OPRX 10-K & 10-Q changes, risk factors and insider trading

With the exception of 2021,2021 and 2025, we have historically incurred losses as a result of investing in future growth. While we have increased revenues, we have not yet consistently achieved profitability due to these investments and non-cash expenses. Our ability to achieve consistent profitability depends on our ability to generate sales through our technology platform and advertising model, while maintaining reasonable expense levels. If we do not achieve sustainable profitability, it may negatively impact our ability to continue our operations.

We may need to raise additional capital in the future, including to expand our operations and pursue our growth strategies, to respond to competitive pressures, or to meet capital needs in response to operating losses or unanticipated working capital requirements. OurIf inabilitywe are unable to raise additionalcapital capitalin sufficient amounts on acceptable terms inwhen the future may limitneeded, our ability to continue to operate our business and further expand our operations.operations may be limited.

Our ability to make payments on and refinance our indebtedness and to fund our operations and capital expenditures depends on our ability to generate cash flow and secure financing in the future. Our ability to generate future cash flow depends,depends on, among other things, on future operating performance, general economic conditions, competition, and legislative and regulatory factors affecting our operations and business.

Some of these factors are beyond our control. There is no assurance that our business will generate cash flow from operations or that future debt or equity financings will be available to us to enable us to pay our indebtedness or to fund other needs. As a result, we may need to refinance all or a portion of our indebtedness on or before maturity. There is no assurance that we will be able to refinance any of our indebtedness on favorable terms, or at all. Any inability to generate sufficient cash flow or refinance our indebtedness on favorable terms could have ana material adverse effect on our financial condition. condition and material business operations.

OurThe $40,000 term loan (the “Term Loan”) that the Company obtained in 2023 to partially finance the Medicx Health transaction, contains customary affirmative covenants, including, among others, covenants pertaining to the delivery of financial statements; certain financial covenants; notices of default and certain other material events; payment of obligations; preservation of corporate existence, rights, privileges, permits, licenses, franchises and intellectual property; maintenance of property and insurance and compliance with laws, as well as customary negative covenants, including, among others, limitations on the incurrence of liens and entering into capital leases, investments and indebtedness;indebtedness, mergers and certain other fundamental changes;changes, dispositions of assets;assets, restricted payments;payments, changes in our line of business;business, and transactions with affiliates and burdensome agreements. These covenants could affect our ability to operate our business, increase the amount of interest expense we ultimately pay pursuant to the Term Loan, and may limit our ability to take advantage of potential business opportunities as they arise.

Once our solutions are implemented, our customers use our account management and support organizationteams to resolve technical issues relating to our solutions. Increased demand for our support services may increase our costs without corresponding increases in revenue, which could adversely affect our operating results. Further, the sale of our solutions is highly dependent on the ease of use of our solutions, on our business reputation, and on favorable recommendations from our existing customers. Any failure to maintain high-quality and responsive customer support, or a market perception that we do not maintain high-quality support, could harm our reputation, cause us to lose customers, adversely affect our ability to sell our solutions to prospective customers, and harm our business, operating results and financial condition.

Because the pharmaceutical industry is dominated by large companies with multiple brands, our revenue is concentrated in a relatively small number of companies. We have over 100 pharmaceutical manufacturers as customers, and our revenues are concentrated in these customers. Loss of one or more of our larger customers could have a negative impact on our operating results. Our top five customers represented approximately 49%47% of revenue for the year ended December 31, 2024. 2025. In 20242025 and 2023,2024, respectively, we had twothree customers and onetwo customercustomers that represented over 10% of our revenues.

We expect that we will continue to depend upon a relatively small number of customers for a significant portion of our total revenues for the foreseeable future. The loss of any of these customers or groups of customers for any reason, a year over year reduction in sales of one or more of our larger customers, a change of relationship with any of our key customerscustomers, or a loss of one or more of any of the pharmaceutical brands that purchase our solutions, could cause a material decrease in our total revenues.revenues and could have a material impact on our operating results.

If we are unable to maintain our contracts with electronic prescriptionprescribing platforms and electronic health record systems, our business will suffer.

We are reliant upon our contracts with leading electronic prescribing (“eRx”) platforms and electronic health record (“EHR”) systems to generate a portion of the revenues received from our customers. Such arrangements subject us to a number of risks, including the following:

We generated 57.3%62% and 55.9%57% of our revenue through our two largest channel partners in 20242025 and 2023,2024, respectively. As such, the inability to maintain one or more of these relationships could materially adversely impact our business.

We currently work with many leading pharmaceutical companies, medical device manufacturers, associations,life sciences marketing agencies, and other companies. Consolidation of companies within the life sciences industry we serve, and more specifically within our customer base, may reduce the volume of solutions purchased by the consolidated customers following an acquisition or merger. Moreover, our relationships with customers or potential customers who are in competition with each other may adversely impact the degree to which other customers or potential customers buy or use our solutions. While we have experienced customer growth, this growth may not continue at the same pace in the future or at all. Achieving growth in our customer base may require us to engage in increasingly sophisticated and costly sales and marketing efforts that may not result in additional customers. We may also need to modify our solution set and/or pricing model to attract and retain such customers. If we fail to attract new customers or fail to maintain or expand existing relationships in a cost-effective manner, our business and future prospects may be materially and adversely impacted.

OurThe markets in which we operate are competitive, continually evolving and, in some cases, subject to rapid change, resulting in our solutions facefacing competition from numerous other companies. We compete for revenue from healthcare advertisers and sponsors (pharmaceutical manufacturers) with healthcare data suppliers, health-focused demand-side platforms, and health-focused walled garden websites and web platforms, and advertising networks that aggregate traffic from multiple web sites or point-of-care platforms such as telehealth, EHR, eRx, physician practice management, healthHIE, information exchanges (HIE),and site-based platforms within large health systems, etc.systems.

Many of our competitors have greater financial, technical, product development, marketing and other resources than we do. These organizations may be better known than we are and have more customers than we do. We cannot provide assurance that we will be able to compete successfully against these organizations or any alliances they have formed or may form. Since there are no substantial barriers to entry into the markets in which we participate, we expect that competitors will continue to enter these markets.markets and that competition in the industry will continue to increase. If we fail to differentiate ourselves from our competitors or to gain market share, our operating results and financial position may be negatively impacted.

TheHIPAA, as amended by the Health InsuranceInformation PortabilityTechnology for Economic and Accountability Clinical Health Act of(the 1996, or HIPAA,“HITECH”), and the rules promulgated thereunder require certain entities, referred to as Covered Entities, to comply with established standards, including standards regarding the privacy and security of protected health information,information or PHI.(“PHI”). HIPAA further requires that Covered Entities enter into agreements meeting certain regulatory requirements with their business associates, as such term is defined by HIPAA, which, among other things, obligate the business associates to safeguard the covered entity’s PHI against improper use and disclosure. While we are not a Covered Entity, we have contracted asor a business associate of our Covered Entity customers and, as such, may be regulated by HIPAA and have contractual obligations under such agreements, including to enter into business associate agreements with our third-party vendors. We, and our Covered Entity customers might face significant contractual liability pursuant to such business associate agreements if the business associate breaches the agreement or causes the Covered Entity to fail to comply with HIPAA. Additionally, even if we do not act as a Covered Entity or Business Associate,associate, we process data that has been de-identified according to the expert determination method under HIPAA’s Privacy Rule. This requires us to take measures to prevent the re-identification of that data and to comply with HIPAA if that data is re-identified.

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, proprietary business information and personally identifiable information (including of our employees, customers, suppliers and business partners). Any data breach may subject us to civil fines and penalties, or regulatory orders, fines or sanctions under relevant state and federal privacy laws in the United States, including the California Consumer Privacy Act (the “CCPA”), which took effect on January 1, 2020 and was amended and expanded by the California Privacy Rights Act (the “CPRA”), which took effect on January 1, 2023, and other laws and regulations. Our failure, or the failure of our third-party vendors, to comply with applicable laws and regulations relating to data security and our involvement or the involvement of any of our third-party vendors in any data security incidents could result in legal claims and liability, obligations to report incidents to governmental agencies, regulatory investigations and penalties, and reputational damage, which could have a material adverse effect on our business, financial condition and results of operations.

Our operations may be impacted fromby changes to current regulations and future legislation.

The current Executive Branch administration and regulatory agencies have proposed, and may propose additional, policy changes that create uncertainty for our business, our customers' businesses and the industries in which we operate, including potentiallyfor example, implementing restrictions on pharmaceutical direct to consumer (“DTC”) marketing.

Additionally, in its June 2024 decision in Loper Bright Enterprises v. Raimondo (the “Loper decision”), the U.S. Supreme Court overturned the longstanding Chevron doctrine, under which courts were required to give deference to regulatory agencies’ reasonable interpretations of ambiguous federal statutes. The Loper decision could result in additional legal challenges to regulations and guidance issued by federal agencies applicable to our customer’s customers’ operations, including those issued by the U.S.FDA, Food and Drug Administration (FDA), the U.S. Department of Health & Human Services,HHS, and the U.S. Federal Trade Commission. Additionally, the Loper decision may result in increased regulatory uncertainty, inconsistent judicial interpretations and other impacts to the agency rule-making process. We cannot predict which additional measures may be adopted or the impact of current and additional measures on our business, or our customer’s businesses, which could have a significant impact on our business, financial condition and results of operations.

The FDA, U.S. state licensure bodies, other healthcare regulators and other comparable agencies in other jurisdictions directly regulate many of the most critical business activities of our customers, partners, and third-party providers, including R&Dresearch and development for biotechnology and pharmaceutical development, and pharmaceutical advertising. States increasingly have been placing greater restrictions on the marketing and advertising practices of healthcare companies, particularly pharmaceutical companies. In addition, pharmaceutical and biotechnology companies have been the target of lawsuits and investigations alleging violations of government regulations, including claims asserting submission of incorrect pricing information, improper promotion of pharmaceutical products, payments intended to influence the referral of federal or state healthcare business, submission of false claims for government reimbursement, antitrust violations, violations of the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and similar anti-bribery or anti-corruption laws. Any failure to comply with applicable laws, rules and regulations may result in civil and/or criminal legal proceedings and lead to fines, damages, mandatory compliance programs and other sanctions and remedies that may materially affect the business, operations and reputations of our customers, partners and third-party providers which could adversely affect our business.

Our business is dependent, in part, on our ability to innovate, and, as a result, we are reliant on our intellectual property. We generally protect our intellectual property through patents, trademarks, trade secrets, confidentiality and nondisclosure agreements and other measuresmeasures, to the extent our budget permits. There can be no assurance that patents will be issued from pending applications that we have filed or that our patents will be sufficient to protect our key technology from misappropriation or falling into the public domain, nor can assurances be made that any of our patents, patent applications, trademarks or our other intellectual property or proprietary rights will not be challenged, invalidated or circumvented. In the event a competitor or other party successfully challenges our solutions, processes, patents or licenses or claims that we have infringed upon their intellectual property, we could incur substantial litigation costs defending against such claims, be required to pay royalties, license fees or other damages or be barred from using the intellectual property at issue, any of which could have a material adverse effect on our business, operating results and financial condition. We cannot assure that steps taken by us to protect our intellectual property and other contractual agreements for our business will be adequate, that our competitors will not independently develop or patent substantially equivalent or superior technologies or be able to design around patents that we may receive, or that our intellectual property will not be misappropriated.

Global cybersecurity threats can range from uncoordinated individual attempts to gain unauthorized access to our information technology (“IT”) systems to sophisticated and targeted measures known as advanced persistent threats. While we employ extensive measures to prevent, detect, address and mitigate these threats (including access controls, insurance, vulnerability assessments, continuous monitoring of our IT networks and systems, maintenance of backup and protective systems and user training and education), cybersecurity incidents, depending on their nature and scope, could potentially result in the misappropriation, destruction, corruption or unavailability of critical data and confidential or proprietary information (our own or that of third parties) and the disruption of business operations. The potential consequences of a material cybersecurity incident include reputational damage, loss of customers, loss of income, litigation with customers and other parties, loss of trade secrets and other proprietary business data and increased cybersecurity protection and remediation costs, which in turn could adversely affect our competitiveness and results of operations. In addition, while we maintain insurance coverage, our insurance coverage for cyberattacks may not be sufficient to cover all the losses, liabilities and costs we may experience as a result of a cybersecurity incident, including any disruptions resulting from such an incident, or that applicable insurance will be available to us in the future on economically reasonable terms or at all.

The use of AI technology in our operations and IT infrastructure could improve internal processes, but posescould pose security risks and privacy risks; the use of AI technology also faces regulatory uncertainty and scrutiny given that AI technology is rapidly growing and evolving.

We have increased efficiency through adoption and use of AI, including with our DAAP programs, machine learning, and similar tools and technologies that collect, aggregate, analyze or generate data or other materials or content, and we expect to continue to adopt such tools as appropriate. In addition, we expect our third-party vendors and service providers to increasingly develop and incorporate AI into their product offerings.

While we anticipate that we will continue to utilize our AI-powered Dynamic Audience and Activation Platform (DAAP), and to research and implement other potential AI-based technology solutions to both mitigate risk and increase automation in our environment, it is possible that bad actors and/or competitors will leverage AI solutions more effectively to either exploit vulnerabilities or take market share. Either outcome could negatively impact our business.

We are aware that generative AI tools may respond with inaccurate or fabricated information, introduce biasbias, or fail to provide traceability of source information.

The intellectual property risks associated with AI include uncertainties around the ownership of AI-generated works, potential infringement of existing patents and copyrights, unauthorized use of third-party data, and exposure of proprietary algorithms or trade secrets. DependenceIf onwe AIfail systemsto secure or AImaintain vendorsprotection meansfor thatthe any downtimeintellectual property rights in technologies developed using AI, or outageslater canhave disruptour businessintellectual operations.property Usagerights invalidated or otherwise diminished, our competitors may be able to take advantage of our confidentialresearch dataand development efforts to traindevelop thecompeting AI models by usproducts or services, which could adversely affect our vendors,business, could resultreputation, infinancial legal risk, especially if it involves customer datacondition, or ourresults proprietaryof information.operations.

There are significant and evolving risks involved in utilizing AI, and no assurance can be provided that our, our third-party vendors’ or service providers’ use of AI will enhance our, our third-party vendors’ or service providers’ products or services, or produce the intended results. The adoption and incorporation of such AI tools can lead to concerns around safety and soundness, fair treatment of consumers, and compliance with applicable laws and regulations. Moreover, the use or adoption of AI and machine learning in our technology may expose us to breach of a data or software license, website terms of service claims, claimed violations of privacy rights, or other tort claims. AI solutions may also be adversely impacted by unforeseen defects, technical challenges, cyber-attacks, cyberattacks, cybersecurity breaches, service outagesoutages, or other similar incidents, or material performance issues.

Furthermore, because AI technology itself is highly complex and rapidly developing, it is not possible to predict all the legal, operational or technological risks that may arise relating to the use of AI. We expect that our DAAP platform and use of AI will require additional resources, including incurring additional costs to develop and maintain our products and solutions, to minimize potentially harmful or unintended consequences, to comply with applicable and emerging laws and regulations, to maintain or extend our competitive position, and to address any ethical, reputational, technical, operational, legal, competitive or regulatory issues which may arise as a result of any of the foregoing.

Overall, we employ a “land and expand” strategy focused on growing our existing customer base and generating greater and more consistent revenues in part through a continued shift in our business model toward enterprise level engagements, while also broadening our platform with innovative proprietary virtual communication solutions such as our patented Micro-Neighborhood® Targeting and our AI-powered DAAP, which uses sophisticated machine-learning machine learning algorithms to find the best audiences in the correct channels at the right time.

Because the pharmaceutical industry is dominated by large companies with multiple brands, our revenue is concentrated in a relatively small number of companies. We have approximately over 100 pharmaceutical companiesmanufacturers as customers, and our revenues are concentrated among the largest pharmaceutical companies in thethese world. Loss of one of more of our larger customers could have a negative impact on our operating results.customers. Our top five customers represented approximately 49%47% and 44%49% of our revenue for the years ended December 31, 20242025 and December 31, 2023,2024, respectively. In 2024 2025 and 2023,2024, we had twothree customers and onetwo customer,customers, respectively, that represented more than 10% of our revenues. Loss or a year over year reduction in sales of one of more of our larger customers, or a loss of one or more of any of the pharmaceutical brands that purchase our solutions, could have a material negative impact on our operating results.

Average revenue per top 20 pharmaceutical manufacturer. manufacturers. Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the total revenue the company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 20232024 revenue” over the last twelve months, divided by the20, total number ofrepresenting the aforementioned pharmaceutical manufacturers thathighlighted our solutions helped support overon that time period.list. The Company uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and believe it also provides investors with a transparent way to chart our progress in penetrating this important customer segment. The increase decrease in the average in 2024,2025, as compared to 2023,2024, is primarily the result of higherlower revenue in the Company’soverall top 520 client accounts, all of which are included in the average revenue per top 20 pharmaceutical manufacturer KPI calculation. The above mentioned top 5 client accounts averaged $9.0 million in revenue, which was primarily driven by growth in DAAP and omnichannel messaging expansion.

Percent of total revenue attributable to top 20 pharmaceutical manufacturers. Percent of total revenue attributable to top 20 pharmaceutical manufacturers is calculated by taking the total revenue the company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 20232024 revenue” over the last twelve months, divided by our consolidated revenue over the same period. The Company uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment. OurThis decrease in our percent of total revenue from attributable to top 20 pharmaceutical manufacturers, in conjunction with the decrease in average revenue per top 20 pharmaceutical manufacturer discussed above, is due in part to a decrease in our activity with top 20 pharmaceutical manufacturers as well as the onboarding and growth of other customers that are not top 20 pharmaceutical manufacturers stayed relatively consistent year over year.manufacturers.

Net revenue retention. Net revenue retention is a comparison of revenue generated from all customers in the previous twelve-month period to total revenue generated from the same customers in the following twelve-month period (i.e., excludes new customer relationships for the most recent twelve-month period). The Company uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers. TheNet revenue retention ratedeclined in 2024 increased2025 duebecause tothe increasedperiod DAAPended relatedDecember revenue31, streams2025 fromdid existingnot clientsinclude andthe full yearinorganic benefit of the OctoberMedicx 2023Health acquisition, while the comparable 2024 period benefited from its timing. The acquisition closed on October 12, 2023, resulting in the inclusion of Medicx Health.Health revenue in the entire 2024 period but not in the full trailing twelve-month comparator period. Despite this, the Company achieved 116% net revenue retention driven by strong organic growth from existing customers.

Revenue per average full-time employee. We define revenue per average full-time employee (“FTE”) as total revenue over the last twelve months divided by the average number of employees over the last twelve months (i.e., the average between the number of FTEs at the end of the reported period and the number of FTEs at the end of the same period of the prior year). The Company uses this metric to monitor the productivity of its workforce and its ability to scale efficiently over time and believes the metric provides investors with a way to chart our productivity and scalability. Our revenue rate per employee increased year over year due to revenue growing at a higher rate than the average number of FTEs over the last 12 month period.

Our total cost of revenues, composed primarily of revenue-share expense paid to our channel partners, increased infor the year ended December 31, 20242025 to $35,834 compared to $32,749 for the year ended December 31, 2023. 2024. Our cost of revenues as a percentage of revenue decreased to approximately 36%33% infor the year ended December 31, 20242025 from approximately 40% in36% for the year ended December 31, 2023.2024. This decreaseimprovement in our cost of revenues as a percentage of revenue resultedwas primarily due toa favorableresult networkof utilization.solution and channel partner mix.

Transaction related costs for the year ended December 31, 2023 2024 arose due to the acquisition of Medicx Health, discussed in Part II, Item 8. Financials Statements and Supplementary Data; Note 3 - Acquisitions.Health.

Other income (expense) was comprised of the following (in thousands):

Income tax (expense) benefit

Historically, our primary sources of liquidity have been cash receipts from customers and proceeds from equity offerings. OnIn addition, on October 11, 2023, wethe Company entered into a financing agreement that provided for a $40.0 million term loan (the “Term Loan”), the proceeds of which$40,000 werein order to fund,partially in part,fund the acquisition of Medicx Health. SeeAs Partof II,December Item31, 8.2025, Financialsthe Statementstotal principal balance outstanding on the Term Loan was approximately $26,290 and Supplementarywe Data;were Notein 12compliance -with Longall of the financial covenants of the Term Debt.Loan. Subsequent to December 31, 2025, the maturity date of the Term Loan was extended to October 11, 2029.

As of December 31, 2024,2025, we had total current assets of $54.0 million,$64,715, compared with current liabilities of $18.7 million,$21,264, resulting in working capital of $35.3 million$43,451 and a current ratio of 33.0 to 1. This compares with a working capital balance of $36.4 million$35,317 and a current ratio of 32.9 to 1 at December 31, 2023. 2024. This decreaseincrease in working capital, as discussed in more detail below, is primarily the result of a slight$9,985 increase in our accounts receivable driven by higher fourth quarter billings,cash and acash slight increase in our accrued expenses due to severance expenses as of December 31, 2024.equivalents.

Following is a table with summary data from the consolidated statement statements of cash flows for the years ended December 31, 20242025 and 2023,2024, as presented.presented (in thousands).

On October 11, 2023 (the “Loan Date”), in connection with the acquisition of Medicx Health,2023, we entered into a financingFinancing agreementAgreement that(the “Financing Agreement”) which provided for athe $40.0$40,000 millionTerm term loan.Loan.

OptimizeRx has historically generated revenue by delivering messages to HCPs via EHR systems and “eRx” platforms using our proprietary network of channel partners. We have gradually expanded our offerings to include audience development, audience creation, and media execution across different messaging types and media distribution channels.

Because the pharmaceutical industry is dominated by large companies with multiple brands, our revenue is concentrated in a relatively small number of companies. We have over 100 pharmaceutical manufacturers as customers, and our revenues are concentrated in these customers. Our top five customers represented approximately 47% and 49% of our revenue for the years ended December 31, 2025 and 2024, respectively. In 2025 and 2024, we had three customers and two customers, respectively, that represented more than 10% of our revenues. As disclosed in our net revenue discussion, one customer that accounted for approximately 10% of total revenue in fiscal 2025 did not generate revenue during the current period, and future revenue from this customer is uncertain. Loss or a year over year reduction in sales of one ofor more of our larger customers, or a loss of one or more of any of the pharmaceutical brands that purchase our solutions, could have a material negative impact on our operating results.

Unfavorable conditions in the economy may negatively affect the growth of our business and our results of operations. For example, macroeconomic events including persistent inflation, elevated interest rates maintained by the U.S. Federal Reserve, ongoing most favored nations (“MFN”) pricing dynamics and ongoing geopolitical conflicts (including the wars in Ukraine and the Middle East) have contributed to sustained economic uncertainty. The implementation of broad-based U.S. tariffs and retaliatory tariffs by major trading partners in 2025 and 2026 has further disrupted global supply chains and contributed to renewed inflationary pressure in the domestic markets, which may continue over the next twelve months. In addition, continued high levels of employee turnover across the pharmaceutical industry, a slower pace of U.S. drug approvals, and reductions in force and policy shifts at the U.S. Food and Drug Administration and other federal health agencies over the past year have created additional uncertainty within our target customer markets. These macroeconomic factors have contributed to more measured customer spending patterns, which was a factor in our 21% revenue decline for the six months ended June 30, 2026. Historically, during periods of economic uncertainty and downturns, businesses may slow spending, which may impact our business and our customers’ businesses. Adverse changes in demand could impact our business, collection of accounts receivable and our expected cash flow generation, which may adversely impact our financial condition and results of operations.

Average revenue per top 20 pharmaceutical manufacturers. Average revenue per top 20 pharmaceutical manufacturer is calculated by taking the total revenue the Company recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2025 revenue” over the last twelve months, divided by 20, representing the aforementioned pharmaceutical manufacturers highlighted on that list. The Company uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and believebelieves it also provides investors with a transparent way to chart our progress in penetrating this important customer segment. TheAverage decreaserevenue inper top 20 pharmaceutical manufacturers decreased $436, or 14%, from $3,095 to $2,659 for the average ofrolling twelve months ended MarchJune 31,30, 2026, as compared to the rolling twelve months ended MarchJune 31,30, 2025,2025. The decrease is aprimarily resultdue ofto reduced revenuesrevenue from a small subset of the top 20 pharmaceutical manufacturers.manufacturers, including the impact of the customer that accounted for approximately 10% of fiscal 2025 revenue and from which the Company did not generate revenue during the current period, as discussed in the net revenues section below.

Percent of total revenue attributable to top 20 pharmaceutical manufacturers. Percent of total revenue attributable to top 20 pharmaceutical manufacturers is calculated by taking the total revenue the companyCompany recognized through pharmaceutical manufacturers listed in Fierce Pharma’s “The top 20 pharma companies by 2025 revenue” over the last twelve months, divided by our consolidated revenue over the same period. The Company uses this metric to monitor its progress in “landing and expanding” with key customers within its largest customer vertical and believes it also provides investors with a transparent way to chart our progress in penetrating this important customer segment. The percentdecrease in the percentage of total revenue attributable to top 20 pharmaceutical manufacturers reflects a combination of a year over year decrease in overall revenue fromthe top 20 pharmaceutical manufacturers andprimarily reflects lower revenue from the top 20 pharmaceutical manufacturers (including the customer discussed in the net revenues section), partially offset by growth in revenue from non-topcustomers outside the top 20 customers.pharmaceutical manufacturers.

Net revenue retention. Net revenue retention is a comparison of revenue generated from all customers in the previous twelve-month period to total revenue generated from the same customers in the following twelve-month period (i.e., excludes new customer relationships for the most recent twelve-month period). The Company uses this metric to monitor its ability to improve its penetration with existing customers and believes it also provides investors with a metric to chart our ability to increase our year-over-year penetration and revenue with existing customers. The decline in net revenue retention for the period ending MarchJune 31,30, 2026, is primarily due to a decline in DTC related managed service revenue and lower revenue from theexisting topcustomers, 20driven pharmaceuticalprincipally manufacturers.by reduced revenue from a small subset of those customers.

Revenue per average full-time employee. We define revenue per average full-time employee (“FTE”), as total revenue over the last twelve months divided by the average number of employees over the last twelve months (i.e., the average between the number of FTEs at the end of the reported period and the number of FTEs at the end of the same period of the prior year). The Company uses this metric to monitor the productivity of its workforce and its ability to scale efficiently over time and believes the metric provides investors with a way to chart our productivity and scalability. Our revenue rateRevenue per employeeaverage increasedFTE yeardecreased over$17, yearor 2%, from $767 to $750 for the rolling twelve months ended June 30, 2026, as compared to the rolling twelve months ended June 30, 2025. The decrease was due to revenuelower growingrevenue, atpartially offset by a higherdecrease rate thanin the average numberFTE ofcount FTEs overduring the last 12 monthmonths period. This is reflective of operational efficiencies gained over the previous twelve months.

Results of Operations for the Three and Six Months Ended MarchJune 31,30, 2026 and 2025

The following tables setsset forth, for the periods indicated, the dollar value and percentage of net revenue represented by certain items in our condensed consolidated statements of operations and comprehensive income (loss) (in thousands):

Our net revenue decreased 10%30% to $19,844$20,504 for the three months ended MarchJune 31,30, 2026 from $21,928$29,195 from the same period in 2025. Our net revenue decreased 21% to $40,348 for the six months ended June 30, 2026 from $51,123 from the same period in 2025. The decrease in net revenue was primarily attributable to aan $3,400$8,400 decline in revenue from a low-margin managed service program which represented approximately 9.8% of total revenue in 2025. The Company is no longer actively supporting these types of low-margin managed service contracts. In addition, the Company did not generate revenue during the current period from a customer that accounted for approximately 10% of total revenue in fiscal 2025. While the master service agreement with this customer remains in effect, future revenue is uncertain and may be lower than in prior periods. This decrease is also attributable to some short to intermediate term disruption from prior year Most Favored Nations pricing negotiations and other macroeconomic factors leading to more measured customer spending. These decreases were partially offset by increased spending from new and existing customers.

Expenses decreased 21% to $19,448$20,592 for the three months ended MarchJune 31,30, 2026 from $24,030$25,988 for the same period in 2025, a decreasereduction of approximately$5,396. 19%.For the six months ended June 30, 2026, expenses decreased 20% to $40,040 from $50,018 for the six months ended June 30, 2025, a reduction of $9,978. The detail by major category is reflected in the next table (in thousands).

Our total cost of revenues, composed primarily of revenue-share expense paid to our channel partners, decreased for the three months ended MarchJune 31,30, 2026 to $4,912$4,816 compared to $8,584$10,560 for the same period of 2025. Our cost of revenues as a percentage of revenue decreased to approximately 25%23% for the three months ended MarchJune 31,30, 2026 from approximately 39%36% for the three months ended MarchJune 31,30, 2025. Our cost of revenues decreased for the six months ended June 30, 2026 to $9,728 compared to $19,144 for the six months ended June 30, 2025. Our cost of revenues as a percentage of revenue decreased to approximately 24% for the six months ended June 30, 2026 from approximately 37% for the six months ended June 30, 2025. This improvement in our cost of revenues as a percentage of revenues was primarily a result of solution and channel partner mix. In addition, the prior year period included a large DTC managed service program that operated at lower margins. This program concluded in the third quarter of 2025 and the Company has since shifted its focus toward higher-margin solutions.

Depreciation and amortization remained consistent at $1,064 for the three months ended MarchJune 31,30, 2026 from $1,094$1,074 for the three months ended MarchJune 31,30, 2025, and remained consistent at $2,128 for the six months ended June 30, 2026 from $2,168 for the six months ended June 30, 2025.

Interest expense decreased to $1,155$1,127 for the three months ended MarchJune 31,30, 2026 from $1,297$1,603 for the three months ended MarchJune 31,30, 20252025, and decreased to $2,282 for the six months ended June 30, 2026 from $2,899 for the six months ended June 30, 2025. Interest expense represents interest charges on our Term Loan and New Term Loan, together with the amortization of the related issuance costs. The decrease in both periods is primarily a result of the decrease in the interest rate on the New Term Loan and a lower average principal balance for the three months ended MarchJune 31,30, 2026 as compared to the three months ended MarchJune 31,30, 2025 and for the six months ended June 30, 2026 as compared to the six months ended June 30, 2025 Interest income decreased to $81 for the three months ended June 30, 2026 from $90 for the three months ended June 30, 2025, and decreased to $158 for the six months ended June 30, 2026 from $177 for the six months ended June 30, 2025. The variability in interest income is a result of the fluctuation in interest rates as the balance in the Company's money market account has remained consistent.

Income tax benefit (expense) benefit

We had a net loss of approximately $(495703) for the three months ended MarchJune 31,30, 2026, as compared to net income of $1,532 during the three months ended June 30, 2025 and a net loss of $(1,198) for the six months ended June 30, 2026 as compared to a net loss of approximately $(2,199667) duringfor the samesix periodmonths inended June 30, 2025. The reasons and specific components associated with the change are discussed above.

As of MarchJune 31,30, 2026, we had total current assets of $56,165,$54,146, compared with current liabilities of $10,459,$9,711, resulting in working capital of $45,706$44,435 and a current ratio of 5.4approximately 5.6 to 1. This represents aan increase from our working capital of $43,451 and an increase from the current ratio of 3.0 to 1 at December 31, 2025.

We believe that funds generated from operations, together with existing cash,cash of approximately $24,096 and our $10,000 undrawn Revolving Facility, will be sufficient to finance our current operations and meet our obligations under the New Term Loan for the next twelve (12) months. In addition, we believe we can generate the cash needed to operate beyond the next 12 months from operations. However, we may seek additional debt, equity financing, or lines of credit to supplement cash from operations to fund acquisitions or strategic partner relationships, make capital expenditures, and satisfy working capital needs. We currently have an effective shelf registration statement, which allows us to issue, from time to time, up to $75,000 of any combination of our common stock, preferred stock, debt securities, warrants, or units.

On March 5, 2026, the Company announced that its’ Board authorized the repurchase of up to $10,000 of the Company’s outstanding common stock. Under this new program, share repurchases may be made from time to time depending on market conditions, share price, share availability, and other factors at the Company’s discretion. This share repurchase authorization was effective on March 12, 2026 and will expire on the earlier of March 15, 2027 or when the repurchase of $10,000 of shares has been reached.reached, if earlier. As of June 30, 2026, no shares had been repurchased under this program.

The Company’s repurchase of shares willmay take place in open market transactions or privately negotiated transactions in accordance with applicable securities and other laws, including the Securities Exchange Act of 1934. The Company intends to finance thepurchases, purchaseif any, under this program using its available cash and cash equivalents. The Board may modify, suspend, extend or terminate the repurchase program at any time.

Following is a table with summary data from the condensed consolidated statements of cash flows for the threesix months ended MarchJune 31,30, 2026 and 2025, as presented (in thousands).

InvestingOur operating activities usedprovided $21$8,144 forduring the threesix months ended MarchJune 31,30, 2026, compared with $84$8,425 in the same period in 2025. The net decrease in net cash usedprovided inby investingoperating activities was mainly attributedattributable to a $531 increase in net loss partially offset by a $195 decrease in capitalizationcash offlows internallyfrom developeddeferred software.revenue.

FinancingInvesting activities used $2,708$56 during the threesix months ended MarchJune 31,30, 2026, compared with $587$128 in the same period in 2025. The increasedecrease in net cash used forin financinginvesting activities was primarilymainly relatedattributed to thea repaymentdecrease in capitalization of long-terminternally debt.developed software.

Off BalanceOff-Balance Sheet Arrangements

From time to time, the Company enters into arrangements with channel partners to acquire minimum amounts of media, data or messaging capabilities. As of MarchJune 31,30, 2026, the Company had commitments with channel partners for future minimum payments of $31,293$27,444 that will be reflected in cost of revenues during the remainder of 2026 and years from 2027 through 2030. See Part I, Item 2. “Financial Statements; Note 1112 – Commitments and Contingent Liabilities.”