NASDAQ:GDRX GoodRx Q4 2023 Earnings Report $4.80 +0.19 (+4.12%) As of 04:00 PM Eastern Earnings HistoryForecast GoodRx EPS ResultsActual EPS$0.02Consensus EPS $0.02Beat/MissMet ExpectationsOne Year Ago EPSN/AGoodRx Revenue ResultsActual Revenue$196.64 millionExpected Revenue$195.59 millionBeat/MissBeat by +$1.05 millionYoY Revenue GrowthN/AGoodRx Announcement DetailsQuarterQ4 2023Date2/29/2024TimeN/AConference Call DateThursday, February 29, 2024Conference Call Time8:00AM ETUpcoming EarningsGoodRx's Q1 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled on Thursday, May 8, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Annual Report (10-K)Earnings HistoryCompany ProfilePowered by GoodRx Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 29, 2024 ShareLink copied to clipboard.There are 13 speakers on the call. Operator00:00:00Ladies and gentlemen, thank you for standing by, and welcome to the GoodRx 4th Quarter and Full Year 2023 Earnings Call. As a reminder, today's conference call is being recorded. I would now like to introduce your host for today's call, Whitney Notaro, Vice President of Investor Relations. Ms. Notaro, you may begin. Speaker 100:00:19Thank you, operator. Good morning, everyone, and welcome to GoodRx's earnings conference call for the Q4 full year 2023. Joining me today are Scott Wagner, our Interim Chief Executive Officer and Carsten Vohrmann, our Chief Financial Officer. Before we begin, I'd like to remind everyone that this call will contain forward looking statements. All statements made on this call that do not relate to matters of historical fact should be considered forward looking statements, including without limitation, statements regarding management's plans, strategies, goals and objectives, our market opportunity, our anticipated financial performance, underlying trends in the business, our value proposition, our potential for growth, collaborations and partnerships with 3rd parties, including our integrated savings program, our hybrid retail direct and PBM contracting approach, anticipated impacts of the deprioritization of certain solutions under our Pharma manufacturer solutions offering and our cost savings initiatives expected impact of the wind down of Kroger Savings Club the amount, timing and benefits of our new share repurchase program the expected impact of the macroeconomic environment on our business and the expected impact of recent outages disclosed by UnitedHealth Group. Speaker 100:01:36These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors. These factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Factors discussed in the Risk Factors section of our annual report on Form 10 ks for the year ended December 31, 2023, and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward looking statements made on this call. Any such forward looking statements represent management's estimates as of the date of this call, and we disclaim any obligation to update these statements, even if subsequent events cause our views to change. In addition, we will be referencing certain non GAAP metrics in today's remarks. Speaker 100:02:30We have reconciled each non GAAP metric to the nearest GAAP metric in the company's earnings press release, which can be found on the overview page of our Investor Relations website at investors. Goodrx.com. I'd also like to remind everyone that a replay of this call will become available there shortly as well. With that, I'll turn it over to Scott. Speaker 200:02:52Thanks, Whitney, and thanks to everyone joining us today to discuss our Q4 results. Today, I'd like to highlight the meaningful progress we're making on our key priorities and then Carsten will take you through our Q4 2023 financials and expectations for Q1 and full year 2024. I'd like to start by framing the fundamentals of what we do, the critical and growing consumer needs we serve and the importance of the GoodRx value proposition, which is saving people money on prescriptions. Over the history of the company, GoodRx has saved consumers approximately $70,000,000,000 and just last year, we saved consumers approximately $15,000,000,000 There's big fundamental value here. And while healthcare is highly complex, the role GoodRx plays is pretty simple. Speaker 200:03:42Consumers today are facing a rising healthcare costs with plans continuing to increase patient out of pocket costs like deductibles and co pays and increasing gaps of drug coverage with narrower formularies. We believe these market coverage trends are stronger than they've ever been and we don't expect them to change. Think about how Medicaid redetermination alone has limited access to funded benefit plans. We believe this reality makes GoodRx an essential part of the American healthcare system as a trusted solution for consumers to access affordable medications in the U. S. Speaker 200:04:18Healthcare providers recognize this, which is why we've become the fundamental resource for them and why more than 80% of healthcare professionals refer their patients to us. In 2023 alone, over 25,000,000 consumers use approximately $15,000,000,000 in prescription savings, making GoodRx one of the leading consumer driven digital healthcare experiences. For those who have been following both GoodRx and the industry in recent years, short term movements in the industry value chain have created some confusion about our prospect. We believe the market tailwinds are increasing. Patient out of pocket costs are growing. Speaker 200:05:00GoodRx's scale, our users, our HCP advocacy are growing too, making us confident in the strength of the GoodRx value proposition and our ability to grow our business. Our financial results continue to improve as we focused on helping our industry partners in the value chain benefit proportionally from the value that GoodRx creates for our 25,000,000 plus consumers annually. In Q4, we continue to see positive momentum in the business both financially and operation, Consistent with the preliminary Q4 results we announced in January, our Q4 year over year adjusted revenue growth accelerated to 7%, up significantly compared to our Q3 growth rate. And our Q4 adjusted EBITDA margin was 29.1%, up 220 basis points year over year with adjusted EBITDA growing 15% year over year. This financial performance is the direct result of our efforts throughout 2023, specifically in 3 areas. Speaker 200:06:03First, leading into our relationships with retail partners. 2nd, bringing the fundamental benefit of GoodRx to commercial plans through our integrated savings program or ISP. And 3rd, bringing GoodRx savings to brand drugs through our pharma manufacturer solutions offering. These all reinforce our value proposition and are showing up in the results. We expect adjusted revenue to continue to grow into Q1 and for the full year 2024 as well. Speaker 200:06:33We anticipate adjusted revenue to be about $800,000,000 for 2024 with adjusted EBITDA of approximately $250,000,000 Karsten will go through our outlook in more detail in a bit. I will say I'm confident our priorities are the right ones to deliver the growth we're expecting in 2024 and to drive shareholder value over the long term. There are 3 areas of the business I'll highlight today. First, we've been focused on strengthening our retail pharmacy relationships and accelerating the continued success of our hybrid model, which includes retailer direct and PBM contracting. As a reminder, our retail direct approach is where leading pharmacies like CVS and Walgreens, as well as smaller grocers and pharmacies work closely with us to create consumer value while executing against joint revenue and margin targets. Speaker 200:07:28In the Q4, our contracting efforts with retailers were a driver of top line performance as we continue to sign direct contracts with new pharmacies and expand the drugs covered by direct contracts within pharmacies. Today, we have retailer direct contracts with most of our largest retail pharmacy partners and our directly contracted medication volume makes up a growing minority of our overall prescription transaction volume. It's important to remember that GoodRx drives volume and traffic for pharmacies. We do this in 2 ways. First, we estimate that between 20% 30% of all prescriptions in the U. Speaker 200:08:08S. Go unfilled each year due to price. By offering lower price points, pharmacies can fill scripts that patients would otherwise walk away from. 2nd, in 2023 alone, we've invested over $200,000,000 in advertising and promotion related marketing, almost all of which is focused on increasing the number of GoodRx users and which ultimately drives incremental prescription volume to pharmacy. Pharmacy's proprietary affordability solutions by definition only impact their customers, while in contrast, GoodRx has the ability to drive incremental retail prescriptions and people into their stores. Speaker 200:08:50This is one of the reasons pharmacies have been so GoodRx offers discount card pricing agreements that provide retailers defined margins and are informed by acquisition cost based pricing at a number of key retail pharmacy partners, including CVS Pharmacy. We've seen other large pharmacies work with us to use a combination of pricing models and that's worked out very well for both of us. We welcome the broader movement to cost plus reimbursement models in both funded benefit plans and off benefit as it's a great way to align economics between pharmacies, payers and consumers. Critically, we believe that our retail direct contracting strategy, which takes a cost aligned approach, positions us well for sustainable growth in a market with evolving pharmacy reimbursement models. We estimate that over 3 quarters of GoodRx users have some form of insurance coverage. Speaker 200:09:54That means consumers are comparing prices against co pays, not exclusively comparing prices between pharmacies. For uninsured users, the opportunity for greater patient affordability is relative to usual and customary cash pricing, which is generally substantially higher than GoodRx pricing. If there were a scenario where a more cost focused pharmacy reimbursement model reduces drug price disparity across retail pharmacies, which we don't believe will ultimately be the case since each pharmacy uses pricing strategically to attract different kinds of consumers. We see this trend overall as neutral to GoodRx given we will still be able to deliver significant savings benefit to consumers. Our second priority has been to hone our growth plans for our core prescription transactions offering, which includes extending the GoodRx benefit to commercial insurance programs or funded plans. Speaker 200:10:51We've done this through our integrated savings program or ISP with PBM partners like CVS Caremark, Express Scripts, Net Impact and Navitus who aggregate demand for our prescription discounts. The early traction we're seeing for ISP so far in 2024 is encouraging and its contribution to Q1 revenue is reflected in our growth expectations. ISP is generating incremental year over year revenue, which is manifesting in line with our expectations. As we mentioned in the past, we believe there will be some level of ramp to the volume that comes through ISP and we're still in the very early days as we work with PBMs to add more types of prescription transactions to the program and to ensure acceptance at retail. Also, while our PBM partners market these programs to be over 60% of eligible lives in the U. Speaker 200:11:44S. That they cover, we're working in parallel with them to educate and inform employers about these programs and accelerate the number of lives we can onboard. Along with increasing lives, we believe we can inflect conversion as well, given we've historically been able to increase GoodRx discounts and lower pricing over time in our non ISP direct and lower pricing over time in our non ISP direct to consumer offerings. As we do so in the context of ISP, we believe we can beat patients' co pays more often. Given that ISP is incremental to our direct to consumer offering and any evidence of cannibalization has been minimal, we remain focused on accelerating its growth. Speaker 200:12:26Based on our learnings from last year, we expect our ISP relationships to create some incremental seasonality with higher revenue during the first half of the year and contributing less revenue in the latter part since more claims are likely to be routed through GoodRx while consumers are in the deductible phase of their health plan. That said, our growth expectations are predicated on how ISP has performed for the 1st few weeks of this year and if we're successful in driving more types of transactions and more lives to the program as we help drive more employer sales, we may achieve incremental lift in the coming months and during 2025 patient deductible reset period. We'll update everyone if we see this manifesting. 3rd, we're focused on scaling our pharma manufacturer solutions. In Q4, we continued doing the work to build our pipeline and believe we've set ourselves up for year over year growth in the Q1 and FY 'twenty four. Speaker 200:13:26We've been leaning into our access and awareness solutions that we believe will accelerate 2024 growth. And as we've mentioned in the past, in 2023, we prioritize deal quality with a focus on foregoing 1 off deals and instead creating standardized go to market programs that we expect to scale sustainably. Our restructuring in this offer, including rationalizing VitaCare is essentially complete and we're on track to deliver our expected margin accretion in 2024, which Carsten will speak to in more detail. With that, I'll hand it over to Karsten. Speaker 300:14:03Thank you, Scott. I'll speak briefly to our 4Q 'twenty three financial results, which were consistent with the preliminary Q4 results we announced in January before turning to guidance. In summary, during the Q4, adjusted revenue exceeded the guidance range we provided on our Q3 earnings call in November and adjusted EBITDA margin was in the upper end of the guidance range we provided. Total revenue and adjusted revenue for the quarter increased 7% year over year to $196,600,000 primarily driven by organic growth in prescription transactions revenue. Prescriptions transactions revenue grew 11% year over year to $143,900,000 an acceleration from Q3 growth, which was partially driven by quarter specific favorability related certain client contracts, which also slightly increased PTR per MAC. Speaker 300:14:59Subscriptions revenue declined 6% to $23,100,000 due to the wind down of Kroger Savings Club. Kroger Savings Club revenue was over $1,000,000 less in the Q4 of 2023 than in the prior year period. Gold subscription count was up both quarter over quarter and year over year. In Q4, gold revenue was $21,500,000 and the related sub count was 694,000. We expect the continued wind down of Kroger Savings Club subscribers from now to July and given the relative subscription fee is much higher for GoodRx Gold than for the Kroger subscribers, the wind down should be more impactful to subscription plan count than revenue. Speaker 300:15:47Pharma manufacturer solutions declined 2% year over year to $24,400,000 driven by our restructuring of the offering, which included shutting down Vitacare. The prior year quarter included over $2,000,000 of revenue related to Vitacare, whereas in 4Q 2023, there was essentially 0. Speaker 200:16:08Net loss was Speaker 300:16:09$25,900,000 compared to a net loss of $2,000,000 in the Q4 of 2022. Adjusted net income was $31,100,000 Speaker 400:16:21compared to Speaker 300:16:21$27,400,000 in the Q4 of 2022. Adjusted EBITDA increased 15% year over year to $57,300,000 The primary driver of the year over year increase was higher adjusted revenue along with our cost discipline, increased marketing efficiency and the actions taken to restructure pharma manufacturer solutions, including the deprioritization of VidaCare. Adjusted EBITDA margin was up 220 basis points year over year to approximately 29.1%, which was on the high end of our guidance range. We generated net cash provided by operating activities of $15,900,000 compared to $31,900,000 in the prior year period. Our capital allocation priorities are unchanged and we'll continue to focus on high return investments and maximizing value for shareholders. Speaker 300:17:18Our balance sheet remains strong and we ended the quarter with $672,300,000 in cash and cash equivalents on the balance sheet and $661,800,000 of outstanding debt. Significant uses of cash quarter included approximately $78,000,000 of share repurchases at approximately $5.53 per share on a blended basis. And as we've discussed on prior calls, a non recurring approximately $45,000,000 of spend on withholding taxes related to the delivery of shares to our co founders related to a 2020 equity grant, which was defrayed by shares we withheld. Our revolving credit facility is untapped except for letters of credit and had $90,800,000 as of December 31, 2023, representing total liquidity of $763,100,000 This month, we extended the maturity date of our revolving credit facility to July 11, 2025. Recently, our Board of Directors approved a new stock repurchase program to repurchase up to $450,000,000 worth of Class A common stock. Speaker 300:18:35Now turning to guidance. Our outlook for Q1 revenue and adjusted revenue is $195,000,000 to $198,000,000 which represents 6% to 8% year over year revenue and adjusted revenue growth, which includes our current estimate of the impact of recent outages disclosed by UnitedHealth Group that we believe at this early stage, despite lasting a couple of days, has likely not had a material impact on our financials. We expect adjusted and GAAP revenue to be identical in the Q1 because we believe the Q3 2023 adjustment to revenue in relation to Pharma Manufacturer Solutions restructuring related to Vitacare was solely one time and non recurring. For the full year 2024, we also expect revenue and adjusted revenue to be identical at about $800,000,000 representing about 5% growth on an adjusted basis. The anticipated adjusted revenue growth rate is tempered by approximately $15,000,000 of top line impact associated with the deprioritization of VidaCare as part of our farm manufacturer solutions restructuring as well as the wind down of the Kroger Savings Club. Speaker 300:19:50Our continued investments in consumer incentives will increase Contour revenue by approximately $10,000,000 In aggregate, this $25,000,000 of top line impact is absorbed in our full year $800,000,000 revenue and adjusted revenue guidance. We thought it might also be helpful to provide our current expectations for our prescription marketplace and pharma manufacturer solutions offerings in 2024. As a reminder, our prescription marketplace is made up of prescription transactions, subscriptions and other revenue. We expect our prescription marketplace contribution to our implied 2024 adjusted revenue growth to be about $25,000,000 to $30,000,000 The expected growth includes the impacts of the previously mentioned headwinds related to increasing contra revenue in the sunsetting of the Kroger Savings Cloud. This also reflects the current ISP network footprint and execution we have today and we are working to optimize both. Speaker 300:20:48We expect Pharma Manufacturer Solutions to contribute about $10,000,000 to $15,000,000 to our implied 2024 adjusted revenue growth. This implies a year over year growth rate for that offering that exceeds the growth rate of the digital pharma ad spend market, which has been in the low teen percentages. As part of the restructuring of our pharma manufacturer solutions offering, we discontinued Vitacare, which contributed approximately $8,000,000 of adjusted revenue in 2023 and is not contributing to 2024. Considering that, we're pleased with our anticipated 2024 Pharma Manufacturer Solutions growth. As a reminder, our Pharma Manufacturer Solutions offering has some seasonality to it and so we expect 1Q 2024 revenue to be slightly below 4Q2023 revenue. Speaker 300:21:37Based on what we've seen historically, we expect there to be seasonality in some quarter over quarter variability for our business more broadly. But given our scale relative to the very large TAMs for our prescription marketplace and our pharma manufacturer solutions offering, we're confident in the growth trajectory. From a margin perspective, during the last couple of quarters, we've delivered adjusted EBITDA margins in the high 20% range and we continue to expect to be in the high 20% range again for the Q1, potentially up to 30% and to achieve around $250,000,000 of adjusted EBITDA for the full year, up 15% from 2023. With that, I'll now turn it over to the operator for Q and A. Operator00:22:23Thank Our first question comes from the line of Stephanie Davis with Barclays. Your line is now open. Speaker 500:22:42Hey guys. Thank you for taking my question. First off, it sounds like you're starting to see the direct contracting become a much bigger part of the model. So I wanted to ask about what GoodRx looks not in 2024, but maybe 5, 10 years from now. You see that becoming more of the primary model versus the D2C business? Speaker 500:23:05Or is this going to be more of a balanced growth once it fully ramp? Speaker 200:23:10Hey, Stephanie. Thanks for the question. I think if you roll this forward, it'll look like what we're doing today, which is a combination of working with a multi variant PBM network as well as some form of direct relationships with retailers depending upon the size of the book. And that's really kind of where we are and are in the process of rolling that out into the world. I don't think that's going to change much because really we're following a retailer, our retail partners guidance in some ways and they all approach this a little bit differently. Speaker 200:23:56And so I don't think there's going to be a really transformative difference in the composition of our network. It'll literally be more of a similar and more rolled out version of kind of what we're going through right now. Speaker 500:24:13And on that kind of note, I feel like there's a lot of questions on the cost plus model that's been floated around CVS and Walgreens. I know you do have some relationships there. Is there anything you can share on how GoodRx fits into the ecosystem? Speaker 200:24:31Absolutely. And I think the big theme for, let's just say, CVS and Walgreens as well is we're really side by side with both of them around their own merchandising strategies for the category. So specifically on CVS and Cost Plus, we're working with them in this manner already today. So the fundamentals of several of our specific drug contracting plus overall is really high at the hip with CVS. And so it works exactly on how we're set up not only with CVS, but really our core foot benefit today. Speaker 200:25:13In Walgreens, an anecdote that I'll share from the fall that I think is just indicative of our working relationship with all the retailers is during a basket of cold and flu drugs and drove 40% savings because that was one of their merchandising goals. And it drove a heck of a lot of incremental activity and traffic was good for Walgreens, was good for us. But again, it was really about working with a retail partner to achieve their category goals. And if you step back and think thematically about what we're doing with this contract approach, it's really that, which is tying them together and working with them to achieve goals. Speaker 500:25:59That's awesome. Thank you. Operator00:26:02Thank you. Our next question comes from the line of Lisa Gill with JPMorgan. Your line is now open. Speaker 600:26:10Lisa Operator00:26:13Gill, your line is open. Speaker 700:26:15Good morning. Thanks for taking the question. Scott, I want to go back to ISP and I want to make sure that I heard this correctly. I think you said that there's a 60% opportunity in the books of business for CBS and Express Scripts as far as the opportunity. When I think about that opt in and them selling them this option into their clients, Can you maybe talk about what you're seeing as far as in the first initial phase here? Speaker 700:26:42Is it opt in is more of the driver here or is it more of utilization? And when we think about the offerings that you have, how should we think about this over time? I heard you talk about deductibles and that sense longer term throughout the year, but is it really going to be utilization that's driving this program over time? So if you can just help me to understand that a little bit. Speaker 200:27:06Yes, thanks. I appreciate it and understand the question. First of all, I'd say the rollout at each of our partners, whether it's Caremark, ESI, MedImpact, Navitus, it's still early. And by early, the 60% you described are the total eligible lives that they cover. Right now, the amount of lives that this program is operating under is much less than that 60% coverage universe. Speaker 200:27:39It's a much narrower set of that, but it's about a rollout. And so as we go, the first step to building this program out is expanding more lives, so getting more coverage. And there are a it's probably a step change or two level of rollout of just lives covered for where we are today. I don't want to give you specific percentages because it differs by it differs by each PBM. But the point is we're in a much narrower universe than that total coverage life. Speaker 200:28:15Then optimization is something that we also believe there's going to be ongoing ways that we can tweak and hopefully help that improve over time. And then the last component to this is how the program is accepted at retail, which is also the final component of this. And so it's early days, I think is the punch line on particularly the lives covered and acceptance level. And it's in line with our expectations, I'd say, from kind of how we thought this would roll out. Speaker 700:28:50And then can you just remind us of how to think about the margin on ISP versus your traditional business? Speaker 300:28:58Sure. Thanks Lisa for the question. This is Carsten. With respect to margin, we think over time it looks substantially identical to the margin in the rest of our business. Really only distinction is how we capture demand. Speaker 300:29:13In our direct to consumer business, we capture demand by spending CAC, marketing dollars in advance to capture users and then we monetize them over time. In the ISP context, demand is aggregated by the PBMs. And so we do pay a marketing fee associated with that, but that's on a per transaction basis. So over time those two things converge, the upfront CAC and the margin we pay to the PBM. So we've engineered them to try and keep them very similar. Speaker 700:29:46That's helpful. Thank you. Operator00:29:49Thank you. Our next question comes from the line of Charles Rhyee with TD Cowen. Your line is now open. Speaker 800:29:57Yes. Thanks for taking the questions. Just wanted to follow-up on Elyse's question. Scott, you just mentioned that some of the factors to consider here is the pace of the rollout and a few other things. Just first on that, I guess for an example, if let's say 10,000,000 lives are going to be covered or signed up for ISV, does that mean all 10,000,000 got access to it Jan 1? Speaker 800:30:27Or is there still a phased rollout where those members will gain access to it over the course of this year? And then secondly, you kind of mentioned, you're also looking at how the program is accepted at retail. My understanding was that someone goes in and the system will automatically adjudicate between the funded benefit price versus the GoodRx price and get the lower of. Where isn't that a system function at the PBM level for the retailer kind of will then just see which one they're charging. Can you talk about what retail acceptance means in this instance? Speaker 800:31:07Thanks. Speaker 300:31:09Sure, Charles. This is Carsten. I may jump in on this one first and Scott may follow. So I think first point to make is ISP is up about 2x year over year, which we're pretty pleased with. I think second point is that while for ESI, this program is now in its 2nd year of existence for Caremark, Navitus, at Impact, this is the 1st year. Speaker 300:31:33And while they have a ton of lives to contribute to us, given they need this for their own customer relationships with sponsors, with employees, etcetera, to be very smooth. We don't believe all of the volume that is potentially available to us has been loaded on immediately upfront. So that's what Scott was referring to when we say, hey, it's still ramping. I think the second point on retail is that much like the PBMs, the retailers are assessing how this impacts their business and also want to make sure it's a good experience for our shared customers, the retail customers and ours. So in that context as well, we see retailers with different levels of energy around trying to attract this ISP business into their stores. Speaker 800:32:31I see. Maybe if I can follow-up, is there a way for consumers to know like, for example, I just went to Walgreens the other day, pick up a generic script and I asked the pharmacist desk whether I was getting the ISP price. It didn't seem like they could tell. Is there a way for consumers will they be able to know, going into the future, if they're like a Caremark number? Speaker 200:32:57That'd be the hope, Gerald, as we get to the end state. I think the rollout of this is really going through plans and the benefit feature. And so as of right now, that's a communication vehicle that is almost working through your plans. Less, oh my gosh, Walgreens or CVS is making that a core merchandising element. But thematically, if you think about the benefits at retail pharmacy and what might be different, Whether it's this or other things we're working on, that's the dialogue that we have with each of our retailer partners, which is how can our value proposition help you achieve your goals. Speaker 200:33:44So that doesn't really exist today, but it's not to say that it won't in the future. Speaker 800:33:49Great. I appreciate it. Thank you. Operator00:33:53Thank you. Our next question comes from the line of Michael Cherny with Leerink. Your line is now open. Speaker 900:34:02Good morning and thanks so much for taking the question. I think a similar one along the same vein in terms of thinking about the evolving nature of your 2 sided network both with the PBM relationships as well as on the ISP side with the pharmacies. Obviously, we had the reset from a couple of years back with Kroger. And now as you go forward, you look at the health of the two side dynamics of your market. Where else do you think you see the next important leg of development? Speaker 900:34:30Is it adding more partners on the ISP side? Is it more direct pharmacy? Do you feel like you're at homeostasis now across the network? And if not, where do we see the next leg who the next partner should be? Speaker 200:34:44Yes. Thank you for that. I like the theme of that question. In terms of our retailer partnerships and balance, I would characterize the approach now as the right one that can carry us forward for, I would hope, years, that is really the forever work of how do you work with retailers as well as PBMs to deliver benefit and have the economics such that people are feeling good about it. And so I think from a retailer standpoint, I would say we're in the earlier days of working kind of how if you could wave a magic wand, you'd always run this effort. Speaker 200:35:35And so I'd say there won't be any probably huge structural differences, but it will continue to evolve over time. What I do believe has a whole another wave of evolution is really the thematic marrying of what GoodRx is, which is the benefit that exists outside of your insurance plan and tying it more closely, right? I think the big macro context here is 80% of our own users and the vast majority of us as Americans get our healthcare through our insurance plans, which come through our work. And the macro trends in that are co pays are going up, deductibles are going up and there's a narrower set of drugs that are being covered. That's the zone that we're addressing and operating in. Speaker 200:36:27And in a world where approximately 1,000,000,000 prescriptions a year, 1,000,000,000 with a B, are left at the counter due to affordability. The whole industry actually has a heck of a lot of incentive to help people get those medications. And that's the value proposition we're sitting in. What does that mean for our partnerships? It means we're going to continue to work with our PBM partners and then their plans down stream to bring these couple of things together, whether it's corporate funded plans and Medicare. Speaker 200:36:57So I hope not just on behalf of GoodRx, but honestly the system, you're hearing about continued evolution from us certainly over the coming months, quarters and years to keep marrying those two things because it will be good for the system and it will also be good for us. Operator00:37:16Thank you. Our next question comes from the line of Jack Wallace with Guggenheim Partners. Your line is now open. Speaker 600:37:28Hi, this is Mitchell on for Jack. Thanks for taking my question. What have you been seeing lately in the demand environment for Pharma Manufacturing Solutions? And have there been any changes in Pharma decision making? And then what gives you the confidence that you're going to outperform the market growth rate in that business? Speaker 600:37:45Thanks. Speaker 200:37:49Manufactured Solutions is approximately $100,000,000 business that's really anchored in the core of the GoodRx marketplace, which is 25,000,000 people a year coming here searching for a specific drug and the pricing benefit that is around that's reflective of approximately again 100,000,000 scripts a year. If you're a brand drug, whether you're a generic, you're a brand, you're an OTC, you kind of want to be in that environment and be in that environment either with a pricing discount, depending upon the nature of your brand drug or if merely communicating to an user at very low in the funnel. So we're a pretty high return marketing vehicle in pharma, one that I would say is pretty unique and extremely valuable. So relative to our expectation here, we should be able to outperform a market that grows in the mid single digits simply by penetrating more brands that we think have high value with us. And the work we're doing is really getting ourselves in front of brand managers, access teams and agencies, which are different in every single company, but getting our value prop for the right things in front of them and having them sign up and run programs. Operator00:39:14Thank you. Our next question comes from the line of Jalendra Singh with Truist. Your line is now open. Speaker 1000:39:22Good morning and thanks for taking my questions. I want to follow-up on your comments around your exposure to the recent system outage disclosed by Change, United. Can you elaborate more on the dependencies and integration there? Is it more for your pharmacy partners, more on CVM side? I know you said 2 days, but it seems systems were down longer than that, have been down longer than that. Speaker 1000:39:43What have been the workarounds? And if it does impact your financials, is it more on volume side or is it more on the cost side? Speaker 300:39:51Hey, Jalendra, this is Carsten speaking here. So I think first of all, we've been really pleased with the performance of our tech teams. We think they did an amazing job in 2 ways. 1st of all, creating alternatives for us. So alternatives in the context of what switches we use and being able to shift our volume quite rapidly. Speaker 300:40:13That's one of the big reasons we refer to this as being an issue that affected us for a couple of days versus an issue that affected many in the industry for a longer period of time. And for folks in the call who might not know the issue, it's the issue around the ability to route transactions in pharmacies being able to fill funded or discount card scripts broadly. So from that perspective, I think our much quicker response was helpful to our users and of course helpful to us because that diminished the impact that would otherwise have manifested in the quarter. I'll also add we're still evaluating it, but sort of like with the winter storm, when volume drops, you often see a significant portion of that volume come back. And that's one of the reasons the impact has been not as large as it would otherwise have been. Speaker 300:41:07Also want to point out that it is reflected in our Q1 guide. We contemplated this based on the data we had to date and our Operator00:41:24next question comes from the line of Ji An Lee with Evercore ISI. Your line is now open. Speaker 1100:41:33Great. Thanks a lot. This is Jan for Mark Mahaney. A couple of questions. One is, maybe just going back to the ISP, what's the go to market that GoodRx can do? Speaker 1100:41:43Because it sounds like it's the, it's sort of dependent on the ISP partners ramping up the benefit plans on it. So anything that GoodRx is doing to increase that penetration? And maybe related to that, I think you guys mentioned sort of ramping up marketing. What channels are you testing? What like where is the dollar spent? Speaker 200:42:06Yes. It's Scott. Thanks. It's again in the vein of early days. Right now, our effort is working with our PBM partners to then present this capability into their plan and their own client base. Speaker 200:42:27And so, the nature of your question of, oh, what are we doing? Right now, we're working with our partners. And then over time, this question of, hey, how do you educate not only corporate the corporate clients, but probably the brokers and consultants who are the real decision makers and influence in this, we'll again work with our partners to figure that out. So that'll be part of the things that we'll work on through this year. And we do believe that there's more that we can and should do, not necessarily even for our own benefit, but just for the success of the product to that audience, but we'll figure it out with our partners. Speaker 200:43:11Then your second question on marketing. So the nice thing about GoodRx and our value prop is if there's an individual and we know what their condition is and what kind of insurance they have, you could pretty much map the savings benefit that we can do to that individual to a super precise amount. And for a marketer, what that means is you can and should be able to hone in on audiences that are particularly valuable in a precise way, not incredibly one to one way, but we can get pretty focused on here are the high value people that we're going to add a lot of benefit to. So it's less about channel per se as much as mapping our messaging and where good our track shows up towards these individuals that we just know we're going to save them $800 $1,000 $5,000 right? You can kind of do that mapping and that's really what the marketing team has been working on. Speaker 200:44:23Along with this ongoing realization or recognition that healthcare professionals who legitimately love GoodRx. Coming in, that was one of my biggest surprise delights about what's here is the fact that you walk into a healthcare professional's office and whether it's a doctor or a nurse or the office administrator, they absolutely love GoodRx because we're helping people get on beds and stay on beds and get better. And so that audience is a huge advocate for us in a supernatural way. When we look at our marketing, we're really focused on how and where can we help that audience continue to advocate for us in this totally natural way. Operator00:45:15Thank you. Our next question comes from the line of Alan Lutz with Bank of America. Your line is now open. Speaker 600:45:23Good morning and thanks for taking the questions. Scott, it sounded like direct contracting may actually be contributing a little bit more than ISP. Can you break down the relative growth in 2024 from direct contracting and ISP? And then regarding the ramp in ISP, is there any way to frame how many more lives could be on the platform by 4Q versus the start of the year? Thanks. Speaker 200:45:51The parsing of relative growth, one versus the other, I might come at that a little differently, which is in the quarter, revenue grew 7%. You can look at the marketplace growth. And I think what you're seeing is now the performance of GoodRx in the context of the system. And so you see a retail network at a we'll call it a stable place, but really working forward. And so now right now, you're basically just seeing the GoodRx operating in the way that we can within the system. Speaker 200:46:35So it's not retail contracting versus ISP. This is back to the fundamentals of number of people who are using GoodRx to get a benefit and you're now seeing that grow nicely in the now what's mid to high single digits and that is I think higher than the average prescription volume growth rate and of our category. And the number of things that we have underway, the nice is, if we keep landing them, we should be able to continue to drive that growth above category rates. Hopefully, we can. Operator00:47:15Thank you. Our next question comes from the line of Daniel Grossleit with Citi. Your line is now open. Speaker 600:47:23Hi guys. Thanks for taking the question. On direct contracting, you've previously noted that it might be a slight headwind to PTR per MAC, just given those contracts generally have lower admin fees. So I'm curious as I look at your 4Q numbers, you had a very nice sequential improvement in PTR per Mac. But for 2024 and beyond, how should we be thinking about that metric given direct contracting will become a bigger part of your business? Speaker 300:47:54Thanks for the question. This is Carsten. With respect to PTR per Mac, you're right. We are pleased to see that as a really a reflection of the relationships we have and the value we add when we deliver prescriptions to our customers, our PBMs and our pharmacies. So from that perspective, it's really a reflection of what we do and how well we do it. Speaker 300:48:18I think with respect to the future, we're not expecting any non linearity in the trends. So we think it's not going to move very much at all as we go into 2024 now that direct contracting is already a significant minority of the volume coming through. Operator00:48:37Thank you. Our next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is now open. Speaker 400:48:46Yes. Thank you. Scott, just circling back to Pharma Manufacturing Solutions, I know you've been meeting with Pharma Companies as well. Any particular feedback that you're hearing in terms of as your strategy evolves there and do you look to target growth in this market? What's resonating versus what are some things you're working on to drive that growth? Speaker 200:49:06Yes. Thanks for the question. I think what's resonating is number 1, the unique role GoodRx has in the ecosystem again, which is 25,000,000 people who are a high intended audience around prescriptions. I mean, in other categories, you might call this Google, right? These outside of healthcare, there's low funnel marketplace areas that marketers in those industries absolutely recognize, love, appreciate. Speaker 200:49:45Healthcare is a little different where this position that we have as a vehicle to reach people who are really thinking about a specific drug or their condition, and not just people, but doctors, is a unique and valuable one. And so we're at this place where a couple of companies and brands who are working with us are leaning into all the unique ways that they can work with GoodRx to again propagate their brand messaging, whether it's to reach an audience or to end up having some unique performance deals around a cash price that are working, which is great. I think the broader context around it is we're still in a spot where when we look at the top 50 brands that we've gone through and said we have a lot of traffic here relative to the brand itself, there's unique things we can do for them. It's sweet spot value. We're working with a very small number of those 50. Speaker 200:50:51And so the effort really throughout this year is just getting ourselves in front of the decision makers and then getting campaigns loaded up. But if I could literally wave a magic wand to get in front of access people and brand managers at each of these companies, maybe not all 50 would sign up, but we think there's a value prop for these that would happen kind of right away. Well, that's the work for our teams and for us to go do, which is to get ourselves in front of them, present a value proposition and hopefully have them start to work with. Operator00:51:25Thank you. Our next question comes from the line of Scott Schoenhaus with KeyBanc. Your line is now open. Speaker 1200:51:33Hi, team. Thanks for taking my question. Most of my questions have been asked. But Scott, I wanted to follow-up on your comments around the ISP. You said you're generating incremental year over year revenue in line with expectations and those will ramp throughout the year. Speaker 1200:51:49But then you also talked about sort of seasonality in this business longer term, you'll have more in the first half due to the deductibles. How should we be thinking about the back half of this year as these new clients ramp, given that probably some of them have already reached their deductibles by that time, the employees. Can you just like walk us through the moving parts of all that? And then my second question is, you talked about the revenue per transaction on the direct retailing side. Can you comment on the ISP side, how that's affecting that part of the business? Speaker 1200:52:23Thanks. Speaker 300:52:25Actually, I might jump in first, Scott, and great to speak with you again. This is Carsten. I think there are 2 parts of the question. One is around seasonality of ISP. And on that dimension, we have two factors that to some degree are offsetting. Speaker 300:52:40On the one hand, you're quite right for a life that comes on at the beginning of the year, you'd expect ISP to be more valuable to them earlier in the year for the reasons you cited. I think the other effect though is that we also anticipate that not only will we be picking up some incremental lives during the year, but we'll be picking up incremental types of transactions during the year as well that we might not have from a given PBM at the start of the year. So while in a steady state, you would see primarily the former effect, meaning the seasonality of people that hit deductibles. I think in this year, that will be attenuated by in year expansion of the peoplelives, medications, etcetera that we pick up. With respect to economics, the economics look very similar. Speaker 300:53:35The only real delta or the primary real delta might be a better way of putting it is how we acquire users, meaning in our direct to consumer business, we pay the CACs upfront and then they pay back over time, still consistent with what we've always said in the past sort of in that sub-eight month timeframe. In the ISP context, it's a little different because there we're paying as we go in terms of marketing fees to the PBMs who aggregate the demand on our behalf. But that's all sort of below the revenue line for the most part. In terms of revenue per transaction or revenue per users, I don't think we see substantial differences there at all, Scott. Operator00:54:26Thank you. Our next question comes from the line of Stan with Wells Fargo. Your line is now open. Speaker 400:54:34Hi. Thanks for taking my questions. On direct contracting, are any of your direct contracting agreements exclusive? And do any of the directly contracted pharmacies advertise GoodRx savings to consumers at the point of sale? Thanks. Speaker 200:54:52Yes, thanks. No, they're not exclusive. But I think the way to frame that is again GoodRx working with retailers and then how do retailers broadly, each of the retailers think about discount cards. And I think the if you zone out a second, we, GoodRx, if you're in the world, if you think about a cash discount card or any benefit that lives off an insurance plan, we're obviously far and away the leading company in that space. We're the only one that drives fundamental demand relative to our marketing efforts and has what I'd call a pure relationship at retail where we're above the board with every interaction we have with our retail partners without anything going to individual pharmacists. Speaker 200:55:54And so this category, I would say, has GoodRx and then a whole long tail of kind of small little card companies. And if you think about us, when we talk about direct contracting and work with retail, what this really is, is the category, working with each retailer in an effective way. I hope from a standpoint over a couple of years that that's going to result in us continuing to gain share just in a natural way because we can do things with a retailer to build their business that legitimately these other companies just can't do. Operator00:56:34Thank you. Our next question comes from the line of Kevin Caliendo with UBS. Your line is now open. Speaker 400:56:42Thank you. This is Dylan Finley on for Kevin Caliendo. Thanks for Speaker 1100:56:46the question. So on ISP, Speaker 400:56:49in year 2, 3, 4 as Caremark and the others offer the program to more and more plans and that in turn gets pushed out to more lives. I guess what is the reasoning that there is not going to be any overlap with the existing GoodRx customer lines that you already have today. I guess it's possible that there wasn't much overlap in the pilot pool that you saw last year with Express Scripts. But I guess what's your conviction that as it continues to grow there isn't much overlap with your existing base? Thanks. Speaker 300:57:23Sure. This is Karsten. Yes, I think the best evidence we have is not just from last year with ESI, but even what we're seeing this year. We've continued to evaluate this. Again, we worked with ESI last year to really assess the benefit of the program for GoodRx as well as for our counterparties before increasing its magnitude this year. Speaker 300:57:45And we did that in large part because it's non cannibalistic, like low single digit overlap on top medications or consumers. And we continue to evaluate obviously now that we've added mid impact Navitus and Caremark. And in that context, nothing has changed. We're still seeing that incredibly low single digit overlap on top 10 drugs, on consumers, etcetera. So what we're really finding here is that this is a SAM expanding opportunity for us, meaning Speaker 1200:58:18there are a Speaker 300:58:18bunch of folks who might never have used GoodRx for a bunch of medications that they might not have used GoodRx for in the past who are doing it when it is automated and part of their benefit. And that's exactly what we hope to see happen and it is happening. Operator00:58:36Thank you. Our next question comes from the line of George Hill with Deutsche Bank. Your line is now open. Speaker 600:58:44Hey guys, thanks for kind of squeezing me in here. Scott, I've got a question about what I think about risk like tail risk. And I'm following like the J and J lawsuit around the ERISA rules, the Consolidated Appropriations Act. Can we probably get to a point in the future where PBMs have to do a better job of matching drug rebates with purchase prices at the point of sale? And I'd just be interested in how you think GoodRx fits into that process and if there's a way for you guys to either facilitate that process or whether or not that serves as a risk? Speaker 600:59:10Thank you. Speaker 200:59:11Yes, thanks. That's a rich question. I hope this is I'll answer in a hopeful way, which is there should be a future where that in some ways reflects the foundation of how we fit in the ecosystem, which again is you have this dynamic of healthcare plans, which rebates, plan design, benefit, right, that is Speaker 300:59:43a that's a complex system Speaker 200:59:47that entails plans, PBMs and the drug manufacturers and the economics flowing through all of them. But appropriately, there's this mix of what do companies pay for as part of paying for insurance coverage and then what do we push on to people, to ourselves. And that's going to be a balance and that's going to be continuing to be a balance. And I think as planned design continues to evolve, there's going to be different kinds of plans for different segments, different companies, all within the same place. And I think what you're seeing with ISP is the industry partners and GoodRx try to address this need that's outside of your plan, but still allowing for affordability to create people to get access to their medications. Speaker 201:00:43And there should be continuing ways for us to work with that corporate funded plan universe to create benefit for companies who are paying for insurance plans and most importantly their people. Like it is again with the 1,000,000,000 scripts plus that don't get filled for affordability and people's uncertainty about is this covered or not and what's it going to look like, that calls for a need for an independent marketplace that's covered across the retail universe that creates transparency relative to their insurance and relative to other pricing options. And that's kind of the value prop that we have and what we're trying to fulfill. Operator01:01:33Thank you. Our next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is now open. Speaker 601:01:42Thanks so much for taking the questions before we ran out of time. Maybe 2 just following up on topics we've talked about so far this morning. In the subscription business, could you help maybe give Speaker 201:01:52a little more granularity on Speaker 601:01:53some of the headwinds and tailwinds in the subscription business as 2024 proceeds and how some of it might be more pronounced on either the subscriber side versus the revenue side as we think about sort of bringing your forecast back to our models? That would be number 1. And on the manufacturer solution side, understood some of the key points made so far in the call, but can you almost better understand some of the execution going forward? Is that just broader adoption of manufacturer solutions that continue to execute against the opportunity? Or there's still building blocks you feel like you're putting in place to drive sort of sustained revenue momentum around that business? Speaker 601:02:32Thanks. Speaker 301:02:34Sure. It's great to speak to you again, Eric. Carsten here. I'll take the first part and Scott may hop in on the second part. On the first part relating to subscriptions, yes, the reality is that our Kroger Savings Club users are a lot less economically interesting for us than our gold users. Speaker 301:02:52Even if you just look at the pricing for the 2 groups, our gold users are paying just shy of $10 a month. The Kroger Savings Club individual users are paying 36 dollars a year, which is split with Kroger. So if you compare that, they're about 1.6% of valuable, right? So as Kroger Savings Club rolls off, we will see subscription subscriber counts decrease, but the revenue impact is much, much more diminished. Just to put it in perspective as well, the revenue impact of Kroger Savings Club along with the Vitacare restructuring that we did together those things were around $15,000,000 worth of impact. Speaker 301:03:35So you can get a sense for the fact that there's not an awful lot of revenue there. Our own gold users are growing, which we talked about in our prepared remarks and we're quite pleased with that, because it does reflect the value proposition that we offer to them and their interest in it, which is something we're very pleased with. With respect to Pharma and Manufacturer Solutions, you want to hop in, Scott? Yes, sure. Speaker 201:04:01I like that question. Thanks, Eric. I'd say first, we have line of sight to our value prop and particularly the kinds of brands where we have high value. So at its fundamentals, right, for everybody here, it's, hey, there's some places we really do work. Now then to your question of where are we in matching yourself to all those opportunities. Speaker 201:04:35From an execution capability standpoint, there's still a bunch of things that we're building, particularly around the flexibility and the GoodRx experience to have a marketer show up in different points and match it with data that for anybody who's been in performance marketing before, it's things like data and ad platform and all these things that honestly walk it in on a scale of 1 to 10, we were like a 2. And I'd say now we're to 5. And that's not difficult intellectual work. You just have to do it. And so we absolutely have work to do to continue to make a highly flexible data metric ecosystem that we can at scale run hundreds of different brands in an intelligent way that you think about as a best in class marketing platform. Speaker 201:05:34But we'll get there. Like that's just pick and shovel work. And then I think from an awareness standpoint, on again the same one through 10 scale, we're probably at like a 3. And I take comfort from that because our single biggest opportunity is just getting in front of the decision makers within each company that sit either in brands and access teams or at agencies. And we just have to keep doing that work. Speaker 201:06:07But we have a good team in place now that has done these kinds of things before and are in the market having these conversations. Operator01:06:16Hopefully, that helps. Thank you. I'd now like to turn the call back over to Scott Wagner for closing remarks. Speaker 201:06:24Yes. Thanks everybody for joining. Appreciate the questions and thanks for joining us today too. I think maybe to wrap a little bit, I hope what people are seeing and hearing is progress seeing the visible progress against things that we started talking about April May that we said we were going to do around bringing not just balance to the network, but partnerships to retail, thinking about ways to take this benefit and build it out over time, which is integrated savings. And we were talking about those things last year. Speaker 201:07:04And they don't they needed time to bake into our financial results. And I'm encouraged by the fact that now you're seeing the visible signs of progress that's a return to growth, not just on the top line, but obviously nice incremental scaling profitably to the bottom line. So it's great to see those two things reflected. And now going forward through 2024, what we're doing with our own teams and what you'll get to see alongside of us Speaker 1201:07:37is the Speaker 201:07:37work to continue to scale each of those efforts and we'll share that progress with everybody as we go throughout the year. Thanks for joining. Operator01:07:48This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallGoodRx Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Annual report(10-K) GoodRx Earnings Headlines3 Reasons to Sell GDRX and 1 Stock to Buy InsteadApril 23 at 11:29 PM | finance.yahoo.comTD Cowen Sticks to Their Buy Rating for GoodRx Holdings (GDRX)April 22 at 8:09 AM | markets.businessinsider.comWho’s really running AmericaMost Americans have never heard his name… He was instrumental in Trump’s victory. He turned J.D. Vance from a Trump-hater into his vice president. He’s one of the driving forces behind the rise of cryptocurrencies, digital commerce, social media, Big Data, cloud computing, and artificial intelligence... In other words, he’s America’s puppet master. April 24, 2025 | Porter & Company (Ad)Overview of the American Telehealth IndustryApril 21 at 10:07 PM | uk.finance.yahoo.comGoodRx price target lowered to $5.50 from $6.50 at TruistApril 11, 2025 | markets.businessinsider.comGoodRx Announces Date for First Quarter 2025 Earnings Release and Conference CallApril 9, 2025 | businesswire.comSee More GoodRx Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like GoodRx? Sign up for Earnings360's daily newsletter to receive timely earnings updates on GoodRx and other key companies, straight to your email. Email Address About GoodRxGoodRx (NASDAQ:GDRX), together with its subsidiaries, offers information and tools that enable consumers to compare prices and save on their prescription drug purchases in the United States. The company operates a price comparison platform that provides consumers with curated, geographically relevant prescription pricing, and access to negotiated prices. It also offers other healthcare products and services, including subscriptions, and pharma manufacturer solutions, as well as telehealth services through the GoodRx Care platform. It serves pharmacy benefit managers who manage formularies and prescription transactions, including establishing pricing between consumers and pharmacies. 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There are 13 speakers on the call. Operator00:00:00Ladies and gentlemen, thank you for standing by, and welcome to the GoodRx 4th Quarter and Full Year 2023 Earnings Call. As a reminder, today's conference call is being recorded. I would now like to introduce your host for today's call, Whitney Notaro, Vice President of Investor Relations. Ms. Notaro, you may begin. Speaker 100:00:19Thank you, operator. Good morning, everyone, and welcome to GoodRx's earnings conference call for the Q4 full year 2023. Joining me today are Scott Wagner, our Interim Chief Executive Officer and Carsten Vohrmann, our Chief Financial Officer. Before we begin, I'd like to remind everyone that this call will contain forward looking statements. All statements made on this call that do not relate to matters of historical fact should be considered forward looking statements, including without limitation, statements regarding management's plans, strategies, goals and objectives, our market opportunity, our anticipated financial performance, underlying trends in the business, our value proposition, our potential for growth, collaborations and partnerships with 3rd parties, including our integrated savings program, our hybrid retail direct and PBM contracting approach, anticipated impacts of the deprioritization of certain solutions under our Pharma manufacturer solutions offering and our cost savings initiatives expected impact of the wind down of Kroger Savings Club the amount, timing and benefits of our new share repurchase program the expected impact of the macroeconomic environment on our business and the expected impact of recent outages disclosed by UnitedHealth Group. Speaker 100:01:36These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors. These factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward looking statements. Factors discussed in the Risk Factors section of our annual report on Form 10 ks for the year ended December 31, 2023, and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward looking statements made on this call. Any such forward looking statements represent management's estimates as of the date of this call, and we disclaim any obligation to update these statements, even if subsequent events cause our views to change. In addition, we will be referencing certain non GAAP metrics in today's remarks. Speaker 100:02:30We have reconciled each non GAAP metric to the nearest GAAP metric in the company's earnings press release, which can be found on the overview page of our Investor Relations website at investors. Goodrx.com. I'd also like to remind everyone that a replay of this call will become available there shortly as well. With that, I'll turn it over to Scott. Speaker 200:02:52Thanks, Whitney, and thanks to everyone joining us today to discuss our Q4 results. Today, I'd like to highlight the meaningful progress we're making on our key priorities and then Carsten will take you through our Q4 2023 financials and expectations for Q1 and full year 2024. I'd like to start by framing the fundamentals of what we do, the critical and growing consumer needs we serve and the importance of the GoodRx value proposition, which is saving people money on prescriptions. Over the history of the company, GoodRx has saved consumers approximately $70,000,000,000 and just last year, we saved consumers approximately $15,000,000,000 There's big fundamental value here. And while healthcare is highly complex, the role GoodRx plays is pretty simple. Speaker 200:03:42Consumers today are facing a rising healthcare costs with plans continuing to increase patient out of pocket costs like deductibles and co pays and increasing gaps of drug coverage with narrower formularies. We believe these market coverage trends are stronger than they've ever been and we don't expect them to change. Think about how Medicaid redetermination alone has limited access to funded benefit plans. We believe this reality makes GoodRx an essential part of the American healthcare system as a trusted solution for consumers to access affordable medications in the U. S. Speaker 200:04:18Healthcare providers recognize this, which is why we've become the fundamental resource for them and why more than 80% of healthcare professionals refer their patients to us. In 2023 alone, over 25,000,000 consumers use approximately $15,000,000,000 in prescription savings, making GoodRx one of the leading consumer driven digital healthcare experiences. For those who have been following both GoodRx and the industry in recent years, short term movements in the industry value chain have created some confusion about our prospect. We believe the market tailwinds are increasing. Patient out of pocket costs are growing. Speaker 200:05:00GoodRx's scale, our users, our HCP advocacy are growing too, making us confident in the strength of the GoodRx value proposition and our ability to grow our business. Our financial results continue to improve as we focused on helping our industry partners in the value chain benefit proportionally from the value that GoodRx creates for our 25,000,000 plus consumers annually. In Q4, we continue to see positive momentum in the business both financially and operation, Consistent with the preliminary Q4 results we announced in January, our Q4 year over year adjusted revenue growth accelerated to 7%, up significantly compared to our Q3 growth rate. And our Q4 adjusted EBITDA margin was 29.1%, up 220 basis points year over year with adjusted EBITDA growing 15% year over year. This financial performance is the direct result of our efforts throughout 2023, specifically in 3 areas. Speaker 200:06:03First, leading into our relationships with retail partners. 2nd, bringing the fundamental benefit of GoodRx to commercial plans through our integrated savings program or ISP. And 3rd, bringing GoodRx savings to brand drugs through our pharma manufacturer solutions offering. These all reinforce our value proposition and are showing up in the results. We expect adjusted revenue to continue to grow into Q1 and for the full year 2024 as well. Speaker 200:06:33We anticipate adjusted revenue to be about $800,000,000 for 2024 with adjusted EBITDA of approximately $250,000,000 Karsten will go through our outlook in more detail in a bit. I will say I'm confident our priorities are the right ones to deliver the growth we're expecting in 2024 and to drive shareholder value over the long term. There are 3 areas of the business I'll highlight today. First, we've been focused on strengthening our retail pharmacy relationships and accelerating the continued success of our hybrid model, which includes retailer direct and PBM contracting. As a reminder, our retail direct approach is where leading pharmacies like CVS and Walgreens, as well as smaller grocers and pharmacies work closely with us to create consumer value while executing against joint revenue and margin targets. Speaker 200:07:28In the Q4, our contracting efforts with retailers were a driver of top line performance as we continue to sign direct contracts with new pharmacies and expand the drugs covered by direct contracts within pharmacies. Today, we have retailer direct contracts with most of our largest retail pharmacy partners and our directly contracted medication volume makes up a growing minority of our overall prescription transaction volume. It's important to remember that GoodRx drives volume and traffic for pharmacies. We do this in 2 ways. First, we estimate that between 20% 30% of all prescriptions in the U. Speaker 200:08:08S. Go unfilled each year due to price. By offering lower price points, pharmacies can fill scripts that patients would otherwise walk away from. 2nd, in 2023 alone, we've invested over $200,000,000 in advertising and promotion related marketing, almost all of which is focused on increasing the number of GoodRx users and which ultimately drives incremental prescription volume to pharmacy. Pharmacy's proprietary affordability solutions by definition only impact their customers, while in contrast, GoodRx has the ability to drive incremental retail prescriptions and people into their stores. Speaker 200:08:50This is one of the reasons pharmacies have been so GoodRx offers discount card pricing agreements that provide retailers defined margins and are informed by acquisition cost based pricing at a number of key retail pharmacy partners, including CVS Pharmacy. We've seen other large pharmacies work with us to use a combination of pricing models and that's worked out very well for both of us. We welcome the broader movement to cost plus reimbursement models in both funded benefit plans and off benefit as it's a great way to align economics between pharmacies, payers and consumers. Critically, we believe that our retail direct contracting strategy, which takes a cost aligned approach, positions us well for sustainable growth in a market with evolving pharmacy reimbursement models. We estimate that over 3 quarters of GoodRx users have some form of insurance coverage. Speaker 200:09:54That means consumers are comparing prices against co pays, not exclusively comparing prices between pharmacies. For uninsured users, the opportunity for greater patient affordability is relative to usual and customary cash pricing, which is generally substantially higher than GoodRx pricing. If there were a scenario where a more cost focused pharmacy reimbursement model reduces drug price disparity across retail pharmacies, which we don't believe will ultimately be the case since each pharmacy uses pricing strategically to attract different kinds of consumers. We see this trend overall as neutral to GoodRx given we will still be able to deliver significant savings benefit to consumers. Our second priority has been to hone our growth plans for our core prescription transactions offering, which includes extending the GoodRx benefit to commercial insurance programs or funded plans. Speaker 200:10:51We've done this through our integrated savings program or ISP with PBM partners like CVS Caremark, Express Scripts, Net Impact and Navitus who aggregate demand for our prescription discounts. The early traction we're seeing for ISP so far in 2024 is encouraging and its contribution to Q1 revenue is reflected in our growth expectations. ISP is generating incremental year over year revenue, which is manifesting in line with our expectations. As we mentioned in the past, we believe there will be some level of ramp to the volume that comes through ISP and we're still in the very early days as we work with PBMs to add more types of prescription transactions to the program and to ensure acceptance at retail. Also, while our PBM partners market these programs to be over 60% of eligible lives in the U. Speaker 200:11:44S. That they cover, we're working in parallel with them to educate and inform employers about these programs and accelerate the number of lives we can onboard. Along with increasing lives, we believe we can inflect conversion as well, given we've historically been able to increase GoodRx discounts and lower pricing over time in our non ISP direct and lower pricing over time in our non ISP direct to consumer offerings. As we do so in the context of ISP, we believe we can beat patients' co pays more often. Given that ISP is incremental to our direct to consumer offering and any evidence of cannibalization has been minimal, we remain focused on accelerating its growth. Speaker 200:12:26Based on our learnings from last year, we expect our ISP relationships to create some incremental seasonality with higher revenue during the first half of the year and contributing less revenue in the latter part since more claims are likely to be routed through GoodRx while consumers are in the deductible phase of their health plan. That said, our growth expectations are predicated on how ISP has performed for the 1st few weeks of this year and if we're successful in driving more types of transactions and more lives to the program as we help drive more employer sales, we may achieve incremental lift in the coming months and during 2025 patient deductible reset period. We'll update everyone if we see this manifesting. 3rd, we're focused on scaling our pharma manufacturer solutions. In Q4, we continued doing the work to build our pipeline and believe we've set ourselves up for year over year growth in the Q1 and FY 'twenty four. Speaker 200:13:26We've been leaning into our access and awareness solutions that we believe will accelerate 2024 growth. And as we've mentioned in the past, in 2023, we prioritize deal quality with a focus on foregoing 1 off deals and instead creating standardized go to market programs that we expect to scale sustainably. Our restructuring in this offer, including rationalizing VitaCare is essentially complete and we're on track to deliver our expected margin accretion in 2024, which Carsten will speak to in more detail. With that, I'll hand it over to Karsten. Speaker 300:14:03Thank you, Scott. I'll speak briefly to our 4Q 'twenty three financial results, which were consistent with the preliminary Q4 results we announced in January before turning to guidance. In summary, during the Q4, adjusted revenue exceeded the guidance range we provided on our Q3 earnings call in November and adjusted EBITDA margin was in the upper end of the guidance range we provided. Total revenue and adjusted revenue for the quarter increased 7% year over year to $196,600,000 primarily driven by organic growth in prescription transactions revenue. Prescriptions transactions revenue grew 11% year over year to $143,900,000 an acceleration from Q3 growth, which was partially driven by quarter specific favorability related certain client contracts, which also slightly increased PTR per MAC. Speaker 300:14:59Subscriptions revenue declined 6% to $23,100,000 due to the wind down of Kroger Savings Club. Kroger Savings Club revenue was over $1,000,000 less in the Q4 of 2023 than in the prior year period. Gold subscription count was up both quarter over quarter and year over year. In Q4, gold revenue was $21,500,000 and the related sub count was 694,000. We expect the continued wind down of Kroger Savings Club subscribers from now to July and given the relative subscription fee is much higher for GoodRx Gold than for the Kroger subscribers, the wind down should be more impactful to subscription plan count than revenue. Speaker 300:15:47Pharma manufacturer solutions declined 2% year over year to $24,400,000 driven by our restructuring of the offering, which included shutting down Vitacare. The prior year quarter included over $2,000,000 of revenue related to Vitacare, whereas in 4Q 2023, there was essentially 0. Speaker 200:16:08Net loss was Speaker 300:16:09$25,900,000 compared to a net loss of $2,000,000 in the Q4 of 2022. Adjusted net income was $31,100,000 Speaker 400:16:21compared to Speaker 300:16:21$27,400,000 in the Q4 of 2022. Adjusted EBITDA increased 15% year over year to $57,300,000 The primary driver of the year over year increase was higher adjusted revenue along with our cost discipline, increased marketing efficiency and the actions taken to restructure pharma manufacturer solutions, including the deprioritization of VidaCare. Adjusted EBITDA margin was up 220 basis points year over year to approximately 29.1%, which was on the high end of our guidance range. We generated net cash provided by operating activities of $15,900,000 compared to $31,900,000 in the prior year period. Our capital allocation priorities are unchanged and we'll continue to focus on high return investments and maximizing value for shareholders. Speaker 300:17:18Our balance sheet remains strong and we ended the quarter with $672,300,000 in cash and cash equivalents on the balance sheet and $661,800,000 of outstanding debt. Significant uses of cash quarter included approximately $78,000,000 of share repurchases at approximately $5.53 per share on a blended basis. And as we've discussed on prior calls, a non recurring approximately $45,000,000 of spend on withholding taxes related to the delivery of shares to our co founders related to a 2020 equity grant, which was defrayed by shares we withheld. Our revolving credit facility is untapped except for letters of credit and had $90,800,000 as of December 31, 2023, representing total liquidity of $763,100,000 This month, we extended the maturity date of our revolving credit facility to July 11, 2025. Recently, our Board of Directors approved a new stock repurchase program to repurchase up to $450,000,000 worth of Class A common stock. Speaker 300:18:35Now turning to guidance. Our outlook for Q1 revenue and adjusted revenue is $195,000,000 to $198,000,000 which represents 6% to 8% year over year revenue and adjusted revenue growth, which includes our current estimate of the impact of recent outages disclosed by UnitedHealth Group that we believe at this early stage, despite lasting a couple of days, has likely not had a material impact on our financials. We expect adjusted and GAAP revenue to be identical in the Q1 because we believe the Q3 2023 adjustment to revenue in relation to Pharma Manufacturer Solutions restructuring related to Vitacare was solely one time and non recurring. For the full year 2024, we also expect revenue and adjusted revenue to be identical at about $800,000,000 representing about 5% growth on an adjusted basis. The anticipated adjusted revenue growth rate is tempered by approximately $15,000,000 of top line impact associated with the deprioritization of VidaCare as part of our farm manufacturer solutions restructuring as well as the wind down of the Kroger Savings Club. Speaker 300:19:50Our continued investments in consumer incentives will increase Contour revenue by approximately $10,000,000 In aggregate, this $25,000,000 of top line impact is absorbed in our full year $800,000,000 revenue and adjusted revenue guidance. We thought it might also be helpful to provide our current expectations for our prescription marketplace and pharma manufacturer solutions offerings in 2024. As a reminder, our prescription marketplace is made up of prescription transactions, subscriptions and other revenue. We expect our prescription marketplace contribution to our implied 2024 adjusted revenue growth to be about $25,000,000 to $30,000,000 The expected growth includes the impacts of the previously mentioned headwinds related to increasing contra revenue in the sunsetting of the Kroger Savings Cloud. This also reflects the current ISP network footprint and execution we have today and we are working to optimize both. Speaker 300:20:48We expect Pharma Manufacturer Solutions to contribute about $10,000,000 to $15,000,000 to our implied 2024 adjusted revenue growth. This implies a year over year growth rate for that offering that exceeds the growth rate of the digital pharma ad spend market, which has been in the low teen percentages. As part of the restructuring of our pharma manufacturer solutions offering, we discontinued Vitacare, which contributed approximately $8,000,000 of adjusted revenue in 2023 and is not contributing to 2024. Considering that, we're pleased with our anticipated 2024 Pharma Manufacturer Solutions growth. As a reminder, our Pharma Manufacturer Solutions offering has some seasonality to it and so we expect 1Q 2024 revenue to be slightly below 4Q2023 revenue. Speaker 300:21:37Based on what we've seen historically, we expect there to be seasonality in some quarter over quarter variability for our business more broadly. But given our scale relative to the very large TAMs for our prescription marketplace and our pharma manufacturer solutions offering, we're confident in the growth trajectory. From a margin perspective, during the last couple of quarters, we've delivered adjusted EBITDA margins in the high 20% range and we continue to expect to be in the high 20% range again for the Q1, potentially up to 30% and to achieve around $250,000,000 of adjusted EBITDA for the full year, up 15% from 2023. With that, I'll now turn it over to the operator for Q and A. Operator00:22:23Thank Our first question comes from the line of Stephanie Davis with Barclays. Your line is now open. Speaker 500:22:42Hey guys. Thank you for taking my question. First off, it sounds like you're starting to see the direct contracting become a much bigger part of the model. So I wanted to ask about what GoodRx looks not in 2024, but maybe 5, 10 years from now. You see that becoming more of the primary model versus the D2C business? Speaker 500:23:05Or is this going to be more of a balanced growth once it fully ramp? Speaker 200:23:10Hey, Stephanie. Thanks for the question. I think if you roll this forward, it'll look like what we're doing today, which is a combination of working with a multi variant PBM network as well as some form of direct relationships with retailers depending upon the size of the book. And that's really kind of where we are and are in the process of rolling that out into the world. I don't think that's going to change much because really we're following a retailer, our retail partners guidance in some ways and they all approach this a little bit differently. Speaker 200:23:56And so I don't think there's going to be a really transformative difference in the composition of our network. It'll literally be more of a similar and more rolled out version of kind of what we're going through right now. Speaker 500:24:13And on that kind of note, I feel like there's a lot of questions on the cost plus model that's been floated around CVS and Walgreens. I know you do have some relationships there. Is there anything you can share on how GoodRx fits into the ecosystem? Speaker 200:24:31Absolutely. And I think the big theme for, let's just say, CVS and Walgreens as well is we're really side by side with both of them around their own merchandising strategies for the category. So specifically on CVS and Cost Plus, we're working with them in this manner already today. So the fundamentals of several of our specific drug contracting plus overall is really high at the hip with CVS. And so it works exactly on how we're set up not only with CVS, but really our core foot benefit today. Speaker 200:25:13In Walgreens, an anecdote that I'll share from the fall that I think is just indicative of our working relationship with all the retailers is during a basket of cold and flu drugs and drove 40% savings because that was one of their merchandising goals. And it drove a heck of a lot of incremental activity and traffic was good for Walgreens, was good for us. But again, it was really about working with a retail partner to achieve their category goals. And if you step back and think thematically about what we're doing with this contract approach, it's really that, which is tying them together and working with them to achieve goals. Speaker 500:25:59That's awesome. Thank you. Operator00:26:02Thank you. Our next question comes from the line of Lisa Gill with JPMorgan. Your line is now open. Speaker 600:26:10Lisa Operator00:26:13Gill, your line is open. Speaker 700:26:15Good morning. Thanks for taking the question. Scott, I want to go back to ISP and I want to make sure that I heard this correctly. I think you said that there's a 60% opportunity in the books of business for CBS and Express Scripts as far as the opportunity. When I think about that opt in and them selling them this option into their clients, Can you maybe talk about what you're seeing as far as in the first initial phase here? Speaker 700:26:42Is it opt in is more of the driver here or is it more of utilization? And when we think about the offerings that you have, how should we think about this over time? I heard you talk about deductibles and that sense longer term throughout the year, but is it really going to be utilization that's driving this program over time? So if you can just help me to understand that a little bit. Speaker 200:27:06Yes, thanks. I appreciate it and understand the question. First of all, I'd say the rollout at each of our partners, whether it's Caremark, ESI, MedImpact, Navitus, it's still early. And by early, the 60% you described are the total eligible lives that they cover. Right now, the amount of lives that this program is operating under is much less than that 60% coverage universe. Speaker 200:27:39It's a much narrower set of that, but it's about a rollout. And so as we go, the first step to building this program out is expanding more lives, so getting more coverage. And there are a it's probably a step change or two level of rollout of just lives covered for where we are today. I don't want to give you specific percentages because it differs by it differs by each PBM. But the point is we're in a much narrower universe than that total coverage life. Speaker 200:28:15Then optimization is something that we also believe there's going to be ongoing ways that we can tweak and hopefully help that improve over time. And then the last component to this is how the program is accepted at retail, which is also the final component of this. And so it's early days, I think is the punch line on particularly the lives covered and acceptance level. And it's in line with our expectations, I'd say, from kind of how we thought this would roll out. Speaker 700:28:50And then can you just remind us of how to think about the margin on ISP versus your traditional business? Speaker 300:28:58Sure. Thanks Lisa for the question. This is Carsten. With respect to margin, we think over time it looks substantially identical to the margin in the rest of our business. Really only distinction is how we capture demand. Speaker 300:29:13In our direct to consumer business, we capture demand by spending CAC, marketing dollars in advance to capture users and then we monetize them over time. In the ISP context, demand is aggregated by the PBMs. And so we do pay a marketing fee associated with that, but that's on a per transaction basis. So over time those two things converge, the upfront CAC and the margin we pay to the PBM. So we've engineered them to try and keep them very similar. Speaker 700:29:46That's helpful. Thank you. Operator00:29:49Thank you. Our next question comes from the line of Charles Rhyee with TD Cowen. Your line is now open. Speaker 800:29:57Yes. Thanks for taking the questions. Just wanted to follow-up on Elyse's question. Scott, you just mentioned that some of the factors to consider here is the pace of the rollout and a few other things. Just first on that, I guess for an example, if let's say 10,000,000 lives are going to be covered or signed up for ISV, does that mean all 10,000,000 got access to it Jan 1? Speaker 800:30:27Or is there still a phased rollout where those members will gain access to it over the course of this year? And then secondly, you kind of mentioned, you're also looking at how the program is accepted at retail. My understanding was that someone goes in and the system will automatically adjudicate between the funded benefit price versus the GoodRx price and get the lower of. Where isn't that a system function at the PBM level for the retailer kind of will then just see which one they're charging. Can you talk about what retail acceptance means in this instance? Speaker 800:31:07Thanks. Speaker 300:31:09Sure, Charles. This is Carsten. I may jump in on this one first and Scott may follow. So I think first point to make is ISP is up about 2x year over year, which we're pretty pleased with. I think second point is that while for ESI, this program is now in its 2nd year of existence for Caremark, Navitus, at Impact, this is the 1st year. Speaker 300:31:33And while they have a ton of lives to contribute to us, given they need this for their own customer relationships with sponsors, with employees, etcetera, to be very smooth. We don't believe all of the volume that is potentially available to us has been loaded on immediately upfront. So that's what Scott was referring to when we say, hey, it's still ramping. I think the second point on retail is that much like the PBMs, the retailers are assessing how this impacts their business and also want to make sure it's a good experience for our shared customers, the retail customers and ours. So in that context as well, we see retailers with different levels of energy around trying to attract this ISP business into their stores. Speaker 800:32:31I see. Maybe if I can follow-up, is there a way for consumers to know like, for example, I just went to Walgreens the other day, pick up a generic script and I asked the pharmacist desk whether I was getting the ISP price. It didn't seem like they could tell. Is there a way for consumers will they be able to know, going into the future, if they're like a Caremark number? Speaker 200:32:57That'd be the hope, Gerald, as we get to the end state. I think the rollout of this is really going through plans and the benefit feature. And so as of right now, that's a communication vehicle that is almost working through your plans. Less, oh my gosh, Walgreens or CVS is making that a core merchandising element. But thematically, if you think about the benefits at retail pharmacy and what might be different, Whether it's this or other things we're working on, that's the dialogue that we have with each of our retailer partners, which is how can our value proposition help you achieve your goals. Speaker 200:33:44So that doesn't really exist today, but it's not to say that it won't in the future. Speaker 800:33:49Great. I appreciate it. Thank you. Operator00:33:53Thank you. Our next question comes from the line of Michael Cherny with Leerink. Your line is now open. Speaker 900:34:02Good morning and thanks so much for taking the question. I think a similar one along the same vein in terms of thinking about the evolving nature of your 2 sided network both with the PBM relationships as well as on the ISP side with the pharmacies. Obviously, we had the reset from a couple of years back with Kroger. And now as you go forward, you look at the health of the two side dynamics of your market. Where else do you think you see the next important leg of development? Speaker 900:34:30Is it adding more partners on the ISP side? Is it more direct pharmacy? Do you feel like you're at homeostasis now across the network? And if not, where do we see the next leg who the next partner should be? Speaker 200:34:44Yes. Thank you for that. I like the theme of that question. In terms of our retailer partnerships and balance, I would characterize the approach now as the right one that can carry us forward for, I would hope, years, that is really the forever work of how do you work with retailers as well as PBMs to deliver benefit and have the economics such that people are feeling good about it. And so I think from a retailer standpoint, I would say we're in the earlier days of working kind of how if you could wave a magic wand, you'd always run this effort. Speaker 200:35:35And so I'd say there won't be any probably huge structural differences, but it will continue to evolve over time. What I do believe has a whole another wave of evolution is really the thematic marrying of what GoodRx is, which is the benefit that exists outside of your insurance plan and tying it more closely, right? I think the big macro context here is 80% of our own users and the vast majority of us as Americans get our healthcare through our insurance plans, which come through our work. And the macro trends in that are co pays are going up, deductibles are going up and there's a narrower set of drugs that are being covered. That's the zone that we're addressing and operating in. Speaker 200:36:27And in a world where approximately 1,000,000,000 prescriptions a year, 1,000,000,000 with a B, are left at the counter due to affordability. The whole industry actually has a heck of a lot of incentive to help people get those medications. And that's the value proposition we're sitting in. What does that mean for our partnerships? It means we're going to continue to work with our PBM partners and then their plans down stream to bring these couple of things together, whether it's corporate funded plans and Medicare. Speaker 200:36:57So I hope not just on behalf of GoodRx, but honestly the system, you're hearing about continued evolution from us certainly over the coming months, quarters and years to keep marrying those two things because it will be good for the system and it will also be good for us. Operator00:37:16Thank you. Our next question comes from the line of Jack Wallace with Guggenheim Partners. Your line is now open. Speaker 600:37:28Hi, this is Mitchell on for Jack. Thanks for taking my question. What have you been seeing lately in the demand environment for Pharma Manufacturing Solutions? And have there been any changes in Pharma decision making? And then what gives you the confidence that you're going to outperform the market growth rate in that business? Speaker 600:37:45Thanks. Speaker 200:37:49Manufactured Solutions is approximately $100,000,000 business that's really anchored in the core of the GoodRx marketplace, which is 25,000,000 people a year coming here searching for a specific drug and the pricing benefit that is around that's reflective of approximately again 100,000,000 scripts a year. If you're a brand drug, whether you're a generic, you're a brand, you're an OTC, you kind of want to be in that environment and be in that environment either with a pricing discount, depending upon the nature of your brand drug or if merely communicating to an user at very low in the funnel. So we're a pretty high return marketing vehicle in pharma, one that I would say is pretty unique and extremely valuable. So relative to our expectation here, we should be able to outperform a market that grows in the mid single digits simply by penetrating more brands that we think have high value with us. And the work we're doing is really getting ourselves in front of brand managers, access teams and agencies, which are different in every single company, but getting our value prop for the right things in front of them and having them sign up and run programs. Operator00:39:14Thank you. Our next question comes from the line of Jalendra Singh with Truist. Your line is now open. Speaker 1000:39:22Good morning and thanks for taking my questions. I want to follow-up on your comments around your exposure to the recent system outage disclosed by Change, United. Can you elaborate more on the dependencies and integration there? Is it more for your pharmacy partners, more on CVM side? I know you said 2 days, but it seems systems were down longer than that, have been down longer than that. Speaker 1000:39:43What have been the workarounds? And if it does impact your financials, is it more on volume side or is it more on the cost side? Speaker 300:39:51Hey, Jalendra, this is Carsten speaking here. So I think first of all, we've been really pleased with the performance of our tech teams. We think they did an amazing job in 2 ways. 1st of all, creating alternatives for us. So alternatives in the context of what switches we use and being able to shift our volume quite rapidly. Speaker 300:40:13That's one of the big reasons we refer to this as being an issue that affected us for a couple of days versus an issue that affected many in the industry for a longer period of time. And for folks in the call who might not know the issue, it's the issue around the ability to route transactions in pharmacies being able to fill funded or discount card scripts broadly. So from that perspective, I think our much quicker response was helpful to our users and of course helpful to us because that diminished the impact that would otherwise have manifested in the quarter. I'll also add we're still evaluating it, but sort of like with the winter storm, when volume drops, you often see a significant portion of that volume come back. And that's one of the reasons the impact has been not as large as it would otherwise have been. Speaker 300:41:07Also want to point out that it is reflected in our Q1 guide. We contemplated this based on the data we had to date and our Operator00:41:24next question comes from the line of Ji An Lee with Evercore ISI. Your line is now open. Speaker 1100:41:33Great. Thanks a lot. This is Jan for Mark Mahaney. A couple of questions. One is, maybe just going back to the ISP, what's the go to market that GoodRx can do? Speaker 1100:41:43Because it sounds like it's the, it's sort of dependent on the ISP partners ramping up the benefit plans on it. So anything that GoodRx is doing to increase that penetration? And maybe related to that, I think you guys mentioned sort of ramping up marketing. What channels are you testing? What like where is the dollar spent? Speaker 200:42:06Yes. It's Scott. Thanks. It's again in the vein of early days. Right now, our effort is working with our PBM partners to then present this capability into their plan and their own client base. Speaker 200:42:27And so, the nature of your question of, oh, what are we doing? Right now, we're working with our partners. And then over time, this question of, hey, how do you educate not only corporate the corporate clients, but probably the brokers and consultants who are the real decision makers and influence in this, we'll again work with our partners to figure that out. So that'll be part of the things that we'll work on through this year. And we do believe that there's more that we can and should do, not necessarily even for our own benefit, but just for the success of the product to that audience, but we'll figure it out with our partners. Speaker 200:43:11Then your second question on marketing. So the nice thing about GoodRx and our value prop is if there's an individual and we know what their condition is and what kind of insurance they have, you could pretty much map the savings benefit that we can do to that individual to a super precise amount. And for a marketer, what that means is you can and should be able to hone in on audiences that are particularly valuable in a precise way, not incredibly one to one way, but we can get pretty focused on here are the high value people that we're going to add a lot of benefit to. So it's less about channel per se as much as mapping our messaging and where good our track shows up towards these individuals that we just know we're going to save them $800 $1,000 $5,000 right? You can kind of do that mapping and that's really what the marketing team has been working on. Speaker 200:44:23Along with this ongoing realization or recognition that healthcare professionals who legitimately love GoodRx. Coming in, that was one of my biggest surprise delights about what's here is the fact that you walk into a healthcare professional's office and whether it's a doctor or a nurse or the office administrator, they absolutely love GoodRx because we're helping people get on beds and stay on beds and get better. And so that audience is a huge advocate for us in a supernatural way. When we look at our marketing, we're really focused on how and where can we help that audience continue to advocate for us in this totally natural way. Operator00:45:15Thank you. Our next question comes from the line of Alan Lutz with Bank of America. Your line is now open. Speaker 600:45:23Good morning and thanks for taking the questions. Scott, it sounded like direct contracting may actually be contributing a little bit more than ISP. Can you break down the relative growth in 2024 from direct contracting and ISP? And then regarding the ramp in ISP, is there any way to frame how many more lives could be on the platform by 4Q versus the start of the year? Thanks. Speaker 200:45:51The parsing of relative growth, one versus the other, I might come at that a little differently, which is in the quarter, revenue grew 7%. You can look at the marketplace growth. And I think what you're seeing is now the performance of GoodRx in the context of the system. And so you see a retail network at a we'll call it a stable place, but really working forward. And so now right now, you're basically just seeing the GoodRx operating in the way that we can within the system. Speaker 200:46:35So it's not retail contracting versus ISP. This is back to the fundamentals of number of people who are using GoodRx to get a benefit and you're now seeing that grow nicely in the now what's mid to high single digits and that is I think higher than the average prescription volume growth rate and of our category. And the number of things that we have underway, the nice is, if we keep landing them, we should be able to continue to drive that growth above category rates. Hopefully, we can. Operator00:47:15Thank you. Our next question comes from the line of Daniel Grossleit with Citi. Your line is now open. Speaker 600:47:23Hi guys. Thanks for taking the question. On direct contracting, you've previously noted that it might be a slight headwind to PTR per MAC, just given those contracts generally have lower admin fees. So I'm curious as I look at your 4Q numbers, you had a very nice sequential improvement in PTR per Mac. But for 2024 and beyond, how should we be thinking about that metric given direct contracting will become a bigger part of your business? Speaker 300:47:54Thanks for the question. This is Carsten. With respect to PTR per Mac, you're right. We are pleased to see that as a really a reflection of the relationships we have and the value we add when we deliver prescriptions to our customers, our PBMs and our pharmacies. So from that perspective, it's really a reflection of what we do and how well we do it. Speaker 300:48:18I think with respect to the future, we're not expecting any non linearity in the trends. So we think it's not going to move very much at all as we go into 2024 now that direct contracting is already a significant minority of the volume coming through. Operator00:48:37Thank you. Our next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is now open. Speaker 400:48:46Yes. Thank you. Scott, just circling back to Pharma Manufacturing Solutions, I know you've been meeting with Pharma Companies as well. Any particular feedback that you're hearing in terms of as your strategy evolves there and do you look to target growth in this market? What's resonating versus what are some things you're working on to drive that growth? Speaker 200:49:06Yes. Thanks for the question. I think what's resonating is number 1, the unique role GoodRx has in the ecosystem again, which is 25,000,000 people who are a high intended audience around prescriptions. I mean, in other categories, you might call this Google, right? These outside of healthcare, there's low funnel marketplace areas that marketers in those industries absolutely recognize, love, appreciate. Speaker 200:49:45Healthcare is a little different where this position that we have as a vehicle to reach people who are really thinking about a specific drug or their condition, and not just people, but doctors, is a unique and valuable one. And so we're at this place where a couple of companies and brands who are working with us are leaning into all the unique ways that they can work with GoodRx to again propagate their brand messaging, whether it's to reach an audience or to end up having some unique performance deals around a cash price that are working, which is great. I think the broader context around it is we're still in a spot where when we look at the top 50 brands that we've gone through and said we have a lot of traffic here relative to the brand itself, there's unique things we can do for them. It's sweet spot value. We're working with a very small number of those 50. Speaker 200:50:51And so the effort really throughout this year is just getting ourselves in front of the decision makers and then getting campaigns loaded up. But if I could literally wave a magic wand to get in front of access people and brand managers at each of these companies, maybe not all 50 would sign up, but we think there's a value prop for these that would happen kind of right away. Well, that's the work for our teams and for us to go do, which is to get ourselves in front of them, present a value proposition and hopefully have them start to work with. Operator00:51:25Thank you. Our next question comes from the line of Scott Schoenhaus with KeyBanc. Your line is now open. Speaker 1200:51:33Hi, team. Thanks for taking my question. Most of my questions have been asked. But Scott, I wanted to follow-up on your comments around the ISP. You said you're generating incremental year over year revenue in line with expectations and those will ramp throughout the year. Speaker 1200:51:49But then you also talked about sort of seasonality in this business longer term, you'll have more in the first half due to the deductibles. How should we be thinking about the back half of this year as these new clients ramp, given that probably some of them have already reached their deductibles by that time, the employees. Can you just like walk us through the moving parts of all that? And then my second question is, you talked about the revenue per transaction on the direct retailing side. Can you comment on the ISP side, how that's affecting that part of the business? Speaker 1200:52:23Thanks. Speaker 300:52:25Actually, I might jump in first, Scott, and great to speak with you again. This is Carsten. I think there are 2 parts of the question. One is around seasonality of ISP. And on that dimension, we have two factors that to some degree are offsetting. Speaker 300:52:40On the one hand, you're quite right for a life that comes on at the beginning of the year, you'd expect ISP to be more valuable to them earlier in the year for the reasons you cited. I think the other effect though is that we also anticipate that not only will we be picking up some incremental lives during the year, but we'll be picking up incremental types of transactions during the year as well that we might not have from a given PBM at the start of the year. So while in a steady state, you would see primarily the former effect, meaning the seasonality of people that hit deductibles. I think in this year, that will be attenuated by in year expansion of the peoplelives, medications, etcetera that we pick up. With respect to economics, the economics look very similar. Speaker 300:53:35The only real delta or the primary real delta might be a better way of putting it is how we acquire users, meaning in our direct to consumer business, we pay the CACs upfront and then they pay back over time, still consistent with what we've always said in the past sort of in that sub-eight month timeframe. In the ISP context, it's a little different because there we're paying as we go in terms of marketing fees to the PBMs who aggregate the demand on our behalf. But that's all sort of below the revenue line for the most part. In terms of revenue per transaction or revenue per users, I don't think we see substantial differences there at all, Scott. Operator00:54:26Thank you. Our next question comes from the line of Stan with Wells Fargo. Your line is now open. Speaker 400:54:34Hi. Thanks for taking my questions. On direct contracting, are any of your direct contracting agreements exclusive? And do any of the directly contracted pharmacies advertise GoodRx savings to consumers at the point of sale? Thanks. Speaker 200:54:52Yes, thanks. No, they're not exclusive. But I think the way to frame that is again GoodRx working with retailers and then how do retailers broadly, each of the retailers think about discount cards. And I think the if you zone out a second, we, GoodRx, if you're in the world, if you think about a cash discount card or any benefit that lives off an insurance plan, we're obviously far and away the leading company in that space. We're the only one that drives fundamental demand relative to our marketing efforts and has what I'd call a pure relationship at retail where we're above the board with every interaction we have with our retail partners without anything going to individual pharmacists. Speaker 200:55:54And so this category, I would say, has GoodRx and then a whole long tail of kind of small little card companies. And if you think about us, when we talk about direct contracting and work with retail, what this really is, is the category, working with each retailer in an effective way. I hope from a standpoint over a couple of years that that's going to result in us continuing to gain share just in a natural way because we can do things with a retailer to build their business that legitimately these other companies just can't do. Operator00:56:34Thank you. Our next question comes from the line of Kevin Caliendo with UBS. Your line is now open. Speaker 400:56:42Thank you. This is Dylan Finley on for Kevin Caliendo. Thanks for Speaker 1100:56:46the question. So on ISP, Speaker 400:56:49in year 2, 3, 4 as Caremark and the others offer the program to more and more plans and that in turn gets pushed out to more lives. I guess what is the reasoning that there is not going to be any overlap with the existing GoodRx customer lines that you already have today. I guess it's possible that there wasn't much overlap in the pilot pool that you saw last year with Express Scripts. But I guess what's your conviction that as it continues to grow there isn't much overlap with your existing base? Thanks. Speaker 300:57:23Sure. This is Karsten. Yes, I think the best evidence we have is not just from last year with ESI, but even what we're seeing this year. We've continued to evaluate this. Again, we worked with ESI last year to really assess the benefit of the program for GoodRx as well as for our counterparties before increasing its magnitude this year. Speaker 300:57:45And we did that in large part because it's non cannibalistic, like low single digit overlap on top medications or consumers. And we continue to evaluate obviously now that we've added mid impact Navitus and Caremark. And in that context, nothing has changed. We're still seeing that incredibly low single digit overlap on top 10 drugs, on consumers, etcetera. So what we're really finding here is that this is a SAM expanding opportunity for us, meaning Speaker 1200:58:18there are a Speaker 300:58:18bunch of folks who might never have used GoodRx for a bunch of medications that they might not have used GoodRx for in the past who are doing it when it is automated and part of their benefit. And that's exactly what we hope to see happen and it is happening. Operator00:58:36Thank you. Our next question comes from the line of George Hill with Deutsche Bank. Your line is now open. Speaker 600:58:44Hey guys, thanks for kind of squeezing me in here. Scott, I've got a question about what I think about risk like tail risk. And I'm following like the J and J lawsuit around the ERISA rules, the Consolidated Appropriations Act. Can we probably get to a point in the future where PBMs have to do a better job of matching drug rebates with purchase prices at the point of sale? And I'd just be interested in how you think GoodRx fits into that process and if there's a way for you guys to either facilitate that process or whether or not that serves as a risk? Speaker 600:59:10Thank you. Speaker 200:59:11Yes, thanks. That's a rich question. I hope this is I'll answer in a hopeful way, which is there should be a future where that in some ways reflects the foundation of how we fit in the ecosystem, which again is you have this dynamic of healthcare plans, which rebates, plan design, benefit, right, that is Speaker 300:59:43a that's a complex system Speaker 200:59:47that entails plans, PBMs and the drug manufacturers and the economics flowing through all of them. But appropriately, there's this mix of what do companies pay for as part of paying for insurance coverage and then what do we push on to people, to ourselves. And that's going to be a balance and that's going to be continuing to be a balance. And I think as planned design continues to evolve, there's going to be different kinds of plans for different segments, different companies, all within the same place. And I think what you're seeing with ISP is the industry partners and GoodRx try to address this need that's outside of your plan, but still allowing for affordability to create people to get access to their medications. Speaker 201:00:43And there should be continuing ways for us to work with that corporate funded plan universe to create benefit for companies who are paying for insurance plans and most importantly their people. Like it is again with the 1,000,000,000 scripts plus that don't get filled for affordability and people's uncertainty about is this covered or not and what's it going to look like, that calls for a need for an independent marketplace that's covered across the retail universe that creates transparency relative to their insurance and relative to other pricing options. And that's kind of the value prop that we have and what we're trying to fulfill. Operator01:01:33Thank you. Our next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is now open. Speaker 601:01:42Thanks so much for taking the questions before we ran out of time. Maybe 2 just following up on topics we've talked about so far this morning. In the subscription business, could you help maybe give Speaker 201:01:52a little more granularity on Speaker 601:01:53some of the headwinds and tailwinds in the subscription business as 2024 proceeds and how some of it might be more pronounced on either the subscriber side versus the revenue side as we think about sort of bringing your forecast back to our models? That would be number 1. And on the manufacturer solution side, understood some of the key points made so far in the call, but can you almost better understand some of the execution going forward? Is that just broader adoption of manufacturer solutions that continue to execute against the opportunity? Or there's still building blocks you feel like you're putting in place to drive sort of sustained revenue momentum around that business? Speaker 601:02:32Thanks. Speaker 301:02:34Sure. It's great to speak to you again, Eric. Carsten here. I'll take the first part and Scott may hop in on the second part. On the first part relating to subscriptions, yes, the reality is that our Kroger Savings Club users are a lot less economically interesting for us than our gold users. Speaker 301:02:52Even if you just look at the pricing for the 2 groups, our gold users are paying just shy of $10 a month. The Kroger Savings Club individual users are paying 36 dollars a year, which is split with Kroger. So if you compare that, they're about 1.6% of valuable, right? So as Kroger Savings Club rolls off, we will see subscription subscriber counts decrease, but the revenue impact is much, much more diminished. Just to put it in perspective as well, the revenue impact of Kroger Savings Club along with the Vitacare restructuring that we did together those things were around $15,000,000 worth of impact. Speaker 301:03:35So you can get a sense for the fact that there's not an awful lot of revenue there. Our own gold users are growing, which we talked about in our prepared remarks and we're quite pleased with that, because it does reflect the value proposition that we offer to them and their interest in it, which is something we're very pleased with. With respect to Pharma and Manufacturer Solutions, you want to hop in, Scott? Yes, sure. Speaker 201:04:01I like that question. Thanks, Eric. I'd say first, we have line of sight to our value prop and particularly the kinds of brands where we have high value. So at its fundamentals, right, for everybody here, it's, hey, there's some places we really do work. Now then to your question of where are we in matching yourself to all those opportunities. Speaker 201:04:35From an execution capability standpoint, there's still a bunch of things that we're building, particularly around the flexibility and the GoodRx experience to have a marketer show up in different points and match it with data that for anybody who's been in performance marketing before, it's things like data and ad platform and all these things that honestly walk it in on a scale of 1 to 10, we were like a 2. And I'd say now we're to 5. And that's not difficult intellectual work. You just have to do it. And so we absolutely have work to do to continue to make a highly flexible data metric ecosystem that we can at scale run hundreds of different brands in an intelligent way that you think about as a best in class marketing platform. Speaker 201:05:34But we'll get there. Like that's just pick and shovel work. And then I think from an awareness standpoint, on again the same one through 10 scale, we're probably at like a 3. And I take comfort from that because our single biggest opportunity is just getting in front of the decision makers within each company that sit either in brands and access teams or at agencies. And we just have to keep doing that work. Speaker 201:06:07But we have a good team in place now that has done these kinds of things before and are in the market having these conversations. Operator01:06:16Hopefully, that helps. Thank you. I'd now like to turn the call back over to Scott Wagner for closing remarks. Speaker 201:06:24Yes. Thanks everybody for joining. Appreciate the questions and thanks for joining us today too. I think maybe to wrap a little bit, I hope what people are seeing and hearing is progress seeing the visible progress against things that we started talking about April May that we said we were going to do around bringing not just balance to the network, but partnerships to retail, thinking about ways to take this benefit and build it out over time, which is integrated savings. And we were talking about those things last year. Speaker 201:07:04And they don't they needed time to bake into our financial results. And I'm encouraged by the fact that now you're seeing the visible signs of progress that's a return to growth, not just on the top line, but obviously nice incremental scaling profitably to the bottom line. So it's great to see those two things reflected. And now going forward through 2024, what we're doing with our own teams and what you'll get to see alongside of us Speaker 1201:07:37is the Speaker 201:07:37work to continue to scale each of those efforts and we'll share that progress with everybody as we go throughout the year. Thanks for joining. Operator01:07:48This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by