OptimizeRx Corporation — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This is an annual report; fourth-quarter figures are included below where disclosed. OptimizeRx provides digital health messaging and patient-engagement technology connecting life sciences companies, healthcare providers, and patients through EHR and e-prescribing networks.
Financial performance and liquidity
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $61.3 million | $43.3 million |
| Gross profit / margin | $35.6 million / 58% | $24.1 million / 56% |
| Operating expenses | $35.3 million | $26.2 million |
| Operating income (loss) | $0.36 million | ($2.14 million) |
| Net income (loss) | $0.38 million | ($2.21 million) |
| Diluted earnings (loss) per share | $0.02 | ($0.15) |
| Cash from (used in) operating activities | $0.73 million | ($6.31 million) |
Revenue increased 42% year over year. Fourth-quarter 2021 revenue was $20.3 million, up 24% from $16.4 million in Q4 2020; Q4 net income was $0.62 million versus $1.36 million. Cost of revenue declined to about 42% of revenue from 44%, supporting gross-margin expansion.
At year-end, cash and cash equivalents were $84.7 million, current assets were $115.1 million, and current liabilities were $9.4 million. Working capital was $105.7 million and the current ratio was 12:1. Total liabilities were $9.6 million, primarily current operating obligations and lease liabilities; the balance sheet reports no borrowings. Operating lease liabilities totaled $0.33 million. Cash rose substantially following a February 2021 public offering that generated $70.7 million net, plus $4.9 million from option exercises. The company reported no off-balance-sheet arrangements.
Changes versus prior year
- Revenue growth reflected enterprise contracts, more pharmaceutical brands, broader network distribution, and messaging-solution growth.
- Operating expenses increased 34% to $35.3 million, principally from staffing and scaling, higher stock-based compensation, data and technology investment, and partner integration and exclusivity costs. The company added 27 net employees during 2021.
- Net income and operating cash flow turned positive from losses and cash use in 2020. Working-capital investment remained significant, including higher accounts receivable.
- Customer penetration improved: 95% of the top 20 pharmaceutical manufacturers were customers, versus 85% in 2020. Average revenue per such manufacturer rose to $2.48 million from $1.95 million. Net revenue retention was 127%, down from 162% in 2020, which management attributed partly to pandemic-related shifts toward digital marketing in 2020.
Outlook, risks, and unusual items
- Management expected continued revenue growth in 2022 and projected gross margins of 57%–60%. It expected compensation expense and depreciation and amortization to rise, while operating expenses were expected to grow more slowly than revenue. Management said cash, existing resources, and operating cash generation should fund operations and planned growth for at least 12 months; significant cash acquisitions could require additional financing.
- Growth initiatives included enterprise platform agreements, the new Real-World Evidence messaging solution, and the Therapy Initiation Workflow for specialty-medication access. These products and anticipated growth are not assured.
- Key risks include concentration in a small customer base and reliance on EHR/e-prescribing partners: one customer generated 23.0% of 2021 revenue, and the largest partner accounted for 53.9%. Customer loss, partner termination, or changes to those relationships could materially affect results.
- Other material risks include healthcare privacy and regulatory compliance, cybersecurity and system availability, competition, rapid growth and integration execution, employee retention, and the continuing effects of COVID-19. Management said COVID-19 had not adversely affected 2021 financial results and did not then expect a negative impact on future prospects.
- The company paid the final $1.6 million acquisition-related contingent consideration in 2021 and reported no remaining contingent purchase-price payable. Stock-based compensation was $5.5 million, up from $3.2 million; the filing also reported $18.4 million of unrecognized RSU compensation and $9.7 million of unrecognized option compensation.
- The company had $3.4 million of minimum partner messaging-capacity commitments for 2022–2023. No legal proceedings were reported. The auditor issued unqualified opinions on the financial statements and internal control; management also concluded internal control was effective at year-end.
Important facts for investors to verify
- Whether revenue growth converts into sustained profitability and operating cash flow, given higher expenses and working-capital requirements.
- Customer and distribution-partner concentration, particularly the largest partner’s 53.9% share of revenue and the largest customer’s 23.0% share.
- Progress in converting customers to broader enterprise agreements and commercializing newer solutions, alongside the 2022 gross-margin and growth outlook.
- Cash availability and deployment, including the large uninsured bank balance: $83.3 million exceeded federally insured limits at year-end.
- Potential dilution from equity compensation and stock issuance: shares outstanding increased to 17.86 million at year-end, and the company raised capital through a public offering and option exercises.