Q3 2020 Goodrx Holdings Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the good.
<unk> third quarter 2020 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 The Toro Vice President of Investor Relations Ms. Notaro, you may begin.
Thank you operator, good morning, everyone and welcome to go direct group earnings Conference call for the third quarter of 2020, our first call as a public company.
Joining me today are Doug Hirsch and Trevor beds back our co founder and co Chief Executive officers and Carson Gorman, our Chief Financial Officer before we begin I'd like.
Our mind, 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 statements regarding managements plan strategies goals and objectives, our market opportunity our anticipated financial performance unexpected.
True impact of Cove at 19 on our business.
These statements are neither promises or guarantees, but involve known and unknown risks uncertainties and other important factors that 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 statement.
Doctors discussed in the risk factor section of our quarterly report on form 10-Q for the quarter ended September Thirtyth 2020, and our final IPO prospectus filed with the FTC on September 24th 2020, and our other filings with the Securities and Exchange Commission.
Good cause actual results to differ materially from those indicated by the forward looking statements made on this call.
Any such forward looking statements represent managements 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 may.
Also reference certain non-GAAP metric, which are reconciled to the nearest GAAP metric and accompany shareholder letter, which can be found on the overview page of our Investor Relations website at investors docket Rx Dot com.
I'd also like to remind everyone that a replay of this call will become available there shortly as well with that I'd like to turn.
And now over to Doug.
Thank you Whitney and thank you everyone for joining us. This morning, I Hope you and your families are safe and well.
We are pleased to report our first quarter results as a public company I want to thank our new shareholders for their confidence in our company and our covering analysts for performing such thoughtful and thorough research.
And also like to thank the amazing could Rx team for all their hard work and especially throughout our recent IPO.
As this is our first earnings call I want to spend a few minutes emphasizing what drives us to build America's best consumer health care platform.
I will then turn the call over to Trevor who will address key highlights from the quarter and trends in our business then.
Carsten will discuss our financial results and guidance.
Good or ex helps Americans get the health care they need at a price they can afford Trevor and I started good or access to provide affordable and accessible health care information and guidance to demystify, an incredibly complex industry and perhaps most importantly to simply help people who have nowhere else to turn.
For too many health care in the U.S. as expensive complicated and confusing every year Americans pay more out of pocket costs and face new insurance hurdles and restrictions too many families are uninsured or underinsured, forcing them to make painful sacrifices justice stay healthy.
Lack of affordability in health care is a key reason why Americans don't get the.
They need which causes massive negative impacts across our entire nation.
We believe good Rx can solve these problems, we can provide a better way for people to understand access and afford quality health care. This is what drives us every day.
We're on the heels of a presidential election, where health care policy became the single most important issue.
Carrying our nation.
Much of our economy remains on hold because of the COVID-19 pandemic, while our medical professionals work heroically to provide care. The world is relying on our health care industry to provide accessible vaccines and treatments to protect lives and the global economy.
I am proud to be joined by growing team of talented passionate colleagues, who are focused on providing assist.
Listen to American through this pandemic unemployment changes to insurance and federal and state laws.
We've come a long way in the decade since Trevor and I started good or X. I'm proud to report that we have reached a number of major milestones in the last few months.
We reached $25 billion in cumulative consumer savings.
We.
We extended Hey, Dr., our Tele health service to offer online medical professional visits for over 150 conditions in all 50 states at a price as often less than a typical insurance co pay.
We introduced affordable home delivery for hundreds of prescriptions.
We launched our EPS helps our philanthropic initiative to provide free medications at more than 20.
Next across America.
There's still so much that needs to be done to fix America's broken healthcare system. We believe that the pandemic has accelerated long needed changes to the way Americans find and receive health care.
Millions of Americans have embraced tele medicine home delivery millions more are turning to the internet to learn about their care and their choices available to them.
Across the healthcare ecosystem long hidden information is flowing more freely and patients are being empowered to own their health care journey.
Survivors are learning the treatments of prescriptions don't work in patients can't afford them. The old model is broken and Americans are ready to embrace a new better way to stay healthy.
We intend to run toward this opportunity we will continue.
To invest our strong cash flow and our platform product user experience and brand with the goal of creating the best consumer experience and major improvements to healthier affordability and access for all Americans.
We are building much more than a company. We are building the leading consumer focused digital health care platform in the United States.
Our impact will ultimately be measured by the lives.
Positively impact and the care, we provide we have never been more motivated.
And with that I'll turn it over to Trevor.
Thank you Doug consistent with our historical performance, we continued to deliver strong profitable growth at a very fast pace in the third quarter, we delivered record monthly active consumers in our prescription offering.
We record revenue and adjusted EBITDA and strong growth in our subscription manufacturer solution and tele health offerings tone.
Total revenue for the quarter grew 38% year over year to $140.5 million.
Prescription transactions revenue grew 30% year over year to $124.4 million.
Driven by 29% year over year growth in our monthly out to consumers.
Other revenue grew 170% year over year to $16.1 million, reflecting strong growth in our subscription manufacturer solution and tele health offering.
And we delivered adjusted EBITDA of $53.2 million, representing an adjusted EBITDA margin.
Margin of 37.8% and year over year growth of 23%.
Consumer facing markets are being rapidly transformed by technology, driving greater transparency and convenience and creating a clear connection between value and cost.
The healthcare market is no exception, good or excellent the forefront pioneering health care's transformation our approach.
Which is always been consumer first and we've created the trusted brand to guide individuals throughout their health care journey.
We're only just beginning our efforts to become the first stop on any health care journey, our expanding suite of offerings deep brand building investment and differentiated content is accelerating consumers understanding of how we help.
We will.
Continue to increase our engagement with health care providers, particularly around affordability adherence and access solutions.
We aim to accelerate this trajectory launching new services and augmenting existing products as we continue to grow our business and expand into new categories.
We're focused on providing value our consumers and are fortunate to have a platform that positively impacts.
It's both consumers and key stakeholders in the healthcare ecosystem we.
We deliver value to consumers through our mobile first offerings and make access to health care simple and more affordable we help people filled prescriptions. They may otherwise not have filled we provide telehealth visits that allow access when care may have been avoided due to cost long wait times are coded concern we drive greater.
Peter medication adherence faster treatment and better patient outcomes, all of which create a healthier happier population.
We deliver value to healthcare professionals by providing information and strategies for their patients financial burdens of prescriptions or treatments, we improved patient outcomes by increasing medication adherence.
We deliver value to pharmacy benefit managers pharma.
Pharmacies, and pharmaceutical manufacturers by helping them reach more consumers, who seek their services and products.
We operate in a massive industry with a combined total addressable market of over $800 billion. The annual prescription market in the us alone, including prescriptions left at the counter is estimated to exceed $500 billion the telehealth.
The opportunity is estimated at $250 million and our manufacturers solutions business has the potential annual addressable market of over $30 billion.
In the third quarter, our team continued to deliver value to our consumers and strengthen our relationships with stakeholders and ecosystem, increasing our penetration in these large markets.
During the call.
We helped a record 4.9 million monthly active consumers save money on their prescriptions through our prescriptions offering, allowing consumers to save money on their medications by simply presenting good or actually one of the 70000 pharmacies were good Rx is accepted.
We continue to have strong relationships with our pharmacy in PBM partners and have recently launched traditional PBM on our platform.
Quarter, we continue to focus on user experience to ensure we can provide consumers with prices savings and information through a simple easy to use and convenient digital interface.
Our proprietary platform now aggregates over $200 billion prescription prices from a variety of different health care sources everyday with good direct consumers can efficiently inconveniently searched.
Medication choose from illicit prices, a very strong suit near them and save money on the prescription medication.
Our relationships with consumers and pharmacy have continued to strengthen and repeat activity exceeded 80%.
The good Rx network strengthens with every transaction, our leading platform and trusted brand allows us to reach more consumers. This increase.
Greece volume driving improved pricing and consumer saving strengthening engagement and expanding unit economics. This allows us to continue to expand our platform and enhance our products, creating a hard to replicate virtuous cycle and a deep competitive mode.
Our prescription offering continues to deliver solid growth with strong revenue and consistent unit economics.
Every time, a consumer use is good our access to save money from the first prescription filled a subsequent refills, we earn a fee from our partners, creating alignment between the value, we deliver to consumers and the lifetime value they generate for.
Our prescription offering has demonstrated resilience during this challenging time as the COVID-19 pandemic continues to impact the economy we.
We believe our prescription.
Offering continues to be impacted by the pandemic as many consumers continue to cancel or defer non urgent physician visits. However, we've seen a significant quarter over quarter increase in our descriptions offering and a number of our monthly active consumers as people begin to resume typical healthcare purchases.
The continued incredibly fast growth of our prescription offering demonstrates our value.
And proposition and a large market in which we operate as we already mentioned, we're working closely with our pharmacy partners on additional programs to drive value for both them and the consumers one highlighted our flu vaccine program, where we're working with retailers to drive additional flu vaccine participation as well as consumer savings we've grown our program from two pharmacies in 29.
18 to eight pharmacy chains with here it will likely be a big year for flu vaccination of the pharmacy and we're happy to help facilitate and look forward to expanding the program in the future.
Our subscription offerings had a successful quarter as well.
We closed a multiyear extension of our relationship as the exclusive prescription savings programs Kroger the largest grocery chain in the.
Yes.
The Kroger Rx savings club powered by cataract offers access to lower prescription prices at Kroger pharmacies.
To date the program has provided hundreds of thousands of customers with exclusive access to discount on commonly prescribed generic medication.
We are very excited to continue its fruitful relationship with Kroger and plan to invest more in marketing and this.
Product with this extension.
We continued to enhance the user experience of Garik coal up good Rx program, where subscribers pay a monthly fee tax at even lower prices at participating pharmacies.
Gold offers over 1000 prescription medication that are available for under $10 with savings of up to 90% of standard lift prices we've.
Been focused on better integrating this program into our platform and optimizing acquisition and conversion, which resulted in accelerating new subscriber momentum.
As the pandemic has made it more challenging for Americans to visit retail pharmacies, we launched prescription mailers services for gold, enabling Americans to receive medications by mail and just days today, we offer more than 300, calling Mick.
Medications by mail for less than $10, which improves access saves patients' money and offers needed convenience when leaving home is not an option.
We also added mail order services to Hey, Dr., our low cost online Telehealth service. In addition, dr. expanded to provide care for Americans in all 50 States and grew the number of conditions retreat.
The combination of convenient online provider for that and our new Mail order service gives Americans access to medical professionals and medication all through an integrated online experience at a time when they need it. Most finally, we increased our focus on providing assistance to reduce the cost of brand prescriptions for America, we launched more than 30 integrated programs.
With manufacturers as we continued to grow our manufacturer solutions offering. We also launched care portals for several brands. This new functionality provides additional ways to help patients find both savings and resources to help manage their condition.
Overall, we are very pleased with our results for the third quarter the growth of our offerings and the continued progress.
We are making with our various products and services, we see exciting growth potential as we continue to attract new consumers through our existing offerings and launched new services to improve healthcare affordability and access for all Americans.
As we extend our platform, we're helping more people at different stages of the consumer healthcare journey delivering more value to our consumers.
And generating higher consumer lifetime value and with that I'll turn it over to Carsten.
Thank you Trevor good morning to everyone and thank you for joining us today.
Our third quarter results highlight the unique combination of scale growth and profitability. Our business provides strong unit economics for the large marketing in which we operate.
Yes, and our ability to execute and generate strong cash flow.
Total revenue for the quarter was $140.5 million growing 30% year over year, driven by continued growth in their prescriptions offering as well as our newer offerings Chris.
Prescription transactions revenue grew 30% year over year.
Year to $124.4 million, driven by a 29% year over year increase in our monthly active consumers.
As a reminder, monthly active consumers represent the number of unique consumers, who use good or acts to save on their prescription them given months and it does not include consumers of our other offerings one.
Thats it for a quarter monthly active consumers represent the average of the calendar month in the quarter.
Other revenue grew 170% year over year to $16.1 million with strong growth on all of our other offerings subscriptions manufacturer solutions and Tele health.
This reflects our ability to deliver.
Our value to consumers at various points in their health care journey as well as our ability to create multiple entry points into our growing platform.
Cost of revenue was $7.5 million or 5.4% of revenue compared to $3.4 million and 3.3% of revenue in threeq to 19.
This.
This increase was driven by provider costs related to our tele health offerings, driven by an increase in the number of online provider visits and an increase in outsourced in house personnel related consumer support expenses to support our growth.
We continued to deliver strong gross margins at the mid Ninetys levels.
Product development and technology expenses were $15.8 million compared to $7.8 million in the comparable period last year.
This increase was primarily due to continued investment in the team and product as well as an increase in stock based compensation, including awards made in connection with our IPO X.
Stock based compensation and various items related to acquisitions adjusted product development and technology expenses, 8.9% of revenue compared to 7.1% of revenue in Threeq you 19.
As Doug said, we plan to continue to invest in our products and platform with the goal of creating the best consumer experience.
France, continuing to scale, our existing offerings and developing new offerings to help more consumers in different stages of their health care journey, delivering more value to them and increasing the lifetime value regenerate.
Sales and marketing expenses were $65.1 million compared to $45.0 million in threeq.
Please you 19, we.
We increased advertising spend by $13.3 million year over year and continued to build a strong team, including hiring our first chief brand officer, all with the goal of increasing our consumer base in building. The good Rx brands, which we believe will yield positive returns for us long term.
Adjusted sales and marketing expense as a percent of revenue was stable year over year, making up 43.3% of our revenue in Threeq, you 20 compared to 43.9% last year.
After reducing advertising spend in certain channels in the second quarter of 2020 due to the impact of COVID-19.
As many consumers avoided visiting healthcare professionals and pharmacies in person, we increased our advertising spend in the third quarter as more consumers resumed their interaction with the health care system.
We will continue to evaluate the impact of COVID-19 on our business and actively manage our consumer acquisition spending according to Mark.
Market conditions.
General and administrative expenses were $108.5 million compared to $4.1 million in the third quarter of 2019.
An action with the IPO, which I'll provide more detail on shortly in the context of guidance.
Excluding stock based compensation and other items adjusted DNA as a percent of revenue is 4.6% compared to 3.2% in Threeq you 19, with the incremental cost primarily related to our IPO.
An associated with starting to operate as a public company at the end of September.
We incurred a net loss of $50.0 million in the third quarter again. This was due primarily to stock based compensation of $106.8 million in the quarter $98.1 million of which related to the co CEO ground.
Grants made at the time of the IPO.
Adjusted net income was $35.6 million compared to $23.2 million in Threeq you 19.
Adjusted EBITDA grew 23% year over year to $53.2 million adjusted EBITDA margin continued to be strong at 37.
<unk>, 0.8%, reflecting our ability to deliver profitable growth due to compelling unit economics of our business and repeat activity on our platform.
Our adjusted EBITDA margin decreased approximately 460 basis points year over year due to the growth of our Tele health business and continued investments in product development.
Settlement and technology as well as entered general and administrative infrastructure all of which I have discussed.
On a quarter over quarter basis, our adjusted EBITDA margin decreased 220 basis points, primarily due to an increase in advertising spend which we pulled back in the second quarter due to coal.
Revenue as I previously mentioned.
We continue to generate strong cash flow with net cash from operating activities of $32.7 million for the quarter.
On the capital investment from our main investments related to the nonrecurring onetime build of our new headquarters in Santa Monica was approximately 13 million.
Dollars spent today net of tenant improvement reimbursements.
And additional investments in our platform and product, we expect to substantially complete construction of our new headquarters by the end of this year.
We ended the quarter with $1.1 billion of cash and cash equivalents after netting approximately $1 billion from our IPO.
In private placement in September.
I'll now turn to guidance.
As we begin our journey as a public company, we want to ensure that we provide clarity and transparency to our shareholders, while maintaining our long term focus as well as our ability to make the right investments to maximize value for our consumers the company.
And our shareholders.
To balance these priorities will be providing guidance on total revenue and adjusted EBITDA margin.
We are committed to being transparent about both her performance as well as our investments in the years to come so shareholders are informed and understand our operating decisions.
For the fourth quarter, we expect.
Revenue of approximately $148 million, reflecting 31% year over year growth.
This would translate to full year total revenue of approximately $545 million representing year over year growth of 40%.
Well, we won't be providing guidance for monthly active consumers regularly we.
We did want to provide or short term expectations on this call since our business is still impacted by COVID-19, and because this is such an important driver of our prescription offering.
For that reason, we expect our quarter over quarter growth of monthly active consumers to be approximately between four and 5% for the fourth quarter.
Remember that consumers of our other nonprescription transactions offerings like for example, our high growth subscriptions offering which delivers two times the contribution do not contribute to our monthly active consumer Shaker.
Final note on revenue, while we won't be providing guidance for each revenue line item, but just.
Total revenue, we expect the other revenue line to continue to gradually make up a higher percentage of our revenue.
Looking at stock based compensation, we expect stock based compensation related to the co CEO grants, we made in connection with the IPO to be approximately $275 million in the fourth quarter.
Compared to $98 million in the third quarter. This will bring total expense recognized for this grant to $273 million out of the total expense of $533 million.
The performance based portion of this grant will be fully recognized by the end of the year as the price triggered criteria for vesting I've been Matt.
For the remaining $160 million is time based and will be recognized over the following 15 quarters on a graded vesting basis with the expense moderately front loaded.
We plan to provide quarterly updates related to the grant until they're fully expense or become material.
Turning to adjusted EBITDA margin.
We expected to be between 30, and 31% for the fourth quarter translating to a full year adjusted EBITDA margin of approximately 36.5% Weve.
We plan to make significant marketing investments in the fourth quarter to continue to grow our brand.
This coupled with a shift in the timing of certain marketing investments.
From the third quarter as a primary driver of the lower adjusted EBITDA margin in the fourth quarter compared to our year to date margin.
Doug said, we are building the leading consumer focused digital health care platform in the country and plan to invest our strong cash flows in our platform product user experience and our.
Brand with the goal of creating the best consumer experience and improve healthcare affordability and access for all Americans. This.
This is a scale platform with a rare combination of high growth and profitability, we benefit from a strong brand first mover advantage and a decade of experience and relationships that benefit all key.
Stakeholders and our ecosystem.
And we believe we have only just begun to scratch the surface of a massive market opportunity.
We are pleased with our third quarter results and we're excited about our future. Thank you for joining us on our mission to help Americans get the health care they need at a price they can afford.
We look forward to sharing our profit.
Our breast in the quarters to come.
And with that I'll now turn the call over to the operator for questions.
Thank you, ladies and gentlemen to ask a question you will need to press star one on your telephone we ask that you. Please limit yourself to one question and one follow up question to withdraw your question press the pound key please standby.
While we compile the Q and a roster.
Our first question comes from Ricky Goldwasser with Morgan Stanley. Please go ahead.
Hi, good morning, and congratulations on your first quarter is a public company.
And when we took it down the performance I mean, clearly must see.
Active consumer awareness is now at Boston pathetic levels than you're seeing momentum in subscriber and subscription growth it's picking up.
But to your point is if we think about that metric.
Scarves are not included in the member and in New York.
In your ability to negotiate and scale can you maybe help quantify for us the subscription growth.
What would what would be the gross monthly active consumer metrics look like if we normalize for for the edge of the subscription side.
Good morning Vicki.
Thank you very much for the question let.
Let me, let me have carsten speak to this.
Customer.
Hey, Ricky great to speak with you again.
Ricky we're very excited about our subscription plan.
Our natural expenses are successful prescriptions offerings and they allow us to deliver more.
Savings and value to our consumers.
We'll increasingly LTV as evidenced by their to EPS year, one country.
And big allow us to create or really hate relationships with the consumers throughout their health care journey.
We're not disclosing specific subscriber counts are mixed by plan meeting goals.
This is kroger on ongoing basis.
Got it and show that goes around it.
You need to show.
Hi, positive growth and great momentum.
We've integrated the gold experience onto our platform and added additional features like mail order as well mailer.
Mail order is added during the third quarter specifically.
We also agreed to a multi year renewal with Kroger, which means we'll make more marketing and product investments going forward.
We're really excited about those offerings I'm, the subscription side wins, but again, our disclosing specific specific numbers on them.
Understood. So when you think about this and you mail.
Well, they're offering and we think about the opportunity.
User base can.
Can you maybe give us some data on what percent of themes here is a chronic medication that over time could convert to mail solutions.
Sure.
Thank you again for that question also card Carson.
Is there.
Do you want to answer that in regards to the nail hurricane specifically.
I think well I think the more general question first of all it is chronic versus acute yeah.
And.
I think in general like like the industry, we skew towards towards a chronic as you'd expect with respect the intersection of chronic and mail order more broadly.
I think that as.
As evidenced by some of the analyst reports of people that have even come out over the last few days.
They'll order continues.
To not be the dominant mode for for our users to get subscriptions and I think Trevor will likely want to address mail order and a little more detail.
Yes, what I would say on on mail is in.
In the U.S.
Mailer penetration is pretty low the.
Cove. It I think is more of an accelerated.
I'd imagine it would be more of accelerator for that than almost anything else and yet you know you look at the this year and it's it hasn't changed mail penetration much for us.
Hi, good or ex and what we're trying to provide.
Me too.
You know to consumers you know, we just want to meet consumers, where they are you know we want to provide consumers.
You know that the what they're looking for and so we want to work with our partners you know like the the retail pharmacies and mail.
And those retail pharmacy by mail and other partners. So that you know where consumers want to use mail and where it's the the appropriate solution, they're able to get it.
Thank you. Our next question will come from Heath, Terry with Goldman Sachs. Please go ahead.
Great. Thank you.
I was wondering if you could give us a little bit of a sense around around the progress with the pay docked at haydock as well as as wide as well as the marketplace itself realize things are still very early stage, but if you could.
Maybe just aggregate for us a little bit the.
The growth that you're seeing in that the two.
Parts of your television medicine platform that would be that would be really helpful. And then as we.
As we look at this quarter and beyond especially as we see cases rising how much of a how much of a factor do you continue to see sort of delay.
Allayed medical visits are delayed.
Procedures.
Being taken at having on overall prescription and particularly the generic prescriptions that are that are such a big part of your business, having an impact on on that and in this most recent quarter as well as the quarter that we're in now.
Thanks.
Thank you very much for the question.
You know.
I'll be glad to answer sort of about the talk about the Markwest and then about Cove. It impact the you know when we when we look at a.
Tell how you know this is continuing to be a great area of.
But you know, we're seeing positive momentum with a doctor on month over month basis on a quarter over quarter basis, we've really done a lot of expansion. We increased the number of conditions treated 25, you know and we've expanded the offering to all 50 States and then as we mentioned we've added mail order options and we've also increased the cross sell numbers.
From Telo out to our prescription offerings when we look at.
Tell how we are we see it both as an additional way for us to acquire customers into the broad set of services, we offer as well as being sort of a part of this additional expansion of our mission to provide.
Grow affordable can be in health care across all of healthcare.
We continue to make product investments and Tom I'll make just like a great user experience for consumers, we want to enable Americans have access to affordable doctor visits to get pregnant occasion, and I have that all be complete integrated experience.
And you know it allows us.
Billy to be where the consumer at sort of a broad set of points in their health care journey.
To the marketplace, we launched the marketplace in late March for providers and we added labs in April this was something that had been on our product roadmap, but then because of Cove. It you know we accelerated this development.
Element of it wanted to make sure consumers had options when it came to getting the care they need it.
In the third quarter, we continued to add additional partners and grow our marketplace. Although this is still in an early stage. This is this is the are part of our broad effort to.
Access and get.
I take rate on a broader set of health care like we do you know around the prescriptions area. So this marketplace gives me a good rx consumers much broader provider choice and conditions and covered by Hey, Dr. And it addresses area is not addressed by Ah Hey, Doctor. So we plan to keep adding services, adding providers to remark.
Waste and if.
Producing some new ways to monetize those large consumer base like sponsored listening in on the partnerships. So so again like tell I'll just another entry point into the broader set of.
Of.
Our our offerings so I.
I'd.
I'd like to also speak about the impact of Cove. It a.
But more generally like like we said you know.
Well, what we have seen is consumers you know.
Have certainly.
Cobot, certainly caused customers to not visit doctors and pharmacies as much as normal.
You know the pharmacy space I believe that impacted less than almost any other industry and are 80%.
You know and so I'd say that factor as well as our 80% plus repeat activity rate has made us continue growing at a really good really.
Really good rate even gearing Kobe.
Yeah, and covert it accelerated a number of trends sort of that we predicted answer and sort of fit into this this roadmap we've had around sort of where the.
Where where the industry and were sort of consumers getting health care is going you know, but what I would say as well as the impact of.
They hold bid hopefully decreases at some point in the future. There is upside there you know.
But.
We are not making sort of real assumptions any any real assumptions here that that happens any anytime soon and we're assuming sort of status quo, but.
But you know hopefully hopefully for the for the country. That's it's it's a.
The betterment.
Great. Thank you very much [laughter]. Thank you. Thank.
Thank you. Our next question will come from Doug Anmuth with JP Morgan. Please go ahead.
Great. Thanks for taking the questions.
You're two years into your Kroger partnership and you talked about recently extending the contract for multiple years.
Years, just talk about the potential to work with other large retail pharmacies on a subscription basis and then.
Just on sales and marketing you know it ramped up pretty aggressively and in 19, and then an early 20 and.
Then kind of slowing some with cobot.
Just curious how you're thinking about that.
Going forward I know, it's it's early obviously to talk about next year, but assuming that we're in a somewhat better place just how you're thinking about that thanks.
Great.
Thank you Doug pretty much for the question.
For your first question.
What I would you know weve really.
And enjoyed working with Kroger you know that.
I believe it has been a very successful program for for both us and them and you know we are excited for it to continue growing credit for.
Our continued and extended partnership there.
Hi.
We.
Want to work with.
All of our you know the retail pharmacies on different programs to help them. So one day, we want to highlight is our flu vaccine program. So in the flu vaccine program. This is where we are going working with.
Pharmacies to help expand availability and help consumers get good you know.
Access access to two good pricing on flu vaccination, you know Thats a program we've expanded from two pharmacies in 2019 to aid pharmacies.
This year and you know just to meet.
This.
Increased demand for flu vaccines in the current environment and what I'd say is that's an example of where we want to find the right programs for each of our partners to help drive what's important for them you know and highlight what's what's really special and good about each of these partners to to consumers. So.
We want to meet you know work to find the right program.
Programs for freeze partner on the sales and marketing.
Spend and how we forecast that.
In this maybe.
Maybe in this year and in.
The future years, what what I would say.
Hey, there is you know well I personally be highlight where we are currently on sales marketing, which as you know this has been a.
Sort of.
Complex year for marketing spend you know like the media environment has changed significantly in the.
In this period and I want to sort of compliment our marketing team that we have been able to spend into this period and do well.
With great performance, even in an environment, where it's.
Where where a lot of things are changing so as we look though at Q. You know Q4, we you know we plan to make sure.
Yes, again marketing investments in the fourth quarter and beyond to continue to grow our brand and we also anticipate theres some seasonal customer acquisition opportunities that often occur at startup plan years. So we will continue continued spending continue making investing in marketing.
Q4, and beyond and I'd say.
Just.
Maybe lastly, we really plan to continue to build our brand increase awareness enhance our offerings.
We have been able to drive this really strong long term profitable growth and we are very focused on driving that long term growth increasing our penetration in these sort of multi hundred billion dollar markets, a prescription tele health Manny.
In fact solutions work, we're scratching the surface of the opportunity. So we're definitely leaning into all these opportunities.
And sorry last question.
The.
On on that marketing spend the other thing I'd guess I'd highlight as you know.
Even in that that challenging farm even increased.
Increased spend you know, we've really been able to keep marketing.
Sort of our acquisition costs below an eight month payback, even an increase in spend levels.
And thank you for the question.
Thank you.
Thank you. Our next question will come from Ross Sandler with Barclays. Please go ahead.
Hey, guys.
Congrats on the first quarter out of the gate.
I guess a question on the total addressable market. So we heard a lot of questions around this since the IPO process kicked off and just wanted to kind of hear your guys take on Tam.
You know at the high end, you've got 5 billion us generic scripts flowing through retail pharma.
Pharmacies.
At the low end, you've got 300 million or so.
Cash pay annual scripts, so that's a pretty wide range, how do you guys think about.
The Tam for your core scripts business. Thanks.
Yeah. Thank.
Thank you. Thank you Ross for the question appreciate.
Appreciate it you know when we look at our users.
Most of our users have and insurance you know so 75%.
Our user base today.
Has.
That has had some normal insurance and a significant portion of those are on Medicaid, which is often the best insurance someone's going to get so generally what I'd say is that we.
I don't actually think cash pay is.
Kind of a relative.
Relevant segment.
That when we look.
Broadly these are.
This is all Americans that were that were serving.
I think that when we've even looked at the market.
You know just since we began I think.
Looking back.
Back.
Health plans have only become more complex, we only now have more three care plan for it to your plan.
And the reality of you Kwon Leland Thats narrow network utilization management.
Like prior authorization, all of which makes access to prescription challenging.
People and so within prescriptions you know there is a large opportunity and.
That $5 billion 5 billion scripts is much more the set the set of services. We offer I mean, you look at some of the some of this also of where we're helping you know and it's really the broad set.
Subscription, where where we can help in addition, you know we're very focused on the broader health care market, how do we help Americans get access to convenient affordable health.
Healthcare broadly, which which is really the need that that Americans have and so I yeah.
I hope that answers answers the question and.
Thank you. Our next question will come from Justin Post with Bank of America. Please go ahead.
Great. Thank you just wanted to ask you as we just coming off of the election and people are kind of learning the company what health care policies are.
You focused on on a federal level and do you would you pursue foresee any changes under a biden administration, we should be thinking about thank you.
Thank you Justin Doug could you speak to that.
Sure I'd be happy to one of the nice things is.
About a good or excellent history, we've had as we've been here for about a day.
Are you Kate and I can recall you know back in 2010, when we first got started it was prior to the C.A. Obama care and you know at the time there was a lot of feedback that there would be significant changes that it would make health care. So much more easy for Americans access you know it and obviously our company has has a existed long thrilled omnicare and to be honest, what weve seen consist.
Distantly over the course of the last decade is.
You know, despite whatever administration or whatever sort of executive orders floating around at the moment. The reality is is that the Bergen Americans just continues to increase right. Ah you know there's been so many policies and somebody attempts and yet I feel like it's often lost in the shuffle is just you know there are just so many gaps in health care policies and whats.
What has been done to date and we're we're very focused ultimately just helping the consumer and really driving.
As you know solutions for them and you know weve anyone any politicians, who engage with us is fantastic and helps consumers, but we're going to be there no matter what to fill in those gaps and make sure I think consumers get the care they need at a price they can afford.
And I'll just add that with you know.
A new administration, we don't anticipate any legislative concerns. The business. You know we were really fundamentally aligned with the political objectives of driving affordability and access to health care for Americans and so we don't foresee.
Any any issue.
Got it and then maybe one follow up yes, because vaccines fill important next year, but how would you expect you know people being outdoors more and just normalization of activity in stores and pharmacies, how would that affect your business next year, how would you.
About that.
Yeah. The when we look at this I mean, this is sort of the what I what I spoke to previously on the consumer you know on the impact of Cove it be.
There is an impact to consumers you know current yeah. Both earlier this year.
Pick up now on going to their physicians getting prescriptions.
At the very beginning of carve. It you know we saw people really not going to their physicians now people are going to citizens, but theyre not going.
To to physicians for sort of non urgent care and that does have an impact.
You know obviously, we're still growing at a very fast rate, even even through that that said. It is good there is upside if that you know if that.
Amount of going out or you know if people going after the clean if any of these things have how.
How positive it back you know this is all all better for four.
Well just the economy in general our business, but you know we've kind of modeled and so you know I can my car speakers, but you know there is a cost.
First maybe you want to speak to the current quarter Sox work there.
Yeah. Appreciate the question, so as we contemplate or from a modeling perspective more.
Finally, we model in a gradual recovery, we've seen some of that happen already some from from Twoq into Threeq, two and benefited from that so if there's a significant lock down that could impact us, but we also having a presence I assume that the V shape incredibly steep recovery.
Likely if that's helpful.
Great. Thank you.
Thank you. Our next question will come from Nick Jones with Citi Group. Please go ahead.
Great. Thanks for taking the questions can you touch on the manufacturer solutions, you mentioned 30, plus new partnerships. You know can you talk about I guess, you know how they viewed together.
Rx channel.
As an advertising channel and then maybe talk about the rate of consumers searching for branded drugs that are maybe looking for generics and just don't know it or actually looking to try to get a discount on the branded drug. Thank you.
Thank you very much Nick for the question.
You know we continue.
Q2 increase our focus on providing assistance to reduce the cost of brand prescriptions for Americans you know, we want to serve consumers as they try to save across all of health care, you know, which includes prescriptions, which.
Which includes all of the different.
Different types of prescriptions that a consumer can get.
I mean, you know Q3, we really continue to build out that team focused on that area and and as you as a as we spoke to and he's mentioned, we rolled out more than 30 integrated programs with approximately 20 manufacturers and we've also launched the <unk>.
Several of these new carrier portals.
For some additional.
A new piece of functionality, which has driven this sort of really strong year over year revenue growth you know along with helping consumers. This is also one of our sort of highest margin offerings. These are really high intent consumers all research.
King for brand drugs in our platform.
20% of our 15 million plus monthly visitors are looking for savings on brand drugs.
And that's really not changed as sort of a portion of the user base looking for brands first generics you know it really has the scale.
Relative to the two that overall growth I'm you know when we're able to help consumers save on these brand medications and to you know to what you're asking on that on how they perceive. It you know we're delivering are a lot of value to these pharmaceutical manufacturers by helping them reach these sort of purchased ready consumers at the right time and this what's.
Also good about I think this line of business is you know there's no incremental cost of acquisition to US you know these are searches on our platform that are already there. These are you know these are users were just trying to use good rx to help them find affordable convenient health care.
And these are you know.
Now we're.
To sort of just make that user experience better for them and also.
Enable.
You know and able to grow from this area. We do have a lot of additional inventory I guess, you know I'd call. It art left across our platform to to sell so lot of.
Yes.
Well huge room for expansion here and while we're not breaking out. This you know the other revenue engine components of the year over year growth was in line. What we provided originally and you know we expect this area to keep being a great area moving forward.
Great. Thank you.
Thank you very much our next question.
Come from Jay Lynn just staying with credit Suisse. Please go ahead.
Thanks, and good morning, everyone. Congrats on your first quarter as a public company.
First question regarding the sequential increase all around 477000 monthly active consume what you saw in the quarter compared with decline in second quarter of around 455.
Most of them can you talk about like how many of these monthly to consumers you game sequentially code core to what part of that cohort, which you lost into Q what to tell me, how many accompanied new users any color around that.
Thank you. Thank you very much for the question cars.
And we do expect with.
Sure thing and thanks for the question to lender agreed to talk to you again.
We're happy with the increase in maximum factor consumers, which hit an all time high of 4.9 million and in Threeq you 20.
And with the overall growth of our of our offering.
Max increased in the third quarter as activity in the prescription market, primarily improved as consumers start to go back to their doctors.
And on a year over year basis, Max grew significantly up 29% and of course, that's a comparison to a non cobrand quarter I think your question.
Just as more specifically related to Q over Q growth worrisome macros grow 11%.
We generally haven't gotten specifically into retention flash attrition, but as you can imagine given the reopening of the economy, we believe that a significant number of.
Shneur users with the reopening.
With the reopening.
Our new users, but we're confident as well that a certain number of them may have been folks who delayed or otherwise elected not to see either their health care providers or go to pharmacies during <unk>.
End of the cold period into Q.
Trust that's helpful and Andy I appreciate the question.
And then a quick follow up I know you guys just announced this partnership with no your meds.
Can you talk about how that integration will work how many consumers that integration provide you bid and what is.
Elected in your guidance with respect to that partnership with no your meds.
Sure you know this is just one of many partnerships. We have an ecosystem you know we have a goal of reaching more consumers you know at a at a time at that but any time, where there are sort of accessing different health care.
Our solution to help them save on prescriptions.
Medications. So you know we really just look at a cross opportunity as we really look where can we increase our reach through scaling existing marketing channels, creating new marketing channels partnering with affiliates in the ecosystem you know and so we are broadly looking around around it.
At opportunities of that nature, and hope each of them provide some incremental value and and and so almost more importantly provide it just you know I really good consumer experience people, where they're able to you.
You know really access the information they need when when when they need it you know across health care journey.
Journey.
Hi, Thanks.
Thank you. Our next question will come from Mark Mahaney with RBC. Please go ahead.
Thanks, I want to ask about the manufacturer solutions. She talked about launching 30, plus new partnerships any more color on those how many total partnerships do you have now.
Is there something I'm in the process. That's allowed you to launch these new partnerships more quickly than you than they were in the past is there reason to think that these new partnerships could be more material than the ones youve than new ones you've had to date. Thanks a lot.
Sure.
Thank you Mark very much for the question.
We see general growth in that.
Eric you know, we're in a situation where on.
On the manufacturer solutions, where we're not just getting the benefit of the you know the growth of our overall platform. There's a huge amount of growth here just because this is an area where we have a huge number of users you know 20% of our 15 million plus sort of monthly visitors are coming to look for.
For savings on these brand drugs and we have not really monetize you know.
This this much in the past I mean, we've really monetize like a really small portion. So we're really also just I'm sort of getting no now monetizing cross those existing set of people. So we've been adding these these studies.
A large reason for that is us building a strong team there we've really built an experienced team. We've we've grown that team. We you know we have been rolling out additional premium customized solutions, but mostly this is just not focused you know we hired.
Banzi nom de from Mckesson, who.
<unk> Chief business development, Chief strategy Officer, we invested in more technology here, we have premium solutions like patient navigator. So I wouldnt, we anticipate that continuing to grow quickly.
Quickly in the future just look at housing this past the past year last quarter.
Okay. Thank you.
Thank you very much.
Thank you. Our next question will come from Eric Sheridan with DBS. Please go ahead.
Thanks for taking the question, maybe if I could just zoom out per minute obviously.
Obviously, we're seeing a little bit of margin pressure over the shorter term would you deploy some of the investments you've talked about in the past to position the business long term could you just refresh us.
It was on what you see is some of the key investments you have to make over the next couple of quarters against your broader long term goals and how people should think about the trade off between growth and margin volatility in the coming quarters. Thanks, So much guys.
Thank you very much our yeah, let me have carsten speak to this take this question.
Yes, sure I'm always good to talk to you we plan to make significant marketing investments in the fourth quarter and also beyond of course to continue to grow our brand and an update anticipation.
The seasonal consumer acquisition opportunities that occur at the start of planning years.
The when we think of that.
Terms of increased investment.
The marketing is just one component, though we're also making increased investments in product and technology supported by a detailed product roadmap at the same time and those are really the key drivers of lower adjusted EBITDA margin for the fourth quarter compared to 2020 year to date.
Charge, one or two or three Q 20, Mars and specifically.
I think you also need to keep in mind that the fourth quarter will be our first full quarter operating as a public company and there are of course, new costs associated with that like an increase Dino auditor.
Auditor fees various other things that that have an impact on margin.
We expect to continue making these products and marketing investments and of course have a public company expenses going forward into next year or two.
With respect to all that the reason we're doing it of course is we have a huge tam. It's a good question came up earlier related to time and we talked about the fact that we feel like we're continue to be mass.
We are underpenetrated and met with a lot of room for expansion. So in terms of your growth versus spend tradeoff. We believe that we're going to continue to make efforts to penetrate more deeply into that Tam and as a relative market share leader. It's in our interest to make sure that we can grab as much of it as we as.
<unk>.
And what I want to add there as well.
Sorry, [laughter], but I'll give that we you know we're just scratching the surface like we are we are super focused on the capturing the larger opportunity of being the digital health platform for all of healthcare and you know we are going.
We deliver on this product vision that that we have.
To provide that so we're really focused on these.
On building, great product and building.
Billy Graham.
Thank you for calling.
Thank you. Our next question will come from Charles Rhyee with Cowen. Please go ahead.
Yeah, Hey.
Thanks for thanks for taking the question guys and congrats on on your first quarter here wanted to ask about the monthly active consumers.
And if there is any kind of color you can kinda give about you mentioned earlier that you are a golden Kroger members. You know are double the contribution to your revenues then your.
Then the typical prescriptions customers, but even within that group you know is there a cohort like what's sort of the average number of scripts someone's filling.
You know I don't know month during the quarter and does that skew to you know is there a subset or kind of heavy users versus you know people, who kinda occasionally use it.
[noise].
Thank you. Thank you very much color question.
Now, let me actually passes to Carson. So you can speak to it specifically.
Sure and thanks Charles.
There are a couple of things like any business, we have different users with different rates of utilization, but again going.
Back to the concept we discussed earlier.
As with most businesses in the base, we benefit from a reality of having number one a significant number of chronic medications that are uses or buying a majority in fact number two and over 80% repeat transaction or.
Right so.
Those things are critical and or what allows us to drive the unit economics. We've discussed earlier like the for example, eight month payback on marketing spend.
With respect to.
Subscriptions, specifically, we look to subscriptions to be a way of continue.
Turning to push incremental value for users. So the subscriptions offering well have a monthly fee associated offers even lower drug prices.
And despite that we've still as you mentioned been able to generate a two x. LTV in the first year off off that subscriptions business.
So hopeful.
Actually that's a that's relatively helpful. In terms of giving you a perspective on how our user base and its usage.
Applies in our case.
Yeah that was helpful. And you said there was a lot obviously they must pay back on marketing spend I guess when you. When you. When you think about marketing then are you.
Are you like targeting within the active consumers that spend directly to get people, who are more likely users to use more or or you really kind of focused on trying to attract always obviously you want to attract new users. But is is there sort of a division within how you kind of look at marketing.
Yes, you know I'd say, we do you know we have a pretty.
Sophisticated I believe marketing operation you know there are certain types of marketing that are really general in nature. So it's we're running television for example, you know that's general.
Finally going to get us sort of just at a.
Okay.
The wide set of all he started healthcare users and prescription users, whereas on the digital we may be able to focus as you said on people you know and on and on.
Particular products that are even more chronic nature. So so we do spend.
You know spend more or less on digital campaigns relative to the type of ER prescription.
Prescription use or we think they are but we try to just optimize out as best we can but you know a lot of the marketing to do.
He is more general in nature, and isn't sort of to a target in that fashion.
Great. Thank you.
Thank you very much.
Thank you. Our next question will come from Lloyd Walmsley with Deutsche Bank. Please go ahead.
Oh, Thanks, I've got a couple of first can you talk about any changes you're seeing in the competitive environment, you know any any competitors stepping up advertising or any impact from.
From new pharmacy discount cards that you're seeing and then secondly can you just talk about some of the other potential areas of healthcare you see yourself potentially at adding product around for price transparency over like the next five year period, leveraging the existing user base.
Any anything you can share there or.
It would be would be grateful.
Thank you. Thank you very much like.
On the competitive side Weve really spent a decade building.
Building the brand Thats a trusted consumer first we have 90 MPS four we have this platform is scalable central steep.
Deep network relationships integration, you know everything we've done.
Just build a deeper competitive competitive mode or for for US you know and what we've seen is you know we are we have not seen sort of any competitors that have a really impacted our.
Our our business in any way sort of historically or currently you know there are cases, where we're seeing sort of some increase increased advertising, but we don't.
From people in the state, but I feel like that's what we've sort of see Angela decades of you know people try to you know putting some type solutions, but also really.
Really being able to capture the vast majority of games in this space you know just due to the scale than data pricing power just the products and a lot of it's also lets US you know, but was now build these better better and new products. You know, we're able to build new products that make.
Make the consumer experience better you know in the offer but more and more tools to consumers to go navigate their health care navigate affordability as well as lets us make more money from each of those those users. So this really does create this virtuous cycle that has made us sort of.
But the the far leader in and helping consumers save money on their health care and you know.
And Thats, what we we continue to see and.
You know in in looking forward the relevant health care in General you know as I mentioned.
You know tells marketplace.
<unk> has been you know and as marketplace. That's now expanded into lives in other areas. It is sort of the beginning of where we.
Where where we have expanded the very you know what we we see a large step across health care services, where their consumers are struggling to afford them and so we aim to.
Provide a you know help across the broad set of these so we'll be rolling out more and more products to address these needs sort of in a much sooner timeframe than than the five years in the five year period.
All right. Thank you guys.
Thank you very much thank you.
Next question will come from Lee Horwitz with Evercore ISI.
Great. Thanks for the question, maybe one more on mail order given a number of announcements from Apple partners and competitors recently ultimately how important do you think that short E commerce like delivery windows are seeing greater adoption of mail order.
Her delivery and <unk> and do you believe that the should or delivery windows can potentially be done profitably.
Thank you very much we for the question yes.
Yes, as I as I sort of spoke to on mail order you don't mail order still is really a small portion of of prescriptions.
And.
You know I I think you know you really can't think of a something that would accelerate adoption more than cove. It you know, causing people to you know often not wanting to see go go places are not be able to go places you know and yet you look at the end of the year as you know and.
And it looks like that mail adoption as a as a percentage of your subscription. So it's not really changed much I think the faster delivery is a factor, but I actually would say I don't.
I think it's the key.
Critical factor.
I think it's one factor out of many then make it so that you know I mean, a lot of situations.
Know that it's just not the preferred solution for consumers I think there are others issues such as just.
You know general General.
General Onboarding general sort of experience of of getting those scripts and there was a a edwardsport yesterday for just aren't glow consumer interest in general and so I think it's a variety of factors that will be required to make that work for us we want to meet consumers, where they are you know where consumers have.
You know one male we want them to go to get mail, whether that's a you know from a retail pharmacy, providing that as male or other partners. You know we want to be consumers, where they are provide them or the services they want and our business works well in all these different environment.
Great. Thanks, and one follow up if I could Carson.
Circling back on the vaccine a bit can you expand.
A bit on how you're thinking about modeling the kovar recovery you talked about not not at the like recovery, but specifically with the vaccine now generally expected in the second quarter of next year can you comment at all on whether this vaccine timeline was cut.
Sticking with your prior view or if your expectations around the pace of recovery and the proliferation of the vaccine has changed at all given the news earlier this week any color there would be helpful. Thanks, So much.
Surely I think first of all with respect to fourth quarter. It doesn't really change anything obviously.
And in the longer term.
Term I think we'd expect a gradual recovery, where the economy would be fully open into next year, regardless. So I think the vaccine more than anything else reaffirms that reality will manifest itself versus being a significant shift to to our expectations are expert.
For patients generally so again I think for for Q I think I think the vaccine doesn't impact them and I think our views on on guidance and continued to be entirely like we discussed.
And I think in general.
Looking forward into into the coming year, we're excited to see.
See the economy potentially reopening further.
But we also modeled in a reopening generally speaking so I don't expect it to have a dramatic impact beyond what we're thinking about it.
Now that said, we certainly have not.
Assumed.
There's a couple of factors when we look at the impact.
One is sort of access to health care in general, which which has been pretty good you know that theres been access to pharmacies sort of broadly throughout this period second is access to health care providers, which was really constrained and now. It is also quite good the thing that's kind of.
We've.
Sort of assumed and have kind of continue to assume takes well just like people just feeling comfortable going to get health care. So the people are going to get.
You know there was no one or two things people, having their annual physical and finding out they have low blood pressure.
We have high blood pressure and.
We're going to get the medication for itself. So those sort of in a lot of new starts related to that you know those just hey, we just think that takes a while for that to come back you know.
Theoretically you know hopefully it is possible that something you know that a vaccine or the effective vaccine caused that to you know really happen soon.
Got it and then than we imagine.
Well in that sort of activity in general goes back in a in a sort of more meaningful way sort of it to normal in a in a you know next year, but you know.
Even you know the vaccine news is amazing.
But you know, we certainly haven't sort of change you know well.
I heard he feel like we don't know enough of when that happens what happened when when things are distributed to make any any real assumptions. There. The one other thing I'd say is just about vaccines in general I think this is a great opportunity for pharmacies, you know as I spoke to you about the flu vaccine program, where we've gone from two partners you know last year to eight partners. This year.
So we really want to help the pharmacies drive additional volume into that want to help the public health side of this that to help people get these vaccinations.
Consumers to get these to help their quality of life and there's probably a similar opportunity you.
You know at some point here around Oh you.
Around the cobot vaccines, where hopefully you know depending on the type of vaccine that the pharmacies me really important distribution partner for those and then we want to make sure consumers able to get those get access to them and you know or you get people into pharmacies to get them to help people through that period, and then and then.
Hopefully hopefully a recovery does happen faster than any than any of us have expected historically.
Thank you. Our next question comes from and Kessler with Raymond James. Please go ahead Craig.
Great. Thank you guys, maybe just quickly on a.
Converting your customers are certainly workers from.
Pretty high brand awareness for good or act how are you.
Thank you know converting more of these customers that obviously, you heard a friend or a.
Sorry could or act, but maybe not customers yet and then maybe thoughts on working with employers a promote good or x. I'm, especially as they move more towards high deductible plans as well. Thank you.
Yeah.
So in terms of converting customers and brand you know we think we you know I I have we think we have lots more to our brand awareness. You know we think we have it's actually extremely high brand awareness among healthcare professionals.
No that among pharmacists, it's almost sort of everyone among sort of position you know two or three.
More than more than two thirds of division sort of no good or act most of those recommended to chew their to their patient. That's a really good brand awareness among healthcare professionals that but we think there is actually a huge amount of additional rooms.
Gain around brand awareness among consumers you know when we think of what are you know competition is that earlier question. The real competition, we have as people not not knowing that there is this opportunity in general to to get you know to save on prescriptions to save on health care and to TV shopper. So most.
Consumers just don't know that there are tools to help them navigate a complex healthcare system and you know we really believe we can help and 70% of consumers don't don't know the prescription prices can vary and everyone's as things everything kind of thinking the same. So this is a there's a great opportunity there. So we're.
You know, we're obviously focused.
On converting customers on increasing usage by customers, but we still think there is so much just additional awareness we can gain across the across the user base in terms of employers.
Our we're not focused on employers I think we are focused on consumers. So when we look.
Look at the market you know something we think we are uniquely good at is speaking to consumers about their health care experience, providing tools to consumers for their health care experience, you know and and really reaching their you know there are plenty of companies that are good at working with employers, but we think we're really uniquely good at working.
As consumers in health care and that is our focus and then you know in terms of Hgh piece you know when when we look at our users our users.
<unk> have all forms of of insurance, you're 75% plus of our users do you have insurance you know more than a third of those have Medicare.
So this is not you know it's not just needs to be as fees are against all across all the commercial insurance you know we see we see good good usage. So we really want to deliver value to users across their health care journey, we really want to continue to invest in our you know in our product build build great new products not more entry points add more service as you know there's just a really.
Really big opportunity. So we're super excited about sort of the progress. We've made in Q3, you know and just all the work we're doing now to you know increase awareness increased.
Extend the platform and just increased penetration broadly across sort of the broad set of consumers and offer them a you know make make.
One's health care experience better in America got it. Thank you.
Thank you very much.
Thank you on today's final question will come from Stephanie Davis with SVB. Please go ahead.
Hey, congratulations on a strong first public quarter aggregate guys.
Thank you very much.
Comment on.
CMS is transparency in coverage rule and how we should think about the puts and takes of increased trade transparency now.
Next is on the market that maybe on your competitive dynamics in specific.
Sure.
Thank you Stephanie very much for the question.
You know we are really in favor of anything.
Never had increases transparency you know when we see as to the you know the what regulators what the public what a lawmaker what people want you know people want you know transparency, you know and they went lower out of pocket costs for consumers and so we we think we are in.
Tire and wheel or those are the things that we want those are the things I think the country wants and you know we think we're really aligned with that in regards to you know specifically sort of you know the new rules around transparency, which there are a variety of you know this is something we definitely want and.
And think is good we think it opens up new opportunities are in in some other portions of health care and you know we think it's only only good for us and and our business our ability to deliver these solutions for consumers.
And and I think that fits into just our.
Our overall overall our goals of the business you know our overall goals are to deliver affordable health care for all consumers to help them navigate this to be this leading digital platform for all of health care and it's just a huge opportunity.
And you know we are you know at the early early early points of it. So we're excited.
Cited at that larger trends are also pushing in the same direction, you know more pricing more transparency being available and so we're excited to capture these new opportunities as well as you.
Just continuing the strong profitable growth, we've been able to deliver in the businesses that we're in.
Hey, good as much.
Now I have a quick follow up Carsten just the difference in air time too.
The fourth key guidance holding all else equal it implies a pretty healthy sequential step down and back then.
Is there anything to call out that drove up napkins wiki you or is it just some uncertainty around the pandemic guide that <unk>.
Hey, Matt metric.
Sure. Thanks for the questions Stephanie and thanks for giving me an opportunity here to talk.
Yes, I am sorry, [laughter], we've continued to see the impact of COVID-19 on ER prescriptions offering realistically primarily through the impact of Doctor visits and access the Trevor talked about.
About a little bit.
Month here to consumers in the third quarter increased about 11% Q over Q.
As activity in the prescription market improved what do we think about that that's the third quarter is a bit of a rebound quarter, though because twoq. You is just such a tough one for coal bed.
And because of that.
We got the benefit of a bit more rebound in that quarter. Then the gradual improvement that were forecasting going forward. So as we look forward, we still see nice growth, 4% to 5% macros going forward, which translates to about 20% Y O Y even as we.
I think Dave economy open up and a more gradual fashion or not I am not sort of instantaneously of course. It also assumes things on the cold fronts. They stay fairly constant I think the.
The other reality is that total revenue growth, we expect to grow significantly faster in part because of the rapid growth.
Most of our of our other revenue lines and frankly in part because the.
The recurring nature prescriptions, the fact that.
We continue to benefit from most of the growth in this space, given where the largest relative market share player and the general reality.
The all of our offerings intersecting in a way that's helpful, meaning that tele health as an entry point for prescriptions and vice versa.
All of those things are helping us to drive even faster revenue growth than than macros, I think the other thing too, which they should probably remind folks of generally is that max or the U.S.
Growth is over prescriptions offering so things like subscribers et cetera, those comps do not formal part of the core Mac count, which was part of the recent reason you see revenue per Mac growing and it's also part of the reason.
As the subscriptions offering continues to expand quite quickly.
Why.
Why or why are we have modeled out our Mac count for the fourth quarter like we have hope that's helpful. Stephanie and thanks again for the for the great questions [laughter].
Ladies and gentlemen, thank you for participating in today's question and answer session as well as today's conference call. This concludes today's program.
You may now all disconnect and have a wonderful <unk>.
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