Ventas Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 14, 2024

There are 10 speakers on the call.

Operator

Good afternoon, everyone, and thank you for joining OptimizeRx's First Quarter Fiscal 20 24 Earnings Discussion. With us today is the Chief Executive Officer of OptimizeRx, William Febbo. He is joined by Chief Financial Officer, Ed Steinach President, Steve Silvestro General Counsel, Marion Odence Ford and Senior Vice President of Corporate Finance, Andrew D'Silva. At the conclusion of today's earnings call, I will provide some important cautions regarding the forward looking statements made by management during today's call. I would like to remind everyone that today's call is being recorded and will be made available for replay via webcast only.

Operator

Instructions are included in today's press release in the Investors section of the company's website. Now, I would like to turn the call over to OptimizeRx's CEO, William Febbo. Sir, please go ahead.

Speaker 1

Thank you, operator, and good afternoon to everyone joining today's Q1 2024 earnings call. I'm delighted to share today's results, which came in ahead of our April 26 preliminary unaudited earnings announcement. Momentum from Q4 2023 has continued into 2024 with Q1 revenues increasing 51% year over year to $19,700,000 which topped the high end of our pre announced revenue range. Growth is being driven by favorable competitive dynamics. We are seeing stronger customer engagement as Pharma is looking for partners with integrated precision offerings that have true scalability in terms of HCP and DTC reach, interoperability across multiple points of care and capability to accurately report insights back in a timely manner.

Speaker 1

The tailwinds are welcome as we continue to lead with our clients around a more efficient and precise platform for marketing and healthcare. We are in the right place at the right time. Our year over year top line strength was driven by a clear demand for our dynamic audience activation platform or DAP as well as from our Medex Health acquisition. Our thesis that smarter solutions such as DAP will gain market share is continuing to be validated and I believe we have significant upside potential from cross selling between the HCP and DPC customer bases. Recall, at the time of the acquisition, we only had about 20% customer base overlap among the 300 plus brands on the platform.

Speaker 1

Therefore, it should not be a surprise that the in year pipeline is building at an unprecedented rate in our history as a company. This momentum as well as financial and operational continuity from Q4 of last year has carried over to the Q1 of 2024. We are optimistic on this year and we are off to a strong start, having signed 9 DAP deals in the quarter, building on the 24 deals we signed in 2023. While we are maintaining our guidance, which calls for revenue to reach a minimum of $100,000,000 for 2024 with an adjusted EBITDA of at least $11,000,000 for the year, we will continue to watch our visibility and fine tune the numbers as appropriate. Our continued growth would not be possible without our market leading team that strives to excel and surpass expectations every day.

Speaker 1

I want to thank everyone on the OptimizeRx team for their concerted effort to navigate through a very complex dynamic yet still nascent digital pharma marketing landscape that the industry is adopting. The OptimizeRx platform and solutions will fundamentally reshape the dynamics of marketing engagement among pharma, patients and prescribers. And our mission driven culture will attract, retain and enhance all the relationships a technology company needs to be a reliable partner. With that, I'll turn it over to the company President, Steve Silvestro to give more color on DAP as well as other commercial updates. Steve?

Speaker 2

Thanks, Will. As a reminder, our dynamic audience activation platform is in essence an AI powered patient and HCP finder for pharma brands that we serve. Simply put, DAP algorithms work by searching through the sea of existing patient level data to find brand eligible patients. Once found, DAP determines the best means of communication with that patient. A call to action message can then be triggered and sent to the appropriate doctor or patient at the most opportune time.

Speaker 2

This process is recurring as the algorithms learn over time, improving execution. Leveraging this technology enables OPRX to move past our peer group spray and pray messaging so commonly found in the space and instead deliver the appropriate information to the correct person when it's most relevant and likely to drive script lift. In doing so, we're helping to build deeper relationships among pharma brands, doctors and patients, falling in line with industry trends as pharma is looking to partner with scalable platforms that have agile precision marketing capabilities, which all falls in line with the core of what DAP enables. With that said, we've had a very promising start to 2024. The company is continuing to experience a meaningfully better selling environment within the pharma end market, which is in contrast to what was seen in 2022 and the first half of twenty twenty three.

Speaker 2

Our commercial integration strategy between OptimizeRx and MedexHealth is also progressing ahead of schedule. We have dozens of GAAP deals in our pipeline with approximately 50% coming from the direct to consumer side of the business with numerous opportunities in late stage negotiations. With the addition of MedexHealth capabilities, we stand out as the most scalable platform with both HCP and direct to consumer reach. This unique positioning enhances our ability to cross sell and up sell, unlocking significant value for which we estimate the potential opportunity with existing brands alone to be over $2,000,000,000 with even greater potential for the brands we don't yet support. This favorable environment strengthens our confidence in meeting or exceeding our financial targets in 2024 and beyond.

Speaker 2

These larger, stickier DAP deals are strategically targeted making us a more relevant partner with our client base. With our in house development capabilities and the foundational work of the last several years that's been tailored specifically for pharmaceutical marketers, OPRX now has the ability to materially grow its top line with limited additional overhead. With our MedexHealth acquisition, we are placing extra emphasis to accelerate a highly impactful DTC component. Moving forward, our mission has never been clear and we continue to believe that the best is yet to come. With the addition of DAP to OPRX's omnichannel network, we have a pioneering and foundational AI directed capability, which removes the mystique of seamlessly integrating point of care and traditional digital media, offering a transparent and holistic solution for pharmaceutical marketing that's able to reach nearly 240,000,000 lives and 2,000,000 HCPs.

Speaker 2

Our enhanced AI platform, DAP, coupled with channels outside of the EHR are driving powerful next best action capabilities based on real world data. As a result, DAP is now used to power CRM alerts as well as social media, web display and other mass digital media communication channels, all which foster greater efficiency and collaboration with our customer sales forces. OPRX is expanding its AI solution work with clients, while others in the space are still trying to figure out how to apply AI. And with that, I'd like to turn the call over to our CFO, Ed Stelmack, who will walk us through the financials and the details. Ed?

Speaker 2

Thanks, Steve, and good afternoon, everyone.

Speaker 3

The press release was issued with financial results of our Q1 ended March 31, 2024. A copy is available for viewing and may be downloaded from the Investor Relations section of our website and additional information can be obtained through our forthcoming 10 Q. First quarter revenue came in at $19,700,000 an increase of 51% from the 13,000,000 dollars recognized during the same period in 2023. Gross margin for the quarter increased from 57.2% in the quarter ended March 31, 2023 to 62% in the quarter ended March 31, 2024. Year on year gross margin expansion is tied to higher DAP related revenue as well as a favorable channel partner mix.

Speaker 3

Our operating expenses for the quarter ended March 31, 2024 increased by $2,700,000 year over year, but included $200,000 in acquisition related fees and $400,000 in severance expenses, where the remainder of the increase largely tied to the Medix Health acquisition. We had a net loss of $6,900,000 or $0.38 per basic and fully diluted share for the 3 months ended March 31, 2024, as compared to a net loss of $6,400,000 or 0.37 dollars per basic and fully diluted share for the same 3 month period in 2023. On a non GAAP basis, our net loss for the Q1 of 2024 was $2,000,000 or $0.11 per fully diluted share outstanding, compared to a non GAAP net loss of $1,600,000 or $0.09 per fully diluted shares outstanding in the same year ago period. Our adjusted EBITDA came in at a loss of $300,000 for the Q1 of 2024 compared to $2,200,000 loss during the same Q1 of 2023. Operating cash flow came in at $2,100,000 for the Q1 of 2024 and ended the quarter with $15,200,000 cash balance as compared to $13,900,000 on December 31, 2023.

Speaker 3

Our debt balance currently stands at 37,800,000 dollars If you recall, to help fund the $84,500,000 cash portion of our October MediS Health acquisition, the company's $2,400,000 in debt financing and we paid off $2,200,000 of principal to the Q1 of 2024. We continue to believe we're well funded to execute against our operational goals. And now with that, let's turn to our KPIs for the Q1 of 2024. Average revenue for top 20 pharmaceutical manufacturers now stands at 2,500,000 dollars and we work with all top 20 largest pharma companies in the world. Net revenue retention rate is showing improvement at 116%, up from 86% in Q1 2023.

Speaker 3

Meanwhile, revenue per FTE came in at $641,000 topping the $605,000 we posted in Q1 2023. We're encouraged by the continuing improvement in our KPIs as we move fast to external market challenges, return to growth and profitability as a leader in our space. Now with that, I'll turn the call back over to the operator for Q and A.

Operator

Thank you. At this time, we'll be conducting a question and answer And our first question is from the line of Ryan Daniels with William Blair. Please proceed with your questions.

Speaker 4

Yes, guys. Congrats on the very strong start to the year and thank you so much for taking the questions. Will, maybe one for you. As we look at DAP, I know it's still a relatively novel platform for you. But I'm curious what type of improvements and maybe ROI metrics you've been able to see as you scale the platform, get more customers, get more knowledge of how to deploy it and leverage that data to improve the product?

Speaker 1

Yes, Ryan. Hey, thanks. Yes, I mean the best proof is just more clients, because they're probably more discerning than anybody. But yes, there's learning all the time. I think we've got an excellent team of data scientists who now have two and a half years of experience doing this.

Speaker 1

Recall, we really that's when we started. And we've also now brought in other teammates from the DTC side who bring their expertise. And if you think about the simple value proposition, which is helping our clients do more with one partner and have it be more successful and a better return on their marketing dollars. I think the value proposition is really resonating. We've also really sharpened our foundational data infrastructure and made some investments last year to streamline reporting and analysis, which are really starting to pay off.

Speaker 1

Because recall, when we engage with the clients on this particular partnership, you're not just dealing with a brand manager, you're actually dealing with an executive, data and analytics teams, reporting teams, technology teams. And it's really just creates a stickier, more holistic relationship, which is obviously why we're so excited. But Steve, did I leave anything out that you want to bring up as well for the question?

Speaker 5

No, I think you said it.

Speaker 2

I mean, our average Ryan, as you know, our average ROI has been tracking roughly 10 to 1 over time. I think if you were to look specifically at DAP, you're going to see much higher return on investment there. And I think as Will said, our foundational data continues to grow and learn because we've now got a plethora of DAP deals that have been live for quite a bit of period of time. And so as the machine learning carries on, they get smarter and smarter and smarter the algorithms that is. So as they get smarter, they become more precise and that improves the ROI.

Speaker 2

So I think we'll cover it nicely, but definitely a trickle up, a tick up off the 10 to 1 for sure.

Speaker 4

Okay. That's super helpful color. And then maybe Steve, another one for you. You were pretty specific about the tone of your conversations with pharma manufacturers improving and really being quite different than it was a year or so ago. And I'm curious if you think that relates to just broader end market improvements with more stability in the FDA and with pharma companies and their internal staffing?

Speaker 4

Or is it really improvements in your offering in DAP and the power there that's resonating in the market, especially as you've now got a combined HCP DTC product at scale, which is unique in the market. So is it maybe one of those two things? Is it both of them? Just any more color there as I think it's an important data point?

Speaker 2

Yes, thanks for the question. I actually think it's both. I think that pharma markets are coming back, meaning that sort of cyclically pharma is now sort of back at the table. They're looking to spend more. They're getting more drugs approved.

Speaker 2

You're seeing some blockbusters get approved. That sort of obesity market is going to become very frothy here, I think, for everybody following that in the coming months years. So spend is, I think, back. But in addition to that, I think that while spend is back, it's much more focused. I think during the pandemic and sort of coming out of the pandemic, pharma was in a position where they needed to sort of try anything they could to try to get some leverage and some digital connectivity because they were just laggards in coming to the digital transformation table.

Speaker 2

Now that they've sort of sorted through that in the last several years, I think they've now picked a couple of the key winners where they want to invest. And from the looks of it, it appears that we're at that table, as you can see, having the dialogue around expanded investment. So feeling great about that, but I would say it's sort of a balance of both of those things.

Speaker 4

Okay, perfect. And then maybe one for Ed, just so I can hit all 3 of you. Solid gross margins in the quarter, I'm curious if you could speak to if there's any nuances there you think are unique to the quarter if we can kind of carry that low 60% gross margin momentum forward throughout the remainder of the year given what you're seeing in the market and in the sales? Thanks.

Speaker 3

Yes. Thanks, Ryan. Yes. So Q1 gross margin has certainly been driven by DAP success early in the year. As you know, we make more margin when we sell more models.

Speaker 3

Will it carry through the rest of the year? I mean, certainly, we got some assumptions around DAP continuing to grow. And if that materializes, there's certainly a potential to be north of 60% throughout the year.

Speaker 4

Okay. Great. Thanks for the time and congrats again guys. Appreciate it.

Speaker 3

Thank you.

Operator

Our next question is from the line of Eric Martinuzzi with Lake Street. Please proceed with your questions.

Speaker 6

Yes. I wanted to make sure I had a good read on seasonality for 2024. Not looking for a specific number for Q2 revenue, but historically we would be kind of flat to up slightly Q1 to Q2. Any reason why that would be outside the normal seasonality?

Speaker 3

Hey, it's Will. No, I

Speaker 1

think you could go ahead, Ed. No, go for it.

Speaker 3

No problem. Eric, yes, so there should be no reason why that shouldn't continue this year. So as you're modeling for numbers for the year, you should absolutely assume the same thing you had last year.

Speaker 6

Okay. And then the I guess the DAP deals that we saw in 2023, we had 24, we had 9 in Q1 of 24. Remind me again what qualifies size wise and I'm curious to know not all DAP deals are equal, but are these 1,000,000 plus transactions that we're talking about? Is that what it takes qualify? And then should we expect that same cadence here in Q2 and beyond?

Speaker 1

Steve, do you want to take that one?

Speaker 2

Yes, no problem. Hey, Eric, good to hear your voice. Yes, on an annualized basis, they're still running on average about $1,000,000 I think we're seeing little to the positive, little to the negative on those. But ACV wise, the average is still roughly $1,000,000 and that's on an annualized basis. So depending on when we close the deal, that will determine how much revenue we'll pull into the year.

Speaker 2

But feeling great about the strong growth in DAP and just sort of where we were compared to where we are now is I think we're all feeling pretty optimistic about it.

Speaker 3

And just to add to that, Larry, your question was what qualifies as a DAPT deal. It's really a combination of data and analysis and model building combined with message delivery. Essentially, in our world, that's what qualifies as AdaptDio. Right.

Speaker 6

Thanks for taking my questions. Thanks.

Speaker 1

Thanks, Eric.

Operator

Our next question is from the line of David Grossman with Stifel. Please proceed with your questions. Thank you for taking the question.

Speaker 5

I'm wondering if we could the net revenue retention looked like it improved pretty significantly. And I'm just curious, is there a material difference that you noticed between the DTC and the HCP business? And just wondering whether or not how the combination of the two business may affect the stability and existing base?

Speaker 1

Yes. Hey, I'll start and then hand it over to Steve. But I think net net, one of the things that we liked about the Medex acquisition was it did enhance our visibility. And we also like the fact that we saw an upsell potential of bringing them into the world of Dapp, our world of Dapp with our clients. And so what that does is it immediately allows you to not only build an algorithm, but also attach more impressions or media to it.

Speaker 1

And as we all know, the market and the budgets on the DTC side are 3x to 5x that of the HCP. So there is a net positive effect relative to the potential ACV when you bring in the 2 together. So we and as Steve said, we're in hyper cross sell mode and frankly haven't baked much of that into our numbers around our guide. So feeling good about the progress so far. And with that, I'll hand it over to Steve if he has anything more to add.

Speaker 2

Yes. Thanks, Will. Hey, David. You heard us say in the prepared remarks, GAAP at its core is patient finding technology, meaning finding a brand eligible patient. And I think that we've already seen the success of finding a brand eligible patient via their HCP and executing the messaging via the HCP to activate and drive script lift.

Speaker 2

That's our core at OPRX. What Medex brings to the table, as you heard Will sort of articulate, is the ability to directly execute messaging to the patient themselves. And then all of that reporting, all of the actions taken gets fed back into the platform and drives another action. So, on the net revenue retention, which was sort of your initial question, how is that going to behave? Well, the platform becomes more sub scripted in nature, not that we're converting everything to subscriptions, but when programs run, they basically are producing results and more information, which is feeding that baseline core data within the business.

Speaker 2

And the natural occurrence of that is for clients to renew because the ROI as time goes on improves because of the machine learning that's driven by the platform. So that's I think why you're seeing early signs of net revenue retention trickle up and I think we'll probably continue to see that. We'll see how it goes, but early optimistic signs.

Speaker 5

Thanks for that, Steve. So do you have any sense for where like a target, is it just too early to really think about what is a steady state NRR for the business, given that you're seeing some early improvement obviously? But just curious whether you have any thoughts on where that shakes out over time?

Speaker 1

Yes, we obviously, we've got our internal goals, which we keep internal, but we'd like to get back to where we were when we had that sort of hyper retention. So it should get to above 120 inside the year if we go according to plan. So that's

Operator

Steve articulated

Speaker 1

it just right. It actually what we have now is even better for retention than what we had before where we were more tactical. This is more strategic and more spread out within the organization of the client. So we're very hopeful and early signs. When Q1 is good, the year is better.

Speaker 1

That's generally true in our business. So we're excited about these early signs.

Speaker 5

Great. And just one other question and sorry if I missed this, but did you guys provide I know you've given us pro form a revenue for the year, but did you give us what the pro form a growth rate would have been for the quarter?

Speaker 3

Yes. So you'll see the numbers published in our Q tomorrow. So we haven't provided it yet. Once you see the numbers, we can talk about kind of some of the details that go into that.

Speaker 5

Okay, got it. Great. All right, guys. Thanks very much.

Speaker 6

Thank you.

Operator

Our next question is from the line of Konstantin Davidez with Citi and JMP. Please proceed with your question.

Speaker 5

Thanks. Well, I just wanted to see if you could expand on some of your comments on the commercial infrastructure. Maybe just give us a sense for if the sales force is brought over for Medex and your legacy sales force are cross trained, what the size of the infrastructure is? And it sounds like you're pretty constructive on the ability to sort of leverage that in the future years. And again, just wondering if you can give us a little bit more color there.

Speaker 1

Yes. I'll hand that over to Steve because he oversees it. But just to say, we've leaned in on investment there because we're seeing the adoption curve happen faster than we anticipated. But Steve can give an update on the team and the numbers.

Speaker 2

Happy to. Hey, Constantine, thanks for the question. We're now up to right around 20 sellers that are actively engaging with pharma, which I think is our it is our largest number. Part of that is via the acquisition of Medex. And then we've also onboarded several new sellers from the competitive set in the space.

Speaker 2

And we've sort of been very deliberate about recruiting best talent, all of which we've been able to successfully capture, which is a good sign for the business. So we're feeling pretty good about that. And we structured it in line with our commercial engine. So we've got folks that are focused on HCP, folks that are focused on DTC, both of which have cross sell incentives, as you heard Will mention earlier. They're laser focused on that and showing early signs of successful execution there.

Speaker 2

And then we have some account management and inside sales capabilities as well, just to sort of address top of the funnel and pull through as we're expanding the pipeline that continues to grow. So addressing each step of that follow-up on

Speaker 5

just sort of traditional follow-up on just sort of traditional engagements versus DAP. And I was wondering if you could just talk about sort of the frequency and depth of your contact with your ultimate end pharma customer relative, an Adapt structure versus a more traditional engagement? Just how many times you're talking, again, the depth of those conversations? It sounds like there's just a lot more people involved by some of your earlier comments, but just wondering if you could expand on that. Thanks.

Speaker 2

Sure. Yes, happy to take that one. Yes, I mean there are definitely more stakeholders that are involved. Funny enough, the close cycle is roughly the same, believe it or not, but you've got several stakeholders. You have an economic buyer.

Speaker 2

You've got a strategic buyer, meaning the brand manager. Economic buyer is always procurement and or via the agency. And then there's a new buyer at the table, which is the analytics team. The benefit, I think, of having that analytics team at the table, which is of a follow on to Ryan's question around ROI, is that the metrics that are governing the ROI calculation and what success looks like are decided early and often by that team concomitantly with our analytics team. And so we know exactly how we are driving and what we're driving to be successful.

Speaker 2

And that gives our platform an ability to make adjustments on the fly and do things that optimize every engagement, make sure that everything is optimized perfectly to drive a good result by the end of the campaign. So it's great to have them as a sort of partner at the table. And it also makes things much stickier. I think once you're sort of implemented with an analytics team and the marketing team and the agency, etcetera, and everyone's you're part of the workflow, renewability is better and again, the net revenue retention continues to triple up. I think that's sort of a byproduct of the stakeholder engagement.

Operator

Our next question comes from the line of Stephanie Davis with SVB. Please proceed with your questions.

Speaker 7

Hey, guys. It's Stephanie Davis with Barclays. Very happy in my new home. So I want to make sure I have the time back. I do want to ask, so the revenue from your top ten, that mix is improving quite a bit, but it is still below what we've seen prior to last year.

Speaker 7

So thinking about that, is there a path to recovery or is there naturally going to be some SKU going forward just either due to D2C mix or prior SKU due to the pandemic?

Speaker 1

Yes, I don't think it's a Stephanie's will. I don't think it's pandemic related because we largely it was that didn't really have a material impact on our business during those years. But for sure the combination of the 2 brand sets, Medex and OPRX is going to I mean, there's improvement that's good. If DAP cross sells works, that should be that should accelerate pretty nicely. So I think from the investors, analyst perspective, that's something to watch relative to the success of cross selling.

Speaker 1

But net net, we're thrilled to be in all of them and up and running and have the kind of net retention where we like it. And as Steve said, it's the training went well on the cross selling and they're deep into the market with it.

Speaker 7

Helpful. And then I look at the pipeline, did highlight a lot of DAS deals that are making up most of the pipeline. Is there anything unique in that? Is that a quicker negotiation cycle? Is that something where the revenues hit little quicker?

Speaker 7

Like how should we think about compared to kind of your legacy book of business?

Speaker 1

Sure. Steve, you want to grab that one?

Speaker 2

Yes, happy to. Hey, Stephanie, good to hear your voice. Look, I think that there are 2 things that I would sort of consider. So average deal size in that DAP range is going to similar pretty much approaching what our normal sales cycle would be. And I think that's largely because we're in a scale place right now with that as opposed to just sort of a launch scale, which we were 12 months ago.

Speaker 2

And then the other thing that I would sort of submit to you is, and this is kind of based on your previous question as well, is that we're not just seeing DAP gain traction and be sticky in the top 10. We're seeing it gain traction across the spectrum of revenue tiers in our client base. And that is really something that we're excited about, which is to say that in the mid tier and the small accounts, we're seeing spend levels that are as large on a deal basis as some of the major manufacturers. And we think right now that that's because major manufacturers have capabilities that they assume are taking care of several of the things that they might be looking for out in the marketplace. They've got some of those things in house, whereas mid tier and smaller accounts just simply don't.

Speaker 2

And so it's much more cost effective for them from both a sort of investment and a time perspective to find a solution that can cover several of the things that DAP is bringing to the table. So more to come on that, but just wanted to give you a sense of the spread of DAP and based on your previous question a little too.

Speaker 7

Okay. Well, those two answers in mind, I want to follow-up then on the NRR question. It sounds like there's a lot of new sales and new products. Is it safe to think that these big improvements you're seeing in NRR is more from new sales and new products and improvements in attrition versus new sales of legacy or core products?

Speaker 1

I'll start with that. One of the things that's really encouraging that we're seeing is the when we do have, let's say, a more sizable tactical engagement with a client and they've obviously all heard of or are running some kind of DAP program. We're now at that stage where they're looking at these bigger programs to convert over to DAP to be even more efficient. And you don't have a price deterioration there. Matter of fact, it's considerably up.

Speaker 1

Not price in the sense of our prices, but just the size of the engagement. So I think it's early days. I mean, going from 24 to 33 in the 1st 3 months. I think when we get to half year, we'll see how many we close and what the impact is on all these KPIs. But we tend to think it's going to be pretty positive and we're not hurting our legacy business.

Speaker 1

We're actually lifting it up and making it more relevant and sticky. So that's my hats off to the team. I mean that is not an easy thing to do when you're transitioning to a different type of solution. No matter how great it is, you can often get stuck with the client in a mindset or solution set. But in this case, we're actually just becoming more evolved and more meaningful, more relevant.

Speaker 1

So it's terrific.

Speaker 7

Good on them. All right. Well, thank you for taking my questions. Hopefully, eventually, we'll start seeing Stephanie Davis and Barclays on your call. I think that's

Speaker 3

all right. Yes.

Speaker 1

Thank you, Stephanie, for

Operator

work. Our final question is from the line of William Wood with B. Riley Securities. Please proceed with your questions.

Speaker 8

Hi, yes. And thank you for taking my question. So it looks like that metastatic is you said that it was earlier that it was progressing ahead of expectations and the late stage negotiations are still going on. So I'm just kind of curious if these have already been included in the guidance for this year or if these will be extra to that and when we think all of this should be closing up and these negotiations should be starting to solidify?

Speaker 1

We basically when you buy a company, you really get to know it after you buy it. So we were very conservative with our 'twenty four guidance and did not assume cross selling in that number. So if this happens at a faster pace than we anticipate, then that should be a really good thing for the guidance and the company, and the clients. And if it does happen, I think you can anticipate it in the second half, just because mid year is a good time where clients readjust, change, reallocate like we saw second half of last year, we expect to see that same enhancement only directed towards this inclusion of DTC. So wouldn't count on too much first half, but the pipeline build in the first half is really impressive.

Speaker 1

The team is doing a terrific job.

Speaker 8

Got it. That's appreciated. It's very helpful. And then I just want to make sure that I'm thinking about this the right way. I know that there seems to be some seasonality in Q4 to Q1.

Speaker 8

When you're looking at those not year over year, so a quarter over quarter basis, it looks like you sort of almost ticked down across the board, at least revenues and gross revenues, adjusted EBITDA, etcetera. But you did go up on debt, you've got 9 debt now. And so I'm just trying to when we think about this going forward, is it that essentially that Q4 to Q1 you didn't take down as much? And I mean, I know you came in, so I'm just trying to sort of get a better get my mind right on how we should thinking about sort of the cadence of the DAP and then the revenue growth going throughout the year?

Speaker 1

Yes, sure. And I'll hand you over to Andy for the seasonality numbers. But 23% to 24%, less than 20% of the business was DAP. So you're still going to see that seasonal drop from Q4 to Q1 that we've seen historically. But as we scale DAP and you get closer to 50 percent a year or more of your revenue, you'll always have a bit of a reset, but it should start to be better over time because you've got active programs rolling forward, you've got algorithms being updated.

Speaker 1

And there's a sequence to Q1 when we close those deals, really the first part of that is getting the model built. So you won't see a big pop immediately. You really get that revenue of designing the algorithm and launching programs and then it carries through. So seasonality will all exist in this business, but it should better as DAP becomes a higher percentage of our revenue.

Speaker 9

Hey, William, it's Andy. I hope you're doing well. So just from a first half or second half standpoint, typically our first half is not going to be more than 40% of our overall revenue in the year. So call it the 35%

Speaker 5

to 40% range and then

Speaker 9

the back half would be the remainder. So I hope that gives some context obviously as we scale up DAP will give better insight into how the seasonality and cadence might change, but that's kind of where it's at right now.

Speaker 8

Yes. No, I appreciate that. And thank you for both for taking our questions and appreciate good quarter and I'll hop back in queue. Thanks.

Speaker 5

Thank you.

Operator

Thank you. Mr. Febbo, I'll turn the floor back to you for closing remarks.

Speaker 1

Great. Thanks, operator, and thank you everyone for joining us today. We trust you share our enthusiasm as we continue to build positive momentum. As we embark on our financial and operational journey, we're pleased to be progressing on solid ground. Our collaboration with pharma manufacturers to reach healthcare professionals and patients has seen really, really nice growth fueled by our innovative AI models.

Speaker 1

This advancement has helped us address and overcome many past challenges. Today, we proudly offer comprehensive solutions that integrate various components into agile powerful strategies. These strategies effectively tackle crucial issues such as brand awareness, education, affordability and the recruitment of hard to find patients. These are the daily challenges our clients, doctors and patients face in the current healthcare environment, and we are very excited to be part of the solution. Our dedication to supporting doctors and patients and aligning on quality care is the driving force behind our team.

Speaker 1

We're looking forward to connecting with many of you at the numerous upcoming investor conferences we'll attend before our next earnings call. Wishing you a great rest of the day. Thanks. Operator?

Operator

Thank you, sir. Before we conclude today's earnings 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 earnings call may contain forward looking statements within the definition of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities of 1934 as amended. These forward looking statements should not be used to make investment decisions. The words anticipate, estimate, expect, possible and seeking and similar expressions identify forward looking statements.

Operator

They may speak only to the date that such statements are made. Such forward looking statements in the call include statements regarding estimation of total addressable market size, market penetration, revenue growth, gross margin, operating expenses, profitability, cash flow, technology, investments, growth opportunities, acquisitions and upcoming announcements. They also include the management's expectations for the rest of the year and the adoption of the company's dynamic audience activation platform. 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.

Operator

Future events and actual results could differ materially from those set forth in, contemplated by, or underlying these forward looking statements. The risks and uncertainties to which forward looking statements are subject include, but are not limited to, the effects of government regulation, competition and other material risks. Risks and uncertainties that could affect business and financial results and to which forward looking statements are subject are included in the company's annual report on Form 10 ks for the year ended December 31, 2023. This Form 10 ks is available on the company's website and on the SEC website atsec.gov. Before we end today's earnings call, I would like to remind everyone that this call will be available for replay via webcast only starting later this evening, running through for a year.

Operator

Please refer to today's press release for replay instructions available via the company's website at www.optimizerx.com. Thank you for joining us today. This concludes today's earnings call. You may now disconnect your lines.

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Earnings Conference Call
Ventas Q1 2024
00:00 / 00:00