Item 1. Business
Item 1. Business
General
OptimizeRx is a leading healthcare
technology company that is redefining how life sciences brands connect with patients and healthcare providers. OptimizeRx is a
Nevada corporation and was founded in 2006 in Rochester, Michigan as a healthcare technology company delivering various types of
messages, including coupons and co-pays directly to physicians and pharmacists though electronic health record (EHR) systems and
ePrescribing (eRx) platforms. Over time, the demand for different types of communication and marketing solutions among life sciences
organizations, healthcare professionals (HCPs), 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.
By combining artificial intelligence (AI)-driven tools with our original
financial messaging solution, we progressively enhanced our original financial messaging solution. Our current AI-enabled Dynamic Audience
Activation Platform (DAAP) not only identifies precise HCP audiences, but also estimates which HCPs will see brand eligible patients,
and when such brand eligible patients will be seen.
After acquiring
Healthy Offers, Inc. (d/b/a “Medicx” or “Medicx Health”) in 2023, we expanded our capabilities to include direct-to-consumer
(DTC) marketing using our patent-protected Micro-Neighborhood Targeting (MNT) solution. MNT uses de-identified claims data to target not
individual patients, but geographies in which eligible patients live, to better target audiences for brand manufacturers - a
privacy-centric approach to audience creation. With the integration of DTC marketing, our life sciences brand customers can now access
across our omnichannel network to reach both HCP and patient audiences. Today, we offer diverse tech-enabled marketing solutions using
sophisticated machine-learning algorithms to find the best audience in the correct channels at the right time.
Customers are able to execute traditional marketing
campaigns on our proprietary digital point-of-care network, as well as dynamic DTC marketing campaigns that optimize audiences in real
time to increase the value of treatment information for HCPs and patients. Connecting over two million U.S. healthcare providers and millions
of their patients through an intelligent technology platform embedded within a proprietary omnichannel network, OptimizeRx helps life
sciences organizations engage and support their customers.
Business Strategy
OptimizeRx is at a pivotal moment in its almost 20-year
history. Over the past few months, we have completed an extensive review of our business processes, operations, growth plans, capital
allocation, strategies and opportunities - with the ultimate goal of assessing how we can best create value for our shareholders.
On March 10, 2025, after a rigorous search and selection
process for a new Chief Executive Officer that was conducted by our independent directors with the assistance of a leading executive search
firm, we named Stephen L. Silvestro as our Chief Executive Officer.
As Mr. Silvestro leads the next phase of the
Company’s growth and transformation, many of our business priorities will be the same, such as continuing to focus on customer
centricity and delight, operational excellence, disciplined execution, developing stronger relationships with our valued business
partners, and expanding our unique value proposition with our top-tier pharma customers. However, going forward, a core aspect of
our new value creation strategy will be to drive towards being recognized as a “Rule of 40” company within the next
several years such that our combined annual revenue growth rate and EBITDA margin are 40% or higher. Like other companies aspiring
to be a “Rule of 40” company, we understand the need to effectively balance growth with profitability. As we drive
towards this ambitious financial goal, we plan to develop a re-occurring revenue component to our business as we look to convert our
DAAP customers to a subscription-based model for the data component of our offerings. We believe this will improve our EBITDA
margins over time while substantially enhancing the overall predictability of our revenue streams. We also believe this will enhance
our ability to scale our business and more thoughtfully plan for profitable growth.
While we believe we are executing the right strategy,
our Board of Directors and management team understand the need to regularly review our strategy, assess it against a variety of opportunities
that may create greater value, and ensure that the strategy we are executing is fully aligned with the best interests of our shareholders.
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Industry Background
Life sciences organizations face a challenging
commercial landscape. The life sciences industry is characterized by rapidly advancing science and technologies, intense competition,
and a strong emphasis on differentiated products.
As a result, life sciences organizations have
increasingly turned to technology solutions to support their commercial strategies. According to industry sources, total pharmaceutical
industry commercial spend in the United States is $30 billion of which approximately $10 billion is attributable to commercial digital
spend.
We believe significant opportunity exists to address
the unmet needs of life sciences organizations as they relate to digital solutions, including omnichannel access to HCPs, for our customers’
biggest commercial challenges. These complex challenges include brand visibility to HCPs which is impacted by a competitive drug environment
with sales representatives losing time in front of prescribers, augmented by the amount of time the HCPs have to spend in front of computers
and in the EHR. Further, EHRs do not often communicate with one another, creating interoperability issues resulting in HCPs not having
all relevant patient information. In addition, expensive specialty medications are becoming more common and involve more complex diagnosis
criteria - factors that contribute to substantial script abandonment by patients. Our solutions are designed to address these and other
commercial challenges faced by our customers.
Principal Solutions
We offer clear, actionable solutions to the challenges
faced by our customers, and our combined HCP and DTC marketing strategies are designed to ensure our customers’ brands are positioned
at the right moment and with the right message, always prioritizing the end result: successful brand engagement to reach both HCPs and
patients, ultimately resulting in improved patient care.
Our principal solutions can be summarized as follows:
Audience Development: DAAP and MNT
● Dynamic Audience Activation Platform (DAAP) generates dynamic audiences
with predictive analytics via machine learning methods. This identifies which potentially qualified patients and which HCPs to actively
engage based on the patient’s care journey and disease progression. These dynamic audiences provide our manufacturing customers
with relevant and timely targets, generating a higher likelihood of impact.
● Micro-Neighborhood Targeting (MNT) creates consumer audiences using
a privacy-first process. MNT looks for all patients expressing brand eligibility signals (covering more than 90% of the U.S. population),
then scores over 35 million 9-digit zip codes based on the concentration of those signals to create a prioritized, yet de-identified audience.
Geographies are automatically refreshed and prioritized regularly for maximum marketing relevance and precision. Our clients may then
activate these audiences through programmatic Demand-Side Platforms (DSPs).
Audience Profiling: Profiler
● Our audience profiling solution, Profiler, provides insights into our customers’
target consumers, identifying the most cost effective and engaging channels, partners, and strategies for our customers. Audience profiling
enables clients to maximize marketing dollars, focusing on channels their targets are most likely to be consuming, and more specifically
focusing on the media partners within those channels. This is critical to upfront planning as well as periodic analysis to ensure efficient
use of marketing budgets.
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Audience Activation and Media Execution
● Our primary media offering is banner messaging delivered to HCPs. Banner messages include brand messaging,
therapeutic support messaging, affordability messaging, HUB awareness, limited distribution drug information, and patient support program
messaging. We can deliver these in a number of ways via our HCP omnichannel network (EHR systems and eRx platforms), programmatic social
media, and programmatic display.
● With the acquisition of Medicx, our omnichannel solutions expanded further to offering media execution
solutions to consumer audiences. To reach consumer audiences - brand eligible patients - we deliver messages via our consumer omnichannel
network including through 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.
Pharmacy Alerts
● Pharmacy Alerts improves the existing workflow for prescribing HCPs by informing
them in real time about which pharmacies are able to fill a patient’s prescription. Currently, HCPs typically see a list of pharmacies
near their patients, sorted by proximity, without regard to whether each pharmacy carries the medication or is permitted to fill it (in
case of a limited distribution drug). Pharmacy Alerts flags pharmacies that have the medication in stock and are able to fill the prescriptions,
resulting in less frustration and added work for prescribing physicians, pharmacies and patients and less waiting time to get essential
medications to the patients.
Financial Messaging
● Financial Messaging provides prescribers visibility to branded copay offers for patients directly within
their EHR systems and eRx platforms. It allows prescribers to print or digitally send copay offer details 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
The go-to-market
strategy for the business aligns sales and marketing efforts while keeping customer engagement at the core. Engaging customers early,
providing value throughout their journey, and nurturing long-term relationships drive sustainable growth and retention. Our sales and
marketing teams include over 25 individuals focused on awareness, adoption and expansion of data and technology solutions designed to
address the digital engagement needs of life sciences brands and their agency partners.
DAAP, our
patent pending patient-centric omnichannel engagement platform combines artificial intelligence (AI) and human intelligence (HI), to determine
the optimal time to engage patients and physicians. We synchronize HCP and DTC marketing across the programmatic and point-of-care channels
to increase brand conversions, streamline therapy starts, and build stronger brand relationships. 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.
Technology
Our proprietary technology platform enables us
to curate privacy safe DTC audiences, dynamic HCP and DTC audiences, and effectively manage digital media campaigns for our advertiser
clients (agencies, and manufacturer/brands) across our channel partner network. Our platform consists of a unified data intelligence technology
stack, multiple cloud-based data warehouses, and in-house applications and application programming interface layers. Collectively, this
platform enables us with a collaborative environment for data engineering, data science, and machine learning, an efficient method to
curate privacy safe DTC audiences, and a scalable means to manage both point-of-care media campaigns and the supply-side inventory request
volume. For the management of point-of-care media campaigns, the platform integrates advanced features of a Supply-Side Platform (SSP),
allowing us to provide seamless access to an expansive range of point-of-care inventory via our strategic partnerships. As an SSP, our
platform enables us to manage and optimize our point-of-care network’s ad inventory, maximizing their revenue. On the demand side,
our platform empowers our account and program managers to efficiently manage our customers’ campaign(s). Our technology is built
on a scalable and secure architecture that supports high-performance data processing, real-time decisioning, and integration with third-party
data providers.
To support our growth and provide maximum security,
scalability, and flexibility, all 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, Business Intelligence, Platform Services, and Internal Systems Support. System enhancements
in 2024 included system and framework upgrades, documentation of processes and procedures, security implementation for ongoing cybersecurity,
Sarbanes Oxley, HIPAA, and customer security assessments, and in achieving both System and Organization
Controls (SOC) 2 Type 1 and Type 2 certifications.
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Competition
The competitive
landscape within life sciences digital marketing is constantly evolving. Our solutions face competition from numerous other companies.
We compete broadly in the dynamic and ever-evolving
pharmaceutical and life sciences digital marketing industry with healthcare data suppliers, health-focused demand-side platforms, and
health-focused walled garden websites and web platforms, and advertising networks that aggregate traffic from multiple web sites or point-of-care
platforms such as telehealth, EHR, eRx, physician practice management, health information exchanges (HIE), and site-based platforms within
large health systems. Our competitors include large well-known companies with established names, solid market niches, and wide arrays
of product offerings and marketing networks.
As innovators
in the industry, we have patented and patent-pending technologies that provide unique differentiation, including a patient-centric focus
on brand conversion, and value generation for our customers. Our extensive point-of-care network provides our customers with unparalleled
reach to relevant prescribers. We are uniquely able to use DAAP to produce targeted, privacy-safe audiences for both consumers and their
treating HCPs, allowing brand engagement to occur within the likely care window to find brand-eligible patients at the right time for
brand adoption. DAAP leverages the investment in data and AI technologies, combined with human intelligence, in applying brand-specific
strategies to optimize program performance. Our patented MNT technology provides a unique opportunity for pharmaceutical brands to market
to consumers while adhering to HIPAA and state level privacy requirements.
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,
2024, 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, 2024, OPTIMIZERx, OPTIMIZEMD, CareSpeak, DIETWATCH, Innovate4Outcomes, SPRx,
SPx, RMDY, Specialty Express, TELAREP, Medicx, Micro-Neighborhood, and Geomedical Targeting are our registered trademarks.
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. Many states have enacted laws regulating
the processing of personal information which may reduce demand for placing digital ads in general, especially when those ads relate to
medications, medical products, or health conditions. Although our solutions address these laws by using publicly available information
and by processing de-identified and aggregated information, and we use this data to target geographies rather than individuals, our customers
and partners in the advertising industry remain subject to these regulatory pressures and may not process personal information in this
same way. 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.
Human Capital
As of December 31, 2024, we had 106 full-time
employees and 1 part-time employee in the U.S, as well as 22 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 for 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, including “Cultural Café”, “Food Waste Awareness”,
“Movement 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.
Smaller Reporting Company
We are a “smaller reporting company”
as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result, we may take advantage of
certain reduced disclosure obligations available to smaller reporting companies, including the exemption from compliance with the auditor
attestation requirements pursuant to the Sarbanes-Oxley Act of 2022, reduced disclosure about our executive compensation arrangements
and the requirements to provide only two years of audited financial statements in our annual reports and registration statements. We will
continue to be a “smaller reporting company” as long as (1) we have a public float (i.e., the market value of our American
Depositary Shares held by non-affiliates) less than $250 million calculated as of the last business day of our most recently completed
second fiscal quarter, or (2) our annual revenues are less than $100 million for our previous fiscal year and we have either no public
float or a public float of less than $700 million as of the end of that fiscal year’s second fiscal quarter. Decreased disclosures
in our SEC filings due to our status as a “smaller reporting company” may make it harder for investors to analyze our results
of operations and financial prospects.
Corporate Information
On January 31, 2006, Optimizer Systems, L.L.C. was
formed in the State of Michigan and, on October 16, 2007, OptimizeRx Corporation was separately incorporated in Michigan. On October 22,
2007, Optimizer Systems, LLC merged into OptimizeRx Corporation, a Michigan corporation, and the name OptimizeRx Corporation remained
unchanged following the merger.
On April 14, 2008, an alternative reporting company with the OTC Market
Group, Inc., known at the time as RFID Ltd., and formed in the State of Colorado, entered into a share exchange agreement with the stockholders
of OptimizeRx Corporation, pursuant to which the stockholders of OptimizeRx Corporation exchanged all of the issued and outstanding capital
stock of OptimizeRx Corporation for shares of common stock of RFID Ltd. As of April 30, 2008, RFID’s officers and directors
resigned their positions and RFID changed its business to OptimizeRx’s business. On April 15, 2008, RFID Ltd’s
corporate name was changed to OptimizeRx Corporation, a Colorado corporation. On September 4, 2008, the Company then completed a migratory
merger, thereby changing the Company’s state of incorporation from Colorado to Nevada, resulting in OptimizeRx Corporation, a Nevada
corporation becoming the parent corporation of OptimizeRx Corporation, a Michigan corporation. On April 11, 2023, OptimizeRx Corporation,
a Michigan corporation was merged with and into OptimizeRx Corporation, a Nevada corporation.
We conduct our operations through our wholly-owned subsidiaries, Healthy
Offers, Inc. (d/b/a Medicx Health or “Medicx Health”), a Nevada corporation, and CareSpeak Communications, d.o.o., a controlled
foreign corporation incorporated in Croatia.
Our principal executive offices are located at
260 Charles Street Suite 302, Waltham, MA 02453 and our telephone number is (248) 651-6568. Our website address is www.optimizerx.com .
Information contained on or accessible through this website is not incorporated by reference in, or otherwise a part of, this Annual Report
on Form 10-K, and any references to this website are intended to be inactive textual references only.
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.