Operator: Good afternoon, everyone and thank you for joining OptimizeRx's First Quarter Fiscal 2026 Earnings Conference Call. With us today is Chief Executive Officer, Stephen Silvestro. He is joined by Chief Financial and Strategy Officer, Edward Stelmakh; Chief Legal and Administrative Officer, Marion Odence-Ford; and Chief Business Officer, Andrew D'Silva. At the conclusion of today's call, I will provide some important cautions regarding the forward-looking statements made by management during today's call. The company will also be discussing certain non-GAAP financial measures, which it believes are useful in evaluating the company's operating results. A reconciliation of such non-GAAP financial measures is included in the earnings release the company issued this afternoon as well as in the Investor Relations section of the company's website. I would like to remind everyone that today's call is being recorded and will be made available for replay as an audio recording of this conference call on the Investor Relations section of the company's website. Now I would like to turn the call over to OptimizeRx CEO, Stephen Silvestro. Mr. Silvestro, please go ahead.
Stephen Silvestro: Thank you, operator and good afternoon to everyone joining us for today's first quarter 2026 earnings call. We delivered a solid start to the year, which exceeded consensus estimates on the top and bottom line. Revenue for the first quarter was $19.8 million and adjusted EBITDA was $3.3 million. While we're pleased with our performance in the quarter, the broader health care technology operating environment continues to evolve. We're seeing ongoing softness in our contracted revenue base relative to prior year levels, largely driven by what appears to be short to intermediate-term disruption from last year's most favored nation pricing dynamics and other macroeconomic factors, which are resulting in more cautious budget allocations, contract durations and in some cases, the delaying of campaign timing and scope. That said, we want to be clear, we do not view these pressures to endure. In fact, we've made good progress with several large manufacturers at this point, getting spend levels back up and the issue is more limited in scope than it previously was. The long-term shift within life sciences toward digital data-driven engagement is accelerating and OptimizeRx is well positioned to capitalize on this growth. Moreover, we continue to see encouraging signs of long-term adoption and expansion by our customers. Our AI-enabled DAAP solution grew 60% in the first quarter, which highlights continued product market fit and customer adoption. In addition, another one of our top pharmaceutical clients has continued to broaden its use of point-of-prescribe solutions across multiple oncology brands. What began as targeted engagement within specific indications has evolved into a scaled multi-brand deployment driven by measurable improvements in prescriber engagement and campaign performance. This type of expansion underscores our ability to grow within large enterprise accounts. We are seeing similar momentum in medtech, where we are driving increased adoption of DAAP to identify and activate high-value prescriber audiences. Initial pilot programs are expanding into multimillion-dollar engagements, further reinforcing the repeatability of our growth model. From an operational standpoint, our business remains very strong as we continue to see consistent validation of our platform across both pharma and med tech customers. At the same time, we are expanding our presence with mid-tier and long-tail life science companies, which we believe represent a significant and underpenetrated growth opportunity for OptimizeRx. We are also making continued progress in shifting a greater portion of our revenue mix towards subscription-based models, particularly within DAAP. Tied to our AI-enabled DAAP solution, which showed growth in the first quarter, our DAAP subscription revenue also grew by 45%. This transition is an important step in improving revenue visibility and building a more durable and predictable financial model over time. Despite seeing measurable growth within our business, macro headwinds are still present and we have less visibility on our full year. Given this, we are updating our full year 2026 guidance to reflect a more conservative revenue outlook. We now expect revenue to be in the range of $95 million to $100 million. Importantly, we're maintaining our adjusted EBITDA guidance of $21 million to $25 million. This reflects both the strength of our operating model and the proactive cost optimization initiatives we have implemented. We've taken steps to align our cost structure with the current environment by prioritizing strategic investments, optimizing discretionary spend, deploying new agentic technology tools within our own business for better efficiency and leveraging the scalability of our largely fixed cost platform. These actions are expected to reduce cash operating expenses by approximately $3 million on an annualized basis, including savings of approximately $1 million in 2026 for an in-year benefit, excluding any severance-related impacts. In addition, our gross margin optimization initiatives are continuing to deliver positive results and we now expect full year gross margin to be in the high 60% range. We've also strengthened our financial position through the recent refinancing of our term loan. Ed will provide more details later in our presentation but suffice it to say that the new term loan is expected to lower our interest expense by approximately 625 basis points. We want to thank Blue Torch for being a good partner over the last 2 years. As we recently announced, we continue to take the important steps to expand our platform capabilities and connectivity into the broader ecosystem. We are now enabling demand-side platforms that control more than 80% of digital promotional dollars to connect directly into OptimizeRx proprietary EHR network. This technical evolution of our platform and expansion in our go-to-market strategy marks a significant opportunity for the business and we anticipate it will drive outsized growth through the planning season and into 2027, providing programmatic access to DSPs through our network enables media buyers to activate scalable point-of-care and point-of-prescribe campaigns within their existing programmatic workflows, effectively positioning OptimizeRx as a supply-side platform for marketers looking to engage health care providers directly within the clinical workflow. Today, we estimate that we are utilizing less than 10% of our available inventory across the network through traditional HCP marketing initiatives. We believe programmatic activation, the preferred way for pharma media agencies to buy these solutions has the potential to significantly increase utilization over time. Given that programmatic has captured the majority of media spend across other verticals, we see a meaningful opportunity for this channel to scale and potentially become comparable in size to our current HCP business over the long term. As the question has been raised before, I want to briefly address artificial intelligence and reiterate that we do not view AI as a disruptor to our business. Rather, we see it as a potential accelerant. As our customers realize efficiencies in areas like content creation, we expect those savings to be redeployed into execution and engagement, areas where OptimizeRx is particularly well positioned. Finally, while we are navigating short-term pressures, our core value proposition remains unchanged and our long-term outlook remains highly optimistic. We are deeply embedded in our customers' workflows. We're delivering both meaningful and measurable ROI and we are operating in a large, dynamic and growing market with significant long-term opportunities. And with that, I'd like to turn the time over to our CSFO, Ed Stelmakh, who will walk us through the financial details. Ed?
Edward Stelmakh: Thanks, Steve and good afternoon, everyone. As with all our calls, a press release was issued this afternoon with the results of our first quarter ended March 31, 2026. A copy is available for viewing and may be downloaded from the Investor Relations section of our website and additional information can be obtained through our forthcoming 10-Q. First quarter 2026 revenue was $19.8 million, a decrease of 10% from the $21.9 million we recognized during the same period in 2025. We believe this decrease was driven in part by a decline in low-margin managed services revenue, revenue reduction on a major client account and a more cautious budget allocation and shorter program duration commitments, driven by most favored nations pricing and other macroeconomic challenges. Our expenses for the quarter ended March 31, 2026, decreased $4.6 million year-over-year, primarily driven by lower cost of revenue and G&A. The decrease in cost of revenue was related to a favorable product mix as we didn't have any DTC managed service revenue this quarter as well as favorable channel partner mix. We believe various margin optimization strategies we implemented over the last 12 months continue to yield significant benefits. As a result, we now expect gross margins to normalize into the high 60% range for the full year 2026. GAAP net loss narrowed to $0.5 million or $0.03 per basic and diluted share for the 3 months ended March 31, 2026, as compared to a net loss of $2.2 million or $0.12 per basic and diluted share for the 3 months during the same period in 2025. On a non-GAAP basis, the company's net income for the first quarter of 2026 increased to $2.7 million or $0.14 per diluted share as compared to a non-GAAP net income of $1.5 million or $0.08 per diluted share in the same year ago period. Meanwhile, our adjusted EBITDA increased to $3.3 million for the quarter compared to $1.5 million during the first quarter of 2025. Operating cash flow came in at a negative $0.5 million for the first quarter, which was primarily due to the payout of 2025 bonuses and fourth quarter 2025 sales commissions during the first quarter of 2026. Meanwhile, our cash balance at the end of the quarter was $20.2 million as compared to $23.4 million on December 31, 2025. Our debt balance at the end of the first quarter was $23.6 million and we paid off $2.7 million of principal during the first quarter. Meanwhile, subsequent to the first quarter, our term loan with Blue Torch Capital was refinanced with Fifth Third Bank, through which we have a fully drawn $25 million term loan and have access to a $10 million revolver. Our current interest rate on the term loan with Fifth Third Bank is SOFR plus 2.25% versus SOFR plus 8.5% we had with Blue Torch Capital, which represents approximately $1.5 million in annual interest expense savings. With that said, given our strong working capital position, we are confident in our ability to fund our operating needs as well as key strategic priorities as we continue to strive to become a sustained Rule of 40 company. Now let's turn to our KPIs for the first quarter of 2026. Average revenue per top 20 pharmaceutical manufacturer now stands at approximately $2.8 million, with these top 20 companies representing 52% of our business in Q1 2026. Net revenue retention rate remains a strong 110%. Meanwhile, revenue per FTE came in at $801,000, topping the $710,000 we had posted in Q1 2025. These metrics reflect the stickiness of our solutions with existing accounts as well as our highly leverageable operating model. As Steve mentioned, despite seeing measurable growth within our business, macro headwinds are still present and we have less visibility on our full year. Given this and as Steve stated before, we're updating our full year 2026 guidance to reflect a more conservative revenue outlook. We now expect revenue to be in the range of $95 million to $100 million but continue to believe our operating leverage will result in our adjusted EBITDA being between $21 million and $25 million. Finally, we continue to expect revenue to be weighted towards the second half of the year at close to 40-60 split. Now with that, I would like to turn the call back over to Steve. Steve?
Stephen Silvestro: Thank you, Ed. Operator, could we now please move to Q&A?
Operator: [Operator Instructions] Our first question comes from the line of Jared Haase with William Blair.
Jared Haase: I guess I'll just start with the updated outlook here. I guess I just wanted to put a fine point on things. Like what specifically changed in terms of how you were thinking about the shape of the year relative to when you last reported back in March? And I'm curious how much of the revised revenue guidance here would you attribute to just still seeing delays in decision-making with pharma clients? Or if it's more that these decisions are coming through and you're just seeing less spend commitment here in 2026 compared to maybe what you anticipated back then? And then, I guess, with that in mind, is there any way to contextualize your level of visibility at this point in terms of the new guidance?
Stephen Silvestro: Jared, thanks for the question. I'll take this one and then Ed and Andy can chime in. So I think what we had in March was initial visibility on where we thought the year would possibly turn around after Q1, where we'd have more visibility into the back half of the year and specifically with a handful of clients that were reacting to sort of the administration's position around MFN, how they were operating with budgets, sort of post their initial reaction, some of those have actually come back and come back stronger even though the contract duration periods have been shorter. And I think we've articulated that kind of publicly. We said it in the last earnings call and we said it again this time. But we've got one specifically larger client where there's continued disruption. And I think that when we're talking about asynchronous disruption at a client level, one of this size, we've got to work through it. So it just gives us less visibility on full year guide, which is why we're being a little bit more conservative in getting it back around to where we think we're going to land for certain. I don't expect that we'll need to adjust again but we're giving the best view that we've got right now. Ed, do you have anything?
Edward Stelmakh: No, I think you've got it covered. Yes.
Jared Haase: Okay. That's helpful. And then I guess you characterized it as short to intermediate-term pressure. And I guess I don't know if there's any way to clarify exactly what you mean behind that. And as we think about sort of the end of year here, is this something that maybe persists in '27? Or do you think of it as sort of contained to this year?
Stephen Silvestro: No. We think it's contained to this year. And look, the reality is, we could see in -- later in the third quarter and the fourth quarter, increased buying from these set of clients and particularly one client where there was disruption. But our best view right now is that there's going to be disruption through the end of 2026. Looking into 2027, there's nothing mechanical wrong in any of these businesses and certainly in our business, as you've seen from the expanded gross margins and just the way we're operating the business with increased leverage and drop-through, getting the debt paid, refi-ing it, lowering the interest expense. Operationally, it's never been stronger. So we are communicating what's going on with the top line as one -- as we should. But we have every confidence that 2027 is going to be pretty spectacular. And I think the connection to the DSPs, you saw the announcement around that. That is a very big deal for this business. It's something we've been working on for a number of years. We're the first ones to really connect at scale to this ecosystem. And so we're pretty excited about what it means both for the top line and for our clients who are moving in the direction of buying this way. So we're pumped for the whole team.
Operator: Our next question comes from the line of Jeff Garro with Stephens.
Jeffrey Garro: Wanted to follow up a little bit on the MFN disruption and maybe more specifically your comments that you've made around contract duration. And I guess that relates to kind of overall visibility. I think last quarter, you said contracted revenue was around 15% to 20% behind where you were in the prior year, excluding the managed services piece. And that was mainly because of customers moving to shorter contract duration. So curious what you saw in the first quarter and even through April and into May here about that client renewal behavior and interest in extending duration, renewal behavior and your expectations for the back half of the year?
Stephen Silvestro: Yes. Thanks, Jeff. Good to hear your voice. Yes, we -- first half of the year, we were off 15%, 20% in contracted revenue. We're still right in that same area, that same zone. And most of that is being driven by the shorter contract duration that's outside of the initial managed service sunset. So typically, what's happening is the commitments are just shorter than they would be. They normally would be 6 to 12 months and our contracted revenue methodologies we're calculating the full value of the contract against the backlog, as I think everyone knows. And so when you've got a shorter contract duration, it gives you less visibility. It means you've got to be on the hook for the next quarter, renewing that and then the next quarter renewing it again. And so it is a little bit less visibility, although what I will say is that people are continuing to renew. We are seeing the flow of business continue to move. And we've had 2 or 3 accounts that have really accelerated between the time we had the first earnings call and the time we're doing this call. And so that is really good news. The challenging news, Jeff, is I think still we have one major client that's still working through some challenges. Part of those are MFN related. Part of them, honestly, is just we didn't execute well in that account and we need to improve. We sort of know what's -- where we fumbled the ball a little bit there. We've had great conversations with their leadership team and there's a plan to get things back on track. And our team has taken good ownership of that and is moving forward. So I think we feel very confident it's short term. We're excited about the innovation and all of our partners are very excited about the innovation announcements that we've just made. So we're looking forward to pressing ahead. But yes, contracted revenue is still the challenge until we pull through that.
Jeffrey Garro: Understood. I appreciate all those comments. And one more for me. Did want to ask about demand activity by customer size, kind of thinking about the top 20 pharma versus that kind of mid-tier long-tail cohort. And the top 20 pharma through your KPI has been declining as a percentage of revenue over the last year. Where does that trend go from here? And how should we think about kind of sales cycle, renewal rates and budget behavior from that mid-tier long-tail cohort?
Stephen Silvestro: Yes. No problem. Thanks for the questions. We are very excited internally about the mid-tier long tail. We've seen tremendous progress in that cohort of clients. We've got a team that's now focused on that. And so we're starting to see some really encouraging growth there. We're also seeing it, I think I shared previously in the med tech sector, it was in my prepared remarks as well, where clients that basically weren't clients previously weren't even in the market that we were speaking to are coming to the table with multiple million dollar investments in the platform. And so we're very, very encouraged by that. On the top 20, we still continue to see great engagement and we are so, I would say, underpenetrated in terms of the brands that we're servicing in the top 20. We do have sort of a footprint in each one of the accounts but the ability to expand where we've landed still remains a tremendous opportunity for this business. And we've got an excellent, excellent sales team that have my full faith and trust and they continue to push and execute well. I have every belief it will be a solid finish from them and prep for 2027, which is really what we're focused on right now.
Operator: Our next question comes from the line of David Grossman with Stifel.
David Grossman: Steve, I'm wondering if you just -- it sounds like there's one particular client that may be off more or having kind of an outsized impact on your growth rate this year. Is there anything unique about the issues that client is having? Or was that the same client that there were some execution issues on your end?
Stephen Silvestro: No, that's the same client. I mean, oftentimes, David, we're -- and by the way, it's great to hear your voice. I can't wait to see you next week or week after next. Oftentimes, we have these sort of asynchronous events that happen at a client level where a client will change an agency or the team will be swapped out. There'll be turnover, people are making decisions and we've been chatting long enough for you to know that, that happens often in this space and that's just sort of what you need to deal with. The DAAP's -- the DAAP growth at 60% and particularly the 45% growth on the subscriptive basis is designed to help get rid of that lumpiness and it's definitely helping. This was not a DAAP client where the disruption was in place. And so that was sort of bimodal buys even at scale. But when there is disruption amongst the ranks, turnover in employees, making decisions, et cetera, it is challenging and we didn't execute as well as we needed to in that area and we need to improve it. The good news that I -- we will share is that, we since visited with that leadership group, had very open conversations, great feedback. And I think that, that relationship has been revindicated and we'll be in a pretty good spot. But again, too early to count it as part of our forecast and guide. We've got to work with that group and make sure that we deliver.
David Grossman: So just kind of assuming it takes its ordinary course is that the headwind for the next 3 quarters and once you comp it next -- in March of next year, we're kind of beyond that? Or could it [indiscernible]
Stephen Silvestro: No. I think we will address it in the renewal cycle of this year. I think we'll probably see some buying here in the second half of the year and that's the hope and goal with that group. And then I think into 2027, we'll be well positioned. But we needed to take a few lumps, I think, in the first half and correct a little bit of the way we were engaging with them and bring it back in the second half.
David Grossman: Got it. Well, thanks for the transparency on that one. And then on the DSP side, the connection to the DSPs, what's the sales cycle? What does it -- how long does it take for that kind of flywheel to start with these media buyers where that actually can start contributing to revenue growth in a meaningful enough way that we would see it?
Stephen Silvestro: Yes. I think we'll start to see early innings of this probably towards the later part of the back half of this year. Q4, we should start to see some revenue start to flow. Going into the renewal cycle for 2020 -- in '27, we will see it really flow. And the way the DSPs operate is once there's a connection there, right, it starts a bidding system where agencies -- and agencies are the principal ones that are buying in these ecosystems through the demand-side platforms. So it will follow that typical brand plan RFP process but they have the ability to accelerate, set the parameters within these DSP platforms and start-to-action buys really. I would call them passive buys because it's -- you're not really engaging directly with the company other than setting up the pricing, setting up the bids, asking the questions of the sales team around it. And then the job of our sales team really is to continue to engage with those clients and make sure they're utilizing those [ modices ] of acquisition, right, make sure they're buying through those DSPs. They know it's available. It's in their favorite DSP of choice and they can go in and action those buys.
David Grossman: And what -- can you just give us some examples of what the revenue could look like, whether it's by -- I assume it's by individual drug, right, or by buyer? I'm not quite sure how to think about what [indiscernible]
Stephen Silvestro: Yes. Revenue could be fairly huge. I'm not ready to share projections on it yet. In the prepared remarks, we shared that it's 80% of the total digital spend in the space. So that gives you a number. I know you know the TAM like the back of your head in the space, back of your hand rather. And so it is very large, David, potential. But it's too early for us to call a potential revenue on it because we're the first ones that are doing it at scale. There are other companies that have connected maybe a piece of the network or one EHR provider and sort of played with it. But at scale and our size, we're the first to actually go all in. And so there will be subsequent announcements that we'll share as we roll out the partnership agreements and we'll have more to say around that but I don't want to jump the gun here.
David Grossman: Sure. And just one -- if I could just one other -- sneak one in here. Is there any managed service -- was it 0 managed services in the quarter and in the guide? Did I hear that right?
Andrew D'Silva: That's correct.
Stephen Silvestro: Yes. Thanks, Andy.
Operator: And we have reached the end of the question-and-answer session. I would like to turn the floor back to Steve Silvestro for closing remarks.
Stephen Silvestro: Thank you, operator. I want to close by reiterating our confidence in the long-term opportunity ahead of us. While we are navigating near-term pressure, we're excited about the transformation within life science towards digital data-driven engagement, which remains a powerful and durable trend. OptimizeRx is uniquely positioned at the center of that transformation. Our point-of-care and point-of-prescribe network, combined with our data-driven targeting capabilities allow us to deliver value at critical moments in the patient journey, all of which will now be available to customers programmatically to buy the way they like to buy. Our priorities remain consistent. We're focused on increasing utilization of DAAP, continuing on our transition toward a more predictable subscription-based revenue model and driving sustainable, profitable growth over time. I would also like to thank our employees for their continued dedication and our customers for their partnership as we navigate this evolving landscape. Thank you again for your time today. We look forward to speaking with you at the upcoming investor conferences and on our next earnings call. Thank you.