OptimizeRx (OPRX) Q3 2025 Earnings Call Transcript

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DATE

Thursday, November 6, 2025 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — Steve Silvestro
• Chief Financial Officer — Edward Stelmakh
• Chief Commercial Officer — Teresa Greco
• President — Andy (Surname not provided; cited as "Andy" throughout the call)
• Chief Operating Officer — Jim Dwyer

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TAKEAWAYS

• Revenue Guidance -- Updated to reflect only contracted visibility; excludes pipeline deals and potential buy-ups without current visibility.
• Revenue Model -- Transitioned to a more subscription-like, predictable model, smoothing revenue phasing across quarters.
• 2026 Guidance -- Management is providing early full-year views due to improved contract visibility and renewable business streams.
• RFP Trends -- Increased volume of requests for proposal with a higher win rate as RFPs increasingly match company offerings.
• Client Mix -- Mid-tier manufacturer segment is contributing increased growth as technology enables these clients to "compete on level ground."
• Partnerships -- Early-stage rollout of the Lamar Advertising partnership is underway; no contribution from this is included in 2026 forecasts.
• Gross Margin -- Stable in the upper 50% to low 60% range, driven by improved product/channel mix and growth in DAP and GTC platforms.
• Gross Margin Expansion -- Benefited from favorable channel partner negotiations and reduced exposure to lower-margin managed services revenue in the period.
• Operating Expenses -- Modest cash-basis increase (~$2 million YoY), driven by higher variable compensation from outperformance.
• Net Revenue Retention -- Recurring business constitutes 85%-95% of annual revenue, with new logos representing the remaining share.
• Contracting Cycle -- Audience-based contracts are signed earlier, improving forward visibility compared to transactional campaign elements.

SUMMARY

Management presented upgraded guidance methodologies, now anchored exclusively to contracted revenues and recurring client business streams instead of pipeline projections. Strategic investments in DAP and acquired micro-neighborhood targeting capabilities have accelerated the transition to more predictable revenue recognition and facilitated early multi-year contracts. Discussions highlighted sustained market demand across both healthcare provider (HCP) and direct-to-consumer (DTC) channels, with growing adoption among mid-tier pharmaceuticals. Operational leverage remains strong as variable expenses parallel topline performance, while stable gross margins benefit from selective channel and product mix optimization. Future revenue and profitability guidance for 2026 explicitly omits any contributions from new strategic partnerships, including Lamar Advertising, reflecting a conservative approach to forecasting.

• Management said, "the partnership is going to start rolling out, you know, pretty rapidly," but confirmed, "Zero. Nothing" from Lamar is included in forward-looking financial forecasts.
• Expectations for gross margins in the "upper fifties to low sixties range" are supported by product mix evolution rather than short-term managed services fluctuations.
• Richard Baldry emphasized a "very conservative approach to providing guidance" by focusing on bookings already "won and is starting to burn into revenue now."

INDUSTRY GLOSSARY

• RFP (Request for Proposal): Formal solicitation from potential clients seeking vendor bids on specific projects or services in which winning implies new contract revenue opportunities.
• DAP (Data Activation Platform): OptimizeRx's data-driven audience identification and targeting suite designed to reach specific patient or provider segments across digital channels.
• GTC Platform: Refers to OptimizeRx's proprietary omnichannel engagement technology for delivering therapeutic support and messaging solutions.
• Micro Neighborhood Audience: Segmentation methodology allowing precise targeting of small, demographically similar clusters for direct-to-consumer outreach.
• Managed Services Revenue: Project-based work with lower gross margin, delivered as custom or non-recurring client service engagements outside of the subscription product base.
• Net Revenue Retention: Measure of recurring revenue performance from existing customers, excluding contributions from new client accounts.

Full Conference Call Transcript

Operator: The street and also to our clients and investors, we are going to give more visibility into the future as we have been migrating more toward a predictive model. We have quoted in the past descriptive momentum, and we are going to continue to push that throughout the remainder of the year. As a result, we are now getting more visibility into the out years, including 2026. In terms of the RFP situation, Ryan, RFP season has been very strong for the business. We see more people coming into the digital space and making investments on the client side. We are seeing equal parts HCP and DTC at this point. Interest in the RFP cycle.

I would say the parts of DTC that we cover at OptimizeRx Corporation are CTV, ATV, the pieces that you are aware of. In the event that we have a linear television ban or reduction, our view and thesis is that our solutions will continue to disproportionately benefit from those types of moves. So I would say at this point, both DTC and HCP are looking very healthy. Appreciate the question. Perfect. Thank you so much. I will hop back in the queue. You got it. Thanks, man. Thank you. And the next question comes from Richard Baldry with ROTH Capital.

Richard Baldry: Thanks. When you look at the implied guidance for fourth-quarter revenue, it would be slightly down year over year at the top end of guidance. Talk about either any one-time year-ago issues or other things because your net retention would argue that is sort of difficult to do.

Operator: Yeah. Thanks for the question, Rich. Good to hear from you. So, I mean, what we are looking at is really a full-year guide at this point. We are trying to give a good range of what we believe will come in. We moved away from quoting pipeline, as everybody on the call knows, and have moved principally toward contracted revenue. What our real visibility is. The new guidance that we have updated with is truly what our visibility is. It does not count bluebirds that might happen, buy-ups that might happen that are not accounted for right now where we do not have visibility.

In years past, we would have thought about that more in terms of pipeline and probabilities. But what you are seeing in the guidance now is, I think, reflective of our true visibility that we know we can deliver on. Again, we are going to continue to be very transparent, very conservative, not sandbagging, but look to beat the numbers that we put out there every time. Hopefully, you appreciate the transparency and conservatism.

Richard Baldry: Yeah. And just to add to that, we are, yes, sir. Just to add a little bit.

Edward Stelmakh: As Steve said, I think we do need to look at it on a full-year basis rather than quarter by quarter. As you know, Q1, Q2, and Q3 have been extremely strong. So it is more of a smoother sort of phasing this year than it was in the past. Again, I would just encourage you to look at the full-year performance versus last year.

Operator: And part of it is the enhancement to the revenue model. Right, Rich? Part of it is we have been successful at migrating away from periodic revenue drops and getting to a more smooth revenue model. That is what Ed is referring to there.

Richard Baldry: Got it. It is, you know, just implicitly a little hard to look at it as a full year. You only have ninety days left. So, same question. I think I am going to get a similar answer. But if you look at the adjusted EBITDA guidance, you would have, you know, an up revenue quarter, maybe 10% plus sequentially. But the adjusted EBITDA would either be slightly down to narrowly possibly up. Again, is there any, like, one-time expenses year-end, you know, things that trip higher that create more of a headwind because it would still be down year over year as well. Thanks.

Operator: Sure. Ed, do you want to take that one? Yeah. I can take that one. Yeah.

Edward Stelmakh: Look. I mean, we are assuming a conservative gross margin number. There is nothing really in the operating expense line that is going to pop. So it is more of just, you know, being a little bit more conservative on what you think is going to happen with the channel and product mix. We do believe that, you know, we are shooting for hitting or beating the top end of the range.

Operator: Thanks, Rich. Appreciate the support.

Richard Baldry: Thank you. And the next question comes from David Grossman with Stifel Financial.

David Grossman: Great. Thanks. Hey, David. Hey, guys. You know, maybe we could just expand a little bit on the line of questioning you just went through. And maybe, Steve, take a minute just to remind us of fundamentally, you know, what may be going on in the business that may be smoothing out the quarters or maybe giving you better visibility. And then I have another question after that. But just curious again, fundamentally, some of the changes that you guys have made that may be creating, you know, a little better visibility and, again, giving you the confidence, for example, to guide to 2026 at this point.

Operator: Sure. Yeah. Happy to talk to it, and then Andy and Ed can chime in. But, I mean, if you think about our business, David, the way that we have talked about it over time, you have got our audience businesses, which is gap principally, and then you have got micro neighborhood audience, which is, you know, that targeting capability for DTC. Both of those are data-driven technologies that lend themselves to becoming more subscriptive in nature. Then you have got our execution functions, both at point of care and the other omnichannel components for HCP, and you have got that for DTC.

Those are obviously going to be transacted largely because that is the way that component of not just our business, but the ecosystem operates. What we have seen is outsized growth in gap like we have talked about in months past. We have seen a resurgence of micro neighborhood audience growth. Those pieces not only give us a smoothing of the revenue because of the revenue models, but they also give us a renewable view into what 2026 will look like, and those contracts start earlier than we would normally do for transaction-level contracting. Right?

Edward Stelmakh: So

Operator: that is the big part of it. Andy, feel free to chime in if you want to add more.

Edward Stelmakh: Yeah. I mean, it is really

Richard Baldry: go ahead, Ed.

Edward Stelmakh: No. I was going to say, I mean, as you guys know, I mean, the vast majority of our business comes from renewals. So if you take that into account, and then add some of the successes that drove this year, on top of it with more visibility into next year in terms of signed contracts as we sit here today. We feel like we are in a position to say, alright. You know, looking at next year, we can start to make at least a, you know, general guide around bookends that we are going to shoot for. And as things progress forward, we will continue to tighten that range. Yeah. Go ahead, Andy. You can add to that.

Richard Baldry: Nope. You got it. Both of you nailed it. Alright. Yep. Thanks. So thanks for all those details. So if

Operator: you know, if I recall, like, last quarter, we talked about, you know, these managed services. You know, type of contracts that come in. How much of that was present in the third quarter? And are you kind of making the same assumption that you did last quarter where you are not assuming any of that comes to bear in the fourth quarter in terms of the guidance that you provided as well as the outlook for '26. Is that the way to think about it?

Edward Stelmakh: Yeah. Andy, why don't you take that one?

Richard Baldry: Yeah. So it went back to more of a normalized rate. In the third quarter as it relates to that managed services business. The only thing that we are including in the forecast period for managed services business is stuff that we have already won and is starting to burn into revenue now. We are not really including anything that is, you know, in the pipeline that we do not have visibility to. So again, we are taking a very conservative approach to providing guidance with, you know, bookings that we feel very comfortable with.

Edward Stelmakh: Right.

Operator: So as we kind of think of your guidance for '26, can you help us kind of bracket the kind of retention that is the baseline, if you will? To achieve that range?

Richard Baldry: Yeah. So, historically, between 5-15% of our business comes from new logos every year. You know? So the remaining would be what you would consider net revenue retention. On a normalized basis. Okay. And that is the same assumption underlying your '26?

Operator: Guidance?

Richard Baldry: It is. Yeah. We do not really guide based on net revenue retention. Right? But that is kind of how it just shakes out as every year progresses. Got it.

Operator: Great. And then on that note, David, on that note, just one other quick bullet for you. Just and you and I spoke about this last time we were together. We are seeing good growth in the mid-tier segment of our business. Meaning the mid-tier segment of clients coming to the table who may not be in that top 20, 25, 30 manufacturers that are, you know, coming in with outsized spend, mostly because we are able to provide capabilities that, you know, can supplement, not just supplement, frankly, replace a lot of the stuff that they cannot afford to do internally. Whereas the big manufacturers might have kind of Cadillac support, so to speak. The mid-tier businesses do not.

But using the technology that we have got allows them to compete on level ground. So that is why we are seeing such a drive there. And our commercial organization that Teresa is leading has done a wonderful job of driving that. So just wanted to call that out as a key point. All very helpful. Thanks very much. Appreciate it. You got it. Great to hear your voice. We will talk soon. Soon.

Richard Baldry: Yep. Thank you. And the next question comes from Eric Martinuzzi with Lake Street. I wanted to dive in on the RFP trends.

Eric Martinuzzi: You talked about they are improved. I was just curious to know is that your win rate is the same and the number of RFPs is improved? Is your win rate improving on a flat RFP? Trend? Can you tell us there?

Operator: Yeah. I will start, and then I will have Andy chime in too. But all of the above, Eric, we are seeing more RFPs come in. The RFPs are more directly pointed at what we want them to be, which I think is good. The market is seeing what we are, you know, shifting the business model to over time. So the RFPs are definitely reflective of what we are providing the market, providing our clients. And I would say our win rate as a result of that is getting better. Again, I want to give some credit to our commercial team.

They are doing an excellent job of getting out ahead of all of this stuff and engaging with clients. When you are engaging with clients more intimately, you can tend to drive the crafting of the RFPs. So that they get written at an appropriate level to something that you can respond to versus just a random spray and pray request for information. Right? And when we get those, the hit rate will be lower because there was no prior engagement. So, hats off to Jim Dwyer, Theresa Greco, and the entire commercial team for doing a great job there.

Eric Martinuzzi: Right. And then you talked about the smoothing of the business. Maybe I could use a brief tutorial on the transactional where you said that those started later in the year. As opposed to the DAP and the micro neighborhood that are more sort of level loaded. The kicks off to each of those types of campaigns.

Operator: Sure. Yeah. Happy to talk about it. I mean, you think about what gap and what M and T or M and A does. It is principally audience creation, and it is the data that drives all of the campaigns. Right? It is the technology that is producing, finding those patients wherever they are going to be. And so because that is more of a software-like play, it lends itself to a normal planning cycle where renewals are going to happen earlier. That is the way pharma manages that segment of their budget.

And then the transactional components, which is typically message distribution, whether it is at an HCP level or if it is something that is going through a DSP like a trading desk or some other way. Typically is budgeted and accounted for on a quarterly basis, and it is based on performance and driven that way. Bringing DAP to the table and getting it more mature, which we have been working very hard on, as you know, over the last several years since we launched it, and now bringing in what we acquired through the Medix acquisition with M and T that has really started to transform the profile of the business.

That is what you are seeing reflected in the performance of this year as well. You are seeing it front and center. But it will reflect into 2026 as well. That is given us great visibility. I think everyone feels better about what we are doing there. We are significantly up year over year on visibility for next year.

Eric Martinuzzi: Is there a what is the right way to think about the percentage of the revenue in 2025 versus percentage of the revenue in 2026 between those two buckets?

Operator: Yeah. We do not break it out. We do not break it out at a product level.

Eric Martinuzzi: Okay. Thanks for taking my questions.

Edward Stelmakh: You got it.

Operator: Great questions. Thanks.

Edward Stelmakh: Thank you. And the next question comes from Anderson Schock of Ivy Riley Securities. Hi, thank you for taking the questions.

Anderson Schock: Congratulations on another really strong quarter. First, could you provide some color on the partnership with Lamar Advertising and on the size of the opportunity here? And I guess, will this gradually roll out in specific regions, or is this going live across their entire national inventory?

Edward Stelmakh: Yep. Happy to talk about it. Great to hear from you.

Operator: So the whole idea with Lamar is they are looking to transform their business model. Right? And their current business model is billboards. One of the things that OptimizeRx Corporation does really well, which you are acutely aware of, is patient finding and an ability to be more precise in the way that we deploy messages across our omnichannel ecosystem. So think about the capability of doing that to enable a screen that is in a disparate location, that might move from a random billboard to maybe a digital screen that is large. Right? And that is really what Lamar is after there. The size of the opportunity is very large.

I am not going to take a stab at the TAM. Because it is not mine to take a stab at. It is really theirs. But the partnership is going to start rolling out, you know, pretty rapidly, I would say. It is still early for us to start quoting projections on what we think it will do. It is really piloting at this point, but we are feeling pretty optimistic about the initial testing that we have done. We will release more information on it as we get some more results. But early stages look pretty encouraging.

Anderson Schock: Okay. Got it. And then I guess just current guidance that you have provided for 2026 factor in any contribution from this partnership?

Edward Stelmakh: No.

Operator: Zero. Nothing. Too early for us to start factoring it into the forecast. We are not going to do it yet. Great question, though. Yeah. And then, could you talk about the gross margin

Anderson Schock: expansion in the third quarter? Really drove this? And how should we be thinking about margins going forward in the fourth quarter and also into 2026?

Operator: Sure. Ed, do you want to take that one?

Edward Stelmakh: Yeah. Sure. Yeah. So, look, I mean, it is typically driven by our product mix or solution mix and the channel partner mix. As we said before, you know, as we scale the business, we tend we have much more ability to negotiate more favorable deals with our channel partners, so that is reflecting itself in the numbers. As well as growth in DAP and the GTC platform. So, those two things together contributed to where we are right now for the year and the Q4. Going forward, I would say, we are kind of stabilizing in that upper fifties to low sixties range from a guidance perspective.

But you can see that it is certainly upside to that number as the year progresses.

Richard Baldry: Okay. Got it. I will add just one quick thing to that. There, Anderson. So we also, in the third quarter, had a lot more or in the second quarter, had a lot more managed services revenue. And we did not have nearly as much in the third quarter. Managed services revenue is our lowest margin product.

Anderson Schock: Okay. Got it. Thank you for that, and congrats again on the great quarter.

Operator: Thank you. Thanks. Great to hear from you.

Eric Martinuzzi: Thank you.

Richard Baldry: Then one if you would like to ask a question. And the next question comes from Jeff Garro with Stephens. Yeah. Good afternoon. Thanks for taking the question. I want to ask on the 2026 guide and the profitability side.

Jeffrey Garro: If I calculate it right at the midpoints, I see about 60 basis points of EBITDA margin expansion. Was hoping you could talk about the mix of gross margin expansion maybe dependent on channel mix versus operating leverage? And then any areas of potential variability that could lead to more or less margin expansion than what we see at the midpoint there? Thanks.

Operator: Yeah. Jeff, I am happy to answer it. Topically, and we will not get too deep into 2026, but happy to answer it topically. And what Andy just said is really a clear articulation of the dynamics of the business that really govern it. Right? So as we continue to see our audiences grow over time, through the DAP and M and T products, margin expansion will continue to be front and center. We will also manage the channel partner mix on the other side of that, looking for optimal margin, and that gives us the dynamic of being able to continue to improve over time.

Execution will be what it is going to be as you know from this business, and that is fairly predictable. On the highs and lows. Those are the dynamics that are sort of shaping how we are thinking about 2026 gross margin expansion opportunities. And where we have landed. I do not think that is helpful.

Jeffrey Garro: Yeah. Maybe a follow-up on the operating leverage side of things. You have certainly seen, I think, a quarter over quarter decline in adjusted operating expenses this quarter, seeing really good leverage and, you know, maybe not expecting

Edward Stelmakh: that to be the persistent trend over the next five or so quarters. But just a little more color commentary on your ability to drive additional operating leverage in the business would be helpful. Thanks.

Operator: Yeah. Yeah. No problem. I mean, look, we are going to consistently go ahead, Ed. Yeah. Why do not you take it? Go ahead.

Edward Stelmakh: Yeah. So OpEx, as we said before, I mean, we can be highly leveraged global business model as it is now. So as I said, on a cash basis, there was a bit of an increase, about $2 million. Versus last year. And most of that is driven by the fact that our bonuses and variable comp are tracking our overperformance on the top line this year. So once you dial that back, you can pretty much assume a relatively stable operating expense run rate on a cash basis.

Jeffrey Garro: Understood. Thanks for taking the questions, guys. Congrats again.

Eric Martinuzzi: Sure. Thank you.

Richard Baldry: Thank you. And this concludes our

Edward Stelmakh: question and answer session. I would like to turn the conference back over to Steve Silvestro for any closing comments.

Operator: Thank you, operator, and thank you all for joining us today. We are pleased to be building our strong operational and financial momentum. Our foundation is solid. Our patient-focused strategy is working. And we are confident in the path ahead. What you heard today reinforces our belief in our ability to achieve both our near-term goals and our long-term growth objectives. I remain deeply optimistic about the future of our business and the opportunities before us. We look forward to speaking with all of you again on the next earnings call and meeting many of you in the upcoming investor conferences and one-on-one meetings in the coming weeks.

Wishing everyone a wonderful rest of your day and a wonderful holiday season with your families and friends.

Edward Stelmakh: Thank you, Mr. Silvestro. Before we conclude today's call, I would like to provide the company's safe harbor statement that includes important cautions regarding forward-looking statements made during today's call. Statements made by management during today's call may include forward-looking statements within the SEC definition of section 27A and the Securities Act of 1993 as amended and section 21E of the Securities

Operator: of 1934 as amended. These forward-looking statements should not be used to make investment decisions. The words anticipate, estimate, expect, possible, and seeking similar expressions identify forward-looking statements. They may speak only to the date that such statements are made. Forward-looking statements in this call include statements made redefining how pharmaceutical companies, patients, and prescribers connect, our value, our growth plans, creating shareholder value, becoming a Rule 40 company, estimated 2025 revenue, and adjusted EBITDA ranges, capturing greater market share, expanding our participation in the pharma industry's digital ecosystem, our technology and growth opportunities, and building a strong operational and financial momentum. Forward-looking statements also include the management's expectations for the rest of the year.

The company undertakes no obligation to publicly update or revise any forward-looking whether as a result of new information, future events, or otherwise. Forward-looking statements are inherent to risks and uncertainties, some of which cannot be predicted or qualified. Future events and actual results could differ materially from those set forth and for and can come by or underlying these forward-looking statements.

The risks and uncertainties to which forward-looking statements are subject to include, but are not limited to, the effects of government regulation, compensation, dependence on a concentrated group of customers, cybersecurity incidents that could disrupt operations, the ability to keep pace with growing and evolving technology, the ability to maintain contacts with electronic prescription platforms, and electronic health records networks, and the material risks discussed on the company's annual report form 10-K for the year ended 12/31/2024, and other companies the company has made and may make with the SEC in the future. These filings, when made, are available on the company's website and on the SEC website at sec.gov.

Before we end today's conference, I would like to remind everyone that an audio recording of this conference call will be available for your replay starting later this evening. Running through for a year on the investor section of the company's website. Thank you for joining us today. This concludes today's conference, and you may now disconnect your lines.

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