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 two million U.S. healthcare providers and millions
of their patients through an intelligent omni-channel 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.
We
are a Nevada corporation organized in September 2008. We conduct our operations through our wholly-owned subsidiaries, Healthy Offers,
Inc. (d/b/a Medicx Health or “Medicx Health”), a Nevada 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 Artificial Intelligence (AI) powered Dynamic Audience and Activation Platform (“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.
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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. 81% of new drug approvals are
specialty medications, leading to more complex diagnosis criteria, increased utilization management by healthcare payors, and lengthy
wait times for patients to begin treatment after 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 commercial spend in
the United States of approximately $30 billion.
We
believe significant opportunity exists to address the unmet needs of life sciences organizations as they relate to digital solutions,
including omnichannel access to health care professionals, for complex commercial challenges.
2023
Company Highlights
1. Net
revenue increased to $71.5 million in 2023, a 15% increase over 2022.
2. Gross
profit increased to $ 42.9
million in 2023 from $ 39.0 million
in 2022 with corresponding gross margins of 60.0% and
62.4% , respectively.
3. Meaningfully
increased our DAAP footprint. With 2023 having 24 DAAP deals compared to only six deals in
2022.
4. Acquired
Medicx Health, a leading healthcare consumer-focused omnichannel marketing and analytics
company that significantly expands our footprint with consumers and patients.
5. Refocused
operations on core solutions to streamline efficiencies and better position the Company to
capitalize on synergies with Medicx Health, focusing on Audience Development, Audience Activation
and Media Execution, and Financial Messaging.
Principal
Solutions
The
Company’s original solution was Financial Messaging - the delivery of treatment-specific financial support information for patients distributed
directly to healthcare prescribers through a combination of our proprietary technology and a network of electronic health record (EHR)
and electronic prescribing (ERx) platforms. Over time, the demand for different types of communication and marketing solutions among
life sciences organizations, healthcare providers, and patients led us to expand upon our initial solution to increase the variety of
health-related information we deliver, as well as the platforms, technology, and audiences through and to which we deliver. Today, we
offer diverse tech-enabled marketing solutions through our AI-generated DAAP, which enables customers to execute traditional marketing
campaigns on our proprietary digital point-of-care network, as well as dynamic marketing campaigns that optimize audiences in real time
to increase the value of treatment information for healthcare professionals and patients in response to clinical care events.
Our principal
solutions, available individually or through our DAAP, can be summarized as follows:
Audience
Development
● AI-generated
dynamic audience creation using 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 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 AI models provide our clients with the most
relevant targets and fuel the deployment of programs across our other solutions.
● Creation
of consumer audiences using our privacy-safe and HIPAA-compliant Micro-Neighborhood Targeting®
technology available for traditional media execution through major programmatic Demand-Side
Platforms (DSPs)
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Audience
Activation and Media Execution
● HCP
media execution delivering awareness (brand, therapeutic support, affordability, HUB, limited
distribution, and patient support program) messaging via our HCP omnichannel network including
digital point-of-care banners within clinical workflow applications, such as EHR systems
and ERx platforms, programmatic social media, and programmatic display.
● Consumer
audience media execution delivering consumer awareness via our consumer omnichannel network
including programmatic display, programmatic connected television (CTV)/over-the-top (OTT),
programmatic social media, addressable television (ATV), digital out-of-home (OOH), programmatic
audio (podcasts, apps, radio), and email/direct mail.
Financial
Messaging
● Financial
Messaging solution providing prescribers visibility to branded copay offers directly within
their EHR systems and/or ERx platforms. It allows prescribers 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 to their prescribed
branded medications.
Sales
and Marketing
We
employ a sales team of over 20 people, marketing our solutions to new and existing clients. Our sales team drives awareness of the increased
value of our technology stack as an AI tech-enabled marketing platform. 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.
Our
sales and marketing teams 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. In 2023,
we enhanced our RWD.AI platform solution to become the premier platform to devise and execute Next-Best-Action marketing strategies within
healthcare professional audiences and branded the platform as DAAP.
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 2023 included upgrades and documentation of processes and procedures
and security implementation for ongoing cybersecurity, Sarbanes Oxley, HIPAA, and customer security assessments, and in achieving enterprise
HITRUST recertification.
Competition
Our
solutions 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.
3
Our
solutions 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, and 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. 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
Historically,
we have created intellectual property or obtained intellectual property through commercial relationships and in connection with acquisitions.
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, 2023, we held five patents and two 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,
subject to term adjustments made by the patent office.
In
addition, we own registered trademarks in the United States and other countries. As of December 31, 2023, OPTIMIZERx, OPTIMIZEMD,
CareSpeak, DIETWATCH, Innovate4Outcomes, SPRx, SPx, RMDY, Specialty Express, TELAREP, Medicx, Micro-Neighborhood, and Geomedical Targeting
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.
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, 2023, we had 116 full-time employees and 1 part-time employee in the U.S, as well as 19 full-time employees in Croatia.
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 providing a supportive and respectful environment to our employees 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 to bettering a professional environment and in making our Company stronger. Our Diversity, Equity, Inclusion
& Belonging Committee (DEI&B) is actively engaged in improving our culture, hiring practices and training. In 2023, we upheld
the Parity Pledge – a commitment made in 2021 to interview and consider at least one qualified woman and one underrepresented minority
for every open role, VP or higher. In addition, the DEI&B Committee sponsored quarterly events in 2023, including “Historic
Women Inventors”, “Mental Health Awareness”, “Step Challenge”, and “Affinity Groups”.
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We
prioritize recruiting, retaining, and incentivizing a highly qualified, diverse workforce as the success of our Company is dependent
on the skills, experience, and efforts of our employees. A skilled workforce not only improves a company’s performance, but also
contributes to overall employee satisfaction and enhances human capital. We have increased our focus on training and development for
our current employees and have implemented a Learning Management System where current and future training modules will be presented and
tracked for reporting purposes. We offer other learning and development opportunities and 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.
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 select employees through the granting of stock-based
awards and cash-based performance bonus awards.
Available
Information
We
are subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and
in accordance therewith, we file reports, proxy and information statements and other information with the Securities and Exchange Commission
(the “SEC”). You can read our SEC filings over the Internet at the SEC’s website at www.sec.gov. Our filings with the
SEC are also available free of charge through the investor relations section of our website at www.optimizerx.com. Reports are
available free of charge as soon as reasonably practicable after we electronically file them with, or furnish them to, the SEC. From
time to time, we also use multiple social media channels to communicate with the public about OptimizeRx. It is possible that the information
we post on social media could be deemed to be material information. Therefore, we encourage you to review the information we post on
the social media channels listed on our investor relations website, if any.
Information
contained on or accessible through the websites and social media channels referred to above is not incorporated by reference in, or otherwise
a part of, this Annual Report, and any references to these websites and social media channels are intended to be inactive textual references
only.