Q2 2021 Goodrx Holdings Inc Earnings Call

[music].

Ladies and gentlemen, thank you for standing by and welcome to the good Alright second quarter 'twenty 'twenty, One earnings conference call.

As a reminder, today's conference is being recorded.

I would now like to introduce your host for today's call.

Whitney Natal, Vice President of Investor Relations. Mr. <unk>, you may begin.

Yeah.

Thank you operator, good morning, everyone and welcome to good access earnings conference call for the second quarter of 2021 joining.

Joining me today are Doug Hirsch and trigger back deck, our cofounder and co Chief Executive Officer, Karsten, Bornemann, our Chief Financial Officer and <unk>.

President of health care.

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 statements regarding management's plan strategies goals and objectives, our market opportunity our anticipated financial performance, our manufacturer solutions offering and the expected impact of Covid 19 on our business.

These statements are neither promises nor guarantees, but involve known and unknown risks uncertainties and other important factor <unk>.

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 quarterly report on form 10-Q for the quarter ended June 32021, and annual report on form 10-K for the year ended December 31, 2020, 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.

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 metrics, which are reconciled to the nearest GAAP metric and the company's shareholder letter, which can be found on the overview page of our Investor Relations website at investors felt good 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'll turn the call over to Trevor.

Thank you Whitney and thanks to everyone for joining us. This morning, I'm proud to report another quarter of strong performance for good or X.

Our track record of strong profitable growth continued in the second quarter with revenue growing 43% year over year, a rapid reacceleration relative to average growth of approximately 31% for the trailing 12 months through March this combined with an adjusted EBITDA margin of 39% makes us.

Any call a rule 70 company much better than a traditional rule of 41, which we believe is unique and our size and in our space.

Revenue grew to a record $176.6 million, even while we believe the backlog of undiagnosed conditions continued to grow.

In fact in our prescription transactions offering our monthly active consumers grew a solid 36% year over year.

Adding subscribers to that figure our aggregate prescription related user growth was above 40% year over year.

Positive results were fueled by our ability to extend our platform from our historical focus on prescription discount to today, where we impact almost 20 million Americans a month, including health care professionals, who make up about 17% of our web site visitors and have built successful subscriptions farmer manufacturer solutions and telehealth offering.

That are growing rapidly almost doubling and tripling respectively. In the case for the first two.

Our growing extensible platform is the foundation, allowing us to continuously offer even more valuable services to our health care providers and consumers for example, our sure scripts relationship, which Doug will discuss further allows us to serve healthcare providers and their patients by providing real time drug discount pricing in electronics.

Health record systems that delivered almost 2 billion prescriptions last year.

Another example is our strategic agreement with go help which marks an exciting first step in the insurance marketplace space for us.

And we didn't get our xcode, our subscription program that provides two times the LTV of our prescription transactions offering we now offer gold at Rite Aid's over 2000 pharmacies.

We continue to be excited about the rapid evolution of our prescription transactions offering as well.

In our subscription offering we helped a record $7.5 million consumers saving their prescriptions by using <unk> in one of our 70000 participating pharmacies. We also expanded the marketplace with the addition of additional Pbms to our network I couldnt be more pleased with our results and the progress we are making toward our goal of reinventing.

<unk> digital health as Karsten will discuss shortly we expect nearly 40% revenue growth in the third quarter. The strength of the relationships, we built with health care providers pharmacists and pharmacies pharma manufacturers and most importantly, consumers and combination of our highly accessible platform and offering puts us in a great position.

And for years to come.

With that I'll turn the call over to Doug who will speak to some recent successes that further our mission to help Americans get the health care they need at a price they can afford.

Thank you Trevor.

We're almost a decade. Good Rx is focused on building the strongest consumer brand in health care.

We have developed trusted relationships with millions of Americans, who in turn recommend us to their friends and family because we offer simple honest solutions to the frustration and complexities of U S health care piece.

Rely on good our acts as an advocate they can turn to you for help.

No that most patient journeys involve a visit to a doctor's office or clinic, and we recognize the central role of doctors pharmacists and medical professionals play in determining the best treatment.

They know as well as we do the prescribing a treatment a patient can't afford isn't really a treatment at all.

That's why physicians have embraced <unk> since our inception put simply we help health care providers do what they do best help their patients.

Working with health care providers is a large part of what we do.

Our products and services help providers find affordable solutions for their patients reducing the time they spend searching on their patients' behalf.

As Trevor mentioned, just this month, we announced an exciting new integration with sure scripts, the nation's leading health information network to provide real time drug discount pricing and electronic health Records.

By working with shell scripts, which delivered nearly 2 billion electronic prescriptions last year.

Can help providers make more informed decisions and address patient prescription cost concerns at the point of care.

We also work with offices and clinics around the country to provide good Rx educational content for their patients with hundreds of thousands of health care providers distributing our collateral.

Remarkably over 2 million prescribers have a patient who has used at Rx and about 80% of surveyed prescribers have recommended that rx to their patients.

All told health care professionals represent more than 17% of the people who visit the <unk> website, and we're delighted that health care providers rewards interacts with an NPS of 86.

We believe that our alignment with providers and our mutual dedication to helping their patients is a fundamental and flourishing part of our success.

There is one area, where doctors and patients alike have consistently asked us for more help brand name prescriptions.

<unk> has helped millions of Americans to now be able to widely a four generic prescriptions, but brand prescriptions often remain unattainable to consumers due to cost.

Pharma manufacturers want to provide affordability options, but even with the $30 billion they spend annually to reach consumers directly or through providers. They struggled to gain awareness and improve access and adherence for their medications with our scale and reach across consumers and providers. We help address this challenge by delivering innovative solutions that connect doctors and patients.

And pharma manufacturers and a more efficient and effective way.

In less than a year, our pharma manufacturer solutions team has re imagine the way patients and providers learn about a forward purchase and stay on brand name prescription treatments. We focus on three shared areas of need boosting awareness of pharma manufacturer savings programs among patients and prescribers improving patient access to these programs.

An increasing adherence to the brand medications that patients need to stay healthy.

With awareness access and adherence front of mind, we believe we are creating novel and easy ways for on the one hand consumers and physicians to directly engage enroll and qualify for pharma manufacturer programs and resources and on the other hand for manufacturers to support both the patient and the physician through all stages of the health care journey.

With that I'll now turn it over to <unk> for our initial feature presentation on our exciting and rapidly growing pharma manufacturer solutions offering.

Thank you Doug I'll start on slide three.

Pharma manufacturer solutions is good our excess fastest growing offering with the most attractive economics.

This compelling suite of solutions creates a highly effective way Obama manufacturers to reach patients and providers.

Leveraging our almost 20 million monthly visitors made up of both consumers and health care providers as well as 20% of searches on our platform that HOKA brand drugs.

In fact, our analysis shows that among the top 100 branded medications. Good Rx has an average of 10 times more traffic to the drug savings page, but these brands on our side compared to the same brand savings page of the manufacturers on websites.

As a reminder, branded medications present consumers in Hcp's with a unique set of challenges when compared to generic medications that they are often much more expensive with or without insurance.

To help address this we built pharma manufacturer solutions to partner and then it's like drug manufacturers.

And the last two years, we've scaled this offering rapidly growing year to date revenue nearly three times year over year with highly attractive economics and delivering over 150% net revenue retention.

Meaning we have grown revenue from the same clients more than 50% compared to the same period last year, a statistic, we're very proud of and that we believe evidence of the value we provide manufacturers.

We work with 19 of the top 20 U S pharma manufacturers and with approximately 100 brands across the more than 550 manufacturers in the U S.

Approximately 85% of the revenue related to this offering was substantially flat fee based making the revenue model, both very attractive and highly predictable.

More specifically substantially flat fee based model consists of fixed commitments typically for a term of one year that are paid out over the term of the agreement.

In a few slides I will share why we're so optimistic about our growth opportunities ahead, which build on our success today.

Turning to slide four.

While we're best known for decades worth of experience saving consumers' money.

We've also built broad and deep relationships with providers.

Oh, good our extra provide us users appreciate our easy to use solutions that help that patient support to stop and stay on their therapies.

17% of the visitors to our website, our hep's are more than 2 million prescribers have had a patient who has used with Iraq.

Our survey show, we have built our brand awareness among health care providers up to an impressive 88% with 80% of providers recommending <unk> to their patients.

We've also found that 93% of health care providers say, but that patient access to medication improved when using good Rx and 87% said that the pay.

Patients are Darren increased this.

This translates to a high net promoter score of 96 from health care providers.

We believe our trusted brand, increasing scale and reach and deep relationships with stakeholders throughout the healthcare ecosystem uniquely position us to be the leading health care platform to connect health care providers and their patients with pharma manufacturers information access and affordability solutions.

We continue to help consumers financially saving them over $30 billion to date.

This is not just about saving money for consumers.

<unk> or uninsured to many this is often the difference between someone's ability to start I'll stay on that medication.

We do all of this in a seamless intuitive way for consumers leading to a very high net promoter score of 19.

All of these dynamics offer an unparalleled platform for pharma manufacturers to reach the bottom of the panel, reaching both highly engaged health care providers and consumers who are searching for affordability solutions.

Looking at slide five.

Let's set the stage with the problem.

Brand medications tend to be expensive and insurance coverage is often complicated and restrictive.

69% of consumers have made personal sacrifices in order to pay for their medications and 70% of HCP side high cost was the primary reason patients did not pick up prescriptions pharma manufacturers spend an estimated $30 billion annually to address these and other challenges.

Either to reach consumers directly or by a health care providers.

Even with this large spend these challenges persist and manufacturers I'm looking for ways to more effectively improved this dynamic.

Several factors not just covid have exacerbated the challenges the manufacturers and shifted the way in which they communicate with HCP.

As of September 2020, and person HCP pharma sales access had fallen by 70% when compared to pre pandemic level.

As a result manufacturers are shifting spend from offline to digital channels.

Manufacturer's ability to digitally reached their intended audience presented by changes in the internet advertising landscape, such as <unk> and the move to a cookie less world.

Hep's are critical not only because they make the prescription decisions, but also as a key resource for helping patients navigate difficult and often stressful decision throughout the patient journey.

Costs are going up branded medications have increased 78% since 2014.

30% of all prescriptions are left until due to cost.

While many manufacturer of sponsored programs exist patients have low awareness of their existence and thus the utilization is very low.

But these challenges also impact hep's.

They know affordability is a critical topic for our patients and providers messed off spend significant time every week navigating administrative task related to drug access and or trying to help their patients get access to these programs.

Moving onto slide six.

Pharma manufacturers deploy strategies across three key stages of the patient journey.

Awareness access and adherence.

They deploy their awareness strategies through an array of channels with decreasing efficiency given some of the deployment challenges we just discussed.

To improve access manufacturers have developed strategy was primarily focused on affordability.

These programs include co pay cards, which buy down of commercially insured members co pay amount funded by the manufacturer.

In addition, they provide sample drug programs and operate large call centers to help address challenges patients and physician space.

Manufacturers are also heavily focused on increasing adherence longer Holy Grail in the industry.

While forgetfulness can play a role in the tariffs it is more commonly overshadowed by how people feel once they are on their medications and questions about whether they should remain on therapy.

Pharma manufacturers have been working to solve these challenges for quite some time and have deployed both digital and call center based solutions to try and address non adherence.

Turning to slide seven.

Good Rx understand the patient journey, given our extensive experience in the prescription market.

With that knowledge as a foundation, we have been re imagining the way patients on hep's interact with the health care system.

We currently operate solutions across the awareness access and adherence patient channel and continue to innovate more solutions.

<unk> offerings are data driven and draw from a decade's worth of insights and learnings about consumer and HCP audiences by.

By leveraging our almost 20 million monthly visitors good rx's audience has to be attractive profile of manufacturers seek to reach.

Our awareness solutions, primarily focus on targeted high quality content.

<unk> is a highly regarded editorial team focus on prescription medications and whose work consistently ranks in the top of search results.

Written content is a great solution for many consumers, but we also recognize that consumers are increasingly leveraging video as a medium to explore and digest content. Hence we recently acquired health initiatives.

With its award winning staff, an extensive library of premium clinician reviewed videos health initiative complements and deepens our capabilities offering highly relevant incredible video content shot with experts in their respective fields and spending more than 90 conditions across 150 health categories.

Good Rx now all cause pharma manufacturers numerous ways to leverage highly relevant content to help drive their awareness initiatives.

Turning to access solutions as a site visit is navigate to find drug savings, we offer pharma manufacturers and the ability to fully integrate the affordability programs.

Our easy to use patient navigator platform driving both engagement and utilization.

Our hotel solutions off of manufacturers the ability to leverage our direct communications and deliver relevant data driven ways to help patients get on and stay on therapy.

These solutions include text me on my messaging as well as the technology enabled nurse chat functionality to address adherence challenges patient space.

Moving on to slide eight.

By driving awareness access and adherence with our multichannel approach, we help health care providers, who just good Rx MF patients to achieve better outcomes.

Manufacturers are able to encourage use of their innovative and life saving products and services, increasing LTV at a compelling ROI.

By way of example, 2020 programs with one of our customers.

Top 20 manufacturer deliberate them on ROI of more than eight X across by brands.

Our net revenue retention, but that customer is 170% yesterday.

With the help of <unk> consumers are easily able to find authoritative educational resources on medications and conditions, including written and video content.

Our visitors can also seamlessly access fully integrated savings in support solutions, such as by our partnership with Santa Fe Top 10 manufacturer.

This encompasses the Sanofi portfolio of insulin branded drugs and Leverages, our patient navigator access and affordability and integration, enabling the consumer to find registered and received a discount off of that can be used at any pharmacy.

Commercially insured members pay zero, while uninsured patients pay of $99 cash price for Sanofi products. This is a great example of our ability to help out the uninsured uninsured patients.

Yeah.

Additionally, healthcare providers see multiple benefits were a highly valued resource what they recommend to their patients.

Trusted educational resources and affordability solutions.

This both reduces time spent searching for information on the patient's behalf, while also increasing the chances of medication adherence.

All said, we were able to offer extremely effective solutions that deliver value to manufacturers consumers and health care professionals.

Turning to slide nine.

Yeah.

While we are proud of the tremendous progress we are still in the early stages of the pharma manufacturer opportunity today.

Today, we have relationships with just 10% of the estimated 550 manufacturers serving the U S market.

Creating an opportunity for us to continue to scale.

We made the strategic decision to target the top 20 pharma manufacturers as they represent almost half of that 30 billion dollar town.

We are proud to have successfully secured relationships with 19 of the top 20 manufacturers and have already set aside something enormous upside potential ahead as we continue to penetrate these accounts to increase our pole percent sell through of the roughly 1000 brands represented in this cohort.

We also had an opportunity to increase the number of solutions each branch employees with us.

Currently our customers average screen solutions per brand up two X year over year. We also continued to innovate and increase the number of solutions we offer them.

I'll close with slide 10.

We are excited about the trajectory of pharma manufacturer solutions.

It is not only the fastest growing offering but also has the most attractive economics are good Rx and we believe we are in the early innings.

With our year to date topline growing approximately <unk> year over year, most of which drops to the bottom line, we certainly beat any rule of benchmark.

Our innovative solutions help address awareness access and adherence challenges faced by manufacturers patients and health care providers seamlessly, creating a win win environment for all stakeholders.

Our existing relationships are sticky and the offering has been able to not only deliver rapid growth, but also unimpressive net revenue retention in excess of 150% representing expansion with existing customers.

We have a significant opportunity to not only further penetrate the top 20 pharma manufacturers, but also into the long tail of 500 or so other manufacturers.

We believe we are well positioned to capitalize on the macro shift to an increasingly digital mix.

Pharma manufacturers increase their digital AD spend by 43% in 2020.

We look forward to helping even more manufacturers and more brand support patients and their physicians through the health care journey we.

We will continue to invest in scaling our commercial product innovation efforts to take advantage of this opportunity.

With that I'll turn it over to cost him to discuss our second quarter financial results as well as our guidance.

Thank you Betsy and good morning, everyone from time to time, we plan to focus on other areas of <unk> and provide incremental future presentations in the meantime, I'm excited to speak about our second quarter results.

This was another strong quarter for our business, we continued to deliver record revenue at attractive margins, while growing the number of consumers, we serve across our platform and adding incremental P. B and during the quarter, we increased our reach to over $7.5 million American through a prescription related offerings with macs growing 36% year over year trade.

A record $6.1 million.

And subscription members, reaching over one 5 million members in connection with or 1.05 million subscription plans.

Continue to successfully drive consumers to a subscription offering with subscriptions growing 86% year over year to over 1 million across our two subscription programs go directs gold and the Kroger Rx savings club Parabrake Rx, including family plans each subscription represent an average of approximately 1.5 Americans.

Our pharma manufacturer solutions offering continues to grow at a rapid pace and we are extremely excited about this amazing opportunity that fancy and team are pursuing with great momentum.

Finally care continues to be a growth engine for us with its exceptional user experience.

The rebrand from Hey, Doctor to get our ex care in combination with the continued work on cross platform integrations and a unified user experience are delivering strong results with over 40% of telehealth visits now converting into gold subscriptions.

More broadly approximately 60% of care visits are driving incremental revenue through our other offerings up from 30% earlier in the year. We believe these types of cross platform integrated experiences will continue to enhance our ability to cross sell going forward, increasing the stickiness and the LTV of our users.

We're excited to announce a number of new collaborations we believe will further extend our reach and deliver more value to consumers across more stages of their health care journey.

In the second quarter, we entered into an agreement with sure script to be the prescription cash discount price provider for its nationwide network connecting virtually all electronic health record systems pharmacies and health systems.

With this new integration prescribers using sure scripts real time prescription benefit we will be able to provide uninsured patients and patients with price information isn't readily available from their P. B M or health plan with drug discount pricing from <unk>. So they can make more educated decisions about their care.

Great and good or it's just kind of pricing will support getting cost information into the hands of patients and increasing our provider to consumer reach.

As Trevor mentioned, we also entered into a strategic agreement with go health, a leading health insurance marketplace and Medicare focus digital health company to help more Americans get the health care they need at a price they can afford by bringing go health Medicare enrollment and engagement solutions directly to the millions of Americans, who visit good R X months.

Got it.

Go direct to consumers, who want to explore Medicare coverage options and understand potential benefits or savings, we'll be able to access this information on the <unk> X platform.

Go health consumers will also have access to good Rx prescription discount.

Through this agreement will be able to help the millions of good or X consumers, who are eligible for Medicare finding and enroll in the best Medicare coverage plan that fits their needs.

We will also expand our reach break even go health members access to affordable choices to further improve health outcomes.

This marks an exciting step into the insurance marketplace space, which can create significant value for the consumers on our platform given that many of them have third party payer coverage and many of her users would like good Rx to provide these services and advice in this area.

<unk> gold continues to grow rapidly as we expand the programs network reach and benefits during the quarter, we entered into multiple collaborations to deliver more value to more consumers across the nation with strength of the Golden network by adding <unk> 2000, plus locations tour subscription savings program substantially.

Growing the footprint of participating pharmacies, delivering greater savings on prescriptions nationwide.

In addition, we're developing strategic relationships with enterprise level companies to build on our mission of providing Americans with access to affordable and convenient health care.

This quarter, we announced we are working with door dash and USA to provide bashers USAA's 13 million members with discounted access to gold with a gold membership bachelors and USAA members can pay.

$10 or less for over 1000 prescription medications connect with a health care provider from home for a low rate and receive free mail delivery for certain prescriptions.

As Bassi highlighted earlier on the call we continue to make impressive progress with our rapidly growing pharma manufacturer solutions offering streamed.

Streamlining access to patient savings programs on the <unk> side by working directly with leading manufacturers.

With the expansion of our integrated patient savings programs consumers can now seamlessly qualify and register for Copay cards for certain drugs within the good or ex experience. We're excited to help consumers accuracies affordability solutions and create innovative ways to connect with consumers and manufacturers.

Moving to our second quarter results revenue for the quarter was $176.6 million growing 43% year over year.

Prescription transactions revenue grew 32% year over year to $144.9 million driven by a 36% year over year increase in our monthly active consumers, which reached a record $6.1 million. This.

This was partially offset by year over year decrease in prescription transactions revenue per Mac solely related to script cycle, which as discussed in prior calls has lower revenue and contribution per consumer.

Good Rx prescription transaction economics of otherwise remained consistent.

As a reminder, monthly active consumers represent the number of unique consumers, who use <unk> to save on their prescription in a given month and it does not include consumers of our other offerings, such as subscriptions farmer manufacturer solutions and telehealth.

When presented for quarter monthly active consumers represent the average of the calendar months in the quarter.

The second quarter Mac number does not include our favor Macs typically we begin including Macs in the first full quarter post acquisition, which would be the third quarter of 2021.

Eric favors prescription transactions revenue and Mac counter small relative to go to or extra scale.

This quarter, we disclose subscription revenue for the first time, which had previously been disclosed as part of our other revenue and which grew 125% to $14.3 million. We finished the quarter with over 1 million subscription plans and over one 5 million Americans benefiting from our subscription offerings since our family's subscriptions.

He served multiple consumers.

Our subscriber count and subscription revenue should provide a more holistic view of a growing consumer base and reflect another way, we monetize a portion of the millions of visitors on our platform.

Our subscription offering which is already a scaled business extends our successful prescription transactions offering while creating even more predictable revenue for us.

Addresses similar consumer needs in January offers even greater savings on prescription medications.

The times consumers go through the same funnel and searching for prescription prices and if they choose the lowest price so often become subscribers without ever having been a monthly active consumer. This is mutually beneficial because we believe that both consumers and <unk> generally generate more value when this happens.

As we continue to grow our subscription offering and it contributes more meaningfully to our financials, we expect to increase conversion from Macs to subscribers, which should result in stronger consumer relationships.

And in more value over time.

Looking at our total prescription related offerings, we had 6.0 million Macs and a prescription transactions offering and over $1.5 million members associated with our 1.05 million subscriptions.

In addition to monetizing Macs in subscribers, we were able to further monetize a portion of the millions of visitors on our platform with offerings, such as telehealth and pharma manufacturer solutions, delivering more value to consumers and increasing the scale of our prescription related offerings.

Other revenue, which now excludes subscriptions revenue grew 136% year over year to $17.4 million, primarily driven by growth in pharma manufacturer solutions, which makes up a significant majority of other revenue as well as growth in telehealth.

The growth reflects the incredible demand for these offerings as well as our ability to leverage multiple entry points into a growing platform and monetize at different stages of the health care journey, which is growing LTV.

Our prescription transactions and subscription offerings continued to face headwinds related to Covid 19.

Well, we've seen moderate sequential improvement since the beginning of the year, new therapy starts and prescription volumes remain below normal levels and the backlog of misdiagnoses continues to increase now at over $1.2 billion. According to Ikea.

Turning back to the second quarter performance and moving down the P&L cost of revenue was $11.1 million or six 3% of revenue compared to $6.8 million and five 5% of revenue in <unk> 'twenty.

The increase was driven by an increase in outsourced in house personnel related consumer support expense to support our growth and increases in hosting expenses merchant fees and allocated overhead.

Product development technology expenses were $29.6 million compared to $12.1 million from the comparable period last year.

This increase was primarily due to continued investments in the team and product as well as an increase in stock based compensation, including awards made in connection with an after IPO.

Excluding stock based compensation and related tax and other items associated with acquisitions adjusted product development and technology expense was 11, 3% of revenue compared to eight 7% of revenue in Q2 'twenty.

We continue to invest in product innovation to create the best consumer experience possible scalar existing offerings and develop new offerings all of which are intended to help more consumers in different stages of their health care journey deliver more value to them and increase the lifetime value we generate.

Sales and marketing expenses were $88.4 million compared to $51.9 million in <unk> 'twenty, we increased advertising spend by $24.4 million year over year and continue to invest in our incredible team with a goal of increasing our consumer base and building the <unk> brand, which we believe will you pause.

Ziv returns for us long term adjusted sales and marketing expense as a percent of revenue grew year over year, making up 46, 7% of our revenue in <unk> 'twenty, one compared to 41, 6% last year as we proactively reduced advertising spend in the comparable period in 2020 at the onset of.

The Covid 19 pandemic.

General and administrative expenses were $39.6 million compared to $6.3 million in the second quarter of 2020.

The majority of this increase $24 million or approximately 72% was due to stock based compensation expense relating to the nonrecurring co CEO awards made in connection with the IPO, excluding this and other adjustments, including noncash and M&A and financing related items adjusted <unk>.

G&A as a percent of revenue was 5.0% compared to four 1% in Q2 'twenty.

With the incremental cost primarily associated with starting to operate as a public company at the end of September.

Net income grew 14% year over year to $31.1 million, which was impacted by a $37.3 million tax benefit as well as by stock based compensation expense of $47 million in the quarter $24 million of which related to the nonrecurring.

Co CEO grants made at the time of the IPO adjusted net income grew 9% year over year to $35.1 million.

Adjusted EBITDA grew 11% year over year to $54.6 million adjusted EBITDA margin continued to be strong at 39%, reflecting our ability to deliver profitable growth due to the compelling unit economics of our business and repeat activity on our platform, which remained at over 80%.

Adjusted EBITDA margin decreased by approximately 910 basis points year over year due to an increase in sales and marketing spend as a percent of revenue compared to the second quarter of 2020, and which as I mentioned earlier, we proactively reduced our sales and marketing spend at the onset of the Covid 19 pandemic.

The decrease was also due to continued investments in product development technology, the growth of our telehealth offering and investments in our general and administrative infrastructure as we began operating as a public company.

We continued to generate strong cash flow with net cash from operating activities of $34.9 million for the quarter.

And now turning to guidance.

For the third quarter of 2021, we expect revenue of $193 million to $197 million, reflecting 37% to 40% year over year growth. We believe this growth will be driven by a triple digit increase in other revenue based on the continued momentum in our pharma manufacturer solutions offering and in our subscription revenue combined.

And with continued growth in prescription transactions revenue.

On the adjusted EBITDA front, we expect an adjusted EBITDA margin of approximately 30% for the third quarter.

We continue to expect our nonprescription transaction revenue offerings, which are reflected in subscription revenue and other revenue to make up a higher percentage of our total revenue in the second quarter. Those items made up 18% of total revenue an increase of approximately 150 basis points compared to the first quarter and we expect that.

To increase by another approximately 200 basis points to reach approximately 20% of total revenue in the third quarter. This means prescription transaction revenue, which was driven by Macs will make up a smaller share of total revenue as more visitors and macs convert to subscribers and as we continue to grow our pharma manufacturer solutions.

We're excited that we delivered strong second quarter revenue above the high end of our guidance range and return to pre covid revenue growth of 40% plus.

We continue to have strong confidence in the outlook for our business. However, based on the general uncertainty around the evolution of the pandemic, we will not be updating our full year guidance at this time.

Okay.

Moving onto a recent acquisition and to some tax topics first subsequent to the second quarter. We closed the acquisition of Rx Macs and prescription technology company that we acquired to support our prescription transaction offering.

We have unique technology that will allow us to partner with health plans, and Pbms and new ways to better service their members unfunded benefit plans.

Related to our Rx favor and healthy nation acquisitions Rx next does not immediately contribute material revenue to go direct in fact, Rx next generated less than $1000 of revenue year to date, the platform will augment our existing prescription transactions offering via innovative technology and domain expertise, enabling long term growth.

Our assumptions related to Rx nextera reflected in our revenue and EBITDA guidance.

Since the company has practically pre revenue our forecast and guidance include no revenue and no Max from Rx next in 2021, we expect the company to generate revenue at some point in mid to late 2022 and to start scaling in 2023.

Second and before I conclude one note on our income tax provision or benefit.

While the tax benefit in the second quarter was meaningful we do not expect it to be recurring however, we continue to expect unpredictability and our future tax provision or benefit amounts due to multiple elements and estimates that impact the interim income tax accounting calculations, one of the most significant elements of excess tax benefits or deficiencies.

Resulting from stock awards.

Element is challenging to forecast is generally driven by factors outside of our control such as the stocks trading price and the decision of employees relating to their award.

This is one of the reasons, we are presenting adjusted net income and adjusted tax.

We are very pleased with our strong second quarter results, including the Reacceleration of our revenue growth to 43% year over year, reaching $176.6 million and our adjusted EBITDA margin of 39%.

Trevor said, combining our growth and margin makes us a rule of 70, plus company, which is quite a unique achievement at our large scale.

36% monthly active consumer growth and the extension of our reach to over seven 5 million Americans, which includes are served by our higher LTV subscription offering reflect how big we have become what excites US. Most however is how brighter growth prospects for the future are.

We're prepared to be there for consumers as they resume their interactions with health care system and start clearing the diagnosis backlog over the next few quarters.

We believe that we are uniquely positioned to capitalize on what would be a new more digital normal in health care is one of the most trusted brands in health care with their high consumer NPS and our consumer centric philosophy.

We see a numerable opportunities to further disrupt the industry with new products that re imagine health care, making it more affordable and convenient for even more Americans.

We are building the leading consumer focused digital health care platform in the U S and plan to continue investing our strong cash flows and our platform product user experience and our brand with the goal of creating the best consumer experience and improved health care affordability and access for all Americans.

Thank you for your continued interest in good Iraq, we look forward to sharing our progress in the quarters to come.

And with that I'll now turn the call over to the operator for questions.

Thank you.

To ask a question you will need to press Star then one on your telephone to withdraw your question. Please press the pound key we ask that you limit yourself to one question. Please.

Please standby, while we compile the Q&A roster.

Yeah.

Our first question comes from the line of Stephanie Davis with SBB Leerink. Your line is now open.

Hey, guys congrats on the solid quarter and I, just thought that I applaud the change in message.

So for them to go to college that Dave I mean, Berkshire isolation.

Yeah.

Thank you very much.

We can marketing spend increase pretty dramatically across the direct to consumer health Tech space. This quarter, just given some cost increases.

The lives of digital AD player.

I was hoping we could dig a little bit more NGL marketing channel mix and maybe talk about how you could see that shift going forward in light of some of your partnership announcements this quarter.

Thank you very much Stephanie for questions.

We're extremely proud of our great results in the second quarter with record revenue users at adjusted EBITDA. When it comes to marketing spend we're continuing to see very strong performance and business strength with consistent payback periods, even with increasing marketing spend.

One of the keys for this great payback period is that our most significant source of traffic and consumer acquisition is unpaid word of mouth referrals, especially by prescribers 2 million of whom have a patient who have used <unk> and 80% of whom recommend there it.

It's now easier than ever for health care professionals to recommend good Rex with a recent sure scripts agreement that will put our <unk> prices in the majority of EHR as in the U S. We're also doubling down on our research and content efforts as we believe the right content and insights further empower consumers and customer acquisition.

Okay.

And propel even faster growth in our manufacturer solutions offering.

As we spoke about we also acquired healthy nation earlier this year and are investing in this in house as well.

In addition to that we continue to test new direct to consumer channels as well as investing in our BD efforts like our recent strategic agreements with great companies like door Dash and USA I'll also add that search and Facebook do not make up a material piece of our user acquisition, we have great diversification on user acquisition between paid and unpaid.

And across the pay channels and.

As I said unpaid is the largest channel.

Now for a follow up on the flip side of that question are you starting to see some of these things all health players have inbounds about advertisement their Xbox one and where is that today in terms of folks advertising platform that seems like a pretty big opportunity.

70, <unk> the contract is nothing Google athlete.

Yes, definitely we have relationships with many of the health Tech leaders, we see many opportunities for all sorts of creative and lucrative partnerships with our 20 million visitors, we offer an incredibly effective way to reach consumers and health care professionals and to support them as they navigate the health care system that can be through integrated solutions.

<unk> pharma manufacturer solutions it can be through strategic agreements like the go health agreement, we've discussed which I can also speak more of or in other ways that help us deliver on our mission to be trusted advocate.

Thank you very much.

Thank you.

Our next question comes from the line of Jay Lynn, just saying with credit Suisse. Your line is now open.

Hi, This is Adam on for Julien today, Thanks for taking my question and congrats on the quarter I'm just going back to the agreement you entered into with go health I appreciate the opportunities within the context of that partnership specifically, but I'm curious if this marks the beginning of you guys, becoming more embedded within the overall insurance infrastructure.

And not just in Medicare, both commercial plans as well and Oh well. This Rx next acquisition helped facilitate that if so or how should we be thinking about that.

Thank you very much Adam.

Well good Rx helps consumers with many health care challenges insurance is a category. We haven't directly addressed the reality is about 75% of our users have insurance with over 30% on Medicare we have almost 20 million visitors who come to our platform. Each month and this is another example of us being their trusted advocate.

Further delivering on our mission to help more Americans get the health care they need at a price. They can afford to go health agreement delivers more value to our users and also opened a new acquisition channel.

Our agreement allows us to help more of our consumers who are Medicare eligible finding enroll and the best Medicare plan that fits their needs and it expands our reach by getting go health members access to affordable choices offered by <unk> to further improve their health outcomes.

As you noted this marks an exciting step into the insurance marketplace, which can create significant value for us and for consumers on our platform and this is also only one of many platform extensions you should expect to see as we take our large and growing audience of users and help them navigate their entire health care journey.

So like to speak to Rx next Rx next is a prescription technology company that we acquired there.

They have unique technology that lets them work with health plans and Pbms in new ways to better service their members unfunded benefit plans as Carsten mentioned, there a pre revenue company with no immediate impact to our financials, but there are a few incredibly smart people building interesting things and we can take their domain expertise and technology and roll.

Out new solutions that further grow the scale of our business.

Thank you very much.

Thank you.

Our next question comes from the line of Mark Mahaney with Evercore ISI. Your line is now open.

I wanted to ask about.

Pharmaceutical manufacturers solutions investment opportunities.

This presentation was very helpful and you clearly laid out what is should be a really large market opportunity you should be well positioned.

Against it you talk about it having very attractive economics, youre tiny now against that market opportunity. So.

He wonders why you arent more aggressively investing against that opportunity and so the crude question would be if you were gonna put $10 million against investing against that opportunity how would you spend it like talk about how you are.

Best and spend against what's a really large opportunity and then second please.

The.

The uncertainty around Covid and not having a full year guidance is there something in particular, that's different that youre seeing in the business that gives you greater uncertainty than it happened earlier. This year what is it that's what's part of the business seems to be uncertain more uncertainty than normal and what's obviously been a very uncertain last year.

That allowed us that makes you not want to give them full year guidance. Thanks.

Thank you very much for the question I want to briefly highlight good or extra providers.

Speaking about manufacturers as good expert providers complements what we offer to consumers and is important part of our pharma manufacturer solutions offering.

Since our inception <unk> has worked closely with health care providers to help patients.

A significant portion of users on our platform our providers and over 2 million prescribers have a patient who has used could racks.

We have a brand awareness of 88% among health care providers and 80% of Hcp's recommend good Rx to their patients.

Good or extra providers as our easy to use solutions that provide reviews to help their patients afford to start and stay on their therapies, we provide them with digital tools to easily communicate savings their patients we offer access to real time, good prices, we discussed a bit the agreement with shell scripts, which is a great example, with nearly 2 billion scripts delivered to their system last year.

Here, we provide hcp's with educational materials that they can share with their patients, but we also have in office presence in over 400000 physicians offices.

All of this translates to a high net promoter score of 86 with health care providers, who use our services.

This drives growth in our prescription related offerings and also allows us to address the full $30 billion Tam in our pharma manufacturer solutions offering as we offer solutions both through good extra providers and good or extra consumers and we are continuing to work on enhanced functionality and new features specific to HCP, such as the ability to request drug samples.

Or virtual pharma sales rep visits speaking to investment in manufacturers. This is an area we care about.

Greatly and we are investing in so I'll highlight that we bought healthy nation, which was a meaningful investment.

And we're also spending.

On both product and content efforts to support this.

The growth of this business I am now going to hand, it over to Carson's speak too.

Your question around Covid.

Hey, Mark as Karsten here, great to speak with you again as.

As we think about Covid and more generally.

As Trevor said, we're really pleased about the results. We have today very excited about the second quarter and we feel like we've got the greatest market strength, we have ever had and no competitive taken share with from us at all so we're continuing to become bigger and stronger in our space.

With respect to Covid, specifically shifting to that.

We're providing guidance for another strong quarter in Q3, we're looking at 37% to 40% year over year growth at attractive margins in the range that we've given I think longer term beyond that our forecast and guidance assumes that volume will continue to increase through the quarter in the second half we have seen that sequential growth here.

Over to you so far through the year and we expect it to continue to do that if that slows down a little it will simply increase the backlog in store of future growth potential for us.

Realistically given the timing and magnitude of the inflection that will be associated with covid.

And hopefully that will be an inflection up.

Heck, we're seeing five or six different models from different sell side analysts among others predicting different covid evolutions, we didn't see the value in updating our full year guidance and narrowing the range yet, but we're highly confident in the third quarter and a 37% to 40% growth.

Okay. Thank you very much.

Thank you.

Our next question comes from the line of Charles <unk> with Cowen. Your line is now open.

Yeah Guy Thanks for taking the questions wanted.

Wanted to focus a little bit back onto manufacturer solutions and really just two questions around that.

Of the 20% of people that visit good Rx with a branded script and.

And that has led to being used.

Yeah, how many of those people have used it.

It's gone through a Fannie farmer manufacturer that you have a relationship with.

With the manufacturer.

Yeah.

Thank you.

So the question I'll, let you speak to manufacture solutions.

Hey, Charles as Betsy could you clarify your question I'm not sure I fully got it.

I'm just trying to find out right now because she's not you've signed a number of agreements, but tied to those agreements like how many of the people. Currently have you been able to direct interest had a search for a branded drug.

We're able to get them to a manufacturer.

Our relationship with.

Yes.

Well what I can tell you is we're just extremely effective at getting those people a solution that's right for them and helping them navigate them through our platform to the best available manufacturing solution that suits that circumstances.

These particularly the solution patient navigator has been extremely effective at that and that's why we've got such high growth in that part of the business.

And can you can you talk a little bit more what the economics are you.

You highlight them.

Economics, but you know when I think back to companies like.

Webmd right and when there was a public company and they would talk about.

You haven't kind of preferred.

Relationships with manufacturers.

Help guide and it would be.

I think it was on there wasn't a physician platform. So you know the the low value was having some type of a banner ad or television commercial advertising, but the more attractive economics would be providing medical content to patients looking for things.

Here you know obviously.

Lot more direct and you're really.

Getting a good lead generation on patients that likely have a script are looking for help on that can you talk about how the step ups in value that you know you know this is relative to other forms of advertising and how how how are you.

Can you just give a little bit more and how to think about that as we think about modeling and the guidance you've given for the segment.

Yes, I'm going to take the first part of that question and I'm going to hand, it up the constant so to help you think about.

And the economics and modeling.

First of all we've got about as I mentioned about 85% of our business is more in the sort of fixed fee based deal and we like that model because it gives us a chance to get value for the integrated solution, we create with the manufacturers directly.

So with that there's usually a setup.

Our monthly fee, we receive over the term of the contract typically a year, which means the fully engaged with the manufacturer and helping tweak and customized to the specific needs. We do have a part of our business that is.

More CPM traditional CPM orientation, which might be what you're sort of alluding to when you were referring to all the participants in the market, obviously thats part of the market we're in and.

We think that's important also.

Ultimately, what we're trying to do is reach an appropriate patient interacting in appropriate position and we think our programs are highly effective and that's demonstrated in some of the rois that we have with our clients.

Hey, Betsy and Hey, Charles This is karsten here with respect to the economics of the thing that's really exciting for me as a CFO, but this business is not just the fact that it's growing so fast for us year over year to three <unk> year over year. It's also the fact that the costs associated with it are so de Minimis basically we already have the 'twenty.

Visitors to our platform or the almost 20 million visitors to our platform coming in monthly and we already have the platform available to be able to place. These different tools for manufacturers onto so theyre really exclusive incremental cost expensive sales team, who goes out and bring these deals in the rest of it essentially drops the bottom line there.

The rest of it is nearly all of it as you can imagine given the on the rail cost here is our sales costs in unallocated overhead. So it's a very profitable business for us.

Yes, we're all out of pharma manufacturers spent $30 billion to reach buyers and consumers and we are extremely well positioned to further penetrate that whole Tam.

We offer an unparalleled platform.

To reach pay.

Patients and physicians through all stages of awareness access adherence good or.

The unrivaled choice for affordable prescription solutions in America for consumer competitors, we generally have 10 X more web traffic for given medication and the pharma manufacturer has on their own site. We have almost 20 million monthly visitors millions of brand drug searches on our platform HCP that consumers know and trust us the various audience embodies the profile of the manufacturers are seeking to reach.

We think we're highly differentiate in the marketplace the value and distinctiveness of our solutions. That's been recognized by the manufacturer customers as evidenced by the three X growth in this business year over year and the ongoing trajectory.

And our trusted brand increased scale and reach and deep relationships across the health care ecosystem position us to be a leading healthcare platform to connect people with this pharma manufacturer information access affordability solutions.

Thank you very much for the question.

Thank you.

Minder, we ask that you limit yourself to one question.

Our next question comes from the line of Ross Sandler with Barclays. Your line is now open.

Hey, just a quick follow up on that last question you guys said that youre ramping revenue per account by like 50%. So is that like a <unk>.

More impressions or more.

Leads that you're driving or is that you are adding additional brands per account and that's where the uptick comes from just any clarification on that'd be great.

And then shifting gears to <unk>.

The overall P&L. So you guys used to have about a 40% to 50% EBITDA margin in a couple of years ago, and we've invested a lot to build out. These new these new other businesses most of which has come in the form of sales.

Sales and marketing deleverage. So I mean, if we just look high level do you think we're kind of trough ing on your overall EBITDA margin here in 'twenty, one and should we think of it as you know.

Maybe we were kind of over earning before when we were at the 50% level or could it could migrate back up.

Now that we're kind of through a lot of the build out of the other businesses just any thoughts high level on the trajectory of your your margins would be great. Thanks a lot.

Oh, Thank you very much for the question.

We've spoken to a bit during this call you know we have record revenue record profit record users.

That growth in users growth in solutions.

Driving this this is not a.

Advertising business. This is strategic solutions with these pharma manufacturers to drive to drive volume. We do have more users. We've talked about how we have this large portion of the brands, but each of the large portion of the pharma manufacturers, but each of these primary infections are a large number of brands. So as we've shown success.

We grow that.

And now we are perfectly well positioned to expand out add more brands <unk> expanded those brands. That's why you see this 150% net revenue retention and three X you know year over year growth in this business. So extremely high performance and this is this is truly just the beginning we had 4% brand presentation with the top 20.

Manufacturers, but relationships with 19 of them. So we've done the hard work and now we're expanding out we're also investing more in the overall team and expanding out outside the top ones. So I'll hand, it back to.

Karsten for the second part of your question.

Thanks, Trevor Yeah.

I appreciate the question, Rob I think with respect to EBITDA and adjusted EBITDA margins again second quarter was $54.6 million, representing about 39, so call. It 31% margin, which is slightly above our guidance of 30%. It's down about one percentage point sequentially about nine percentage points as you said year over year the why.

Roy element of it was driven by an increase in sales and marketing spend primarily as a percent of revenue compared to the second quarter of 2020 in that quarter, it kind of proactively reduced sales and marketing at the onset of Covid.

And we also continued.

The second factor in the margin impact to make investments in product development and technologies as well as in G&A to some degree as we began operating as a public company. So given where we are building a leading consumer focused digital health care platform in the U S. We plan to continue to invest heavily at this stage to the growth opportunities are just so big.

So we'll invest our strong cash flows and our platform product user experience and the brand and marketing and sales with the goal of creating the best possible experience. We can given that the market is so massive that said your question is more around timing I think Ben then then around exclusively adjusted EBITDA margin and I think he.

So were in profit and I think it is a good word to use because as we continue to scale a large number of investments we make effectively are pretty fixed like whether we have twice as many visitors so close to $40 million close to instead of close to $20 million a month to our platforms.

That doesn't necessarily drive up our product development and technology expense at all for example, so I think we continue to believe the margins will expand as we move forward and as we continue to scale. The business. This is just a great opportunity right now to double down and grow and continue to serve more Americans.

<unk>.

Yeah.

Yeah.

Thank you.

Our next question comes from the line of Justin Post with Bank of America. Your line is now open.

Great. Thank you I'll just ask one as we're getting through time and I also appreciate the new disclosures. So so I get a lot of questions on Amazon just wondering it looks like they are offering more services via prime but anything new you're seeing from Amazon specifically around inside Rx activity and reach.

And any changes in the adoption of mail order that youre seeing in the industry. Thank you.

Thank you very much good morning, Justin.

Our entire history no competitor has had a material impact on our growth trajectory companies have tried to copy our model or tried different models, but none have been able to impact our business Amazon has been trying to grow a pharmacy delivery business. We believe they have not been successful mail order prescriptions only make up about 5% of still count in the U S. Even through Covid males remained a small piece.

Of overall volume and is now starting to decrease ex Covid eases as we said in the past. We believe there are primary card the inside Rx program, you're referencing was launched to enable Amazon pharmacy display third party cash prices not because theyre trying to send consumers competing retailers to fill their prescriptions, which is a departure from their model since.

November from what we've seen in third party surveys and prescription volume data and heard from industry participants we have observed almost no usage of the primary <unk> discounts at retail. We also now have seen third party data, suggesting they only have a few hundred users a month our business has reached record revenue record profit and record users and no competitive efforts.

That impacted our views of our prospects.

Great. Thank you for the question.

Yeah.

Thank you. Our next question comes from the line of John Ransom with Raymond James Your line is now open.

Hey, good morning team.

One of the market consensus this quarter was the.

Early week, Yes, third party App data of your your site and I know you're not talking about the fact that you guys are mailing out more physical cards.

Maybe you could talk about the disconnect. There and also do you have some number on the use of the physical cards this quarter versus.

In prior years.

Okay.

Sure.

Our platform gives all Americans, the knowledge choice and care they need to stay healthy sometimes those users come to us when they're about to fill a prescription or access telehealth, but often there at a different stage of their health care journey for those users we provide great information and tools to help them make better health care decisions that means there is not always a correlation.

Online traffic or app downloads, and our user count or financial results. We are building relationships with our consumers that translates into the record high brand awareness, we have seen with consumers.

88% awareness, we spoke of and we now have with HCP is a.

A great example of this is our vaccine guide, which we launched in the first quarter to help consumers at a critical time, we built an amazing product and it generated significant traffic to our platform and increased awareness is good Rx brand, but not all of those visitors immediately became macs or subscribers are downloaded our app. This was just the beginning of our relationship with them.

The same goes for a lot of great content, our amazing team of economists pharmacist and researchers produce that is broadly used by both consumers and health care professionals.

This effort is important for building our brand driving awareness empowering consumers and establishing a relationship with them, but it may not immediately translate to in period conversion. In addition to these factors a significant portion of our business is recurring with 80% plus repeat activities and these repeat users come back to our platform.

And with different frequencies.

I'll speak briefly you mentioned cards and physical materials, we do have presence in 400000 provider offices, which we're very proud of some of those are online from offline but.

All of this is part of a really diversified marketing mix without concentration in any in any particular area.

In addition to these.

I'll also add traffic and activity in our platform continues to be strong our platform at a significant scale and reach with almost 20 million visitors on average year to date, and our $7.5 million combined Macs in subscribers in the second quarter. This approach of being a trusted advocate for consumers is already paying off with a record second quarter results and we believe it will pay off even more cigna.

Second we overtime as awareness continues to build and translates into future growth.

And by the way you got sent me three five this quarter so I'm good.

Okay.

[laughter].

Thank you.

Thank you.

Thank you. Our next question comes from the line of Doug Anmuth with J P. Morgan. Your line is now open.

Great. Thanks for taking the questions.

Wanted to talk about Macs, a little bit of I think the <unk> they've come down a little bit just from the March levels. So I was just hoping you could provide a little bit more context kind.

Kind of on what Youre seeing maybe on a monthly basis through <unk> and just how you're thinking about that into <unk>.

And then also just on the corporate opportunity given the door dash and USAA deals just curious how big of a priority. It is for you here and building out more of these kind of relationships and just how we should think about the economics there for gold.

<unk>.

Thank you all speak to the second part of your question and then I'll hand, it Carson for FERC.

We are excited to offer the value and benefits of our gold subscription products to more consumers through great companies like USAA and door Dash, Greg called is growing very fast subscriptions grew almost two X year over year to over $1.5 million subscription members. We have today remember subscribers at a higher LTV.

We have a much tighter relationship with them as we continue to deliver increased value.

These two agreements are great. Examples of how we can reach even more Americans, including those in the gig economy through door dash and those in active service of veterans for USAA. Historically, most of our new subscribers came through direct to consumer marketing or through Upsells from our existing prescription base user base, but we think there's a great opportunity to increase our reach and help even more can.

Tumors through <unk> relationships, we're just getting started with our business development efforts around gold and we see these as great avenues to continue to quickly grow the program I'll hand, it over to Carsten speak to your question regarding <unk>.

Macs.

Hey, Doug this is karsten product and great to speak to you. This morning again.

Couple of things on Macs, I think the first thing is that the.

The growth in Macs that we've shown.

Year over year or Q over Q, respectively is positive you have to remember Macs on average.

Of the accounts in each months of the quarter. So we have seen if you look at it through that lens we.

We've seen Mac count increase again from from.

Fourth quarter into first quarter into second quarter. So we're very excited about that progress and the increase in count and our <unk>.

Our macs.

The other thing to say.

The reality is in the prior quarter, we still have some of the effects left of the pull forward in demand that happened at the beginning of Covid because that then creates a pattern where those fill to recur at the same time as the pull forward originally occurred.

So you saw some of that in March but that said if you look at average Mac now versus average mark in the first quarter were up significantly on that so we're very very happy with that with that outcome, especially given the reality that we've grown subscription so much at the same time, they're subscription count now at <unk>.

Little bit over $1 million at 105, and the users served by subscriptions up at about $1.5 million on top of the Mac count. So that's completely in addition to bringing the total number of Americans served by a good Rx through some form of our prescriptions offerings to a full $7.5 million, which is an absolute all time high here.

Okay. That's great. Thank you.

Thank you.

Our next question comes from the line of Sean Dodge with RBC capital markets. Your line is now open.

Thanks, Ed.

Good morning.

Maybe digging into the margins a little more testing.

You mentioned again, the shifting revenue mix towards the other businesses. If we think about the longer term implications of that to the X.

And Alex on the manufacturing solutions.

That is great, but on the subscription business could you talk.

Maybe just a little bit more about how margin on subscribers compared to Max when when you are successful in converting a Mac just described it.

What's the margin impact from that.

Yeah.

Thank you.

Karsten could you speak to this also.

Sure, Yes, I think when you when you look at our subscriptions, we're really excited about them generally.

<unk> business is for us great because it creates more visibility.

And it's got higher Ltvs in our base business and is of course, great for users because theyre benefiting from even lower pricing again, when the reasons discussed the higher LTV.

And parts of the margins as high as in part also simply to the frequency of use you get that subscription fee either every months or get a prepaid in advance.

Highly visible highly recurring as we said and that can be a little different from our core prescription transactions business in so far as depending on what your fill frequency as you may have 30 days sales or 90 day fills we may not have as much frequency as monthly and that business, whereas for sure we do and our subscriptions business from a March.

<unk> perspective, when you think about it that business is the subscription business is pretty exciting for us.

Other than bring you on as a subscriber once you're on and using us.

The contribution to you provide in the revenue provide effectively dropped pretty much entirely to the bottom line. The platform's built you as a subscriber are onboard using our services.

And from that therefore, there isn't a significant amount of opex generated or a significant amount of cogs generated and thats. One of the beauties of this business is that the fixed cost structure allows us to continue to grow margins as we scale. So helpful.

Yes, yes very helpful. Thank you.

Yes.

Thank you. Our next question comes from the line of Ricky Goldwasser with Morgan Stanley. Your line is now open.

Yeah, Hi, good morning.

I had a question a follow up question on the guidance and then just a question on the manufacturing business just to clarify on the guidance.

One are you.

<unk> you.

<unk> guide.

Or just providing sleek Q guide.

And if you also can you remind us what are you assuming for.

In the fourth quarter, I think you talked about it in the past, but I just want to make sure.

We're thinking about this correctly.

And then on the manufacturing solution and one of the thing I think that stood out in your letter to shareholders of sort of the cross selling opportunities.

They are materializing.

In the different businesses.

So when you think about manufacturing solutions.

What are the opportunities are there opportunities you're seeing to cross sell so Timothy R. B.

<unk> subscription business.

We're not just a <unk> prescription.

Revenue stream.

Thanks.

Karsten could.

Could you answer these questions.

Alright.

I'll bring it back to yen for the end of it on menthol, but great to speak with you Ricky I think to your the first part of your question, we haven't pulled our full year guidance and we're also not changing or changing the range, we're providing specific guidance for the third quarter again, thats, a 37% to 40% year over year revenue growth.

We're extremely excited about.

Adjusted EBITDA expected to be around 30% again.

We continue to have strong confidence in the outlook for the business broadly just given the sequential growth we've seen in volumes over the last few months and quarters.

Our planned guidance assumes that prescription volume will continue to increase through the third quarter through the rest of this quarter that we're currently in and the rest of the second half as well.

Given the timing and magnitude of the potential inflections of Covid. That's when the reasons, we're not updating now I think there's just so much diversity and thought there that either narrowing the range or trying to pick a point that's different from before at this plant would be pretty tricky.

With respect to the specifics around around flu I think we expect that to be more normalized this year at present themselves seeing a lot of articles.

Talking about number one the increase in sort of acute volume starting to happen and number two I think we still anticipate that we will see more normalized business.

All of US are in the same room here at good R X again and that hasn't happened for a long time and great for all of us to be in the same room. We're excited about that on the other hand, those are exactly the kinds of things that drive cold flu season, and I'll turn it over to <unk> on the mend sulfide.

Yes.

Honestly take the second part of the question.

Whether you need to fill a prescription for a brand or generic renew it for good or cure you know we offer a diverse set of services to customers and we're all our efforts are to find more ways to be relevant and helpful to consumers and health care professionals, you can see how successful that cross.

<unk> has been and can be from care. Following the rebrand cross sell went from 10% last year to 30% earlier this year to 60% now because the experience so delightful and positive and the experience gained unified and so we anticipate even greater cross sell.

Opportunities and successes as we continue which only helps make the LTV better for users who come to us and makes the consumer experience better.

Ross our platform.

Yeah.

And.

And are you seeing the same sort of opportunity on the branded side.

It just seems like such a large market opportunity I mean, clearly the co pays are are higher but it seems that that's where there's an opportunity to.

To attain to consumers.

Absolutely.

I'd say when we spoke when we've spoken previously we've talked about 20% of searches are for brand drug theater users, who come to <unk> to get access to affordable health care and they go into brand drugs. Those can then be serviced by our pharma manufacturer solutions, where we helped <unk>.

Tumors and health care professionals on that health care journey, so that the.

Farm manufacture area of cross selling is one that's almost the easiest. In addition, this speaks to what Andy spoke about where we typically have 10 X the traffic on.

Our drug pages versus.

Brands manufacturer's site. So we can capture more of the basket for users of how to help them save on prescriptions in healthcare generally and within prescriptions. As you said many of those are brand drugs.

Okay.

Thank you.

Our next question comes from the line of Vikram.

As Sava Viola with Baird.

Your line is now open.

Hey, good morning, Thanks for taking the question I just had a quick one on script cycle that you've talked about the lower prescription revenue per macs that comes from that business. Just curious if you had any updated thoughts on the opportunity to close the monetization gap there relative to the traditional good Rx user on the potential timing around that opportunity. Thanks.

Well. Thank you very much we've spoken about script cycle in the past. This is a different model serving a bit of a different market.

I think what I'll hand, it over to Carsten to speak about.

General take rate generally and how that performance, which I think may maybe.

A reasonable way to give more insight into the question Youre asking.

Hey, Vikram. This is karsten I think couple of things. So one of the things Thats interesting about that business is that among other things. It doesn't really have tac associated with it so because we partner with retailers to provide the ability to save on cash pay we don't really bear that cost.

No real attack, which means even at somewhat lower margins is pretty much risk with <unk> and <unk>.

Pretty much an attractive business for us.

Because of the dynamics on it are just so good with respect to sort of take rates more broadly.

Revenue per Mac more broadly the unit economics in a prescription to vaccines offerings have been very consistent increasing a little bit over time and the reason that's a sustainable is because we keep on driving more and more volume to our <unk> partners and that volumes incremental to them.

Those almost directly to their bottom line given theyre highly fixed cost players and the evidence of the value is really that we continue to add new pbms again, a couple even in the last quarter or so from that perspective.

We continue to believe that we're going to be able to sustain essentially increase the PTR per macs subscription transactions revenue per Mac further with respect to script cycles, specifically and whether that will ultimately converge with our existing business and heat given the models are so different again, given the fact that we're not supporting the market.

For that and just benefiting from the resulting LTV or contribution stream over time.

I suspect that business will never reach as high margin levels of our core businesses PTR per Mac, but we do continue to evaluate opportunities to enhance our margin profile and it as well.

Thank you. Our next question comes from the line of George Hill with Deutsche Bank. Your line is now open.

Yes.

Good morning, guys and thanks for taking the question I guess Karsten just something that came out of your prepared commentary.

Struck out with me was you talked about working with incremental pbms in the quarter I guess I'd be interested to hear you talk a little bit more about kind of what is the value add of adding kind of more pbms at the margin and I don't know if there's anybody that you can name you also talked about expanding rite aid and adding them into it.

The gold product I guess can you talk about whether or not you see more opportunities to expand and add additional pharmacy partners there.

Sure I'll jump in here I think first of all on.

And George with respect to adding Pbms, we haven't named other than the ones that are the top ones in our in our financial nodes.

So I won't go specific names, but we again added a couple of just this last quarter, which we're super excited about.

Well each incremental PVM doesn't make a ton of difference anymore. There are still some pluses to all of them have unique and better pricing on some portion of their formulary. So even if the addition doesn't make as big a difference as it might have made if we still had single digit accounts and pbms instead of being very deep into the double digits.

The benefit is there from an immediate economic perspective for users in terms of being able to save even more money.

Along with that.

The benefit of being able to save even more money. We believe that the concept of a marketplace is important to us and so far as when we have that marketplace. It creates and catalyzes competition to drive prices for users down further and that in turn frankly as a user prices dropped further and further and we get to keep a little bit of that and that does good.

For take rate as well.

We're extremely excited also to have ready to join up in gold and I think having that Golden network continues to expand and the reflection on our brands that that represents that we have yet another pharmacy or who is interested in partnering with us with a strong brand 90, NPS with consumers and.

We have high degree of trust, we've engender and pull our strong brand onto their brand is really a reflection of how much value that brand really has and how big of an asset. We've created so we look forward to more more partnerships like that and we continue to be extremely excited.

About the gold program generally given the economics that have that we've talked about a little earlier.

Thank you. Our next question comes from the line of Kevin Caliendo with UBS. Your line is now open.

Great. Thanks for taking my question.

I wanted to understand the economics around subscribers and Macs in the conversion over.

Alright.

The math around your math per revenue per Mac is higher than what you get for a subscription so I'm guessing like I'm trying to understand where the conversions are coming from that would make it beneficial to good Rx or you.

If you have a very high Mac user it would make sense to go to a subscription model is that what you're seeing are you seeing subscriptions happen across.

Your user base sort of new users, who maybe haven't used it as much or.

Essentially subscribers, who aren't necessarily at the average.

Usage rate.

Yes ill, let Krishna answer this as we're getting to the end of time.

Sure I'll be quick so maybe we can squeeze in one more tube.

Kevin Great to talk to you. This morning with respect to subscription the the main reason subscriptions have higher LTV is again because of the frequency, meaning we're getting that money every month no matter, what and with respect to our Macs will they have higher prescription transaction revenue per Mac and in many cases and on average.

They're not necessarily coming in each month, depending on whether they have 90 day co profiles. So frequency is a really big factor for us.

Along with frequency to the other part of your question, we're seeing more and more folks go directly into subscriptions, we've integrated the subscriptions offering on the App. So when you look up a drug crazed you see right away that the drug prices cheaper than the subscription program and often the very first failure doing can be big enough from a savings perspective.

And the delta versus our prescription transactions offering to pay for a subscription for a month. So a lot of users are coming in directly that way beyond that we see the use of subscriptions being pretty well distributed in terms of conversion from Macs to subs again, because we priced it so aggressively to make it attractive for almost everybody to do that.

Even if you don't not even in consideration of the other non prescription benefits like health services that discounted levels and other things we offer.

Great. Thanks, that's actually very helpful. Thanks, so much.

Thank you.

This concludes today's question and answer session I will now turn the call over to Kevin to Trevor Vince that for closing remarks.

Thank you operator, we are very pleased with our strong second quarter results from our record revenue record profit and record users our business is stronger than ever the reacceleration of our revenue growth to 43% year over year in combination with our attractive adjusted EBITDA margin of 39% mix of the rule of 70 company, which is.

Undeniable point of differentiation, we're excited to further strengthen our extra providers through our recently launched integration with <unk> scripts over 2 million subscribers on a patient who had used it Rx we have enough its presence in over 400000 physicians offices and about 80% of prescribers recommend us to their patients and this new integration can help even more providers and their patients at the point of care.

We're also rapidly scaling our pharma manufacturer solutions offering and delivering innovative solutions that connect doctors patients and pharma manufacturers more efficiently and effectively we've grown year to date revenue nearly three X year over year with net revenue retention over 150% year over year today, we work with 95%.

The top 20 manufacturers and have already set our sights and the enormous upside potential ahead, what excites us. The most however is how we are working to develop the most significant digital brand in health care that gives us the capability to deliver new services and improve care and affordability for Americans are success amplifies our opportunities as we grow we can.

Can further leverage our scale and data, allowing us to drive deeper consumer savings and higher usage. It also drives richer engagement unless or expand our subscriptions pharma manufacturer solutions and telehealth offerings and provides a platform for additional offerings also we can reach more consumers across the stages of the health care journey I'm incredibly proud.

Route of the effort and dedication of our team and their ability to relentlessly innovate and re imagine the future of health care. We are empowering Americans with the knowledge choice and care they need to stay healthy regardless of income or insurance status. We made tremendous progress over the last decade, but it is just the start we believe the runway and opportunities we intend to capture.

A massive thank you for joining us on this journey.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

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