Q4 2021 Goodrx Holdings Inc Earnings Call
So you think it's an M T V stand by and welcome to the good R X fourth quarter and full year 2021 or east call. As a reminder, today's conference call is being recorded I would not like to excuse to your house for todays call the Canadian.
Vice President at Industrial Relations Mister Charles you may begin.
Thank you operator, good afternoon, everyone and welcome to get access to earnings conference call for the fourth quarter and full year 2021.
Joining me today are dead purse and covered that deck are co founders and co Chief Executive Officer.
<unk>, our chief Financial Officer.
Before we begin I'd like to remind everyone that this call will contain forward looking statements.
All statements made on this call that you're not relate to matters of historical fact should be considered forward looking statements, including statements regarding management plan strategies goals and objectives.
Our market opportunity participated financial performance and the expected impact of COVID-19 on their business.
These statements I need their promises nor guarantees.
Got involved known and unknown risks uncertainties and other important factors east.
The factors may cause our actual results performance or achievement to be materially different from any future results performance or achievement express or implied by the forward looking statements.
Factors discussed in the risk factors section of our annual report on Form 10-K for the year ended December 31, 2021, and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward looking statements made on this call.
Any forward looking statements represent management's estimates as of the date of this call and we disclaim any obligation to update these statements you've been a subsequent events cause our views to change.
In addition, we May also referenced certain non-GAAP metrics, which are reconciled to the nearest GAAP metric in the company shareholder letter, which can be found on the overview page of our Investor Relations website at investors Dot good R X 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 Doug.
Good afternoon, everyone and thank you for joining us today.
2021 was another record year forget arrests, we spent the you're working hard to bring lower prescription and care places to more people will also finding more ways to make <unk> more helpful and additional points along more healthier journey.
I'm proud to say that we've made real progress and or impact has never been greater.
During the year millions of Americans use good R X to navigate their chair we've made significant.
[noise] investments in our brand substantially raising her own unaided awareness.
We created an acquired new products and consumer content and resources, while strengthening our relationships with providers and deepening our relationships with pharmacies and others across the health care industry.
Our platform has grown as as a reach where especially excited about the delivery of our content initiatives around good R X health and health care provider focus platform extensions would help providers help their patient and support our pharma manufacturers solutions offering.
We have now helped American say more than $35 billion on their prescriptions compared to the pharmacy cash price. This is an incredible milestone as we consider the impact of our business in 2021 alone more than 5 million of our users saved more than $500 compared to the pharmacy cash price and R. M. P. S increased to 90 among <unk>.
Riders equal to our high M P S with consumers.
The incredible value, we continue to deliver to consumers and providers led to another your record results in record users the greater impact the stronger our performance.
I couldn't be more proud of our team while millions of Americans continued to be impacted by COVID-19, we developed innovative and impactful ways to help.
Early in 2021, when vaccines first became available we quickly mobilize to build a vaccine guys, helping number 20 million Americans navigate when where and how to get vaccinated.
This year with the gradual rollout of the new COVID-19, Antivirals, we quickly bill to consumer friendly online tracker showing availability of pharmacies nationwide.
Many of the visitors to the services, having previously interacted with correct offering us an exciting opportunity to build a relationship with them.
If this year has shown us anything it's the importance of gratitude and I could not be more grateful to work day in and day out with a team that is so fiercely dedicated to our mission and hard at work every day to make sure that we have an even greater impact in 2022.
With that I'll turn it over to Trevor to address key highlights from the quarter and our strategic priorities for 2022.
Thank you and thanks to everyone for joining us this afternoon <unk>.
Before I talk about all of our 20th 21 achievements I wanted to take a moment to discuss where we ended the year relative to our expectations and what that means for both our near term and long term expectation.
When we built our 20th 21 plan, we expected the second quarter would continue to be impacted by Covid, but that health care activity would pick up in the third quarter as the undiagnosed condition backlog started to clear.
These assumptions formed the basis of our four year, 20th 21 guidance, which we outlined on the fourth quarter earnings call last year.
The reality is that the effects of Covid have remained longer than we expected and the resulting impacted our business has been greater than we anticipated car.
Karsten will discuss the quantification and its implications on 2022 guidance, but I wanted to acknowledge that we underestimated the length of time, the COVID-19 would've packed or visit.
Having 24 months of smaller new therapy starts in a business that's highly recurring due to refill frequency and the longterm nature of prescriptions created a compounding impact overturned.
Despite COVID-19 lasting far longer than we expected are full year revenue was still within the guidance range. We provided early in the year and just one per cent shy of the midpoint, including the fourth quarter results.
We were able to deliver this performance thanks for a newer fast growing subscriptions offering or even faster growing pharma manufacturers solutions offering both of these incredible businesses, where Nathan just a few quarters ago and today contribute significantly to our financial results.
Despite the headwinds we faced in 2021, we've continued to grow revenue Margaret chair and relationships all of which set a strong foundation for years of sustainable growth and profitability.
We didn't reduce our pace of investment during the slower than anticipated growth period, even though this resulted in lower than historical emergence, we chose not to slow down the pace of innovation, we're taking a long term view.
Some of these products and marketing investments deliver returns quickly like good or extra providers, which launched in the fourth quarter and we believe puts us on a path to quickly becoming one of the largest provider platforms. The country. We've already seen excitement for this all frigging, our sales pipeline with pharma manufacturers.
Other investments will take longer to be reflected in our financial results, but we'll leave that would be hugely impactful for consumers and our future revenue.
We have generated significant cash flow for many years and have add historical adjusted EBITDA margins about 40 per cent.
A conscious decision to invest in our platform in a brand over the last few quarters has resulted in record unaided awareness.
Most of our teams where we've been focused on investment are now largely in place and we anticipate our operating leverage will scale and the second half of 2022 with margins expanding throughout the year. We are committed to returning to snorkel adjusted EBITDA margins of 40 per cent plus the coming years, but we are confident in their ability to do so.
Longer term, we expect annual revenue growth rates in the mid twenties. These grocery combined with increasing margins over time will position us as a strong rule was 65 company even as her scale continues to grow.
Our plan is to continue to build innovative products and execute strategic M&A to offer more value to large and increasingly recurring user base that knows and loves good Iraq.
We are confident we can deliver more value in the future and do so with high revenue growth rate and expanding margin.
Critics substantial long term shareholder value.
While we expected 2021 to be an even better year I remain incredibly proud of our accomplishment. We finished with your strong with another quarter of record revenue record adjusted EBITDA and record users. We grew revenue 39% year over year to a record 213 43 million in the fourth quarter at our adjusted EBITDA.
To a record $62.3 million.
Are positive results were fueled by the strength of our prescription related offerings as well as incredible growth in our pharma manufacturers Sweetens offers in.
In the fourth quarter, we reached over 6.4 million monthly active consumers. They number 1.6 billion subscription members. Despite the all the Kroger barrier adversely impacting the latter portion of the quarter.
We continued extending our reach in the fourth quarter and into the new year.
New <unk> distribution channels towards prescription related offerings further aggregating demand, we announced a new integration with wheel digital healthcare platform. The Power's virtual primary care and behavioral health services to make good R X prices available to wheel clients and their millions of patients. She also entered into an agreement with Instacart.
Right, they're shoppers with discounted access to gold.
Our farm and manufacture solutions offering delivered another quarter of explosive growth growing for X year over year capitalizing on the fact that 20% of searches on a platform are for brand drugs are.
A fourth quarter net revenue retention was over 150 per cent. We finished the year working with 19. The top 20 manufacturers had over 140 brands and we also built a very robust pipeline for 2022, setting a foundation for strong and sustainable growth of this offering I'm also excited sure we closed our first farmer.
Deals specifically targeting Hcp's this quarter with two top manufacturers.
Our ability to sell these HCP specific deals with supported by the fourth quarter launch a provider mode on a new and improved good or X for providers platform as.
As we highlighted on our second quarter earnings call good or extra providers is our dedicated provider platform offering them more customized experience the caters to specific H C. P need it equips providers with the tools they need to support their patient throughout their health care journey.
We'd been re imagining the way patients and hcp's interact with the health care system.
As a scaled platform, where both patients and hcp's engage with us at the same stage of the patient's health care journey, we believe there's enormous opportunity for us to meet providers unique needs with innovative solutions, while helping them achieve better patient outcomes.
Since we started tracking D. M D. I Q V. A data in June 20th 21 over 700000 providers have used the good R X platform space broadly across specialties from oncology primary care.
We have been introducing our new provider, but gradually to a subset of the providers who visit good R X and I've seen strong adoption with over 90 per cent of providers will be introduced opting into this new mode, which represents over 80000 hcp's and growing.
We believe this high rate of adoption without 80 off part for marketing underscores, it's highly differentiated value from providers and points to a competitive superiority.
As part of its launch we also redesigned our prescription savings club with a provider in mind offering more streamline navigation and focusing on their knees.
These changes are significantly increased provider engagement.
So far we've seen providers and the platform sharing discounts with patients at a much higher rate than before almost twice as frequently based on early results. We've helped our huge provider base, which was already highly engaged become significantly more effective at driving use of our prescription related offerings.
Providers are also turning to go directly to the source for editorial content.
What price searches and products savings drive significant provider engagement, we have seen increasing provider interested <unk> health content.
In 2021, we added thousands of new articles and videos, where the tripling the size of the <unk> health content library providers on the platform are actively searching good or ask for articles and content reviewed by medical editorial experts and we played to make sharing those resources, even more seamless H P. P mode.
This engagement further validates our focus on good R X health it lends itself to a more curated content experience for providers in the future.
In the first quarter, we added to a provider specific solutions with the acquisition of flip empty, but essentially pre revenue marketplace that has achieved significant momentum connecting practicing physicians with organizations seeking on demand medical expertise, we believe flip M. B as exciting capabilities. They were both expand our engagement with health care.
Riders an increase in complement the services available to our pharma manufacturers solutions offering continuing to differentiate it and expand the offerings lead relative to alternatives.
Good or extra providers allows us to not only drive growth in our prescription related offering but also expand our farm a manufacturer solutions offering by addressing an even greater share of the $30 billion spent annually on pharma marketing.
We believe the runway and opportunities to continue to address provider needs. A massive we are actively developing novel with innovative platform features to grow provider engagement reach and scale and are excited about the opportunity to forge deeper relationships between providers and others like pharma manufacturers and the healthcare ecosystem.
With a combination of good or extra providers and a consumer offerings. We believe good R X delivers a truly unparalleled digital healthcare platform any unique ability for us and for our partners, especially pharma manufacturers to educate influence and served providers and patients in a coordinated fashion.
Looking ahead, we're excited to build on our 20th 21 growth and success to deliver a very strong 20, twenty-two reaching more consumers and providers and bringing them more value at each stage of the health care journey, we remained intent on strengthening our Brandon and broadening our reach taking a consumer first focus to the next level and investing in.
Platform to launch new partnerships, new products, and even better services and.
In 2022 were focused on for strategic priorities.
First increasing awareness and reach helped more consumers understand how we can help them navigate their health care journey. This is true for both uninsured Americans as well as insured where we think the opportunity is massively underpenetrated.
Second strengthening our HCP relationships by expanding the H C P value proposition and continuing to make <unk> a destination for providers. We're focused on meeting their unique needs with innovative solutions, while helping them achieve better patient outcomes.
Third deepening our relationship with consumers by offering relevant timely and actionable services advice and content that enhanced engagement.
Fourth building or acquiring new platform capabilities that creates the foundation for additional services and value, we can offer consumers hcp's and farm and manufacturers.
We continue to evolve our solutions to benefit our users can further improve our unit economics.
This year, we are strategically repositioning gold or subscription program to focus on a more specific audience that we believe finds the most value from gold members with chronic condition multiple recurring prescriptions and other long term needs as part of this repositioning we increased prices for new gold subscribers in January to reflect.
The value of added to the program in 2021 and create a clear differentiation between our offerings.
We are almost two years past the time, when we integrated gold into our platform and with a much larger subscriber base was time to evaluate our subscriber behavior in pricing strategy. We found some subscribers or high utilizers can savings thousands of dollars a year will pay them only around 100 for the dark annual subscription and other subscribers are not using the offering it.
<unk> and are probably better off using our free prescription transactions offering.
Overall, we believe this changed benefits our user base gets users to be offering that makes the most sense for them and that the price increase improves our unit economics as well as the differentiation between our prescription transaction and gold offerings.
We believe this more targeted approach will allow us to continue to invest in gold and it's offering and deliver more value to an attractive user segment, resulting in improved retention and L. T V.
We are excited about the opportunities ahead in 2022 and beyond and it's Karsten will discuss shortly we're confident in our ability to normally drive growth, but also to inflict margin significantly while the macro environment will have its ups and downs, we're confident in the long term growth and sustainability of our business model, we continue to see many of <unk>.
Jason categories for good or extra enter within the massive four trillion dollar U S health care market and we will approach each opportunity with the goal of making health care easier more transparent and more affordable for America.
With that I'll turn it over to karsten to discuss our financial results some guidance.
Thank you Trevor good afternoon, everyone and thank you for joining US today, we finished easier strong with another quarter of a record revenue record adjusted EBITDA and record users as we continue to help more Americans get the health care they need at a price they can afford.
Revenue for the quarter grew at 39% year over year, the $213.3 million at the lower end of our guidance range prescription transactions revenue grew 21% year over year $258.8 million driven by a 14% year over year increase in our monthly active consumers, which exceeded 6.4 million for the first time.
<unk> as well as an increase in prescription transactions revenue per Mac, the fourth quarter of the first period. This year, where the comparable period included script cycle Macs, which we first reported in the fourth quarter of 2020.
Margaret prescription volumes continue to show a gradual recovery and have largely returned to 20th 19 levels. So the recovery has been uneven in nature and is not provided us with a high enough increase from new therapy starts to make up for the cumulative impact Cove. It has had on our business also the growth in total market in new bark a prescription installed.
Towards the end of the fourth quarter is a <unk> crew and 2022 started soft for January volumes down months over a month to the December January pattern, we haven't seen in recent years.
Clue season started aggressively and was even though pacing 2019 at some point, but it slowed enough to eventually fall below our expectations.
Office and clinic medical claims, which can serve as a good proxy for doctor visits and our key for us from a referral standpoint, given are extremely high awareness and referral rate also slowed down while the third quarter is almost back to 2019 levels. Two four was disappointingly lower than 20th 19 levels by single digit purse.
Centers, which presented an unfortunate headwind that was not anticipated.
At this point most of the coven effect on our business relates the cumulative to your impact of smaller new therapy start cohorts, which is a much longer period than we had expected and affects both new and returning users.
We can't make up for the smaller cohorts instantly, even if the market was fully recovered acute and seasonal trends like cold and flu or fully on pace and the availability and effectiveness of the amazing referral engine rebuilt through physicians and pharmacists had fully rebounded.
Subscription revenue grew rapidly up 79% year over year to $17.4 million. We finished the quarter with over 1.2 million subscription plans number 1.6 million members benefiting from a subscription offerings since our families subscriptions January serve multiple consumers.
Other revenue grew a phenomenal hundred and 96% year over year to $37.1 million, primarily driven by growth and pharma manufacturers solutions, which makes up a significant majority of other revenue as well as growth in telehealth. The grocery reflected the incredible mentum of her farmer manufacturers solutions offering.
And as mentioned on our prior earnings call the impact of some end of your incremental budget allocations that are seasonal in nature.
We will discuss a mixture of catalyzed by pharma manufacturers solutions subscriptions and the positive impact mix shift has on longer term margins in a moment.
Moving down the P&L cost of revenue is $13.9 million or 6.5% of revenue compared to $9.2 million and 6.1% of revenue and four 220 the.
The increase was driven by higher I would sort of in house personnel related to consumer support expanse to support our growth as well as changes in our revenue Macs.
Product development technology expenses were $35.1 million compared to $23.7 million from a 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 expense, including awards maiden connection with and after I P O.
O X.
Excluding stock based compensation expense unrelated packs from other items associated with acquisitions adjusted product development and technology expense was 12.0% of revenue compared to 11.2% of revenue and four 220.
Sales and marketing expenses were $106.5 million compared to $74.9 million and four 220, we increased advertising spend by $22.1 million a year over year and continue to invest in our incredible team with the goal of increasing a consumer and manufacturer based on building the good R X.
Brand.
With respect to a brand I needed awareness increase materially queue over too and also why over why setting another record for us, which we believe will yield positive returns for us longterm.
Adjusted sales and marketing expenses a percent of revenue grew a year over year, making up 47.4% of our revenue and four 221 compared to 46.8% last year.
General and administrative expenses were $35.4 million compared to $340.8 million in the fourth quarter of 2020. The decrease was due primarily to stock based compensation expense relating to the non-recurring co C. O words made in connection with the I P O, which including related payroll tax.
<unk> was approximately $268.2 million higher than the comparable period last year. The decrease was also due to last year's $41.7 million of non-recurring non-cash charges related to the charitable stock the nation and supportive Goodrich helps excluding these and other adjustments.
Just to G&A as a percent of revenue is 5.4% compared to 4.1% and four 220.
Met lots of $39.9 million compared to a net loss of $298.3 million in the fourth quarter of last year. Our net loss was impacted by $45.8 million of tax expanse due primarily to 52.4 million dollar valuation allowance, which will discuss in greater detail in a moment.
As well as stock based compensation expanse of $33.3 million $16.8 million of which related to the non-recurring co C O or it's made of time before I P O.
The year over your change was driven by at 263.2 million dollar decrease in stock based compensation expense and related payroll taxes, primarily relating to non-recurring co C O or it's made in connection with the I P. L.
This is partially offset by an increase to a tax provision, which was a 45.8 million dollar expense my fourth quarter of 2021 compared to a 7.4 million dollar benefit and a comparable period last year.
Adjusted net income grew 26% year over year to $40.5 million.
They just did EBITA grew 27% year over year to a record $62.3 million adjusted.
Just to be with a margin continued to be strong at 29.2%, reflecting our ability to deliver profitable growth due to a compelling unit economics of our business and higher repeat activity on our platform.
We continue to generate strong cash flow with net cash from operating activities of $49.8 million for the quarter.
Going back to the tax valuation in the fourth quarter, we recorded at 52.4 million valuation allowance.
This non-cash charge was driven primarily by significant access tax benefits realized after initial public offering which put us an accumulative three you're pre tax law suggested for permanent adjustments Adam this quarter.
Given that we still have a significant number of outstanding options that were granted before initial public offering a fairly low exercise prices, we expect those excess tax benefits to continue to accumulate so because the relevant guidance, where it's factors such as historical cumulative losses, much more heavily than future profitability.
<unk> it required that we put the allowance in place from the fourth quarter.
As a number of options remaining is definite and as we do have a strong record of patch profitability absent the extra stock benefits, we may be able to reverse all or a portion of valuation allowance and one or more future periods.
As we discussed in the past, we anticipate I'm predictability in our future tax provision or benefit amounts due to multiple factors, including the one I just described the exercise of stock options.
This element among others, it's challenging to forecast.
As it is generally driven by factors outside of our control such as the stock trading price and the related decision of employees deciding whether and what to do with your equity awards. This one of the reasons, we believe presenting adjusted net income and adjusted tax provides a useful perspective.
Looking at the year as a whole or proud to have delivered 35% year over year revenue growth at an attractive 30.8% adjusted EBITDA margin. We believe very few companies have our scale are able to grow out rates this high and be as profitable as we are on and adjusted EBITDA basis, We believe losing 24 months of normal.
New therapy cohort.
Which impacts both new and returning good or X users has been detrimental tour recurring revenue base.
We estimate the impact of depressed new therapy started sled to cumulative revenue a reduction of approximately 70 million to 140 million plus over the period since Covid began waited significantly towards 2021 based on our internal analysis, while we previously discussed the COVID-19 diagnosis guy and how it.
Could catalyzed incremental script volume that does not appear to have happened and even as new therapy starts returned to normal we expect the gap to impact us in the future.
We anticipate the impact of Covid on a revenue and our growth rate may decrease over time has increased new therapy started to begin to fill the gap that was created over the last two years.
We are confident in our strategy and believe the leadership position, we have achieved and or a prescription transactions subscription offerings as well as the strength manifested by the high growth of or a farmer manufacturers solutions and other offerings will allow us to continue to deliver strong growth well into the future.
We are committed to creating long term sustainable value for shareholders. In addition to making investments to increase our brand awareness and reach Strengthener H G. P relationships deepen our relationships with consumers and build a require a new platform capabilities. Among others. We recently announced the authorization by our board of directors to re.
Purchase up to $250 million worth of common stock, which will limit dilution associated with him ploy equity.
We expect to find the repurchases, where it's our existing cash and cash equivalents working capital cash flow from operations are funds available through various boring arrangements.
Moving onto Guy.
For the first quarter of 2022, we expect revenue of approximately $200 million, reflecting twenty-five percent year over year growth driven by our pharma manufacturers solutions offering or other revenue. We expect other revenue to grow 70% to 90% year over year, followed by subscription revenue growth of 45 to 55.
5% and prescription transactions revenue growth of 16% to 18%.
I should note that our success in closing large deals in our pharma manufacturers solutions offering can lead to fluctuations in the growth of other revenue and therefore, our overall growth rates. This is especially true when transitioning between calendar years.
Ah revenue guidance reflects a quarter over quarter decline compared to our fourth quarter revenue of $213.3 million well, we expect quarter over quarter growth My a prescription transaction subscription. Some telehealth offerings are farmer manufacture solutions offering is expected to declare in quarter over quarter between the fourth and first quarters.
The fourth quarter of seasonally strong do two year and spend increases and end of year budget. The pharma manufacturers choose to allocate to get our act and a recognition of our ability to quickly deploy their marketing investment dollars effectively however.
However, not all a fourth quarters revenues expect it to be a recurring and the same magnitude in the first quarter.
Oh spend will decrease we anticipate we will continue to serve the manufacturers and brands we worked with in the prior quarter based on the extraordinary Rois, we deliver for them as such we expect a quarter over quarter declined followed by sequential growth in each of the fallen quarters in 2022.
On the adjusted EBITDA friend, we expect an adjusted EBITDA margin of approximately 28% to 30% for the first quarter similar to a margin in the fourth quarter for the full year, we expect revenue to grow about 23% slightly below or guidance for the first quarter as we lap two small acquisitions, we made in the second quarter of 2020.
He won and lap at first half of 2021 that was more heavily affected by COVID-19 , creating slightly higher year over your comps of 2022 progressive.
We expect adjusted EBITDA margin to expand sequentially through the year with full your adjusted EBITDA margin landing between 31, and 33% and a fourth quarter margin access of 33%.
This merchant dynamic is related both to are expected revenue growth the higher margin flow through from a rapidly growing pharma manufacturers solutions offering and some upfront marketing investments that we're making in the first quarter to maximize in your return.
As we look ahead to a multiyear outlook were highly confident in our ability to grow revenue right from the mid 20 per cent range in the next few years without any inflections from the current macroeconomic or coven environment. We expect pharma manufacturers solutions to continue to grow rapidly and become a larger contributor to our revenue we're rapidly and.
Creasing her share of the 30 billion dollar pharma manufacturers solutions, Tam, which we believe will continue to grow as more and more farmers friendships to digital.
Even with this offerings three times year over year growth in 2021, and 150 per cent plus net revenue retention, we're still not even penetrated anywhere close to 1% and our relationships with 19 of the top 20th pharma manufacturers put us in a great position to continue to rapidly grow.
Another driver of this longer term revenue growth is our ability to replenish some of the smaller cohorts from the last 24 months with larger ones as we become further removed from the impacts of COVID-19 overtime or penetration into the huge prescriptions time remains low and we continue to increase their share of this market consistently.
Giving us confidence in the business.
We're equally confident in our ability to expand our adjusted EBITDA margins back up to the 40% plus levels. We've delivered in past years due to changes in revenue mix is wells are largely fixed cost structure and operating leverage.
Is it previously discussed we expect a continued shipped in revenue mix with an ever greater proportion of revenue coming from our very high and margin expanding pharma manufacturers solutions offering. This makeshift has been consistent for several quarters two years ago, approximately 90% of revenue was associated with or a prescription.
<unk> offering, whereas it's now less than 80% at 74% of total revenue in the fourth quarter that means our high margin nonprescription transactions revenue percentage has grown by about 2.5 times since the I P. L and the percentage has almost doubled in the last year alone.
In addition to changes in their revenue mix once the foyer impacts of her 20th 21 marketing product and technology investments are fully reflected in our 2022 cost structure, we will start exhibiting more opex leverage in subsequent periods.
This reflects a relatively fixed cost structure across much of our business, including a D N a and increasingly our product development and technology functions.
This operating leverage from our increased scale will start showing results later this year as it drives are expected higher adjusted EBITDA margin exit right in 2022.
In addition to our cost structure each year, the proportion of our transactions that a recurring that is zero tack and nearly pure margin continues to grow we're.
We're committed to translating a recurring transaction based increasingly fixed cost structure into incremental adjusted EBITDA margin, bringing it to the 40% plus range over the coming years.
Between our anticipated growth rates, increasing to the mid 20 per cent range and contemplating margin accretion as I discussed we believe will moved from being a rule of 55 to rule of 65 growth plus margin company in the years to come.
Finally, given the successful repricing initiatives reason <unk> initiated and our goals subscription offering you know I'd like to give some of our high level expectations for the offering is.
Is Trevor said were strategically repositioning golders, we tightened our focus on members with chronic conditions, who we believe can benefit the most from gold. In addition to offering gold members, even better prices on their prescriptions that are prescription transactions offering we've added more value to this program over the past year with new benefits, including mail or.
<unk> and discount to telehealth visit to support the repositioning of gold in two a liner pricing with the incremental value. We offer we increased pricing for new subscription members to 999 per month for individuals in 1999, a month for families.
This is the first price change the gold since we introduced the program five years ago.
Prices were increase for new members only starting January 10th and initial tests are encouraging.
If Tess continues to show positive results, we plan to increase prices for existing gold subscribers as well and a phased approach by the end of the second quarter.
We're expecting this change to resolve all hook and relatively flat subscriber pine growth. This year as a number of new subscribers will decrease with this more focused approach and because we expect a one time churn impact when we raise prices tour existing subscriber base later this year most likely in the second quarter, we believe that for.
The subset of folks who may shipped off subscriptions will pick them up and monetize deimos prescription transactions Macs instead.
To help with modelling, we're providing a one time gold update we finished the year with approximately 774000 gold subscriptions and a 77% to 23% individual to family mix delivering fourthquarter gold revenue of $13.8 million more.
More broadly we continue to evaluate or subscription offerings strategy going forward with much like everything we do a consumer first approach.
[noise], good or excess committed to building the leading consumer focus digital health care platform in the U S and we plan to continue investing a strong cashflows in our platform product user experience in our brand with a goal of creating the best consumer experienced and improved health care affordability and access for all Americans were equally committed to drive.
And shareholder value through aggressively driving margin growth and leveraging our cash to undertake the share repurchases that will limit dilution associated with employee equity.
Thank you for your continued confidence in good R X, we look forward to sharing her progress in the quarters to come and with that I will now turn the call over to the operator for questions.
Leafing isn't it if you had a question at this time. Please press star one on your telephone keypad. If your question has been answered do you wish to remove yourself from the keys Cranky Pankey. Once again, that's star one to ask a question. Your first question comes from the line at the jail languishing with Friday.
Please go ahead.
Thank you and thanks for taking my questions. Thanks for the go to Big down do you expect for the first <unk> I was wondering if you can pull I just seemed a big dollar cost of T business lines between P. T. A subscription <unk> based on sudden as I'm sure that all done it Avenue and assuming you'll get revenue benefit from Gwadar pricing teeth. It seems an order assuming much good only thing with C D.
Out of business help us understand that does it but more than I do not assuming much of a company from the time that you saw in January also how about all the partnerships by finding 21 in a long long just <unk> pull up the lightest back calm I'm just trying to understand why not much benefit is coming out there sorry about Lindy question, but trying to better understand you'll see the odd isn't it.
Expectations in 20th <unk>, Mac go with expectations as well as going to see it.
Thank you very much <unk> for the question I think it'll be helpful to answer that to frame 2021, a little bit and so I'll start with that and then I'll hand, it over to Karsten. When we built our 20th 21 plan. We expected Q2 would continue to be impacted by Covid, but that health care activity would pick up in Q3 as the.
Diagnose condition backlog started to clear and these assumptions form the basis of our full year 2021 guidance, which we outlined on our queue for earnings call last year as I mentioned earlier the effects of COVID-19 of remain longer than we expected, causing an impact to be greater than it would be expected there've been volatility in total prescription new prescriptions doctor visits and even long lines.
For consumers to fill scripts due to vaccine administration, all had some impact on our business as karsten set in our earlier remarks, we'd leave the COVID-19 cost US 70 to 140 plus million in revenue since the pandemic began to the end of 2021 and despite all of this we grew revenue 39% in the fourth quarter and came within our guidance and we grew.
Pull your revenue, 35% and we're just one per cent shy of the midpoint of the guidance range. We provided early last year. We achieved this full year revenue growth by the fast growth of our subscriptions offering and or even faster growing pharma manufacturers solutions offering even with Covid. We've reached record users in our prescriptions offering an increased market share all of which had a strong foundation.
For years of sustainable growth and profitability, we have a strong track record of significant cash flow generation. We've historically been at least a rule of 65 company and we're confident we'll return to this unique combination of growth and profitability in the years to come so I'll, let karsten comment more specifically about the other parts of your question.
Yeah. Thanks for the question to the lender and good to speak to you again uhm. So for the they think you're reflecting mostly in the full year and we expect full year revenues to grow that a 23% or slightly below our guidance for the first quarter as we laughed too small acquisitions, who made in the second quarter of 2021 and also as we laugh the first half of 21.
Because that first half those more heavily effective I called in and that creates a little bit higher year over your accomplices 2022 progressive.
The lines of business in terms of relative growth rates, we expect their manufacturers solutions offering to continue to grow very rapidly blue and consumer front and also on the provider. So I was correct for provider. So that part of your question. We expect it to almost double as here you got to remember that our Brian penetration of the top 20 manufacturers is missing.
A legit, but we have relationships with 19 of those top 20, and we can significantly grow the number of solutions each friend lives with us today that about three of <unk> and it continues to grow.
Passes.
Specter subscriptions will continue to grow nicely in 22, as well with gold leading the way after the strategic repositioning we discussed a little earlier on the call and finally, our pizza or a prescription transactions business. We continue to see if they were going to increase market share and grow ray similar to our first quarter guidance for that part of it.
Business.
We also expect to increase or adjusted EBITDA <unk> this year and exit the emergence exceeding 33 per cent hopefully that's helpful.
Yeah, I mean I'd be willing to give it like Mac go with expectations for the year.
In particular.
Yeah, I think we're doing a Mac number right now, but uhm given that revenue for Mac has remained relatively consistent over time I think the the teacher revenue because you're pretty close to Atlanta.
Just one quick follow up here nothing it's impacting your business and dumps W. A contract with <unk> just trying to understand that if there's any update on <unk> you guys. You guys can ship. Thank you.
Yeah. Thank you for that follow up you know our relationships with P. B M's remain great. You know we continue to add P. B M's, we haven't you know our relationships with retailers are very good we haven't seen any significant changes or developments in terms of the competitive landscape. That's had zero impact on financial results. You know we feel good about about.
The situation.
Thank you very much <unk>.
Thank you. Your next question comes from the line. It's average time again with Goldman Sachs. Please go ahead.
Thanks, so much for taking my questions, maybe I could zoom out in a sort of a bigger picture question. When you. When you look at the investment landscape, you're laying out for 22, what do you guys see as the two or three investments that you have to make against your longer term goals irrespective of the rate of recovery or the redid in peace you see in the Red.
The new environment in 22, and then the second part of the question would be can we maybe put final point on your confidence interval and the sizing opportunity as some of those investments morphed into revenue in and you return against sort of the rule of framework that you gave in your prepared remarks. Thanks, so much.
Yeah to really appreciate the questions and I think there are two ways to look at it when we think about the business broadly speaking in response to the latter part of your question and the rule of that looked at and we have one of the reasons. We believe that we can continue to throw up.
EBITDA more similar to historical levels in the 40 plus range and once again return to the rule of 65 uhm level that we've been performing at historically is that we're confident and they're both in their ability to grow revenue, but also in our ability to grow margin and on the on the investments.
I think that has two pieces to it one piece of it as a significant number of our investments are already made so when we look at our business broadly speaking, we see or overall cost structure, becoming incrementally more and more fixed and there are a couple of different dimensions to why that is the first piece of the dimension is.
R. R. The ability to continue to leverage the work we've done today, we built it or product and technology teams is grey being able to deliver it b B C and a side of a business is also great, but what folks don't always realize as a marketing front to where there are two able to increase their level.
Because of course number of business. This recurring gets bigger and bigger each week month year et cetera, and so the benefit of having that recruit business, which of course is milk <unk> associated with it is just a great thing. So what are we looking at investments we think those investments generally.
Mistakenly been laid in large parts of our business today and I think the other element to thinking about this through is that when we look for the investments were continuing to make our investments and things open up even more of a massive massive time. We are ahead of us for our benefit so assuming.
Examples of that.
<unk> things like our our connect acquisition that we made it last year, which allows us to be operating at the intersection of insured and cash pay which are great in terms of demand aggregation and other similar investments as well. So we're extremely excited about those elements as well as their investments and.
The Doctor asked the provider platform, that's allowed us to be able to pick up over the last several months a significant number of providers with 90% of the provider is exposed to the offering opting in using it. So we're just very very excited about all these dimensions.
Hey, there this is Doug Hershey I wanted to just jump in as well and and just let you know we are incredibly excited here about some of the the <unk> momentum that we have on the product side and some of the incredible stuff that we've been coming out with recently, obviously, the the nuts and bolts of good R X as generic drugs, we've had tremendous success and manufacturers solutions and I'm really excited about some of the new products that are coming along.
That are far more interesting and more engaging not just for consumers, but all all set for providers as well and I really want to hammer home that this relationship that correct has with providers is so special and something that we plan to continue to invest in and you'll see lots of incredible new products in ways that we can ultimately really help providers connect with patients because obviously, they're an incredible influence in the decision making process for.
Any patient across multiple journeys and last thing you know I encourage you to keep your eyes on product development because it just really really an incredible innovations that we're putting out in our products and they're starting to come to fruition now and I really hope I'm very very excited about the course of the next year because some of the stuff that we can work it out for quite some time is just starting to make its way out into the world and I think it's gonna be.
[noise] really impactful not just in there while the prescriptions, but as we love broader at the entire four trillion dollar Tam of all of Medicine Uhm I'm, just very very motivated from a from a product perspective as some of the really engaging stuff that we're doing again for both consumers and for providers.
Thanks for the Telegraph.
Thank you.
Thank you. Your next question can spend online Stephanie Davis.
S B B a living please go ahead.
Hey, guys. Thank you for taking my question.
I'll start with want the karsten given the the high incremental margin nature I'd be manufacturers person does that mean.
How should we think about the relatively needed 2022 EBITDA margin guidance is this.
More of a muted expectations, just because you don't really have that much clarity on it and you talk about the Democrat majoring a pair of black or is there an easier as post clothing D. So that we should be thinking of.
Big Stephanie Thanks for the thanks for the Great question, Yeah, I think one of the reasons, we're looking at emergency and the way we are tied to the last question that we responded to a little bit too we made pretty significant investments last year and wrapped up our employee base quite aggressively between the end of.
Of 2020, and the end of 2021, and so a portion of that investment carries over into 20th let me too in so far as you have a partial year and 21 of higher than the Lake New obviously get the full year 22.
So I think that factor is when is material to this discussion and one of the reasons were so confident that we don't need to continue to increase cost structure that we feel like we build those teams, they're leverageable, which means that we feel like we can do a lot more revenue scale off the size of the business and that's whether that ties together.
The the 22 margin anticipation and also the longer term emergent accretion from there as well so hopefully that's helpful.
Super helpful and I, just think about your shopping list since you mentioned, a little bit higher and Sir for 2022.
Is it safe to assume that's going to be more of the please adding type companies me acquiring more of a product or can we think of something a bit more of a scale that looks like you're kidding airpower you today.
Thank you could I follow up.
We are looking and you know we'd had the history of successful.
Smaller M&A transactions that have added capabilities added new new services, we can deliver.
We are.
You know, we just spoke about the flip M D acquisition. However.
We're looking at a variety of different scales for transactions that makes sense yeah.
Yeah, I can jump in little on that one too I think we we continue to think emanate can will play an important role and then we've looked at them and done deal historically around capabilities and then integrating them successfully to bring them to their let me look at things like script cycle or healthy nation, which was a big component.
The growth and manufacture solutions as well, we think we see a lot of opportunities in digital healthcare and they think going for we believe we're a very attractive platform for high growth companies to be able to scale them based on the massive size very existing base not just be 8 million folks who use.
Isn't the prescriptions business, meaning the the Macs and the subscribers when we think about it it's really more like be almost 20 million visitors, we get and a huge number of health care providers to health care providers are incredibly attractive to accelerate some of the potential acquisition targets, we see it there.
Number of them that we serve it I think the.
The most recent stuff that I've been looking at show the approximately half a million healthcare provider's a visit to get a rough platforms over the last 90 days or so and that's just a huge number.
Very challenging number for anybody else to obtain let alone some of the smaller target you can pick it up.
Thank you. Your next question comes from the lineup Chang eventually like maiden name. Please go ahead.
Hey, good afternoon.
Can we get a little more precise reading on when you think.
The growth in revenue might outpaced the growth and marketing spend.
Sure Uhm, a personal question off person speak to them.
Yeah sure John Uhm, that's yeah. It's a really good question I think the way we're looking at it in general is we see continued potential for efficiency and marketing.
We were talking in response to the question that came out a little earlier one of the things I said as as the recurring user base gets bigger and bigger and bigger we continue to believe that will be able to drive more efficiency in marketing too and as we think about even this this coming year that we're entering.
We believe that will be will be deemed to see some of the fruits of that in this in this impending twenty-twenty soon what I would also like to add is we've seen from a marketing standpoint, where other D to see players both in tech and indeed.
See health care have been rising costs, and we've been able to keep our payback under eight months and marketing you know, we really have a lot of controlling discretionary purposefully decided to invest to build bran hit record levels of unaided awareness and we think these are all great choices on this discretionary send me off so much <unk>.
Last and we're investing for the long term and trying to capture all these opportunities that are out there.
Thank you. Your next question comes from the line, yet Freaky Gotcha questions.
Okay.
Yeah, Hi, good evening. So a couple of questions here first of all if you think that the provider business I should we ultimately think about it as a direct contributor to the other revenue nine or should we think that it is a theater too far my services into prescription revenues and then second.
<unk> provided you updated uhm longterm revenue targets need mid twenties can you walk us just for the breakdown of how these things all the time on the <unk> contribution each of the different.
Businesses prescription or assist Thomas services in in a subscription.
Thank you so much I'm going to speak to the first part of your question and then I'm Gonna hand, it over to Karsten to answer the second part of your question.
For good or X providers, we see this as an enormous opportunity you know <unk> in the last seven months without over 700000 prescribers visit good R X and with a combination of good or extra providers and or consumer offerings. We believe we deliver a truly unparallel digital health care platform would unique ability for us and for our partners, especially.
Farmer manufacturers to educate influence and serve providers and patients in a coordinated fashion you know on a second quarter earnings call. We talked about good extra providers and that a significant portion of good R X website visitors or HC peas in the fourth quarter, we launched this new and improved good rest providers platform through the recently launched provider mode on our App and the result.
So far I've been quite an incredible we've seen a high rate of adoption with over 90 per cent of providers, who are being introduced opting into this node <unk>.
And as Karsten mentioned that almost 500000 providers visiting in the last 90 days. We believe we are one of the largest if not the largest provider and patient platform and we believe these exciting new provider focused tools and this increased reach with this audience extend that consumer reach and breath position is really uniquely well so with a new mode.
We're focused on two things just you know which are both of the items you've raised one driving further growth in our prescription related offerings by adding solutions that are designed specifically for providers.
An example, there as we redesign the prescription savings flow with a provider in mind and it has already doubled the number of physician to consumer referrals from the base providers adopted in and then second we're <unk>, creating providers fix solutions to drive more value to them and to continue to grow the H C. P part of the pharma manufacturers solutions offering.
We sold our first H C. P specific deals in queue for and in the future. We see opportunities offer many HCP specific solutions like personally I've content newsletters hosted prescribing and work flow tools to deliver value to providers and so we're extremely excited about this part of the platform and and the massive opportunities with providers and so all that karsten speak to you.
Your second Uhm question around revenue.
He uses karsten. Thanks for the great question, because we look towards their multi your outlook were highly confident in her ability to grow revenue are raised in the mid 20% range Uhm, we plan on doing that without any inflections in the current macro environment or in the coven environment, either just as we said for the go ahead for this year most of the growth.
Point of how <unk>.
Which represents an acceleration from the groceries in 2022, and the 2022 guidance.
We expect to come from a rapidly growing farmer manufacturers solutions offering even though that offer is getting quite a bit bigger the acceleration that were already beginning to see in connection with our ACP specific revenue will be an accelerant in 2023 and beyond Lucille typically occur on the fourth.
Quarter of the year prior so towards the end of this year will expect to see that revenue grow quite aggressively for future years on the prescriptions offering we think we're going to continue to grow and market share as we always have both absolute and relative or Tan is huge there in our marketing metrics like Trevor saying response to your question earlier.
<unk> continues to be positive I consistent cat, even in the face of growing spend so that supports a lot of room for incremental growth. We also believe that demand aggregation opportunities that I've talked about a little bit of things like our Macs are gonna help us in this dimension too.
Uhm gold benefits will lately will continue to invest in and so that offering to we'll see further acceleration in 23 and beyond we're really confident about the strength of their business from the revenue side in the coming years and also from the perspective of emergent accretion like we're talking about on the earlier question given the over.
Time incrementally more fixed cost structure nature of the business.
Thank you. Your next question comes from the line, it's Steven delicate sleek Black. Please. Please go ahead.
Thanks that good afternoon, everyone.
So I guess, what they covet disruption to the business in the fourth quarter coming from a combination of the Covid case might that are currently in the corner, but also the cumulative effect of cover that you alluded to guess.
Yes, I just want to make sure that I understand the messaging going into this year around.
Around how tightly your grow with will still inversely evenflo month by month with Covid case counts you mentioned that January was still somewhat weak, which makes sense given the elevated coast case can we saw January but.
As far as the February was there any evidence that trends were improving in February or is the cumulative effect, you're alluding to still causing disruption in February just curious around that how that correlation is still flowing.
The acute versus cumulative effect of Covid this year. Thanks.
Thank you very much your question and all that all that person's pizza.
It's it's karsten yeah. That's a great question I think perspective. It is that they will continue to be so I mean, and even this and to specific place of the will be effects on the courts continue to exist I think there are a couple of minutes is that.
On the historical course that are smaller than they would otherwise have been will continue to carry those four so those are folks who filled less and say April of 2020 or April of 2021 matters. So no none of US expected it to last that long and both of those initial fill out and then the subsequent refill.
Right of course will be lower by rather than just being smaller cause we sort of fast forward that to today.
As we thought about the guy we so we would anticipate that there are no real changes the macro environment from what we've seen over the last quarter. So so December January February and I think that has been to your point.
Uneven, but the point here is that given the importance of the health care provider referral town to us, which is significant and given what we're seeing in the marketplace generally in terms of health care utilization.
We don't think we're fully back yet, but we also wanted to go ahead in a manner that is consistent with that reality.
Thank you. Your next question comes from the line get done and that's J P. Morgan. Please go ahead.
Thanks for taking my question just related to the last topic just thinking about this 70 to 140 million that you mentioned since the beginning of Kobe through 2021, what kind of impact would you expect you know on a similar basis. In 22, you know I guess, it's kind of a similar question just trying to.
Understand like how long of a tail or a lag you could have going forward I mean, even if you get into 2023. For example, do you still have some degree of drag from you know like 21 timing on those on those to your cohorts and and I don't know if you said it or not but I mean, we've seen a lot of company.
That clearly had omicron Dragon December and January but you know we've got better into February are you seeing that as well.
Yeah. So go ahead and been in reverse order I think there there was some <unk> drag in December and there's also some cold flu drag frankly, because I think both of those things came out a little different moving respected uhm I'm cold and flu began pretty aggressively with it.
Pacing 2019 at some point, but then slowed down kind of fell below at least our expectations I think more broadly in terms of market data, we saw momentum slow in the fourth quarter a little bit.
We spent a total prescriptions new prescriptions be higher.
At the beginning of the fourth quarter, but then slowed down towards the end of the year.
Same thing roughly medical players, which are a good proxy for doctor visits and key referral channel. We have I think we saw a third corps pretty much back close to 2019 levels and then four fourth quarter dropped down a little bit again, so from that perspective fourth quarter to come in.
Later than we would have then we would've Bolton then we contemplated in or die.
I think more broadly on the on the court related question as well I think when we look at that.
The the smaller colors that came in in 20 and in 2021 there'll be sticking around for awhile. A retention. This continues to be great cancer recurring transaction rate of well over 80%. So from that perspective with those of course will be sticking around for quite a while.
Some time they are smaller the oven historical records have been which means it means that even if things return back to normal Uhm, we will have a few coolers that have less recurring revenue from from chronic.
Option streams, and they might otherwise have and we contemplated all that in in the establishing of the of the longterm guidance range that'll be a couple of percentage points higher than the 2022 revenue growth. We believe that some of those effects are mitigated diminish over time.
Okay.
Thank you. Your next question comes from the line and just caught Schonhaus Lake Stevens. Please go ahead.
<unk>. Thanks for all the color unprepared comments the guidance and long term objectives, just wanted to dig into your provider network, which is clearly a focus at last count I believe there was over 25% of your total platform users being providers. So my first question is where are we currently what are your target in your.
Fiscal year 22 guidance and then longer term objectives, and then a follow up question relates to the.
Is your ability to replace your contract you mentioned that with the goal to describe it but I really want to focus on the on farm a client as your provider network Rose you should make you more attractive and valuable and given that 85% of those clients aren't 60 contracts what should we were <unk> what should we expect both from a revenue perform a client expansion and.
[noise] margin expansion is it already running a high margin. So in this segment. Thank you.
Sure you know so for good or extra providers, maybe just to start we you know we I don't think we we don't think of a particular mix that we're trying to achieve on providers versus consumers. We're just trying to provide a great solutions that are super high value too.
<unk>, both the prescriber as providers as as well as consumers and and that's what we've achieved we were happy that M. P. S scores for providers are now up to 90, which matches the extremely high M. P. S numbers, we have of 90 for consumers and you know that that audience.
Of.
Over almost 500000 prescribers visiting and using our tools in the last three months. We we think really makes it an incredibly large platform. So on the provider side we have.
We think that's a great success and saw that karsten speak about the ability to.
Control pricing and sauce on the pharmacy item thrust of your question.
Yeah No great question, we really appreciate it and I think on this on this dimension, where we're continuing to be incredibly excited about the progress we're making on manufacturers solutions. We feel like we have a great pipeline hitting the new year and like I said in a call. We think you should almost double with growth driven both from for.
Further penetration of the existing solutions selling into H, two so I've farm in the ACP provider solution now as well and also being able to drive other dimensions like for example, having more solutions for manufacturing for medications and more medications for mammy for manufacturer.
As well I think what's really changed a lot for US is that was a focus on the provider mode and with the incredible adoption, we've seen him. It again like 90% of providers, who get exposed to provider mode opt into it which we think is amazing and we've had over half a million providers visit has been.
The last 90 days, which we think is also amazing we think those things create an inflection point for us that we haven't had before so historically, we've been able to tackle this town pretty aggressively but the 10th split between pharma spent manufacturers and on patients were historically more focused on the patient side, but now we can get.
Both problems and that actually have synergistic effects between the two pronged it's.
It's very challenging for a manufacturer to find any other platform out there any other platform period, so that can target both of consumers.
And the provider side in a coordinated fashion. So we think we're really uniquely positioned to do that well. That's one of the reasons. We're so bullish on the growth here and we love. The fact that it grows assist revenue mix towards this higher marginal offering it ends up dragging emerging up too.
And that can please a question and answer session for today I will now is trying to call them back to you Mister Treiber Bezdek for closing remarks.
2021, with another amazing ear for good R X, we help more Americans whenever access affordable health care when they needed. It most we delivered record revenue at attractive margins won't growing or consumer and provider base, increasing our market share and deepening the relationships that set the foundation for years of sustainable growth and profitability I couldn't be more proud of our strong resolve.
And the continued progress, we're making towards our goal of filling more gaps in healthcare, although we've made a lot of progress over the last year. We believe we are just getting started we see tremendous opportunity ahead to continue to revolutionize health care for Americans in this massive four trillion dollar market, we see many exciting opportunities to expand our platform and range of services over time.
And believe we are well positioned for 2022 and beyond. Thank you for your continued interest in good R. X. We look forward to sharing our progress in the quarters to come.
And ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect.
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