction costs

Other sales, general, and administrative expense

Total operating expense

Within the operating expenses, there were a variety

of increases, the largest of which was in stock-based compensation, a non-cash expense, which increased by $10.3 million from $5.5 million

in 2021 to $15.7 million in 2022.

Stock-based compensation is awarded to all full-time employees upon their start of employment as well

as to directors, officers and certain key employees to provide an equity-based incentive to maintain and enhance the performance and profitability

of the Company.

In the fourth quarter of 2021, we issued a significant market-based grant with a requisite service period of less than

The expense for the market-based award is amortized over the expected service period.

The impact on 2022 expense for such market-based

award in 2022 was $6.1 million.

The increase in other sales, general, and administrative

expense is due to higher salaries, wages, and benefits and other human resources related costs as a result of the expansion of, and investment

in, our team to support additional growth.

During 2022, we hired 12 net additional employees.

Stock-based compensation decreased to $13.7 million

for the year ended December 31, 2023, from $15.7 million for the year ended December 31, 2022, as a result of the lower grant

date fair value of awards due to declines in the Company’s stock price.

Depreciation and amortization increased to $2.4

million for the year ended December 31, 2023, from $2.0 million for the year ended December 31, 2022, as a result of the amortization

associated with the identifiable intangibles arising from the Medicx Health acquisition.

impairment charges recorded during 2023 relate to intangible assets, primarily technology and patent and trademarks relating to certain

non-core products.

The Company determined that the carrying value of these long-lived assets was not recoverable on an undiscounted basis

and accordingly, an impairment charge was recognized to the extent fair value exceeds carrying value.

The fair value of the assets was

determined based on various estimates and assumptions including internal estimates of cash flows directly attributable to the assets,

the useful life of the assets and residual value, if any.

loss on disposal of a business is discussed in Part II, Item 8.

Financials Statements and Supplementary Data;

Note 7 - Goodwill and Intangibles.

Transaction related costs arose due to the acquisition

of Medicx Health, discussed in Part II, Item 8.

Financials Statements and Supplementary Data;

Note 3 - Acquisitions.

Other sales, sales general, and administrative

expense increased to $39.8 million for the year ended December 31, 2023 from $33.5 million for the year ended December 31,

The acquisition of Medicx Health increased Operating expense, primarily compensation and amortization, by approximately $2.5 million

year on year.

In addition, within the other sales, general and administrative expenses, there were a variety of increases, the largest

of which was in compensation, which increased by $3.3 million from $20.8 million in 2022 to $24.1 million in 2023.

The increase is due

to the addition of Medicx Health employees since the acquisition date and higher severance, employee benefit and commission costs.

income (expense)

Income (Expense) was comprised of the following:

(in thousands)

Other income (expense)

Interest expense

Interest income

Interest expense represents interest charges on

our Term Loan, which was raised during the year to partially fund the acquisition of Medicx Health, together with the amortization of

the related issuance costs, (see Part II, Item 8.

Financials Statements and Supplementary Data;

Note 12 - Long Term Debt for further details

concerning our Term loan).

income represents the net proceeds from the sale of customer assets, primarily contracts, relating to two non-core products.

Interest income represents interest earned on

our short-term investments, which were realized during 2023 in order to partially fund the acquisition of Medicx Health.

Interest earned

in 2022 reflects the shorter period and lower average balance on amounts held in short-term investments during that period.

The income tax benefit recorded in 2023 represents

the partial reversal of our valuation allowance, previously recorded against the value of our net operating loss (“NOL”) carryforwards.

In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence,

including our past operating results, the impact of the Medicx Health transaction on our consolidated tax returns, and our forecast of

future earnings, future taxable income and prudent and feasible tax planning strategies.

The assumptions utilized in determining future

taxable income require significant judgment and are consistent with the plans and estimates we are using to manage the underlying businesses.

Actual operating results in future years could differ from our current assumptions, judgments and estimates.

Net Income (Loss)

We finished the year ended December 31, 2023

with a net loss of $11.4 million, compared to net income of $0.4 million during the year ended December 31, 2021.

The reasons for

specific components are discussed above.

Overall, we had an increase in revenue and gross margin partially offset by increased operating

In addition, the income or loss in both periods included significant noncash items.

We had $18.0 million in noncash operating

expenses in 2022 compared to $7.6 million in noncash operating expenses in 2021.

with a net loss of $17.6 million, compared to $11.4 million during the year ended December 31, 2022.

The reasons for specific components

are discussed above.

Overall, we had an increase in revenue and gross margin partially offset by increased operating expenses.

the loss in both periods included significant noncash items.

We had $25.0 million in noncash operating expenses in 2023 compared to $17.8

million in noncash operating expenses in 2022.

Liquidity and Capital Resources

Historically, our primary sources of liquidity have been cash receipts

from customers and proceeds from equity offerings.

As of December 31, 2022, we had total current assets of $98.6 million, compared

with current liabilities of $8.4 million, resulting in working capital of $90.2 million and a current ratio of 12 to 1.

This compares

with a working capital balance of $105.7 million and a current ratio of 12 to 1 at December 31, 2021.

This decrease in working capital,

as discussed in more detail below, is primarily the result of the common stock buyback program.

Following is a table with summary data from the

consolidated statement of cash flows for the years ended December 31, 2022 and 2021, as presented.

Net cash provided by operating activities

Net cash used in investing activities

(58,176,386 )

Net cash (used in) / provided by financing activities

(18,950,777 )

Net (decrease) / increase in cash and cash equivalents

$ (66,473,085 )

Our operating activities provided $10.7 million

in the year ended December 31, 2022, as compared with approximately $0.7 million provided by operating activities in the year ended

December 31, 2021.

We had a net loss of $11.4 million for 2022, but non-cash expenses of $18.1 million and working capital generated

by the collection of receivables offset the loss.

The cash provided in 2021 was the result of our net income and non-cash expenses, which

together totaled $8.0 million.

This was partially offset by the increased working capital, totaling $7.3 million, required to support

higher revenues.

We used $58.2 million in investing activities

in 2022, compared with $0.5 million in 2021.

In addition to the $2.0 million investment in EvinceMed technology, we purchased $55.9 million

in Treasury bills in 2022 with maturity dates in 2023.

The 2021 amount included $0.4 million of capitalized software development costs

related to our proprietary systems and $0.1 million of tangible property, primarily personal computers.

We used $19.0 million in financing activities

in the year ended December 31, 2022.

We repurchased 1,214,398 shares of common stock for $20.0 million.

This was partially offset

by the collection of $1.1 million related to the exercise of stock options during the period.

The cash provided in 2021 was the result

of our underwritten offering in 2021, which generated $70.7 million, as well as from the proceeds of option exercises, which generated

$4.9 million.

This was partially offset by the payment of contingent consideration related to previous acquisitions of $1.6 million.

Historically, our primary sources of liquidity

have been cash receipts from customers and proceeds from equity offerings.

On October 11, 2023, we entered into a financing agreement

that provided for a $38 million term loan (the “Term Loan”), the proceeds of which were to fund, in part, the acquisition

of Medicx Health.

See Part II, Item 8.

Financials Statements and Supplementary Data;

Note 12 - Long Term Debt.

As of December 31, 2023, we had total current

assets of $54.3 million, compared with current liabilities of $17.9 million, resulting in working capital of $36.4 million and a current

ratio of 3.0 to 1.

This compares with a working capital balance of $90.2 million and a current ratio of 11.7 to 1 at December 31,

This decrease in working capital, as discussed in more detail below, is primarily the result of our common stock buyback program

and the acquisition of Medicx Health, which was funded from a combination of cash on hand, short-term investments and the Term Loan.

We believe that funds generated from operations,

together with existing cash and short term investments, will be sufficient to finance our current operations and planned growth for the

next twelve months.

together with existing cash and cash equivalents, will be sufficient to finance our current operations and planned growth for the next

twelve months.

We do not anticipate the need to raise any additional cash to support operations.

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the cash needed to operate beyond the next 12 months from operations.

Off Balance Sheet Arrangements

As of December 31, 2022, there were no off-balance

sheet arrangements.

Critical Accounting Estimates

Our discussion and analysis of our financial condition

and results of operations are based upon the Consolidated Financial Statements, which have been prepared in accordance with U.S.

accepted accounting principles.

The preparation of these financial statements requires us to make estimates, judgments and assumptions

that affect the reported amounts of assets and liabilities at the date of the financial statements and reported amounts of revenues and

expenses during the periods presented.

Actual results could differ from those estimates and assumptions.

See Note 2 to the Consolidated

Financial Statements for a discussion of significant accounting policies.

Actual results may differ materially from these estimates due

to different assumptions or conditions.

Company’s contractual obligations and cash commitments at December 31, 2023, consisted of long term debt, operating lease

liabilities, and payments to partners to acquire minimum amounts of media, data or messaging capabilities as follows:

● Long-term debt:

Total obligations under the Term Loan were $38.3 million,

with $2.0 million due over the next twelve months.

For details regarding long-term obligations, see Part II, Item 8.

Financial Statements

and Supplementary Data;

Note 12 – Long Term Debt in the Consolidated Financial Statements.

● Lease liabilities:

Total obligations under short- and long-term operating

leases were $0.7 million, with $0.3 million due over the next twelve months.

For details regarding short- and long-term operating lease

liabilities, see Part II, Item 8.

Financial Statements and Supplementary Data;

Note 13 – Leases in the Consolidated Financial Statements.

payment obligations:

Total obligations for partner payments were $25.1 million, with $11.0

million due over the next twelve months.

For details regarding the Company’s future

payments to partners to acquire minimum amounts of media, data or messaging capabilities,

see Part II, Item 8.

Financial Statements and Supplementary Data;

Note 16 – Commitments.

On October 11, 2023 (the “Loan Date”),

in connection with the acquisition of Medicx Health, we entered into a financing agreement that provided for a $40.0 million term loan.

The outstanding principal amount of the Term Loan

is repayable in quarterly installments on the last business day of each fiscal quarter commencing on December 31, 2023, in an amount

equal to 1.25% of the principal amount.

The outstanding unpaid principal amount of the Term Loan, and all accrued and unpaid interest

thereon, shall be due and payable on the earliest of (i) the fourth anniversary of the closing of the financing agreement and funding

of the Term Loan and (ii) the date on which the Term Loan is declared due and payable pursuant to the terms of the financing agreement.

The Term loan bears a variable interest rate which is currently priced at 14.1%.

We incurred debt issuance costs of approximately

$2.3 million, in connection with this Term Loan and made repayments of approximately $1.7 million.

We are subject to market risks arising from changes

in interest rates which relate primarily to the Term Loan our term loan, which is variable rate debt.

(see Part II, Item 8.

Statements and Supplementary Data;

Note 12 - Long Term Debt).

Our potential additional interest expense over one year that would result

from a hypothetical, instantaneous and unfavorable change of 100 basis points in the interest rate on all of our variable rate obligations

would be approximately $0.4 million on a pre-tax basis.

Part II, Item 8.

Financials Statements and Supplementary Data;

Note 12 - Long Term Debt for additional information regarding the Term

is a table with summary data from the consolidated statement of cash flows for the years ended December 31, 2023 and 2022, as presented.

(in thousands)

Net cash (used in) / provided by operating activities

Net cash used in investing activities

Net cash provided / (used in) by financing activities

Net decrease in cash and cash equivalents

Our operating activities used $7.2 million in

the year ended December 31, 2023, as compared with approximately $10.7 million provided by operating activities in the year ended

December 31, 2022.

We had a net loss of $17.6 million for 2023, and a net increase in working capital of $7.9 million, notably accounts

receivable, which increased as a result of higher fourth quarter billings, which was partially offset by non-cash expenses of $25.0 million.

The cash provided in 2022 was the result of our

net loss of $11.4 million offset by non-cash expenses of $17.8 million and a decrease in net working capital of $4.0 million, generated

by the collection of receivables.

Investing activities used $25.3 million in 2023,

compared with $58.2 million in 2022.

In addition to the cash payment, net of cash acquired of $82.9 million related to the acquisition

of Medicx Health, we purchased $162.8 million and redeemed $218.7 million in Treasury bills during 2023.

We also incurred capitalized

software development costs of $0.8 million, and purchased $0.1 million of tangible property, primarily personal computers and received

$2.5 million from the disposal of our Access products (see Part II, Item 8.

Financials Statements and Supplementary Data;

Note 7 - Goodwill

and Intangibles).

2022, we made a $2.0 million investment in EvinceMed technology, purchased $55.9 million in Treasury bills and incurred $0.2 million

and $0.1 million, respectively related to capitalized software development and tangible property.

Financing activities provided $28.2 million

in 2023 and used $19.0 million in 2022.

During 2023, we raised $38 million pursuant to the Term Loan to partially fund the

acquisition of Medicx Health.

In connection with the Term Loan we incurred debt issuance costs of approximately $2.3million, and

have made repayments of approximately $1.7 million.

In addition, during 2023, we repurchased 526,999 shares of common stock for $7.5

cash used in 2022, related to the repurchase of 1,214,398 shares of common stock for $20.0 million, partially offset by $1.1 million

from the exercise of stock options.

Balance Sheet Arrangements

of December 31, 2023, there were no off-balance sheet arrangements.

Accounting Estimates

discussion and analysis of our financial condition and results of operations are based upon the Consolidated Financial Statements, which

have been prepared in accordance with U.S.

generally accepted accounting principles.

The preparation of these financial statements requires

us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial

statements and reported amounts of revenues and expenses during the periods presented.

Actual results could differ from those estimates

and assumptions.

See Part II, Item 8.

Financial Statements and Supplementary Data;

Note 2 - Summary of Significant Accounting Policies,

for a discussion of significant accounting policies.

Actual results may differ materially from these estimates due to different assumptions

or conditions.

The following areas all require the use of subjective or complex judgments, estimates and assumptions:

Recognition of revenue requires evidence of a

contract, probable collection of proceeds, and completion of substantially all performance obligations.

We use a 5-step model to recognize

Business Combination

Business combinations are accounted for under

the acquisition method.

Assets acquired and liabilities assumed as part of a business acquisition are generally recorded at their estimated

fair value at the date of acquisition.

The excess of purchase price over the amount allocated to the assets acquired and liabilities assumed

is recorded as goodwill.

In determining the fair value of assets acquired, including intangible assets, the Company uses a variety of

The method used to estimate the fair values of intangible assets incorporates significant estimates and assumptions regarding

the estimates a market participant would make in order to evaluate an asset, including a market participant's use of the asset, future

cash inflows and outflows, probabilities of success, asset lives, and the appropriate discount rates.

This judgement and determination

effects the amount of consideration paid that is allocated to assets acquired and liabilities assumed in the business purchase transaction.

The Company engages third-party appraisal firms to assist in determining fair value of assets acquired and liabilities assumed when appropriate.

During the remeasurement period, which extends

no later than one year from the acquisition date, the Company may record certain adjustments to the carrying value of the assets acquired

and liabilities assumed with a corresponding offset to goodwill.

of revenue requires evidence of a contract, probable collection of proceeds, and completion of substantially all performance obligations.

We use a 5-step model to recognize revenue.

These steps are:

identify the contract with a customer, identify the performance obligations in the contract, determine the transaction

price, allocate the transaction price to the performance obligations in the contract, and recognize revenue when or as the performance

obligations are satisfied.

Revenues are primarily generated from content

delivery activities in which we deliver financial, clinical, or brand messaging through a distribution network of eprescribers and electronic

health record technology providers (channel partners), directly to consumers, or from reselling services that complement the business.

identify the contract with a customer, identify the performance obligations

in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract, and

recognize revenue when or as the performance obligations are satisfied.

are primarily generated from content delivery activities in which we deliver financial, clinical, or brand messaging through a distribution

network of eprescribers and electronic health record technology providers (channel partners), directly to consumers, or from reselling

services that complement the business.

This content delivery for a customer is referred to as a program.

Unless otherwise specified, revenue is recognized based on the selling

price to customers.

Our contracts are generally all less than one

year and the primary performance obligation is delivery of messages or other forms of content, but the contract may contain additional

Additional services may include program design, which is the design of the content delivery program, set up, and reporting.

We consider set up and reporting services to be complimentary to the primary performance obligation and recognized through performance

of the delivery of content.

We consider the design of the programs and related consulting services to be performance obligations separate

from the delivery of messages.

As the content is distributed through the platform

and network of channel partners (a transaction), these transactions are recorded, and revenue is recognized, over time as the distributions

Revenue for transactions can be realized based on a price per message, a price per redemption, as a flat fee occurring over a period

of time, or upon completion of the program, depending on the client contract.

We recognize setup fees that are required for integrating

client offerings and campaigns into the rule-based content delivery system and network over the life of the initial program, based either

on time, or units delivered, depending upon which is most appropriate in the specific situation.

Should a program be cancelled before

completion, the balance of set up revenue is recognized at the time of cancellation, as set up fees are nonrefundable.

Additionally, we

also recognize revenue for providing program performance reporting and maintenance, either by our company directly delivering reports

or by providing access to our online reporting portal that the client can utilize.

This reporting revenue is recognized over time as the

messages are delivered.

Program design, which is the design of the content delivery program, and related consulting services are recognized

as services are performed.

In some instances, we license certain of our software

applications in arrangements that do not include other performance obligations.

In those instances, we record license revenue when the

software is delivered for use to the license.

In instances where our contracts included Software as a Service, the revenue is recognized

over the subscription period as services are delivered to the customer.

In some instances, we also resell messaging solutions

that are available through channel partners that are complementary to the core business and client base.

These partner specific solutions

are frequently similar to our own solutions and revenue recognition for these programs is the same as described above.

In instances where

we sell solutions on a commission basis, net revenue is recognized based on the commission-based revenue split that we receive.

were no programs recorded on a net basis in the years presented.

In instances where we resell these messaging solutions and have all financial

risk and significant operation input and risk, we record the revenue based on the gross amount sold and the amount paid to the channel

partner as a cost of sales.

Cost of Revenues

The primary cost of revenue is revenue share expense.

Based on the volume of transactions that are delivered through the channel partner network, we provide a revenue share to compensate the

partner for their promotion of the campaign.

Revenue shares are a negotiated percentage of the transaction fees and can also be specific

to special considerations and campaigns.

In addition, we pay revenue share to ConnectiveRx as a result of a 2014 legal settlement in an

amount equal to the greater of 10% of financial messaging distribution revenues generated through our integrated network, or $0.37 per

financial message distributed through our integrated network.

As our solution mix has expanded and our revenues have grown, financial

messaging has become a smaller percentage of our revenues and these payments to ConnectiveRx, a smaller portion of our revenue share.

The contractual amount due to the channel partners is recorded as an expense at the time the message is distributed.

Intangible Assets

Intangible assets are stated at cost.

assets are being amortized over their estimated useful lives of fifteen to seventeen years for patents, eight years for customer relationships,

fifteen years for tradenames, two to four years for covenants not to compete, and three to ten years for software and websites, all using

the straight-line method.

These assets are evaluated when there is a triggering event.

There was no impairment of our intangible assets

in either year presented.

We evaluate goodwill for impairment during our

fiscal fourth quarter, or more frequently if an event occurs or circumstances change.

We determined there was no impairment as goodwill

had a fair value comfortably in excess of its carrying value.

Stock-based Compensation

We use the fair value method to account for stock-based

compensation.

The fair value of the equity instrument is charged directly to compensation expense and additional paid-in capital over

the period during which services are rendered.

The fair value of each award is estimated on the date of each grant.

For options, fair value is estimated using the

Black-Scholes option pricing model that uses the following assumptions.

Estimated volatilities are based on the historical volatility

of our stock over the same period as the expected term of the options.

The expected term of options granted represents the period of time

that options granted are expected to be outstanding.

We use historical data to estimate option exercise behavior and to determine this

Unless otherwise specified,

revenue is recognized based on the selling price to customers.

contracts are generally all less than one year and the primary performance obligation is delivery of messages or other forms of content,

but the contract may contain additional services.

Additional services may include program design, which is the design of the content

delivery program, set up, and reporting.

We consider set up and reporting services to be complimentary to the primary performance obligation

and recognized through performance of the delivery of content.

We consider the design of the programs and related consulting services

to be performance obligations separate from the delivery of messages.

the content is distributed through the platform and network of channel partners (a transaction), these transactions are recorded, and

revenue is recognized, over time as the distributions occur.

Revenue for transactions can be realized based on a price per message, a

price per redemption, as a flat fee occurring over a period of time, or upon completion of the program, depending on the client contract.

We recognize setup fees that are required for integrating client offerings and campaigns into the rule-based content delivery system

and network over the life of the initial program, based either on time, or units delivered, depending upon which is most appropriate

in the specific situation.

Should a program be cancelled before completion, the balance of set up revenue is recognized at the time of

cancellation, as set up fees are nonrefundable.

Additionally, we also recognize revenue for providing program performance reporting and

maintenance, either by our company directly delivering reports or by providing access to our online reporting portal that the client

This reporting revenue is recognized over time as the messages are delivered.

Program design, which is the design of the

content delivery program, and related consulting services are recognized as services are performed.

some instances, we license certain of our software applications in arrangements that do not include other performance obligations.

those instances, we record license revenue when the software is delivered for use to the license.

In instances where our contracts included

Software as a Service, the revenue is recognized over the subscription period as services are delivered to the customer.

some instances, we also resell messaging solutions that are available through channel partners that are complementary to the core business

and client base.

These partner specific solutions are frequently similar to our own solutions and revenue recognition for these programs

is the same as described above.

In instances where we sell solutions on a commission basis, net revenue is recognized based on the commission-based

revenue split that we receive.

In instances where we resell these messaging solutions and have all financial risk and significant operation

input and risk, we record the revenue based on the gross amount sold and the amount paid to the channel partner as a cost of sales.

primary cost of revenue is revenue-share expense.

Based on the volume of transactions that are delivered through the channel partner

network, we provide a revenue-share to compensate the partner for their promotion of the campaign.

Revenue-shares are a negotiated percentage

of the transaction fees and can also be specific to special considerations and campaigns.

In addition, we pay revenue-share to ConnectiveRx

as a result of a 2014 legal settlement in an amount equal to the greater of 10% of financial messaging distribution revenues generated

through our integrated network, or $0.37 per financial message distributed through our integrated network.

As our solution mix has expanded

and our revenues have grown, financial messaging has become a smaller percentage of our revenues and these payments to ConnectiveRx,

a smaller portion of our revenue-share.

The contractual amount due to the channel partners is recorded as an expense at the time the

message is distributed.

Additionally, within the cost of revenues is data acquisition costs which are amortized over the period for which

we have access to the data.

assets are stated at cost.

Finite-lived assets are being amortized over their estimated useful lives of fifteen to seventeen years for

patents, eight years for customer relationships, fifteen years for tradenames, two to four years for covenants not to compete, and three

to ten years for software and websites, all using the straight-line method.

assets are reviewed whenever events or changes in circumstances indicate that the related carrying amounts may not be recoverable.

of assets with definite-lives is generally determined by comparing projected undiscounted cash flows expected to be generated by the

asset, or asset groups, to its carrying value.

If the carrying value of the long-lived asset or asset group is not recoverable on an

undiscounted basis, an impairment is recognized to the extent fair value exceeds carrying value.

Determining the extent of impairment,

if any, typically requires various estimates and assumptions including cash flows directly attributable to the asset, the useful life

of the asset and residual value, if any.

When necessary, the Company uses internal cash flow estimates, quoted market prices and appraisals,

as appropriate, to determine fair value.

Actual results could vary from these estimates.

In addition, the remaining useful life of the

impaired asset is revised, if necessary.

recorded impairment charges of $6.7 million against the value of our intangible assets during the year ended December 31, 2023.

No events or circumstances were noted that would be indicative of potential impairment during the year ended December 31, 2022.

evaluate goodwill for impairment during our fiscal fourth quarter, or more frequently if an event occurs or circumstances change.

both the years ended December 31, 2023 and 2022

our annual reviews determined there was no impairment as our single reporting unit had a fair value in excess of its carrying value.

During the year ended December 31, 2023, following the disposal of the Access business,

we performed an interim review of our goodwill balance and also determined that there was no impairment due the fair value of our single

reporting unit being in excess of its carry value.

use of different assumptions, estimates or judgments in the goodwill impairment testing process may significantly increase or decrease

the estimated fair value of a reporting unit.

Generally, changes in DCF estimates would have a similar effect on the estimated fair value

of the reporting unit.

impairment charges may be recognized in future periods to the extent changes in factors or circumstances occur, including deterioration

in the macro-economic environment or in the equity markets, including the market value of the Company’s common shares, deterioration

in its performance or its future projections, or changes in its plans for one or more reporting units.

Compen sation

use the fair value method to account for stock-based compensation.

The fair value of the equity instrument is charged directly to compensation

expense and additional paid-in capital over the period during which services are rendered.

The fair value of each award is estimated

on the date of each grant.

time-based options, fair value is estimated using the Black-Scholes option pricing model that uses the following assumptions.

volatilities are based on the historical volatility of our stock over the same period as the expected term of the options.

term of options granted represents the period of time that options granted are expected to be outstanding.

We use historical data to

estimate option exercise behavior and to determine this term.

The risk-free rate used is based on the U.S.

Treasury yield curve in effect at the time of the grant using a time period equal to

the expected option term.

We have never paid dividends and do not expect to pay any dividends in the future.

The Black-Scholes option valuation model and other

existing models were developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully

transferable.

These option valuation models require the input of, and are highly sensitive to, subjective assumptions including the expected

stock price volatility.

Our stock options have characteristics significantly different from those of traded options, and changes in the

subjective input assumptions could materially affect the fair value estimate.

For restricted stock units, the fair value is

based on the market value of the Company’s common stock on the date of grant.

For market based restricted stock units, fair value

is estimated using a Monte Carlo simulation model.

This valuation technique includes estimating the movement of stock prices and the effects

of volatility, interest rates and dividends.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No.

Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

ASU 2019-12 is intended to improve consistent application

and simplify the accounting for income taxes.

ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and clarifies

and amends existing guidance.

ASU 2019-12 was effective for us as of January 1, 2021.

The adoption of this standard did not have a material

effect on our financial position, results of operations, or cash flows.

Not Yet Adopted

ASU Topic 2021-08 Business Combinations (Topic

805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which requires contract assets and contract

liabilities acquired in a business combination to be recognized and measured by the acquirer on the acquisition date in accordance with

ASC 606, Revenue from Contracts with Customers, as if it had originated the contracts.

The standard is effective for the Company’s fiscal

year beginning January 1, 2023, with early adoption permitted.

The adoption of this standard is not expected to have a material effect

on our financial position, results of operations, or cash flows.

Quantitative and Qualitative Disclosures

About Market Risk

Not applicable.

Treasury yield curve in effect

at the time of the grant using a time period equal to the expected option term.

We have never paid dividends and do not expect to pay

any dividends in the future.

Black-Scholes option valuation model and other existing models were developed for use in estimating the fair value of traded options

that have no vesting restrictions and are fully transferable.

These option valuation models require the input of, and are highly sensitive

to, subjective assumptions including the expected stock price volatility.

Our stock options have characteristics significantly different

from those of traded options, and changes in the subjective input assumptions could materially affect the fair value estimate.

restricted stock units, the fair value is based on the market value of the Company’s common stock on the date of grant.

based restricted stock units, fair value is estimated using a Monte Carlo simulation model.

This valuation technique includes estimating

the movement of stock prices and the effects of volatility, interest rates and dividends.

Issued Accounting Pronouncements

November 2023, the Financial Accounting Standards Board (“FASB”), issued Accounting Standards Update (“ASU”) No.

2023-07 (“ASU 2023-07”), Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

ASU 2023-07 requires

annual and interim disclosures that are expected to improve reportable segment disclosures, primarily through enhanced disclosures about

significant segment expenses.

The provisions of ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim

periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

We are currently evaluating the impact

of adopting ASU 2023-07.

December 2023, the FASB issued ASU No.

2023-09 (“ASU 2023-09”), Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 addresses investor requests for more transparency about income tax information through improvements to income tax disclosures

primarily related to the rate reconciliation and income taxes paid information.

This update also includes certain other amendments to

improve the effectiveness of income tax disclosures.

The provisions of ASU 2023-09 are effective for annual periods beginning after December

15, 2024, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2023-09.

Quantitative and Qualitative Disclosures About Market Risk

section “Term Loan” under Liquidity and Capital Resources above.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis