OptimizeRx Corporation (OPRX)

[FrankLind]

In what way?

[umiak]

This L2 is a bit strange.

[Stocks4John]

Thank you.

[Stocks4John]

So, they are just unrestricting them?

[FrankLind]

Nobody is selling anything.

The shares are being registered as potentially available for sale on the general market. Previously, they were unavailable. If large shareholders such as Radoff sell, then there will be Form 4s.

The shares detailed here were originally given/acquired/issued privately due to the Vicis buyout and the closing of it. Now they are officially on the market (if any of these shareholders wish to sell)

[Stocks4John]

Why do these shareholders want out? The CC sounded very positive.

[FrankLind]

What did you find interesting about it?

BTW - I don't know when the AUXO reverse split is due to occur. am only watching that stock, not in it.

[Stocks4John]

This is interesting.......

http://ih.advfn.com/p.php?pid=nmona&article=62312127

[FrankLind]

1st q CC and transcript

http://www.optimizerxcorp.com/investors/audio.php

Read it!

[FrankLind]

I agree it's naivete rather than purposeful obfuscation.
I will be trying to set up a call with Harrell in a week or two (not sure if I'll actually be able to get him because I live overseas and the time zones are difficult) and I'll be asking him about the plan to improve legal disclosure side. I think the market is discounting this right now.

This is still one of the the strongest business models I have ever seen.

[DragonKrys]

You make a good point concerning a changing price per voucher. It's entirely possible that they have negotiated different pricing (volume incentives, etc.) with various pharma companies. Likewise, the revenue share may vary by EHR platform. The "competitive reasons" cited may be flexibility with their own partner and client contracts rather than strictly competition.

I appreciate your voicing of concerns. I became aware of this story last year and started accumulating shares with the Vicis buyout. For the past year I've been weighing the enormous potential of this business with the execution risk of a fairly inexperienced management team. My confidence has ebbed and flowed here more than any other company I follow, mainly due to a lack of proactive communication. As examples, I felt that they could have been more transparent/timely about the Stastney situation, the LDM suit/settlement, and now, as you've pointed out, the Allscripts and Novartis delays that they were fully aware of on the April 1st call. However, each of these issues seems to have reached a positive resolution, and I've been impressed by just how quickly new partner and pharma relationships have developed.

In management's defense, they've been operating without a CFO, so I have hope communication will now improve going forward. They've always been pretty responsive to concerns raised on the quarterly calls (we even got a PR today after it was recommended!). I've never gotten the sense that they're trying to mislead investors, but rather just aren't always familiar with best practices.

[vlscout]

Thank you for the comprehensive reply and CC summary. Indeed I most probably have been too negative. Kind of my mentality. Once I am invested in a stock, I try to "watch out for the downside, as the upside will take care of itself".

Also calculated a potential q4.14 revenue of 4m and fully taxed eps of 2.5c Depending on the PE multiple awarded by the market then for a fast growing firm, we might see a price of 3-5 dollars then.

But cannot completely lay to a rest some doubts. Do you really need to take a very effective marketing tool offline for 4 months to judge effectiveness? Maybe I'd just take it offline for North Carolina and see how results diverge from SC, or something similar. If you had found a great marketing tool, would you tell all your competitors about it on a conference? Could it be that the reason they stopped providing voucher numbers is to keep secret a changing price / voucher?

[DragonKrys]

It was a very positive call, in my opinion.

The Allscripts tech issue is already resolved and distribution is expanding with the transition from opt-in to opt-out. It's hard to quantify the Q1 impact but it was clearly significant.

Novartis (second largest customer?) paused distributions January to April. The study/audit they commissioned proved SampleMD's ROI, causing Novartis not only to resume distributions (perhaps at increasing levels?) but also highlight these results at the CBInet conference. The Q1 impact was around $300k.

I think it's abundantly clear that Q1 revenues would have reached $2M without these two issues.

Management reiterated a target of doubling distributions in 2014 (implying 2.4M). Also targeting 1M/quarter by year-end. I agree with you that their citing of competitive reasons for the lack of Q1 disclosure if rather confusing, though this may be related to the LDM settlement terms. However, with the Q1 top-line being nearly exclusively distributions, it's rather easy to calculate at the 2013 rate of roughly $4.00 - $4.50/distribution.

Other positive items from the call and Q:

- Operating expenses ex-LDM and stock comp were just 650k

- More pharma wins (Baush & Lomb and AstraZeneca)

- More EHR integrations (eHealthLine and Quest), with target to double network by year-end

- Consulting revenues expected to ramp in balance of 2014

- Harrell & Lester both offered color around recent stock sales

- Experienced CFO hired at reasonable salary and bonus

- Uplisting considered within next year (not really news, but nice to know it's on their radar as fundamentals allow)

I wouldn't be surprised to see some continued selling pressure from the one-time revenue and expense impacts in Q1. I was happy to pick up more shares at $1.60 today. By year-end we should be at an annual run-rate of $16M revenue (distributions only), or $8M after revenue share (40%) and LDM (10%). Even if cash opex increases significantly to $3.5M, you have an adjusted EBIT run-rate of $4.5M. Consider growth and 14M in NOLs in assigning your target EBIT multiple, but I find the risk/reward very compelling here.

[vlscout]

Not sure what to make of this quarter (q1) and the CC.

They suddenly revealed that their largest customer stopped using them for 4 months jan-apr (to evaluate effectiveness they say). Also allscripts had reduced activity due to privacy issues on their platform. Neither of this mentioned in the previous call or ahead of the secondary.Seems like material information to me.

On the other hand their comments regarding future are very positive. Pharma firms all agreeing that sampleMD is a fantastic channel. "Very significant" ramp expected in h2. Never read this kind of positive language in a SEC filing.

Then on one hand they hand out the target of doubling distributions (of vouchers). But they refuse to give those numbers for q1 for "competitive reasons"., so investors have no ability to judge achievement of targets.

Every couple of quarters they have these rather huge "one time" stock option expenses for "former" and current executives.

The good thing is that the new investor who bought a lot of shares lately (partially from the selling executives), Harvey Poppel, seems not to be shy to hold managements' feet to the fire if he thinks its required.

[baltimorebullet]

I'm breaking a major trading rule of mine by owning such thinly traded stock but I see this companies potential as huge. I'll be very, very happy when volume gets to a higher level.
Could someone tell me the easiest way to access the earnings call several hours after it occurs.

[4retire]

Quarterly call tomorrow. Glad to see so much volume in anticipation of what should be a good result. Yes by gosh a whopping 200 shares were traded today!!!!! We'll hit everyone's radar screen soon.

[Stocks4John]

I think it's May 15th but don't quote me.

[VidosL]

Does anyone know when results for Q1 will be out?

[Stocks4John]

Amended

[VidosL]

Is this really an other insider selling or did I misunderstand something?
http://ih.advfn.com/p.php?pid=nmona&article=62028279&symbol=OPRX

[FrankLind]

They have stated they are looking for a new CFO, but in the last CC, did they indicate they had officially started a search for a new CEO?

As far as I can see, the sale was not an options exercise but an actual sale.

I would be more comfortable with more seasoned management, that is for sure. However, I feel their business model is one of the strongest I have ever seen. Let's hope they don't screw it up.

[4retire]

Thank you for that information. A new CEO would address the communication problem. A friend, that also holds this stock, thinks Harrel also doubles as a cadaver. He is not the most compelling person to listen to. That being said, the positives of this stock will be realized one day; hopefully sooner than later.

[DragonKrys]

Any of the free SEC filing sites will alert you to Form 4s.

secfilings.com is good, and the e-mail alerts usually come a few minutes before they're even available on edgar.

[vlscout]

Frank, thank you for mentioning the share sale, did not see that yet.

Anyone have a good ( and free) way to get automatically updated on insider trades? I use Yahoo, but they only include the 8ks and 10k and q in their newsfeed.

Regarding the sale itself, it was not an option exercise. Code "s" stands for sale, so he sold both shares and option. Unless its an erroneous filing.

Now, regarding the significance of the sale, tea leaf reading like this is always difficult. Could be neutral ( he just needed cash), negative ( sale before poor results) or even positive (most companies have a blackout period for insider transaction between the end of the quarter and before the result announcement, as an insider sale during that period would be easy fodder for a lawyer claiming that material bad news should not have been withheld. so you "could" argue that he wouldn't sell now in case the quarter is bad, as otherwise he'd be in legal trouble.)

Some more tea leaf reading: When having found a company that I think has huge growth potential in their core business, I always tend to second guess my thoughts when I see management thinking about diversification at an early stage.

[baltimorebullet]

I'm thinking the vet thing could be big but that's an uneducated guess. Anyone have any thoughts?

[baltimorebullet]

Their earnings call transcripts are almost indiscernible.
I feel like I'm playing a puzzle trying to figure out what they actually said.

[DragonKrys]

Harrell's sale was on an options exercise, so I'm not too concerned. Per today's 13G, it appears the shares were picked up by Harvey Poppel. Poppel acquired 551,500 shares in the recent offering and now holds 1,235,650.

Management indicated on the last call they weren't preannouncing monthly distribution figures. I would assume the quarterly revenue preannouncement is discontinued as well. It will always raise some near-term questions when a company stops preannouncing, but they've reached a revenue scale where this is unnecessary.

I agree with your general concerns surrounding management communication. There has been a lack of positive PRs (e.g. Quest deal), lack of clarity surrounding significant events (e.g. LDM settlement), errors in their filings and websites, and in general a failure to tell their compelling story to potential investors. This may be largely responsible for the continued share price weakness even after the Vicis buyout and bullish 2014 outlook. To their credit, management has been transparent and forthcoming when asked, and has hosted quarterly calls earlier than most at their stage. I expect communication will improve with the hiring of a CEO this year.

[FrankLind]

One criticism I have of this company are their communication skills.
I hope they can improve this.
Did you also notice the CEO sold a big block of shares yesterday?

[vlscout]

Well I don't think it matters to the competition whether they know revenue figures now or in 3 weeks.

Who knows maybe they just want to save on PR fees. No PR on the Quest deal either. But then they issued a PR to announce that they now also look into animal health market, so maybe money-saving is no explanation either.

We'll know more in a couple of weeks

[FrankLind]

They are no longer pre-releasing those as far as I understand. I am guessing competitive reasons.

[vlscout]

Waiting for their revenue preannouncement. Seems to be late this time.

[FrankLind]

The fact that they put specific dates and terms is very encouraging too. We'll see. I think the rubber band is stretching. This company is way too cheap.

"The agreement will be consistent and will follow the revenue share performance model as established by OPTIMIZERx. As the organizations have entered into this agreement the integration work has commenced and is anticipated to be operational in late Q2 to early Q3 of 2014."

[4retire]

Great news.......QUEST

[baltimorebullet]

I'm thinking the vet thing has potential.
Great outside the box thinking. Wonder what else they have up their sleeve?

[FrankLind]

Zacks outperform rating.

http://tickerreport.com/banking-finance/180177/optimizerx-co-nda-given-outperform-rating-at-zacks-oprx/

Target moved from 3.50 to 4.00

[FrankLind]

Latest CC

http://www.otcmarkets.com/edgar/GetFilingPdf?FilingID=9901872

[FrankLind]

Hi Tiny, Sorry for the late response.
Yes, I was hoping for a higher buyout price of the Vicis share.
At least 1.60.Anyway, it is what it is and it's done now.

The fully diluted share count will be around 24.4 million.

Here is a link to the latest CC.
It does a pretty good job of explaining
revenue and earnings potential I think

http://www.otcmarkets.com/edgar/GetFilingPdf?FilingID=9901872

[Tiny1]

Frank,

What are your thoughts on the buy out? Seems to be a bit more dilutive than I had hoped for. Also, what are your thoughts on the year end numbers and the future of OPRX?

[FrankLind]

Booyah!

http://ih.advfn.com/p.php?pid=nmona&article=61492737&symbol=OPRX

[baltimorebullet]

I meant dilutive equity offering.

[baltimorebullet]

With Gray Healthcare being a 29 billion dollar company 6 million doesn't seem like a lot.
Is it possible a deal could be worked out instead of a dilutive financing?

[FrankLind]

Detailed write-up on OPRX

Courtesy of a friend of mine.

http://moatology.com/2014/02/20/optimizerx-a-little-company-in-the-sweet-spot-of-a-massive-industry/#comment-410

[FrankLind]

Welcome, and good luck to both of us.

[vlscout]

Thank you Frank. 40pc revenue share, did not know that.

Now its easier to model. With this I calculate "true" taxed eps around breakeven for q3 (excluding extraordinary costs due to Leadership change, but including the 40pc) and 0.65c for q4 (assuming a worst case scenario in which the vicis deal does not happen and we stll have 35m diluted shares).

With a vicis deal, shares out might get reduced by almost half and thus eps and value per share doubles.

And of course we both expect continued fast growth.

Remember you from the REPR board. We seem to look for the same traits in companies. REPR growth started to trail off as soon as I bought in, a bit unfortunate there. Looking forward to get paid back this time, with interest.

Thanks also for clearing up my double posts. Ihub froze so i clicked submit a couple of times.

cheers!

[FrankLind]

There will be no restatements, but there will be one quarter where they will have to 'catch up' on unpaid revenue share. So earnings will be depressed by that. However this was already known and it has always been valued on a revenue minus 40 percent revenue share basis.

I don't know if they will meet the 3 month deadline because I think the CEO only wants to dilute at 2.50 or higher (just a guess). I think it might be extended. I hope they release February distribution numbers, as I think a large increase will be shown with AllScripts Pro going live and NextGen integrated.

[vlscout]

Not sure yet.

We'll know after they have filed annual results and did the 6m secondary to pay off Vicis.

Personally I am a bit concerned by the latest news on accounting. They said that they previously recognized the partner's revenue share after 1-2 quarters only. With rapidly rising revenue, this meant that in any quarter the revenue share costs were understated. The release did not give any indication how much margins and profits were overstated. Do they have to restate financials? Will they file on time? Will this impact the plan to do a secondary to pay off Vicis? Management has said and I fully agree that it is very important to take this opportunity to clean up the balance sheet and reduce dilution.

I hope they can be successful.

[baltimorebullet]

I believe things are quietly falling into place.
Harrell mentioned toward the end of this last presentation the big pharms would like to see the company be a bit bigger or something to that effect.
Makes sense when you think about it.
We're attempting to revolutionize the way the big pharms do business.
It must be scary as hell to have all this hinge on a
25m market cap company.
Enter Grey healthcare( management said the would seek guidance from "friends and family" and I'm guessing they were pointed in Grey's direction).
Now with their wagon hitched to a 30 billion dollar company this becomes far less an issue.
Onward and upward.

[Justin42]

The price seems to be sticky at around $1.8 for the last month. I think it's obvious that the future of the stock is going to be great, but I'm curious: do you guys think we'll see another slide down to the $1 range before things really take off?

[FrankLind]

ghg is actually a subsidiary of WPP - one of the largest marketing companies in the world.

It is close to a 29 billion dollar company

https://www.google.com/finance?q=NASDAQ%3AWPPGY&ei=2CbnUqi3BdHPkAXllAE

Here is their website showing ghg as their subsidiary
http://www.wpp.com/wpp/companies/ghg/

"ghg is one of the world’s top five healthcare communications companies, with 42 offices in 21 countries. ghg’s global companies provide an extensive array of integrated services in support of brand acceleration and sales. Nominated as Med Ad News’ 2005 Agency of the Year, Most Admired Agency and Best Global Network, and winner of 2002’s Agency of the Year, ghg boasts a client list that includes 14 of the world’s top 15 pharmaceutical clients."

ghg will streamline and handle most of their sales and marketing and of course make it a lot better.

When a company as small as OPRX is partnering with companies like this (and PDR, Allscripts etc) it shows their position, credibility, and potential.

Their aim is to reach 1 million in distributions by 3rd quarter this year. I think it will be worth around $4.50 or more by that time.

[Frozen in time]

Frank, can you comment on the Gray Healthcare partnership. David Harrell seems extremely excited about this.
Thank you.