What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-15 compared with 2024-05-15 · 136 added, 92 removed, 268 unchanged (46% of the section changed)

122 unchanged sentences

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

For example, macroeconomic events including rising inflation and high interest rates have led to economic uncertainty.

In addition, high levels of employee turnover across the pharmaceutical industry

as well as a fewer number of U.S.

For example, macroeconomic events including rising inflation and high

interest rates have led to economic uncertainty.

In addition, 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’

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.

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

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

The increase in the average in twelve months ended March 31, 2024

as compared to the twelve months ended March 31, 2023 is primarily the result of stronger DAAP related revenue streams and the Company’s

October 2023 acquisition of Medicx Health, which added to 2024 revenues and was not included in the 2023 amounts (in thousands).

Rolling Twelve Months

Ended March 31,

increase in the average in twelve months ended June 30, 2024 as compared to the twelve months ended June 30, 2023 is primarily

the result of stronger DAAP related revenue streams and the Company’s October 2023 acquisition of Medicx Health, which added to

2024 revenues and was not included in the 2023 amounts (in thousands).

Rolling Twelve Months Ended

Average revenue per top 20 pharmaceutical manufacturer

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

Our penetration within this core customer group stayed consistent from the twelve months ended March 31, 2023 to the twelve months

ended March 31, 2024.

Our penetration within this core customer group stayed consistent from the twelve months ended June 30, 2023 to the twelve months

ended June 30, 2024.

Rolling Twelve Months

Ended June 30,

Percent of top 20 pharmaceutical manufacturers that are customers

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Rolling Twelve Months

Ended March 31,

Ended June 30,

Percent of total revenue attributable to top 20 pharmaceutical manufacturers

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The retention rate in the

twelve months ended March 31, 2024 was higher due to stronger DAAP related revenue and the acquisition of Medicx Health in the fourth

twelve months ended June 30, 2024 was higher due to stronger DAAP related revenue and the acquisition of Medicx Health in the fourth

quarter of 2023.

Twelve Months

Ended March 31,

Rolling Twelve Months

Ended June 30,

Net revenue retention

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Rolling Twelve Months

Ended June 30,

Revenue per average full-time employee

Results of Operations for the Three Months Ended March 31,

Results of Operations for the Three and Six Months Ended June 30,

2024 and 2023

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indicated, the dollar value and percentage of net revenue represented by certain items in our consolidated statements of operations (in

Three Months Ended March 31,

Three Months Ended June 30,

Cost of revenues

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Loss before provision for income taxes

Income tax benefit (expense)

* Balances and percentage of net revenue information may not

add due to rounding

Six Months Ended June 30,

Cost of revenues

Operating expenses

Loss from operations

Other income (expense)

Interest expense

Interest income

Total other income (expense)

Loss before provision for income taxes

Income tax benefit

* Balances and percentage of net revenue information may not add

due to rounding

Our net revenue reported for the three

months ended March 31, 2024 was approximately $19,690, an increase of 51% over the approximately $13,003 from the same period

The increase in revenue was as a result of the impact of the fourth quarter 2023 acquisition of Medicx Health, which was

not included in the prior year numbers, plus growth of DAAP related sales.

This increase was partially offset by a reduction of

approximately $1,876 as a result of the disposal of our non-core Access solutions and the sale of certain non-core solutions-related

contracts in the fourth quarter of 2023.

Adjusting net revenues of $21,031 as shown in the pro-forma consolidated statement of

operations data table in Note 1 to the condensed consolidated financial statements by the $1,876 of non-core solutions revenues

included in 2023, the adjusted net revenues were $19,690 in 2024 versus $19,155 in 2023.

* Balances and percentage of net revenue information may not

add due to rounding

Net revenue reported for the three months ended

June 30, 2024 was approximately $18,812, an increase of approximately 36% over the approximately $13,818 from the same period in

Our net revenue reported for the six months ended June 30, 2024 was approximately $38,502, an increase of approximately 44%

over the approximately $26,821 from the same period in 2023.

The increase in net revenue was as a result of the impact of the fourth quarter

2023 acquisition of Medicx Health, which was not included in the prior year numbers, plus growth of DAAP related sales, where the quarter

benefited from an increase list delivery related revenue tied to new DAAP program launches.

The increases in the three and six months

ended June 30, 2024 were partially offset by a reduction of approximately $1,213 and $3,080, respectively, as a result of the disposal

of our non-core Access solutions and the sale of certain non-core solutions-related contracts in the fourth quarter of 2023.

Net revenues of $22,408 and $43,439, as shown

in the pro forma financial consolidated statement of operations data table in Note 1 above, includes $1,213 and $3,080 related to the

Access and other non-core solutions revenues for the three and six months ended June 30, 2023, compared to $18,812 and $38,502 for

the three and six months ended June 30, 2024, for which no Access or other non-core solutions revenue was recorded.

Cost of Revenues

Our cost of revenues, composed primarily of revenue

Our cost of revenues, comprised primarily of revenue

share expense paid to our network partners as well as costs associated with licensing data from third parties, was approximately $7,108

for the three months ended March 31, 2024 compared to $5,570 for the same period of 2023.

Our cost of revenues as a percentage of

revenue decreased to approximately 38% for the quarter ended March 31, 2024 from approximately 42.8% for the quarter ended March 31,

This improvement in cost of revenues as a percentage of revenue was a result of solution and channel mix.

Additional discussion

is included in the Gross Margin section below.

or 37.8% of net revenues for the three months ended June 30, 2024 compared to $5,993 or 43.4% of net revenues for the three months

ended June 30, 2023 and was approximately $14,595 or 38% of net revenues for the six months ended June 30, 2024, compared to

$11,563 or 43% of net revenues for the six months ended June 30, 2023.

The changes in cost of revenues as a percentage

of revenues was a result of solution and channel mix.

Additional discussion is included in the Gross Margin section below.

Our gross margin, which is the difference between

our revenues and our cost of revenues, increased for three months ended March 31, 2024, as a result of solution and channel mix.

During the three months ended March 31, 2024, we had higher revenues due to the fourth quarter acquisition of Medicx Health and growth

in our DAAP related sales, leading to increased gross margin.

Our overall margin percentage improved, compared with a year ago, as a result of an increased delivery

of higher margin revenue solutions, such as DAAP, and using more cost-effective channel partnerships.

our revenues and our cost of revenues, was approximately $11,704 or 62.2% of net revenues for the three months ended June 30, 2024

compared to $5,993 or 56.6% of net revenues for the three months ended June 30, 2023 and was approximately $14,595 or 38% of net

revenues for six months ended June 30, 2024 compared to $11,563 or 43% of net revenues for the six months ended June 30, 2023.

We had higher second quarter revenues compared

to the same year ago period due to the fourth quarter acquisition of Medicx Health and growth in our DAAP related sales, leading to increased

gross margin.

Our overall margin percentage improved, compared with a year ago, as a result of an increased delivery of higher margin

revenue solutions, such as DAAP, and using more cost-effective channel partnerships.

Operating Expenses

Operating expenses increased to approximately

$17,233 for the three months ended March 31, 2024 from approximately $14,496 for the same period in 2023, an increase of approximately

$15,453 for the three months ended June 30, 2024 from approximately $12,674 for the same period in 2023, an increase of approximately

For six months ended June 30, 2024 operating expenses were approximately $32,685 compared to approximately $27,137 for the six

months ended June 30, 2023, a increase of 20%.

The detail by major category is reflected in the table below (in thousands).

Three Months Ended

Six Months Ended

Stock-based compensation

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Stock-based compensation decreased from approximately

$4,381 for the three months ended March 31, 2023, to approximately $3,024 for the three months ended March 31, 2024.

was a result of the lower grant date fair value of awards due to declines in the Company’s stock price as well as fewer equity awards

made in the first quarter of 2024.

$3,503 for the three months ended June 30, 2023, to approximately $2,903 for the three months ended June 30, 2024, and decreased

from approximately $7,884 for the six months ended June 30, 2023, to approximately $5,926 for the six months ended June 30,

The decrease in both periods was a result of the lower grant date fair value of awards due to declines in the Company’s stock

price as well as fewer equity awards made in such periods.

Depreciation and amortization increased from approximately

$464 for the three months ended March 31, 2023, to approximately $1,067 for the three months ended March 31, 2024.

was a result of the additional amortization from associated with the identifiable intangibles arising from the Medicx Health acquisition.

$465 for the three months ended June 30, 2023, to approximately $1,073 for the three months ended June 30, 2024, and increased

from approximately $929 for the six months ended June 30, 2023, to approximately $2,140 for the six months ended June 30, 2024.

The increase in both periods was a result of the additional amortization associated with the identifiable intangibles arising from the

Medicx Health acquisition.

Other general and administrative expenses increased

from approximately $9,651 for the three months ended March 31, 2023 to approximately $13,142 for the same period in 2024.

increase is primarily as a result of increases in compensation expense, due to additional headcount as a result of the Medicx Health acquisition,

professional fees, primarily audit and accounting fees, and partner integration incentives.

from approximately $8,706 for the three months ended June 30, 2023 to approximately $11,477 for the three months ended June 30,

2024, and increased from approximately $18,325 for the six months ended June 30, 2023, to approximately $24,619 for the six months

ended June 30, 2024.

This increase in both periods is primarily a result of increases in compensation

expense, due to additional headcount as a result of the Medicx Health acquisition therefore causing a related increase in bonus and commission

expense, professional fees, primarily audit and accounting fees, insurance costs and partner integration incentives.

income (expense)

expense was approximately $1,546 for the three months ended March 31, 2024 and represents

interest charges on our Term Loan, which was raised to partially fund the acquisition of Medicx Health in the fourth quarter of 2023,

together with the amortization of the related issuance costs.

income decreased from approximately $665 for the three months ended March 31,

2023, to approximately $20 for the three months ended March 31, 2024.

The decrease was

a result of lower invested balances as we realized short-term investments during 2023 in order to

partially fund the acquisition of Medicx Health.

expense was approximately $344, or an effective rate of 5.2%, for the three months ended March 31, 2024.

For further information,

see Part I, Item I.

expense was approximately $1,528 and $3,074 for the three and six months ended June 30,

2024 and represents interest charges on our Term Loan, which was raised to partially fund the acquisition

of Medicx Health in the fourth quarter of 2023, together with the amortization of the related issuance costs.

was $75 for the three and six months ended June 30, 2024 and represents a reduction

in the estimated amount due as a result of a supplier related payment contingency.

income decreased from approximately $721 for the three months ended June 30,

2023, to approximately $106 for the three months ended June 30, 2024, and from approximately

$1,386 for the six months ended June 30, 2023, to

approximately $125 for the six months ended June 30, 2024.

The decrease was a result of lower invested balances as we realized

short-term investments during 2023 in order to partially fund the acquisition of Medicx Health.

benefit was approximately $1,088, or an effective rate of 21.4%, and $744, or an effective rate of 6.4%for the three and six months

ended June 30, 2024, respectively.

For further information, see Part I, Item I.

Financial Statements;

Note 11 — Income Taxes in the Condensed Consolidated Financial Statements.

Note 12 — Income Taxes

in the Condensed Consolidated Financial Statements.

We had a net loss of approximately $4,008 for

the three months ended March 31, 2024, as compared to a net loss of approximately $6,398 during the same period in 2023.

and specific components associated with the change are discussed above.

the three months ended June 30, 2024, as compared to a net loss of approximately $4,161 during the three months ended June 30,

2023 and approximately $10,908 for the six months ended June 30, 2024 as compared to $10,559 for

the six months ended June 30, 2023.

The reasons and specific components associated with the change are discussed above.

Liquidity and Capital Resources

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the Company entered into a Term loan of $40.0 million in order to partially fund the acquisition of Medicx Health.

As of March 31,

As of June 30,

2024, the total principal balance outstanding on the Term loan was approximately $37.3 million and we were in compliance with all

of the financial covenants of the Term loan.

As of March 31, 2024, we had total current

As of June 30, 2024, we had total current

assets of approximately $46.0 million, compared with current liabilities of approximately $15.0 million, resulting in working capital

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This represents a decrease from our working capital of approximately

$36.4 million and an decrease from the current ratio of 3.0 to 1 at December 31, 2023.

This decrease in our working capital is discussed

in more detail below.

$36.4 million, whilst maintaining the same current ratio at 3.0 to 1 when compared to December 31, 2023.

This decrease in our working

capital is discussed in more detail below.

We believe that funds generated from operations,

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Following is a table with summary data from the consolidated statements

of cash flows for the three months ended March 31, 2024 and 2023, as presented (in thousands).

Three Months Ended

of cash flows for the six months ended June 30, 2024 and 2023, as presented (in thousands).

Six Months Ended June 30,

Net cash provided by /(used in) operating activities

Net cash used in investing activities

Net cash used in financing activities

Net cash provided by /(used in) investing activities

Net cash provided by /(used in) financing activities

Net increase (decrease) in cash and cash equivalents

We generated approximately $2,900 from operating

activities during the three months ended March 31, 2024, compared with $86 used in operating activities in the same period in 2023.

We had a net loss of $6,899 for the first three months of 2024, which included non-cash expenses of $4,273.

activities during the six months ended June 30, 2024, compared with $2,455 used in operating activities in the same period in 2023.

We had a net loss of $10,908 for the first six months of 2024, which included non-cash expenses of $8,431.

This was offset by cash generated

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Cash used by investing activities was approximately

$153 for the three months ended March 31, 2024.

We invested in internally developed software in the amount of $121 and spent $32

on property and equipment.

$238 for the six months ended June 30, 2024.

We invested in internally developed software in the amount of $161 and spent $77 on

property and equipment.

Cash used in investing activities for the same period in the prior year was $1,674 as we made a net investment

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Cash used for financing activities was approximately

$640, during the three months ended March 31, 2024.

$1,555, during the six months ended June 30, 2024.

We used $555 to pay withholding taxes on behalf of employees vesting in restricted

stock units and $500 was related to repayments on our Term loan.

stock units and made repayments totaling $1,000 on our Term loan.

Cash used for financing activities for the same period in prior year

was $131, primarily related to paying withholding taxes on behalf of employees vesting in restricted stock units.

was $7,621, primarily related to the repurchase of 526,999 shares of our common stock for approximately $7,522.

The remaining amount arose

from paying withholding taxes on behalf of employees vesting in restricted stock units, partially offset by receipt of funds from the

exercise of stock options.

Critical Accounting Estimates

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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.

Our significant accounting policies are described in Note 2 to the Consolidated Financial Statements

in the Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Annual Report on Form 10-K).

The accounting policies

we used in preparing these financial statements are substantially consistent with those we applied in our 2023 Annual Report on Form 10-K.

Our critical accounting estimates are described in Management’s Discussion and Analysis included in the 2023 Annual Report on Form

Estimates and assumptions

have been made in determining the allowance for credit losses, carrying value of assets, fair values assigned to acquired long-lived assets,

depreciable and amortizable lives of tangible and intangible assets, the carrying value of liabilities, the valuation allowance for deferred

tax assets, the timing of revenue recognition and related revenue-share expenses, and inputs used in the calculation of stock based compensation.

Actual results could differ from those estimates and assumptions.

Our significant accounting policies are described

in Note 2 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2023 (2023 Annual

Report on Form 10-K).

The accounting policies we used in preparing these financial statements are substantially consistent with those

we applied in our 2023 Annual Report on Form 10-K.

Our critical accounting estimates are described

in Management’s Discussion and Analysis included in the 2023 Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements

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or messaging capabilities.

As of March 31, 2024, the Company had commitments for future minimum payments of approximately $22.6 million

As of June 30, 2024, the Company had commitments for future minimum payments of approximately $18.5 million

that will be reflected in cost of revenues during the remainder of 2024 and years 2025 through 2028.

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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-Q

Item 2. Management’s Discussion and Analysis