OptimizeRx Third Quarter 2020 Revenue Up 110% to Record $10.5 Million, Driving Non-GAAP Net Income of $1.1 million or $0.07 Per Share
- Revenue in the third quarter of 2020 increased 110% to a record
$10.5 million, with the first nine months of 2020 up 56% to a record $26.9 million.
- Gross profit in the third quarter of 2020 increased 99% to
- GAAP net loss totaled
$0.3 millionor $(0.02)per share in the third quarter, with non-GAAP net income at $1.1 millionor $0.07per share (see definition of this non-GAAP measure and reconciliation to GAAP, below).
- Cash and cash equivalents totaled
$12.0 millionat September 30, 2020.
- Closed additional enterprise deals, bringing total value of enterprise-level engagements to
$21 millionin annualized revenue.
Q3 2020 Operational Highlights
- Expanded direct-to-patient reach via partnership with
Epion Health, a leader in digital patient engagement solutions, allowing patients at health systems and medical groups across the nation access to the OptimizeRxdigital health and communications platform.
- Partnered with Higi, a consumer healthcare technology and engagement company, to provide healthcare consumers with financial assistance and treatment support programs at point-of-dispense. Higi provides
OptimizeRxaccess to more than 10,000 self-service health stations nationwide that allow consumers to measure, track and act on their health data.
- Expanded digital health communication network in collaboration with Change Healthcare to enable providers in the Change Healthcare network to digitally receive important information from the life sciences industry via
- Secured two SaaS-based enterprise-level engagements with a combined annual contract value of
- Enhanced corporate governance with the addition of
Greg Wasson, former president and CEO of Walgreens Boots Alliance, to the board of directors.
- Continued webinar series featuring industry thought leaders discussing innovative ideas for improving medication launches.
Q3 2020 Financial Summary
Total revenue in the third quarter of 2020 increased 110% to a record
Gross margin decreased to 57.1% in the third quarter of 2020 as compared to 60.4% in the year-ago quarter. The decrease was related to a change in mix of services provided. The company expects gross margin to improve in the fourth quarter with a target of 60% for the year.
Operating expenses totaled
Net loss on a GAAP basis in the third quarter of 2020 was
Non-GAAP net income for the third quarter of 2020 was
While the company expects to return to GAAP profitability as its revenue grows, expenses related to investments in growth initiatives or non-cash charges could result in a GAAP loss in any given quarter. Given the opportunity at hand as discussed below, the company continues to be focused on top-line growth while maintaining a strong balance sheet.
Cash and cash equivalents totaled
“In Q3, we realized triple digit revenue growth, mostly organic, which drove strong non-GAAP net income,” stated
“We also continued to see a growing proportion of enterprise-level recurring revenue and growing interest from our customer base for our new solutions, such as patient engagement, hub enrollment and TelaRep™. We finalized our integration and go-forward plan for patient engagement, which provides additional scale for driving growth in recurring revenue. It also opens up access to additional budgets within our client base and supports improved gross margins over time.
“We expanded our platform reach during the quarter via our Higi and Epion partnerships that connect us digitally to millions of new patients. We see ourselves at just the beginning of a broad expansion into retail or point-of-dispense as another channel to enable affordability and adherence. Both of these partnerships are very timely, as we are all looking for ways to connect digitally at more points in the healthcare workflow and maximize access to care.
“We are seeing more rapid adoption of digital tools for doctors to combat the COVID disruption. Macro trends are in our favor as highlighted by the rapid adoption of telehealth and other digital tools. A clear theme forming is the need for the appropriate digital tools for doctors to maintain their practices with under such drastic disruptions occurring with the pandemic. This allows for our solutions to be highlighted as an effective tool set to help deliver care to patients.
“Looking ahead, we are on track for a strong annual growth rate, non-GAAP income and positive cash flow from operational activities. Our pipeline is better than it has ever been, currently sitting at $140 million, nearly double versus this time last year. We continue to anticipate a close rate in the range of 35 percent to 50 percent, with these prospects keeping us on pace for another year of record growth in an expanding addressable market.”
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Definition and Use of Non-GAAP Financial Measures
This earnings release includes a presentation of non-GAAP net income (loss) and non-GAAP earnings (loss) per share or non-GAAP EPS, both of which are non-GAAP financial measures.
The company defines non-GAAP net income (loss) as GAAP net income (loss) with an adjustment to add back depreciation, amortization, non-cash lease expense, stock-based compensation, acquisition expenses, income or loss related to the fair value of contingent consideration, and deferred income taxes. Non-GAAP EPS is defined as non-GAAP net income (loss) divided by the number of weighted average shares outstanding on a basic and diluted basis. The company has provided non-GAAP financial measures to aid investors in better understanding its performance. Management believes that these non-GAAP financial measures provide additional insight into the operations and cashflow of the company.
Because of varying available valuation methodologies, subjective assumptions and the variety of equity instruments that can impact a company’s non-cash operating expenses, management believes that providing non-GAAP financial measures that excludes non-cash expenses allows for meaningful comparisons between the company’s core business operating results and those of other companies, as well as provides an important tool for financial and operational decision making and for evaluating the company’s own core business operating results over different periods of time.
The company’s non-GAAP net income (loss) and non-GAAP EPS measures may not provide information that is directly comparable to that provided by other companies in the company’s industry, as other companies in the industry may calculate such non-GAAP financial results differently. The company’s non-GAAP net income (loss) and non-GAAP EPS are not measurements of financial performance under GAAP and should not be considered as an alternative to operating income or as an indication of operating performance or any other measure of performance derived in accordance with GAAP. The company does not consider these non-GAAP measures to be substitutes for or superior to the information provided by its GAAP financial results.
The table, “Reconciliation of non-GAAP to GAAP Financial Measures,” included below, provides a reconciliation of non-GAAP net income (loss) and non-GAAP EPS for the three months and nine months ended
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Important Cautions Regarding Forward Looking Statements
This press release contains forward-looking statements within the definition of Section 27A of the Securities Act of 1933, as amended, and such as in section 21E of the Securities Act of 1934, as amended. These forward-looking statements should not be used to make an investment decision. The words 'estimate,' 'possible' and 'seeking' and similar expressions identify forward-looking statements, which speak only as to the date the statement was made. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted, or quantified. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. The risks and uncertainties to which forward-looking statements are subject include, but are not limited to, the effect of government regulation, competition, and other material risks.
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CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
|Cash and cash equivalents||$||12,032,538||$||18,852,680|
|Accounts receivable, net||13,332,552||7,418,025|
|Total Current Assets||27,232,680||27,141,748|
|Property and equipment, net||151,809||176,014|
|Technology assets, net||5,464,916||6,238,453|
|Patent rights, net||2,388,320||2,550,587|
|Other intangible assets, net||4,677,439||5,151,102|
|Right of use assets, net||474,906||559,863|
|Other assets and deposits||16,013||80,727|
|Total Other Assets||27,761,625||29,320,763|
|LIABILITIES AND STOCKHOLDERS’ EQUITY|
|Accounts payable – trade||$||480,502||$||492,995|
|Revenue share payable||3,642,088||1,618,438|
|Current portion of lease obligations||121,583||115.431|
|Current portion of contingent purchase price payable||1,610,813||1,500,000|
|Total Current Liabilities||8,110,282||6,107,513|
|Lease obligations, net of current portion||356,618||448,753|
|Contingent purchase price payable, net of current portion||-||5,220,000|
|Total Non-current Liabilities||356,618||5,668,753|
|Commitments and contingencies||-||-|
|Total Stockholders’ Equity||46,679,214||44,862,259|
|TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY||$||55,146,114||$||56,638,525|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
|For the Three Months Ended||For the Nine Months Ended|
|COST OF REVENUES||4,504,844||1,981,143||11,385,622||6,251,766|
|LOSS FROM OPERATIONS||(176,722||)||(1,987,310||)||(3,491,787||)||(1,375,101||)|
|OTHER INCOME (EXPENSE)|
|Change in fair value of contingent consideration||(110,390||)||280,000||(140,390||)||25,000|
|TOTAL OTHER INCOME (EXPENSE)||(106,172||)||416,368||(72,506||)||217,305|
|LOSS BEFORE PROVISION FOR INCOME TAXES||(282,894||)||(1,570,942||)||(3,564,293||)||(1,157,796||)|
|PROVISION FOR INCOME TAXES||-||-||-||-|
|NET INCOME (LOSS)||$||(282,894||)||$||(1,570,942||)||$||(3,564,293||)||$||(1,157,796||)|
|WEIGHTED AVERAGE SHARES OUTSTANDING|
|EARNINGS (LOSS) PER SHARE|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
|For the Nine Months Ended
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net loss to net cash used in operating activities:|
|Depreciation, amortization, and non-cash lease expense||1,563,883||745,928|
|Stock issued as board compensation||325,011||361,782|
|Provision for loss on accounts receivable||80,000||-|
|Change in fair value of contingent consideration||140,390||(25,000||)|
|Prepaid expenses and other assets||(931,833||)||(469,623||)|
|Revenue share payable||2,023,650||(240,329||)|
|Accrued expenses and other liabilities||704,599||(772,953||)|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Purchase of equipment||(45,254||)||(61,457||)|
|Purchase of intangible assets||-||(1,000,000||)|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Proceeds from issuance of common stock, net of commission costs||1,332,080||22,369,960|
|Expenses related to issuance cost of common stock||-||(301,711||)|
|Payment of contingent consideration||(4,389,187||)||-|
|NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES||(3,057,107||)||22,068,249|
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS||(6,820,142||)||20,845,933|
|CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD||18,852,680||8,914,034|
|CASH AND CASH EQUIVALENTS – END OF PERIOD||$||12,032,538||$||29,759,967|
|SUPPLEMENTAL CASH FLOW INFORMATION:|
|Cash paid for interest||$||-||$||-|
|Cash paid for income taxes||$||-||$||-|
|Intangible asset additions included in accounts payable||$||-||$||500,000|
|Acquisition liabilities paid in common stock||$||1,550,000||$||-|
|Non-cash effect of cumulative adjustments to accumulated deficit||$||-||$||3,229|
|Lease liabilities arising from right of use assets||$||-||$||672,809|
Reconciliation of non-GAAP to GAAP Financial Measures
|For the Three Months
Ended September 30,
|For the Nine Months
|Depreciation, amortization, and non-cash lease expense||523,420||320,055||1,563,883||745,928|
|Income or loss related to the fair value of contingent consideration||110,390||(280,000||)||140,390||(25,000||)|
|Non-GAAP net income (loss)||$||1,107,353||$||(940,643||)||$||531,599||$||1,332,852|
|Non-GAAP net income (loss) per share|
|Weighted average shares outstanding:|
Source: OptimizeRx Corporation