What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-11-07 compared with 2025-08-08 · 71 added, 51 removed, 177 unchanged (41% of the section changed)

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inability to attract and retain customers;

federal or state legislation or regulatory action and/or policy efforts restricting direct-to-consumer advertising and limitations on interactions with healthcare professionals;

inability to comply with laws and regulations that affect the healthcare industry;

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The Company uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical 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 the twelve months ended June 30, 2025 as compared to the twelve months ended June 30, 2024 is primarily the result of stronger DTC and DAAP related revenue streams (in thousands).

The increase in the average in the twelve months ended September 30, 2025 as compared to the twelve months ended September 30, 2024 is primarily the result of stronger DTC and DAAP related revenue streams (in thousands).

Rolling Twelve Months

Ended June 30,

Ended September 30,

Average revenue per top 20 pharmaceutical manufacturer $ 3,073 $ 2,874

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The Company uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment.

This decrease in our total revenue attributable to top 20 pharmaceutical manufacturers, in conjunction with the increase in average revenue per top 20 pharmaceutical manufacturer discussed above, is reflective of the onboarding and growth of other customers that are not top 20 pharmaceutical manufacturers and not a decrease in our activity with top 20 pharmaceutical manufacturers.

This decrease in our percent of total revenue attributable to top 20 pharmaceutical manufacturers, in conjunction with the increase in average revenue per top 20 pharmaceutical manufacturer discussed above, is reflective of the onboarding and growth of other customers that are not top 20 pharmaceutical manufacturers and not a decrease in our activity with top 20 pharmaceutical manufacturers.

Rolling Twelve Months

Ended June 30,

Ended September 30,

Percent of total revenue attributable to top 20 pharmaceutical manufacturers 56 % 65 %

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The Company uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers.

Net revenue for the period ending June 30, 2024 benefited from the timing of the Medicx Health acquisition, which was consummated on October 12, 2023, as its comparator period (the trailing twelve months ended June 30, 2023) did not have any Medicx Health related revenue.

The period ended June 30, 2025 did not have the same magnitude of inorganic benefit from the Medicx Health acquisition;

Net revenue for the period ending September 30, 2024 benefited from the timing of the Medicx Health acquisition, which was consummated on October 12, 2023, as its comparator period (the trailing twelve months ended September 30, 2023) did not have any Medicx Health related revenue.

The period ended September 30, 2025 did not have the same magnitude of inorganic benefit from the Medicx Health acquisition;

however, the Company still retained a 120% net revenue retention in the period as a result of strong organic growth from existing customers.

Rolling Twelve Months

Ended June 30,

Ended September 30,

Net revenue retention 120 % 127 %

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Rolling Twelve Months

Ended June 30,

Ended September 30,

Revenue per average full-time employee $ 820 $ 732

Results of Operations for the Three and Six Months Ended June 30, 2025 and 2024

The following tables sets forth, for the periods indicated, the dollar value and percentage of net revenue represented by certain items in our condensed consolidated statements of operations (in thousands):

Three Months Ended June 30,

Results of Operations for the Three and Nine Months Ended September 30, 2025 and 2024

The following tables set forth, for the periods indicated, the dollar value and percentage of net revenue represented by certain items in our condensed consolidated statements of operations (in thousands):

Three Months Ended September 30,

Net revenue $ 26,067 100.0 % $ 21,309 100.0 %

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Income (loss) from operations 2,050 7.9 % (8,562) (40.2) %

Other expense (1,476) (5.1) % (1,347) (7.2) %

Other expenses (1,001) (3.8) % (1,379) (6.5) %

Income (loss) before provision for income taxes 1,049 4.0 % (9,941) (46.7) %

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* Balances and percentage of net revenue information may not add due to rounding

Six Months Ended June 30,

Nine Months Ended September 30,

Net revenue $ 77,190 100.0 % $ 59,811 100.0 %

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Income (loss) from operations 3,124 4.0 % (17,340) (29.0) %

Other expense (2,646) (5.2) % (2,874) (7.5) %

Other expenses (3,645) (4.7) % (4,253) (7.1) %

Loss before provision for income taxes (521) (0.7) % (21,593) (36.1) %

Income tax benefit 633 0.8 % 1,561 2.6 %

Net loss $ (667) (1.3) % $ (10,908) (28.3) %

Net income (loss) $ 112 0.1 % $ (20,032) (33.5) %

* Balances and percentage of net revenue information may not add due to rounding

Our net revenue increased 55% to $29,195 for the three months ended June 30, 2025 from $18,812 from the same period in 2024.

Our net revenue increased 33% to $51,123 for the six months ended June 30, 2025 from $38,502 from the same period in 2024.

Our net revenue increased 22% to $26,067 for the three months ended September 30, 2025 from $21,309 from the same period in 2024.

Our net revenue increased 29% to $77,190 for the nine months ended September 30, 2025 from $59,811 from the same period in 2024.

The increase in net revenue was a result of the growth of DTC and DAAP related sales.

Cost of Revenues

Our cost of revenues, composed primarily of revenue-share expense paid to our channel partners, increased for the three months ended June 30, 2025 to $10,560 compared to $7,108 for the same period of 2024.

Our cost of revenues as a percentage of revenue decreased to approximately 36% for the three months ended June 30, 2025 from approximately 38% for the three months ended June 30, 2024.

Our cost of revenues increased for the six months ended June 30, 2025 to

$19,144 compared to $14,595 for the six months ended June 30, 2024.

Our cost of revenues as a percentage of revenue decreased to approximately 37% for the six months ended June 30, 2025 from approximately 38% for the six months ended June 30, 2024.

Our cost of revenues, composed primarily of revenue-share expense paid to our channel partners, increased for the three months ended September 30, 2025 to $8,551 compared to $7,862 for the same period of 2024.

Our cost of revenues as a percentage of revenue decreased to approximately 33% for the three months ended September 30, 2025 from approximately 37% for the three months ended September 30, 2024.

Our cost of revenues increased for the nine months

ended September 30, 2025 to $27,695 compared to $22,456 for the nine months ended September 30, 2024.

Our cost of revenues as a percentage of revenue decreased to approximately 36% for the nine months ended September 30, 2025 from approximately 38% for the nine months ended September 30, 2024.

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

Our gross margin, which is the difference between our revenues and our cost of revenues, divided by our revenues, increased for the three months ended June 30, 2025 and the six months ended June 30, 2025 compared to the same periods of 2024, primarily due to product and channel partner mix.

Our gross margin, which is the difference between our revenues and our cost of revenues, divided by our revenues, increased for the three months ended September 30, 2025 and the nine months ended September 30, 2025 compared to the same periods of 2024, primarily due to product and channel partner mix.

Further, the increase in revenue year over year diluted the effect of certain fixed cost of sales on gross margin.

Operating Expenses

Operating expenses remained consistent, slightly decreasing to $15,446 for the three months ended June 30, 2025 from $15,453 for the same period in 2024.

For six months ended June 30, 2025, operating expenses decreased to $30,904 from $32,685 for the six months ended June 30, 2024, a decrease of approximately 5%.

Operating expenses decreased to $15,466 for the three months ended September 30, 2025 from $22,009 for the same period in 2024, a decrease of approximately 30%.

For nine months ended September 30, 2025, operating expenses decreased to $46,371 from $54,695 for the nine months ended September 30, 2024, a decrease of approximately 15%.

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

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended September 30, Nine Months Ended September 30,

2025 2024 2025 2024

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Depreciation and amortization 1,080 1,095 3,249 3,235

Goodwill impairment — 7,489 — 7,489

Other general and administrative expenses 12,430 10,821 38,120 35,441

Total operating expenses $ 15,466 $ 22,009 $ 46,371 $ 54,695

Stock-based compensation decreased to $1,488 for the three months ended June 30, 2025 from $2,903 for the three months ended June 30, 2024, and decreased to $3,046 for the six months ended June 30, 2025 from $5,926 for the six months ended June 30, 2024.

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 a decrease in the quantity of awards granted.

Further, the prior year expense included significant costs associated with grants to the prior CEO which were forfeited as of December 31, 2024.

Depreciation and amortization increased to $1,074 for the three months ended June 30, 2025 from $1,073 for the three months ended June 30, 2024, and increased to $2,168 for the six months ended June 30, 2025 from $2,140 for the six months ended June 30, 2024.

The increase in both periods was a result of the additional amortization associated with capitalized labor for internal software development.

Other general and administrative expenses increased to $12,884 for the three months ended June 30, 2025 from $11,477 for the three months ended June 30, 2024, and increased to $25,690 for the six months ended June 30, 2025 from $24,619 for the six months ended June 30, 2024.

Stock-based compensation decreased to $1,956 for the three months ended September 30, 2025 from $2,604 for the three months ended September 30, 2024, and decreased to $5,002 for the nine months ended September 30, 2025 from $8,530 for the nine months ended September 30, 2024.

The decrease in stock-based compensation expense in both periods primarily reflects changes in the Company’s stock price, which affects the grant-date fair value of awards.

The Company’s stock price peaked in 2021, resulting in higher grant-date fair values for awards issued during that period.

These higher-valued awards were generally amortized over a three-year vesting period, which concluded in 2024.

In addition, stock-based compensation expense in the prior year included costs associated with awards granted to the former CEO, which were forfeited as of December 31, 2024.

Depreciation and amortization remained consistent, slightly decreasing at $1,080 for the three months ended September 30, 2025 from $1,095 for the three months ended September 30, 2024, and remained consistent, slightly increasing to $3,249 for the nine months ended September 30, 2025 from $3,235 for the nine months ended September 30, 2024.

The Company did not have a goodwill impairment in the three months ended September 30, 2025, whereas the Company recorded goodwill impairment in the amount of $7,489 in the three months ended September 30, 2024.

This amount represented the excess of the book value of the Company’s equity over the estimated fair value.

Other general and administrative expenses increased to $12,430 for the three months ended September 30, 2025 from $10,821 for the three months ended September 30, 2024, and increased to $38,120 for the nine months ended September 30, 2025 from $35,441 for the nine months ended September 30, 2024.

This increase in both periods is primarily a result of an increase in compensation expense.

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Other income (expense)

Interest expense increased to $1,603 for the three months ended June 30, 2025 from $1,528 for the three months ended June 30, 2024, and decreased to $2,899 for the six months ended June 30, 2025 from $3,074 for the six months ended June 30, 2024.

Interest expense decreased to $1,154 for the three months ended September 30, 2025 from $1,524 for the three months ended September 30, 2024, and decreased to $4,053 for the nine months ended September 30, 2025 from $4,597 for the

nine months ended September 30, 2024.

Interest expense represents interest charges on our Term Loan, together with the amortization of the related issuance costs.

The increase is primarily a result of the higher effective interest rate due to the voluntary prepayments of principal on the Term Loan resulting in an interest penalty for the three months ended June 30, 2025 as compared to the three months ended June 30, 2024.

The decrease is primarily a result of the decrease in the interest rate on the Term Loan and a lower average principal balance for the six months ended June 30, 2025 as compared to the six months ended June 30, 2024

Interest income decreased to $90 for the three months ended June 30, 2025 from $106 for the three months ended June 30, 2024, and increased to $177 for the six months ended June 30, 2025 from $125 for the six months ended June 30, 2024.

The decrease in both periods is primarily a result of the decrease in the interest rate on the Term Loan and a lower average principal balance for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 and for the nine months ended September 30, 2025 as compared to the nine months ended September 30, 2024

Interest income decreased to $91 for the three months ended September 30, 2025 from $107 for the three months ended September 30, 2024, and increased to $269 for the nine months ended September 30, 2025 from $231 for the nine months ended September 30, 2024.

The variability in interest income is a result in the fluctuation of interest rates as the balance in the Company's money market account has remained consistent.

Income tax benefit (expense)

Income tax expense was $181, or an effective rate of 10.6%, and income tax benefit was $904, or an effective rate of (57.5)% for the three and six months ended June 30, 2025, respectively.

Income tax 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.

Income tax expense was $270, or an effective rate of 25.7%, and income tax benefit was $633, or an effective rate of (121.5)% for the three and nine months ended September 30, 2025, respectively.

Income tax benefit was approximately $817, or an effective rate of 8.2%, and $1,561, or an effective rate of 7.2% for the three and nine months ended September 30, 2024, respectively.

For further information, see Part I, Item I.

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Net income (loss)

We had a net income of approximately $1,532 for the three months ended June 30, 2025, as compared to a net loss of approximately $(4,008) during the three months ended June 30, 2024 and a net loss of approximately $(667) for the six months ended June 30, 2025 as compared to $(10,908) for the six months ended June 30, 2024.

We had a net income of approximately $779 for the three months ended September 30, 2025, as compared to a net loss of approximately $(9,124) during the three months ended September 30, 2024 and a net income of approximately $112 for the nine months ended September 30, 2025 as compared to a net loss of $(20,032) for the nine months ended September 30, 2024.

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

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In addition, on October 11, 2023, the Company entered into a Term Loan of $40,000 in order to partially fund the acquisition of Medicx Health.

As of June 30, 2025, the total principal balance outstanding on the Term Loan was approximately $29,290 and we were in compliance with all of the financial covenants of the Term Loan.

As of June 30, 2025, we had total current assets of approximately $54,080, compared with current liabilities of approximately $21,057, resulting in working capital of approximately $33,023 and a current ratio of approximately 2.6 to 1.

This represents a decrease from our working capital of approximately $35,317 and an increase from the current ratio of 3.0 to 1 at December 31, 2024.

As of September 30, 2025, the total principal balance outstanding on the Term Loan was approximately $28,790 and we were in compliance with all of the financial covenants of the Term Loan.

As of September 30, 2025, we had total current assets of approximately $56,320, compared with current liabilities of approximately $18,466, resulting in working capital of approximately $37,854 and a current ratio of approximately 3.0 to 1.

This represents an increase from our working capital of approximately $35,317 and a consistent current ratio compared to 3.0 to 1 at December 31, 2024.

We believe that funds generated from operations, together with existing cash, will be sufficient to finance our current operations and meet our obligations under the Term Loan for the next twelve (12) months.

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We currently have an effective shelf registration statement, which allows us to issue, from time to time, up to $75,000 of any combination of our common stock, preferred stock, debt securities, warrants, or units.

Following is a table with summary data from the condensed consolidated statements of cash flows for the six months ended June 30, 2025 and 2024, as presented (in thousands).

Six Months Ended June 30,

Following is a table with summary data from the condensed consolidated statements of cash flows for the nine months ended September 30, 2025 and 2024, as presented (in thousands).

Nine Months Ended September 30,

Net cash provided by operating activities $ 11,627 $ 4,691

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Net increase in cash and cash equivalents $ 6,139 $ 2,274

Our operating activities provided $8,425 during the six months ended June 30, 2025, compared with $2,900 in the same period in 2024.

The net increase in net cash provided by operating activities was mainly attributable to a $10,241 decrease

This was partially offset by a $2,880 decrease in noncash expense related to stock based compensation, a $926 decrease in cash flows from accounts payable and a $870 decrease in cash flows from deferred revenue.

Investing activities used $128 during the six months ended June 30, 2025, compared with $238 in the same period in 2024.

Our operating activities provided $11,627 during the nine months ended September 30, 2025, compared with $4,691 in the same period in 2024.

The net increase in net cash provided by operating activities was mainly attributable to a $20,144 increase in net income (loss).

This was partially offset by a $3,528 decrease in noncash expense related to stock based compensation, a $3,810 decrease in cash flows from accounts receivable and a $3,037 decrease in cash flows from taxes receivable and payable.

Investing activities used $138 during the nine months ended September 30, 2025, compared with $330 in the same period in 2024.

The decrease in net cash used in investing activities was mainly attributed to a decrease in capitalization of internally developed software.

Financing activities used $5,092 during the six months ended June 30, 2025, compared with $1,555 in the same period in 2024.

The increase in net cash used for financing activities was primarily related to the increase in repayments of long-term debt partially offset by a decrease in payments of withholding taxes on behalf of employees vesting in restricted stock units.

Financing activities used $5,350 during the nine months ended September 30, 2025, compared with $2,087 in the same period in 2024.

Critical Accounting Estimates

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

expect to adopt ASU 2023-09 for the annual period ending December 31, 2025, and the adoption will not materially affect our financial position or our results of operations, but the Company expects the adoption to result in additional disclosures.

In November 2024, the FASB issued ASU 2024-03 (“ASU 2024-03”), Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40).

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The Company is currently evaluating the effect of this new guidance on its consolidated financial statements.

In July 2025, the FASB issued ASU No.

2025-05 (“ASU 2025-05”), ASU No.

2025-05, Financial Instruments – Credit Losses (Topic 326):

Measurement of Credit Losses for Accounts Receivable and Contract Assets.

ASU 2025-05 provides (1) all entities with a practical expedient and (2) entities other than public business entities, with an accounting policy election when estimating credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606.

This authoritative guidance is effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted.

We are currently evaluating the impact of adopting ASU 2025-05.

In September 2025, the FASB issued ASU No.

2025-06 (“ASU 2025-06”), ASU No.

2025-06, Intangibles—Goodwill and Other — Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

ASU 2025-06 updates the cost capitalization threshold for internal-use software development costs by removing all references to software project development stages and providing new guidance on how to evaluate whether the probable-to-complete recognition threshold has been met.

This authoritative guidance is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods.

The Company is currently evaluating the effect of this new guidance on its consolidated financial statements.

Off-Balance Sheet Arrangements

From time to time, the Company enters into arrangements with channel partners to acquire minimum amounts of media, data or messaging capabilities.

As of June 30, 2025, the Company had commitments with channel partners for future minimum payments of $13,071 that will be reflected in cost of revenues during the remainder of 2025 and years from 2026 through 2029.

As of September 30, 2025, the Company had commitments with channel partners for future minimum payments of $9,609 that will be reflected in cost of revenues during the remainder of 2025 and years from 2026 through 2029.

See Part I, Item 2.

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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