OptimizeRx Corp 10-Q

Item 1. Financial Statements Our condensed consolidated financial statements included in this Form 10-Q are as follows: 2 Condensed Consolidated Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024; 3 Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2025 and 2024 (unaudited); 4 Condensed Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2025 and 2024 (unaudited); 6 Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2025 and 2024 (unaudited); 7 Notes to Condensed Consolidated Financial Statements (unaudited). 1 Table of Contents OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) March 31, 2025 December 31, 2024 ASSETS (unaudited) Current assets Cash and cash equivalents $ 16,573 $ 13,380 Accounts receivable, net of allowance for credit losses of $ 335 at March 31, 2025 and December 31, 2024 32,720 38,212 Taxes receivable 113 — Prepaid expenses and other 2,305 2,379 Total current assets 51,711 53,971 Property and equipment, net 150 150 Other assets Goodwill 70,869 70,869 Patent rights, net 5,349 5,517 Technology assets, net 7,931 8,180 Tradename and customer relationships, net 31,226 31,819 Operating lease right of use assets 303 366 Security deposits and other assets 229 296 Total other assets 115,907 117,047 TOTAL ASSETS $ 167,768 $ 171,168 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities Current portion of long-term debt $ 3,300 $ 2,000 Accounts payable 3,381 2,156 Accrued expenses 9,277 8,486 Revenue share payable 1,743 5,053 Taxes payable — 318 Current portion of lease liabilities 139 168 Deferred revenue 511 473 Total current liabilities 18,351 18,654 Non-current liabilities Long-term debt, net 29,190 30,816 Lease liabilities, net of current portion 171 209 Deferred tax liabilities, net 3,786 4,491 Total liabilities 51,498 54,170 Commitments and contingencies (See Note 11) Stockholders’ equity Preferred stock, $ 0.001 par value, 10,000,000 shares authorized, none issued and outstanding at March 31, 2025 and December 31, 2024 — — Common stock, $ 0.001 par value, 166,666,667 shares authorized, 20,234,186 and 20,194,697 shares issued at March 31, 2025 and December 31, 2024, respectively 20 20 Treasury stock, $ 0.001 par value, 1,741,397 shares held at March 31, 2025 and December 31, 2024 ( 2 ) ( 2 ) Additional paid-in-capital 202,819 201,348 Accumulated deficit ( 86,567 ) ( 84,368 ) Total stockholders’ equity 116,270 116,998 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 167,768 $ 171,168 The accompanying notes are an integral part of these condensed consolidated financial statements. 2 Table of Contents OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except share and per share data, unaudited) For the Three Months Ended March 31, 2025 2024 Net revenue $ 21,928 $ 19,690 Cost of revenues, exclusive of depreciation and amortization presented separately below 8,584 7,486 Gross profit 13,344 12,204 Operating expenses General and administrative expenses 14,364 16,166 Depreciation and amortization 1,094 1,067 Total operating expenses 15,458 17,233 Loss from operations ( 2,114 ) ( 5,029 ) Other income (expense) Interest expense ( 1,297 ) ( 1,546 ) Other income 39 — Interest income 88 20 Total other expense, net ( 1,170 ) ( 1,526 ) Loss before provision for income taxes ( 3,284 ) ( 6,555 ) Income tax benefit (expense) 1,085 ( 344 ) Net loss $ ( 2,199 ) $ ( 6,899 ) Weighted average number of shares outstanding – basic 18,470,808 18,170,108 Weighted average number of shares outstanding – diluted 18,470,808 18,170,108 Loss per share – basic $ ( 0.12 ) $ ( 0.38 ) Loss per share – diluted $ ( 0.12 ) $ ( 0.38 ) The accompanying notes are an integral part of these condensed consolidated financial statements. 3 Table of Contents OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2025 (in thousands, except share data, unaudited) Common Stock Treasury Stock Additional Paid in Capital Accumulated Deficit Total Shares Amount Shares Amount Balance January 1, 2025 20,194,697 $ 20 ( 1,741,397 ) $ ( 2 ) $ 201,348 $ ( 84,368 ) $ 116,998 Stock based compensation expense Options — — — — 579 — 579 Restricted stock — — — — 979 — 979 Issuance of common stock For restricted stock units vested 39,489 — — — ( 87 ) — ( 87 ) Net loss — — — — — ( 2,199 ) ( 2,199 ) Balance March 31, 2025 20,234,186 $ 20 ( 1,741,397 ) $ ( 2 ) $ 202,819 $ ( 86,567 ) $ 116,270 4 Table of Contents OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY FOR THE THREE MONTHS ENDED MARCH 31, 2024 (in thousands, except share data, unaudited) Common Stock Treasury Stock Additional Paid in Capital Accumulated Deficit Total Shares Amount Shares Amount Balance January 1, 2024 19,899,679 $ 20 ( 1,741,397 ) $ ( 2 ) $ 190,793 $ ( 64,258 ) $ 126,553 Stock based compensation expense Options — — — — 1,353 — 1,353 Restricted stock — — — — 1,671 — 1,671 Issuance of common stock For restricted stock units vested 22,200 — — — ( 140 ) — ( 140 ) Net loss — — — — — ( 6,899 ) ( 6,899 ) Balance March 31, 2024 19,921,879 $ 20 ( 1,741,397 ) $ ( 2 ) $ 193,677 $ ( 71,157 ) $ 122,538 The accompanying notes are an integral part of these condensed consolidated financial statements. 5 Table of Contents OPTIMIZERX CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands, unaudited) For the Three Months Ended March 31, 2025 2024 OPERATING ACTIVITIES: Net loss $ ( 2,199 ) $ ( 6,899 ) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 1,094 1,067 Stock-based compensation 1,558 3,024 Bad debt expense — 132 Amortization of debt issuance costs 174 182 Changes in: Accounts receivable 5,492 6,373 Prepaid expenses and other assets 74 800 Accounts payable 1,225 ( 562 ) Revenue share payable ( 3,310 ) ( 2,692 ) Accrued expenses and other liabilities 854 ( 362 ) Taxes receivable and payable ( 431 ) 323 Deferred tax liabilities ( 705 ) — Deferred revenue 38 732 NET CASH PROVIDED BY OPERATING ACTIVITIES 3,864 2,118 INVESTING ACTIVITIES: Purchase of property and equipment ( 27 ) ( 32 ) Capitalized software development costs ( 57 ) ( 121 ) NET CASH USED IN INVESTING ACTIVITIES ( 84 ) ( 153 ) FINANCING ACTIVITIES: Cash paid for employee withholding taxes related to the vesting of restricted stock units ( 87 ) ( 140 ) Repayment of long-term debt ( 500 ) ( 500 ) NET CASH USED IN FINANCING ACTIVITIES ( 587 ) ( 640 ) NET INCREASE IN CASH AND CASH EQUIVALENTS 3,193 1,325 CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD 13,380 13,852 CASH AND CASH EQUIVALENTS - END OF PERIOD $ 16,573 $ 15,177 SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for interest $ 1,121 $ 1,350 Cash paid for income taxes $ — $ 21 The accompanying notes are an integral part of these condensed consolidated financial statements. 6 Table of Contents OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION The accompanying condensed consolidated financial statements include OptimizeRx Corporation and its wholly owned subsidiaries (collectively, the “Company”, “we”, “our”, or “us”). We are a digital healthcare technology company that connects over two million HCPs and millions of their patients through an intelligent technology platform embedded within a proprietary omnichannel network. OptimizeRx helps life science organizations engage and support their customers through our combined HCP and DTC marketing strategies. The condensed consolidated financial statements for the three months ended March 31, 2025 and 2024 have been prepared by us without audit pursuant to the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments necessary to present fairly our financial position at March 31, 2025, and our results of operations, changes in stockholders’ equity, and cash flows for the three months ended March 31, 2025 and 2024, have been made. Those adjustments consist of normal and recurring adjustments. The condensed consolidated balance sheet as of December 31, 2024, has been derived from the audited consolidated balance sheet as of that date. We operate a single reporting segment and, accordingly, use our consolidated net income as our measure of profit and loss and it is not presented separately here. Certain information and note disclosures, including a detailed discussion about the Company’s significant accounting policies, normally included in our annual consolidated financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. These condensed consolidated financial statements should be read in conjunction with a reading of the consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on March 20, 2025 (“Form 10-K”). The results of operations for the three months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year. Segment Reporting We operate in one reportable segment and use consolidated net income as our measure of segment profit and loss. Overall, our business involves connecting life science companies to patients and providers. We have a common customer base of life sciences customers geographically located in the U.S. for all of our solutions, which primarily focus on all communications between our life sciences customers and with healthcare providers or patients. We do not prepare separate internal income statements by solution as our focus is on selling enterprise arrangements covering multiple solutions that span the entire patient journey with a specific brand. Our chief operating decision maker (“CODM”) is our Chief Executive Officer (“CEO”). The CODM allocates resources and assesses performance of the business and other activities at the operating segment level. The CODM assesses performance for the operating segment and decides how to allocate resources based on net income (loss) that is also reported on the Condensed Consolidated Statement of Operations as consolidated net income (loss). The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as total assets. The CODM uses consolidated net income (loss) to evaluate income generated in deciding whether to reinvest profits into the segment or to use such profits for other purposes, such as for acquisitions or share repurchases. Consolidated net income (loss) is used to monitor budget versus actual results. The CODM also uses consolidated net income (loss) in competitive analyses by benchmarking to the Company’s competitors. The competitive analysis along with the monitoring of budget versus actual results are used in assessing performance of the segment, and in establishing management and variable compensation. The CODM also regularly reviews the Condensed Consolidated Statement of Operations for segment expenses, of which the significant expenses are related to cost of revenues, exclusive of depreciation and amortization, and operating expenses. Since we operate as one reportable segment, all required segment financial information is found in the condensed consolidated financial statements. 7 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 1 – NATURE OF BUSINESS AND BASIS OF PRESENTATION (CONTINUED) Fair Value of Financial Instruments Fair value is defined as the price that would be received upon the sale of an asset or paid upon the transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk. In addition to defining fair value, the disclosure requirements around fair value establish a fair value hierarchy for valuation inputs, which is expanded. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels, which is determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are: Level 1 – Inputs are based upon unadjusted quoted prices for identical instruments traded in active markets. Level 2 – Inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 – Inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques. The Company’s stock options and warrants are valued using Level 3 inputs. The Company's carrying amounts of financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and other current liabilities, approximate their fair values due to their short maturities. NOTE 2 – NEW ACCOUNTING PRONOUNCEMENTS In 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. In November 2024, the FASB issued ASU 2024-03 (“ASU 2024-03”), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40). ASU 2024-03 requires that public business entities disclose additional information about specific expense categories in the notes to financial statements at interim and annual reporting periods. The prescribed categories include purchases of inventory, employee compensation, depreciation, intangible asset amortization, and depletion. This authoritative guidance is effective for annual periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the effect of this new guidance on its consolidated financial statements. NOTE 3 – CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS Cash equivalents include items almost as liquid as cash comprised of investments in AAA rated money market funds that invest in first-tier only securities, which primarily include domestic commercial paper and securities issued or guaranteed by the U.S. government or its agencies. We account for marketable equity securities in accordance with ASC 321-10, “Investments - Equity Securities”, as the shares have a readily determinable fair value quoted on the national stock exchange and are classified within Level 1 of the fair value hierarchy. At March 31, 2025 and December 31, 2024, we have recorded $ 8,391 and $ 8,300 , respectively, of money market funds at approximate fair value. 8 OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 4 - CAPITALIZED SOFTWARE COSTS The Company capitalizes certain development costs incurred in connection with software development for internal-use software platforms used in operations and for providing services to our customers. Costs incurred in the preliminary stages of development are expensed as incurred. Once software has reached the development stage, internal and external costs, if direct, are capitalized until the software is substantially complete and ready for its intended use. Capitalization ceases upon completion of all substantial testing. The Company also capitalizes costs related to specific upgrades and enhancements when it is probable the expenditures will result in additional functionality. Capitalized internal use software development costs are included in intangible assets and are amortized on a straight-line basis over the estimated useful life of the software platforms and are included in depreciation and amortization within operating expenses in the condensed consolidated statements of operations. Amortization of capitalized internal use software expense for the three months ended March 31, 2025 and 2024 was $ 91 and $ 71 , respectively. The Company accumulates capitalizable costs related to current projects in a construction in process (“CIP”) software account, the balance of which was $ 378 and $ 320 at March 31, 2025 and December 31, 2024, respectively. NOTE 5 - LONG-TERM DEBT Long-term debt, net comprised of the following at March 31, 2025 and December 31, 2024: March 31, 2025 December 31, 2024 Term loan, due in 2027 $ 33,790 $ 34,290 Less: current portion of long-term debt ( 3,300 ) ( 2,000 ) Less: unamortized issuance costs ( 1,300 ) ( 1,474 ) Long-term debt, net $ 29,190 $ 30,816 On October 11, 2023, the Company entered into a Financing Agreement (the “Financing Agreement”) which provided for a term loan (the “Term Loan”) of $ 40 million, the net proceeds of which were used to partially finance the Medicx Health transaction. In connection with the Term Loan the Company incurred issuance costs of approximately $ 2,270 , which were capitalized and are being amortized to interest expense over the life of the Term Loan. Amortization of debt issuance costs for the three months ended March 31, 2025 and March 31, 2024 was $ 174 and $ 182 , respectively. The Company’s obligations under the Term Loan are secured by all of the Company’s and its subsidiaries’ assets (including a pledge of all of the capital stock and equity interests of its subsidiaries). The Term Loan is repayable in quarterly installments on the last business day of each fiscal quarter, beginning December 31, 2023, in an amount equivalent to 1.25 %, of the original principal amount. The outstanding unpaid principal amount and all accrued but unpaid interest thereon, shall be due and payable on the earlier of (i) the fourth anniversary of the closing date of the Term Loan or (ii) the date on which the Term Loan is declared due and payable pursuant to the terms of the Financing Agreement. The Company may prepay, subject to an Applicable Premium, 3 % if the prepayment is made on a date that is up to and including the first anniversary of closing, 2 %, if the prepayment is made up to and including the second anniversary, 1 % if the prepayment is made up to and including the third anniversary and zero thereafter, all or a portion of the Term Loan and, under certain circumstances, including certain asset disposals and the raising of indebtedness not permitted under the Term Loan is required to make mandatory prepayments of the principal balance. If the prepayment occurs within 12 months of the date of the loan, the Company is also required to pay lost interest from the prepayment date to one year from the loan funding date. In addition, the Company is required to make a mandatory prepayment on March 31, of each year, commencing with 2025, equivalent to Excess Cash Flow multiplied by a percentage factor of 25 %, if the leverage ratio is 3.60 to 1.00 or less, 50 % if the leverage ratio is greater than 3.60 to 1.00 or less than or equal; to 4.10 to 1.00 and 75 %, if the leverage ratio is greater than 4.10 to 1.00. Excess Cash Flow is defined in the Financing Agreement as Consolidated EBITDA for the previous fiscal year less scheduled principal and interest payments, capital expenditure, cash taxes and any cash expenses/gains 9 Table of Contents OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 5 – LONG-TERM DEBT (CONTINUED) added back to net income in the calculation of Consolidated EBITDA, adjusted for any increase/decrease in working capital during the fiscal year. During the three months ended March 31, 2025 and March 31, 2024, the Company made total principal repayments of $ 0.5 million. At the Company’s option the Term Loan, or any portion thereof bears interest at either: a. The greater of (a) 4.00 % per annum, (b) the Federal Funds Rate plus 0.50 % per annum, (c) the one month Secured Overnight Financing Rate (“SOFR”), plus an adjustment of 26.161 basis point and 1.00 % per annum, and (d) the rate last quoted by The Wall Street Journal as the “Prime Rate”, plus an Applicable Margin of 7.5 %; or b. Three-month SOFR plus an adjustment of 26.161 basis points and an Applicable Margin of 8.5 % As of March 31, 2025, the Term Loan bears interest at 13.1 %, with an effective interest rate of 15.5 % for the three months ended March 31, 2025, including the impact of the amortization of debt issuance costs. The Term Loan requires the Company to maintain certain maximum leverage ratios and Liquidity (as defined in the Financing Agreement), of at least $ 5.0 million. The Company was in compliance with its financial covenants as of March 31, 2025. The Term Loan contains customary events of default, which include, (subject to, in certain circumstances to grace and cure periods), non-payment of principal and interest, non-compliance with certain covenants, commencement of bankruptcy proceedings and a change in control. Payments due on the Term Loan in each of the next three years subsequent to March 31, 2025, are as follows: As of March 31, 2025 2025 (remainder) $ 1,500 2026 2,000 2027 30,290 $ 33,790 NOTE 6 – LEASES We had operating leases with terms greater than 12 months for office space in four multi-tenant facilities, which are recorded as Operating lease right-of-use assets and Operating lease liabilities. For the three months ended March 31, 2025 and 2024, the Company’s lease cost consists of the following components, each of which is included in operating expenses within the Company’s condensed consolidated statements of operations: Three Months Ended March 31, 2025 2024 Operating lease cost $ 62 $ 62 Short-term lease cost — 1 Total lease cost $ 62 $ 63 10 Table of Contents OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 6 – LEASES (CONTINUED) The table below presents the future minimum lease payments to be made under operating leases in each of the remainder of the current and next four fiscal years and thereafter: As of March 31, 2025 2025 (remainder) $ 119 2026 112 2027 64 2028 45 2029 — Thereafter — — Total — 340 Less: discount — 30 Total lease liabilities $ — $ 310 As of March 31, 2025, operating lease payments excludes approximately $ 269 of legally binding minimum lease payments for leases signed but which we have not yet commenced payments. The weighted average remaining lease term at March 31, 2025 for the operating leases is 2.6 years, and the weighted average discount rate used in calculating the operating lease asset and liability is 6.01 %. Cash paid for amounts included in the measurement of lease liabilities was $ 60 and $ 54 for the three months ended March 31, 2025 and 2024, respectively. For the three months ended March 31, 2025 and 2024, payments on lease obligations were $ 68 and $ 65 , respectively, and amortization on the right of use assets was $ 62 and $ 51 , respectively. NOTE 7 – STOCKHOLDERS’ EQUITY Preferred Stock The Company had 10,000,000 shares of preferred stock, $ 0.001 par value per share, authorized as of March 31, 2025. No shares were issued or outstanding in either 2025 or 2024. Common Stock The Company had 166,666,667 shares of common stock, $ 0.001 par value per share, authorized as of March 31, 2025. There were 18,492,789 and 18,453,300 shares of common stock outstanding, net of shares held in treasury of 1,741,397 and 1,741,397 at March 31, 2025 and December 31, 2024, respectively. During the three months ended March 31, 2025, the Company issued no shares of our common stock and received no proceeds in connection with the exercise of options under our 2013 Incentive Plan (the “2013 Plan”) and our 2021 Equity Incentive Plan (“2021 Plan”). The Company issued 39,489 shares of common stock in the three months ended March 31, 2025, in connection with the vesting of restricted stock units under our 2013 Plan and our 2021 Plan. Some of the participants utilized a net withhold settlement method, in which shares were surrendered to cover payroll withholding taxes. Of the shares issued to participants during the three months ended March 31, 2025, 14,038 shares, valued at $ 87 , were surrendered and subsequently cancelled. During the three months ended March 31, 2024, the Company issued no shares of our common stock and received no proceeds in connection with the exercise of options under our 2013 Plan and our 2021 Plan. The Company issued 22,200 shares of common stock in the three months ended March 31, 2024, in connection with the vesting of restricted stock units under our 2013 Plan and our 2021 Plan. Some of the participants utilized a net withhold settlement method, in which shares were surrendered to cover payroll withholding taxes. Of the shares issued to participants during the three months ended March 31, 2024, 9,423 shares valued at $ 140 were surrendered in connection with the net withhold settlement method and were subsequently cancelled. 11 Table of Contents OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 7 – STOCKHOLDERS’ EQUITY (CONTINUED) Treasury Stock During the quarter ended March 31, 2023, the Board authorized a share repurchase program, under which the Company could repurchase up to $ 15.0 million of its outstanding common stock. This stock repurchase authorization expired on March 12, 2024. During each of the quarters ended March 31, 2025 and March 31, 2024 , the Company did not repurchase any of its outstanding shares of common stock . NOTE 8 – STOCK BASED COMPENSATION The Company sponsors two stock-based incentive compensation plans. The first plan is known as the 2013 Plan and was established by the Board of Directors of the Company in June 2013. The 2013 Plan, as amended, authorized the issuance of 3,000,000 shares of Company common stock. The amended plan was approved by stockholders. In connection with the adoption of a new plan in 2021, the Company froze the 2013 Plan. A total of 191,845 shares of common stock underlying options and 4,000 shares of common stock underlying restricted stock unit awards were outstanding at March 31, 2025. At March 31, 2025, there were no shares available for grant under the 2013 Plan. In 2021, the Company adopted a new plan known as the 2021 Plan. The plan was established by the Board of Directors and approved by stockholders in August 2021. On June 5, 2024, at the 2024 Annual Meeting of Stockholders, the Company's stockholders approved an amendment to the 2021 Plan to increase the number of shares of common stock available for awards under the 2021 Plan by 1,950,000 shares for a total of 4,450,000 shares. A total of 1,500,037 shares of common stock underlying options and 614,465 shares of common stock underlying restricted stock unit awards were outstanding at March 31, 2025. At March 31, 2025, 1,183,398 shares were available for grant under the 2021 Plan. Stock Options The compensation expense that has been charged against income related to options for the three months ended March 31, 2025 and 2024 was $ 579 and $ 1,353 , respectively. There is $ 2,897 of remaining expense related to unvested options to be recognized in the future over a weighted average period of 2 years. The total intrinsic value of outstanding options at March 31, 2025 was $ 2,394 . The fair value of these instruments was calculated using the Black-Scholes option pricing model. During 2022, the Company granted certain performance-based stock options, the expense for which will be recorded over time once the achievement of the performance is deemed probable. There was $ 8 in expense related to these options recorded during the quarter ended March 31, 2025. There was no expense related to these options for the three months ended March 31, 2024. Restricted Stock Units The Company recorded $ 979 and $ 1,671 in compensation expense related to restricted stock units for the three months ended March 31, 2025 and March 31, 2024, respectively. A total of $ 3,996 remains to be recognized at March 31, 2025 over a weighted average period of 1.81 years. During 2022, the Company granted certain performance-based restricted stock units, the expense for which will be recorded over time once the achievement of the performance is deemed probable. There was $ 8 in expense related to these restricted stock units recorded during the quarter ended March 31, 2025. There was no expense related to these restricted stock units recorded for the three months ended March 31, 2024. 12 Table of Contents OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 8 – STOCK BASED COMPENSATION (CONTINUED) Non-employee Directors Compensation The director's compensation program calls for the grant of restricted stock units with a one year vesting period. There was $ 173 and $ 199 included in the compensation expense discussed above related to director's compensation for the three months ended March 31, 2025 and March 31, 2024, respectively. Equity Award Modification On April 16, 2023, the Compensation Committee approved a grant to the Company’s then CEO of 86,685 restricted stock units and 161,698 stock options with a grant date fair value of $ 2,500 to vest over a three year period. Concurrently, the then CEO forfeited his October 2021 grant of 182,398 market-based restricted stock units. The forfeiture and accompanying grant were considered an equity modification according to ASC 718, Compensation-Stock Compensation (“ASC 718”). The additional compensation value created by the termination and issuance of new equity awarded, as measured using a Monte Carlo simulation, was approximately $ 1,900 in total. Under ASC 718 this results in a non-cash expense in current and future periods to be recognized over a three-year period. These expense values are reflected and included in the option and restricted stock expense values discussed above. At December 31, 2024, the remaining expense of $ 1,556 related to the October 2021 grant of market-based restricted stock units was accelerated upon the departure of the CEO. The expense for unvested stock-options and restricted stock units related to the April 2023 grant was reversed. NOTE 9 – REVENUES Under ASC Topic 606, Revenue from Contracts with Customers, 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 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 the Company delivers 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. The Company also generates revenue through data subscriptions. Data subscriptions can be contracted on a stand alone basis or as a complement to content delivery. Additional services include set up, and reporting. We consider these services to be complimentary to the primary performance obligation and recognized through performance of delivery of content or data. We have certain contracts which are satisfied at a point in time, primarily for consulting projects or NPI data target lists. For such contracts, we recognize revenue upon delivery of the related data, study or report. The Company’s contracts are generally all less than one year and the primary performance obligation is delivery of messages, or our forms of content, but the contract may contain additional services. The net contract balance for contracts in progress at March 31, 2025 and December 31, 2024, was $ 35,342 and $ 4,288 , respectively. The outstanding performance obligations are expected to be satisfied during the year ending December 31, 2025. In certain circumstances, the Company will offer sales rebates to customers based on spend volume. Rebates are typically contracted based on a quarterly or annual spend amount based on a volume threshold or tiered model. At the beginning of the year, the rebate percentage is estimated based on input from the sales team and analysis of prior year sales. Thereafter, the open contract balance for the customer is assessed quarterly to ensure the estimated rebate percentage being used for the rebate accrual remains reasonable. The estimated amount of variable consideration will be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. For the year ended 13 Table of Contents OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 9 - REVENUES (CONTINUED) December 31, 2024 and during the first three months of 2025, there were two contracts with customers that included a rebate clause. 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 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. The Company recognizes 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 contract. 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, the Company also recognizes revenue for providing program performance reporting and maintenance. 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 licensee. 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, the Company also resells messaging solutions that are available through channel partners that are complementary to the HCP marketing business and customer 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 the Company sells solutions on a commission basis, net revenue is recognized based on the commission-based revenue split that the Company receives. In instances where the Company resells these messaging solutions and has all financial risk and significant operation input and risk, the Company records the revenue based on the gross amount sold and the amount paid to the channel partner as a cost of sales. The amount of revenue recognized as an agent on a net basis was $ 3,373 and $ 2,625 for the three months ended March 31, 2025 and March 31, 2024, respectively. The Company has several signed contracts with customers for the distribution of messaging, or other services, which include payment in advance. The payments are not recorded as revenue until the revenue is earned under our revenue recognition policy. Deferred revenue was $ 511 and $ 473 as of March 31, 2025 and December 31, 2024, respectively. The contracts are all short term in nature and all revenue is expected to be recognized within 12 months, or less. The following is a summary of activity for the deferred revenue account: Three Months Ended March 31, 2025 2024 Balance January 1 $ 473 $ 172 Revenue recognized ( 2,989 ) ( 3,229 ) Amount collected 3,027 3,961 Balance March 31 $ 511 $ 904 Disaggregation of Revenue Consistent with ASC Topic 606, we have disaggregated our revenue by timing of revenue recognition. The majority of our revenue is recognized over time as solutions are provided. A small portion of our revenue related to program development, 14 Table of Contents OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 9 - REVENUES (CONTINUED) solution architect design, and other solutions is recognized at a point in time upon delivery to customers. A break down is set forth in the table below. Three Months Ended March 31, 2025 2024 Revenue recognized over time $ 21,782 $ 16,925 Revenue recognized at a point in time 146 2,765 Total Revenue $ 21,928 $ 19,690 Accounts receivable are reported at realizable value, net of allowances for credit losses, which is estimated and recorded in the period the related revenue is recorded. The Company does not seek collateral to secure its accounts receivable and amounts billed are generally due within a short period of time based on terms and conditions normal for our industry. The Company has a standardized approach to estimate and review the collectability of its receivables based on a number of factors, including the period they have been outstanding. Historical collection and payer reimbursement experience is an integral part of the estimation process related to allowances for credit losses. In addition, the Company regularly assesses the state of its billing operations in order to identify issues, which may impact the collectability of these receivables or reserve estimates. If current or expected future economic trends, events, or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and the allowance is adjusted accordingly. Past-due receivable balances are written off when the Company’s collection efforts have been exhausted. The following is a summary of changes in the allowance for credit losses for the: Three Months Ended March 31, 2025 2024 Balance at January 1, $ 335 $ 239 Provision for credit losses — 132 Write-offs — — Balance at March 31, $ 335 $ 371 From time to time, we may record revenue based on our revenue recognition policies in advance of being able to invoice the customer, or we may invoice the customer prior to being able to recognize the revenue. Included in accounts receivable are unbilled amounts of $ 4,240 and $ 3,241 at March 31, 2025 and December 31, 2024, respectively. Amounts billed in advance of revenue recognition are presented as deferred revenue on the condensed consolidated balance sheets. Related Party Transactions Related party transactions include transactions between the Company and its stockholders, management, or affiliates. The following transactions were in the normal course of operations and were measured and recorded at the exchange amount, which is the amount of consideration established and agreed to by the parties. During the year ended December 31, 2010, the Company acquired the technical contributions and assignment of all exclusive rights to and for a key patent in process at the time from a former CEO, in exchange for a total payment in shares of common stock and options valued at $ 930 at the time of the acquisition and recorded the patent at that cost. That patent remains in Patents Rights on the condensed consolidated balance sheet as of March 31, 2025 and December 31, 2024. Jim Lang, one of our Board Members, is the CEO of Eversana, a leading global provider of services to the life sciences industry. Eversana is similar to other customers from which we generate revenue, such as agencies or resellers. During the three months ended March 31, 2025 and March 31, 2024, we have recognized $ 242 and $ 72 , respectively, in revenue from 15 Table of Contents OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 9 - REVENUES (CONTINUED) contracts engaged with Eversana. These contracts were sourced by Eversana on behalf of life science customers of theirs. The contracts are at market rates and were generated in the normal course of business. NOTE 10 – LOSS PER SHARE Basic earnings per share (“EPS”) is computed by dividing net income (loss) by the weighted average number of common shares outstanding during the period. The number of shares related to options and restricted stock units included in diluted EPS is based on the “Treasury Stock Method” prescribed in ASC 260-10, Earnings per Share . This method assumes the theoretical repurchase of shares using proceeds of the respective stock options exercised, and for restricted stock units, the amount of compensation cost attributed to future services which have not yet been recognized, and the amount of current and deferred tax benefit, if any, that would be credited to additional paid in capital upon the vesting of the restricted stock units, at a price equal to the issuer’s average stock price during the related earnings period. Accordingly, the number of shares that could be included in the calculation of EPS in respect of the stock options and restricted stock units is dependent on this average stock price and will increase as the average stock price increases. The following table sets forth the computation of basic and diluted net loss per share. Three Months Ended March 31, 2025 2024 Numerator Net loss $ ( 2,199 ) $ ( 6,899 ) Denominator Weighted average shares outstanding used in computing net loss per share Basic 18,470,808 18,170,108 Effect of dilutive stock options, warrants, and stock grants — — Diluted 18,470,808 18,170,108 Net loss per share Basic $ ( 0.12 ) $ ( 0.38 ) Diluted $ ( 0.12 ) $ ( 0.38 ) The number of common shares potentially issuable upon the exercise of certain options and the vesting of certain restricted stock units that were excluded from the diluted loss per common share calculation are reflected in the table below. Three Months Ended March 31, Weighted average number of shares for the periods ended 2025 2024 Options — 22,522 Unvested restricted stock unit awards 108,204 83,237 Total 108,204 105,759 NOTE 11 – COMMITMENTS AND CONTINGENCIES Litigation From time to time, the Company may become involved in legal proceedings or be subject to claims arising in the ordinary 16 Table of Contents OPTIMIZERX CORPORATION NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (in thousands, excepts share and per share data, unaudited) NOTE 11 – COMMITMENTS AND CONTINGENCIES (CONTINUED) course of our business. We are currently not a party to any material legal or administrative proceedings, and we are not aware of any pending or threatened material legal or administrative proceedings against us. Commitments From time to time, the Company enters into arrangements with partners to acquire minimum amounts of media, data or messaging capabilities. As of March 31, 2025, the Company had commitments for future minimum payments of $ 16.6 million that will be reflected in cost of revenues during the years from 2025 through 2029. Minimum payments are due in the remainder of 2025 and fiscal 2026 and 2027 in the amounts of $ 10.9 million, $ 4.1 million and $ 1.6 million, respectively. NOTE 12 – INCOME TAXES The Company reported a benefit from income taxes of $ 1,085 for the three months ended March 31, 2025, representing an effective tax rate of 33.0 %. The effective tax rate for the three months ended March 31, 2025 reflects the impact of certain permanent items and discrete items for the quarter related to projected decreases in our valuation allowance and to stock based compensation. There was no provision for or benefit from taxes in the three months ended March 31, 2025 in the jurisdictions of Croatia and Israel, as the Company carried a full valuation allowance against our net deferred tax assets due to our history of losses. The Company recognizes deferred tax assets to the extent it believes these assets are more-likely-than-not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing temporary differences, projected future taxable income, tax planning strategies and recent results of operations. On the basis of this evaluation, as of the quarter ended March 31, 2025, the valuation allowance has been reduced to $ 2.9 million to recognize only the portion of the deferred tax asset that is more likely than not to be realized. The amount of the deferred tax asset considered realizable, however, could be adjusted if estimates of future taxable income during the carryforward period are reduced or increased or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence such as our projections for growth. The Company reported a provision for income taxes of $ 344 for the three months ended March 31, 2024, representing an effective tax rate of 5.2 %. The effective tax rate for the three months ended March 31, 2024 reflects the impact of certain permanent items, projected increases in our valuation allowance during the year and discrete items for the quarter related to stock based compensation. As discussed in our annual report on Form 10-K for the year ended December 31, 2024, we had net operating loss carry-forwards for federal income tax purposes of approximately $ 11.6 million as of December 31, 2024. NOTE 13 – SUBSEQUENT EVENTS None. 17 Table of Contents