SampleMD Adoption Increasing

Brian Marckx, CFA

Q1 Results

OptimizeRx Corp (OPRX) filed their 10-Q for the first quarter ending 3/31/2012 on 5/15/2012. While revenue was slightly lower than what we had modeled, this was more than offset by lower than estimated operating expenses. The net result was net loss coming in slightly better than our number. Our outlook remains largely unchanged and reiterate our Outperform rating on OPRX.

On the operational side, indications are that management continues to make meaningful headway with adoption of SampleMD by clinicians and in partnering with additional eprescriber services. Management reiterated its goal of expanding the SampleMD reach to 100k (i.e. – triple their current base) physicians by the current year end. OptimizeRx also continues to refine SampleMD and increase its functionality, which recently included the integration (currently still in a beta phase) of eRep scheduler, which allows physicians to schedule meetings with drug reps.

Q1 revenue was $329k compared to our $397 estimate. Operating expenses were $630k, well below our $781k estimate, the difference mostly related to lower than modeled professional and advertising expense.

Q1 net income and EPS were ($301k) and ($0.02) compared to our ($384k) and ($0.03) estimates.

OPRX exited Q1 with $798k in cash, compared to $960k at the end of Q4 2011. Cash used in operations was $128k in Q1. Ex-changes in working capital, cash used in operations was $135k. As a reminder, OPRX pays for some services with stock and options which, coupled with only moderate operating expenses, helps keep its cash burn to a minimum. Another $34k was used in investing activities in Q1, the majority of which is related to capitalization of web-development costs.

Recent Points of Interest;

  • SampleMD roll-out: the most recent 10-K notes the roll-out with through Allscripts “showed early signs of great potential” also mentioning that while wrinkles needed to be ironed out, prescribers have been satisfied with the ease and availability of SampleMD. Version 3.0 was introduced in Q4 2011 which incorporates enhanced access to formulary information, additional search capability and functionality to schedule meetings with drug reps – the launch in Q4 is commensurate with the expected timeline management had previously indicated.
  • SampleMD Adoption: OPRX continues to streamline the integration of SampleMD into eprescriber and electronic medical record systems. The most recent eprescribers to adopt SampleMD was NewCrop and DrFirst. NewCrop , which came onboard in Q4 2011, has been used with over 150 electronic medical record providers and medical networks since 2003. An agreement with DrFirst, another eprescription system, was the latest addition, which is now beginning integration with SampleMD. Physician adoption of SampleMD also continues to grow. Through the first quarter of 2012 OptimizeRx noted that integration of SampleMD within the Allscripts platform continues to bear fruit and increased clinical adoption.
  • Marketing / Advertising: OPRX recently hired a VP of Eastern Sales and beefed up their sales and marketing staff. The company attended some focused industry conferences, promoting the benefits of SampleMD to health systems and drug manufacturers. The company will continue to attend events and in Q2 plans to participate in the Marcus Evans Pharma Executive Summit and Health Connect Partners events. OPRX also recently launched a new ad and marketing campaign, including advertisements in targeted industry publications.
  • Outlook: OPRX notes that they now “have signed contracts with eprescribing platforms that have the potential to triple our reach to over 100k physicians in 2012.” The company anticipates (per the most recent 10K)”significant acceleration of revenue within the 2nd half of 2012″.

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