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OptimizeRx Corp. (OPRX)
Q3 2017 Results Conference Call
November 02, 2017 04:30 PM ET
William Febbo - CEO
Doug Baker - CFO
Miriam Paramore - President
Eric Martinuzzi - Lake Street Capital Makers
John Ziegelman - Wolverine Asset Management
David Harrell - OptimizeRx
Previous Statements by OPRX
» OptimizeRx's (OPRX) CEO William Febbo on Q2 2017 Results - Earnings Call Transcript
» OptimizeRx's (OPRX) CEO Will Febbo on Q1 2017 Results - Earnings Call Transcript
» OptimizeRx's (OPRX) CEO William Febbo on Q4 2016 Results - Earnings Call Transcript
» OptimizeRx's (OPRX) CEO William Febbo on Q3 2016 Results - Earnings Call Transcript
I would also like to remind everyone that today’s call will be recorded and will be made available for a telephone replay via instructions in today’s press release in the Investors section of the Company’s website.
Now, with that, I’d like to turn the call over to the Chief Executive Officer of OptimizeRx, Mr. William Febbo. Please go ahead, sir.
Thank you very much and good afternoon everyone. Thanks for joining us on the call today. During the third quarter, we made a lot of progress financially and operationally. I am glad to as we continue to build upon the foundation we’ve been talking about over the last several quarters. I’m happy to report net revenue was up 74% to a record 3.1 million. The increase was driven by growth in our core solutions of financial messaging or eCoupon product as well as our new brand messaging launched in Q1 of this year.
We also added channel partners and we continued to invest our team to scale the business and expand our digital health platform. This platform integrates leading electronic health record systems or EHR as you’ll hear me say many times and within the e-prescription workflow then physicians are physically with their patients we call that point of care. Just to give you some additional perspective before we get into the numbers with Doug, I’d like to talk a little bit about why our platform is show valuable to our clients, the pharma manufacturers, patients, and why our opportunity in this market is so large and grow.
The healthcare market has been undergoing in many change. It is becoming increasingly difficult for pharmaceutical representative, the sales people, to get final positions they need to reach. Over 50% of hospitals now don’t even let them in the door. Physicians are also spending more than five hours a day accessing patients EHR’s those are the electronic health records. In 2016 alone where the 2 billion e-prescriptions were transmitted from doctors to pharmacy, which reflects that now about 85% of the nation physicians are using e-prescription as their preferred way to prescribe.
This adoption has accelerated over the last few years, which is why it's important to recognize that our technology, our solution and platform now reaches a very large segment of this market. One key driver is actually something we've all been hearing about much lately that’s the opioid crisis. New York was the first state to mandate ePrescribing as a main demo [indiscernible] abuse. Now, we are seeing this set across the country in different states. Our solutions have tremendous potential, which is being realized more and more as we expand our client base and channel reach, and integrate further within and outside the prescription workflow. Based on indications from clients and agencies and partners, we estimate the total available market to be well over a 1 billion in other words we have a lot of room to grow.
Now before we delve into the operational details for quarter and outlook for the year, I’d like to turn the call over to our CFO, Doug Baker, who will walk us through the financial details for the quarter. Doug?
Thanks Will and good afternoon everyone. Earlier today, we issued a press release with the results for our third quarter ended September 30, 2017. A copy of the release is available on the Investor Relations section of our website.
As Will mentioned, our net revenue in the third quarter of 2017 totaled 3.1 million, up 74%, compared to 1.8 million in the same year ago quarter. The increase was primarily attributable to growth of our two core products, financial and brand messaging, along with broader distribution through our new channel partners. The launch of new pharma brands which now total over a 100 between financial and brand messaging also contributed to the increase.
Our gross margin in the third quarter was 45.1%, which compares to 59.5% in the same year ago quarter. The decrease was primarily due to the launch and expansion of our brand messaging products, which had overall lower margins in our core financial messaging products. However on a sequential quarterly basis, gross margin improved from 44% last quarter, which was in line with our expectations and we communicated in our last call. This indicates, we are advancing towards our goal of 50% gross margins or better.
Moving down the income statement, our operating expenses in the third quarter were 2 million, which was up from 1.3 million in the same a year ago quarter. The increase was primarily due to additional expenses related to our growth initiatives including from the Company’s executive and sales team. Our operating expense as a percentage of revenue decreased to 65.4% versus 73.5% in the year ago quarter. As we grow, we expect operating expense as a percentage of revenue to continue to decrease.