Q1 2024 GoodRx Holdings Inc Earnings Call

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the GoodRx First Quarter 2024 Earnings Call. At this time, a reminder, today's conference is being recorded. I would now like to introduce your host for today's call, Whitney Notaro, Vice President of Investor Relations. Ms. Notaro, you may begin.

Okay.

Ladies and gentlemen, thank you for standing by and welcome to the good Art X first quarter 2024 earnings call at this time.

Speaker Change: Today's conference is being recorded I would now like to introduce your host for today's call within a tyro Vice President of Investor Relations. Mr. <unk> you may begin.

Whitney Notaro: Thank you, operator. Good morning, everyone.

Speaker Change: Thank you operator, and good morning, everyone and welcome to go to access earnings conference call for the first quarter of 2020 for joining.

Joining me today are Scott Wagner, our interim Chief Executive Officer, and Carsten Garner, our Chief Financial Officer.

Whitney Notaro: And welcome to Goodrx's earnings conference call for the first quarter of 2024. Joining me today are Scott Wagner, our Interim Chief Executive Officer, and Karsten Voermann, our Chief Financial Officer. Before we begin, I'd like to remind everyone that this call will contain forward-looking statements. All statements made on this call that do not relate to matters of historical fact should be considered forward looking statements, including without limitation statements regarding management's plans, strategies, goals and objectives, our market opportunity, our anticipated financial performance, underlying trends in our business, our value proposition, our potential for growth, our hybrid retail direct and PBM contracting approach, collaborations and partnerships with third parties, including our integrated savings program, anticipated impacts of the deprioritization of certain solutions under our pharma manufacturer solutions offering and our cost savings initiative, expected impact of the sunsetting of Kroger Savings Club, anticipated impact of the change health care outage, our capital allocation priorities and the amount, timing and benefits of our share repurchase program.

Before we begin I'd like to remind everyone that this call will contain forward looking statements.

All statements made on this call that do not relate to matters of historical fact should be considered forward looking statements, including without limitation statements regarding managements plan strategies goals and objectives, our market opportunity our anticipated financial performance underlying trends in our business our value proposition our potential.

Speaker Change: For growth, our hybrid retail direct and P b and contracting approach collaborations and partnerships with third parties, including our integrated training program.

Speaker Change: The impact of the de prioritization of certain solutions under our panel manufacturer solutions offering and our cost savings initiatives.

Speaker Change: The impact of the sunsetting of progress savings club anticipated impact of the change health care outage, our capital allocation priorities and the amount timing and benefit of our share repurchase program.

Whitney Notaro: These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties, and other important factors. These factors may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statement. Factors discussed in the risk factors section of our annual report on Form 10-K for the year ended December 31, 2023, and 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.

These statements are neither promises nor guarantees, but involve known and unknown risks uncertainties and other important factors.

Speaker Change: 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.

Speaker Change: Factors discussed in the risk factors section of our annual report on Form 10-K for the year ended December 31, 2023, and other filings with the Securities and Exchange Commission could cause actual results could differ materially from those indicated by the forward looking statements made on this call.

Whitney Notaro: Any such forward-looking statements represent management's estimates as of the date of this call, and we disclaim any obligation to update these statements, even if subsequent events cause our views to change. In addition, we will be referencing certain non-GAAP metrics in today's remarks. We have reconciled each non-GAAP metric to the nearest GAAP metric in the company's earnings press release, which can be found on the overview page of our investor relations website at investors.goodrx.com. I'd also like to remind everyone that a replay of this call will become available there shortly as well. With that, I'll turn it over to Scott.

Speaker Change: 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.

Speaker Change: In addition, we'll be referencing certain non-GAAP metrics on today's remark, we have reconciled each non-GAAP metric to the nearest GAAP metric in the company's earnings press release, which can be found on the overview page of our Investor Relations website at investors got better at dotcom.

Speaker Change: I'd also like to remind everyone that a replay of this call will become available there shortly as well with that I'll turn it over to Scott.

Scott W. Wagner: Thanks, Whitney, and thanks to everyone joining us today to discuss our first quarter results. And today, I'd like to highlight the meaningful headway we've made over the last 12 months, and more specifically in the first quarter. Then Karsten will take you through our Q1 financials and expectations for Q2 and full year 2024. But I'd like to open by saying that, as many of you are likely aware, we announced our first Investor Day, which is taking place next Wednesday, May 15. We hope those of you listening today will join us for that event, which will be webcast via our Investor Relations website. We'd like to use that opportunity to discuss several things.

Scott: Thanks, Whitney and thanks to everyone joining us today to discuss our first quarter results.

Scott: Today I'd like to highlight the meaningful headway, we've made over the last 12 months and more specifically in the first quarter, Ben Carson will take you through our Q1 financials and expectations for Q2 and full year 2024.

Ben Carson: I'd like to open by saying that we'll be keeping our prepared remarks focus during this call because as many of you are likely aware, we announced our first Investor day, which is taking place next Wednesday may 15th we hope those of you listening today and will join us for that event, which will be webcast via our investor Relations website.

Ben Carson: We'd like to use that opportunity to discuss several things first.

Scott W. Wagner: First, the market context in which we operate. Specifically, the persistent and growing need for prescription affordability solutions, including, Second, the power of the Goodrx value property. Elements that make us the preferred destination for consumers and healthcare professionals to find affordable prescriptions. Third, Goodrx's position within the healthcare value

Ben Carson: The market context in which we operate specifically the persistent and growing need for prescription affordability solutions, including ours second the power of the good R X value proposition elements that make us the preferred destination for consumers and health care professionals to find affordable prescriptions.

Ben Carson: Third good rx's position within the health care value chain details on the strength and durability of our pharmacy network as we focused on rebalancing pharmacy, MTBE I'm economics, with our own while incentivizing joint growth with our retail partners.

Scott W. Wagner: Details on the strength and durability of our pharmacy network as we focused on rebalancing pharmacy and PBM economics with our own while incentivizing joint growth with our retail partners. Fourth, our expected growth levers, including the B2B Integrated Savings Program that allows us to aggregate prescription demand efficiently, as well as continued growth in pharma manufacturer solutions. TIFF, our financial trajectory and growth process. Our plan is to lay out medium-term revenue expectations for both our prescription marketplace and manufacturer solution segments, as well as earnings flow curves. And finally... Growth Influx.

Ben Carson: With our expected growth levers, including <unk> integrated savings program that allows us to aggregate prescription demand efficiently as well as continued growth in pharma manufacturer solutions, Jeff our financial trajectory and growth prospects. Our plan is to lay out medium term revenue expectations for both of our.

Ben Carson: Marketplace and manufacturer solutions segments as well as earnings flow through.

Ben Carson: Finally.

Scott W. Wagner: Additional upsides and opportunities that aren't in our base trajectory but give us the opportunity to accelerate growth by leveraging our existing and differentiated assets to enable extensions of the offerings that we have today. We look forward to our Investor Day and using this as an opportunity to increase our transparency for all of those in the investor community. While I look forward to discussing these further, I do want to take a moment to discuss my views on my first year at GoodRx and what I see as our significant accomplishments during that time.

Ben Carson: Growth in <unk>, additional upsides and opportunities that arent in our base trajectory, but give us the opportunity to accelerate growth by leveraging our existing and differentiated assets to enable extensions of the offerings that we have today.

Ben Carson: We look forward to our Investor day, and using this as an opportunity to increase our transparency for all of those and the Investor community.

Ben Carson: While I look forward to discussing these further I don't want to take a moment to discuss my views on my first year at <unk> and what I see as our significant accomplishments during that time.

Scott W. Wagner: When I arrived here a year ago, there were a number of questions about the company's position in the broader health care ecosystem. At the outset, I worked with the team to establish a set of clear priorities that reinforced our core value proposition. Saving people money on prescriptions with the goal of strengthening the durability of our business model and reigniting growth. Looking back, I'm encouraged and energized by the strides we've made. First, we've strengthened our retail pharmacy relationships and accelerated the uptake of our hybrid model, which includes both RetailDirect and our historical PBM contract. A retail direct approach is where some of the largest pharmacies, as well as smaller grocers, and other retailers, work closely with us to offer consumer savings while we help retailers manage their revenue and category profitability.

Ben Carson: When I arrived here a year ago, there were a number of questions about the company's position in the broader healthcare ecosystem at the outset I worked with the team to establish a set of clear priorities to reinforce our core value proposition.

Ben Carson: Giving people money on prescriptions with the goal of strengthening the durability of our business model and reignite growth looking back I'm encouraged and energized by the strides. We've made first we've strengthened our retail pharmacy relationships and accelerated the uptake of our hybrid model, which includes both retail direct.

Ben Carson: And our historical TBM contracted.

Our retail direct approach is where some of the largest pharmacies as well as smaller grocers and other retailers worked closely with us to offer consumer savings, while we help retailers vantage the revenue.

Scott W. Wagner: We believe this is complementary to our existing PBM relationship and creates significant additional value for retail pharmacies, opening up the potential for Goodrx as a true marketing platform and reducing friction both for consumers and for pharmacies themselves. During Q1, we continued to sign direct contracts with new pharmacies and expand the drugs covered by direct contracts. In Q1 2023, approximately 5% of our claims were through retail direct contracts, and in Q1 2024, they made up over 20% of our claims.

Ben Carson: Laurie profitability.

Ben Carson: We believe this is complementary to our existing <unk> relationships and create significant additional value for retail pharmacies opening up the potential for good our acts as a true marketing platform and reducing friction both for consumers and for pharmacies themselves.

Ben Carson: During Q1, we continued to sign direct contracts with new pharmacies that expand the drugs covered by direct contracts.

Ben Carson: Q1, 2023, approximately 5% of our claims were through retail direct contracts and in Q1 2024 that made up over 20% of our claims.

Scott W. Wagner: Our second priority has been to hone our growth plans for our core prescription transaction offering, which includes extending the benefit of Goodrx to commercial insurance programs or funded plans. We've done this through our Integrated Savings Program, or ISP, with PBM partners like CVS Caremark, ExpressGrips, MedImpact, and Avidis, who efficiently aggregate demand for our prescription disk. We're driving real value with payers and their members by seamlessly lowering the cost of their prescriptions automatically at the point of sale. We're quickly becoming a leader in the commercial market for integrated benefits, and while our programs We estimate that the patients and prescriptions billed in ISP have negligible overlap with those in our direct consumer offering, which means that our ISP product line is almost entirely SAM-exclusive.

Ben Carson: Our second priority has been to hone our growth plans for our core prescription transaction offering which includes extending the benefit of good Rx to commercial insurance programs were funded plans.

Ben Carson: Done this through our integrated savings program our ISP.

Ben Carson: <unk> partners like Cvs Caremark Express scripts net impact on diabetes, who efficiently aggregate demand for our prescription discounts were.

Ben Carson: Driving real value with payers and their members by seamlessly lowering the cost of their prescriptions automatically at the point of sale, we're quickly becoming a leader in the commercial market for integrated benefits and while our programs are currently only available to a subset of our partner TBM eligible members. These pbms do cover over.

Ben Carson: 60% of eligible U S lives.

Ben Carson: The market opportunity remains a key area of focus for us we estimate that the patients and prescriptions filled in ISP.

Ben Carson: Negligible overlap with those in our direct to consumer offering which means that our ISP product line, it's almost entirely Sam expanding.

Scott W. Wagner: So far this year, ISP is tracking in line with our expectations, and the traction that we're seeing is exciting as we continue to gain more lives and types of transactions. We look forward to working to continue to ramp this program over time with both our PBM partners and retailers. types of prescription transactions in the program Third, we've been bringing Goodrx savings to brand drugs through pharma manufacturer solutions. In 2023, we prioritize deal quality with a focus on foregoing one-off deals and instead creating standardized go-to-market programs that we expect to scale sustainably. The restructuring of our pharma manufacturer solutions offering, including the rationalization of VitaCare, is complete.

Ben Carson: So far this year ISP is tracking in line with our expectations and the traction that we're seeing is exciting as we continue to gain more lives and types of transactions. We look forward that we are working to continue to ramp. This program over time with both our <unk> partners and retailers and types of prescription transactions in the program.

Ben Carson: Third we've been bringing good Rx savings to brand drugs through pharma manufacturer solutions in 2023, we prioritize deal quality with a focus on foregoing one off deals and instead, creating standardized go to market programs do we expect to scale sustainably.

Ben Carson: Restructuring of our pharma manufacturer solutions offering, including the rationalization of bite of care is complete we have already begun to see margin accretion in the first quarter of 2024, which we expect will continue.

Scott W. Wagner: We've already begun to see margin accretion in the first quarter of 2024, which we expect will continue. Over the last year, we've also strengthened our management team and organized ourselves to execute effectively. More specifically, we've made a great executive addition with Dorothy Gemmel as our chief commercial officer. We welcomed Andrew Slepsky back as our chief marketing officer and promoted several high-performing executives, including Mike Walsh, who's now our president and EVP of Prescription Market.

Ben Carson: Over the last year, we've also strengthened our management team and organized ourselves to execute effectively more.

Ben Carson: More specifically we've made a great Executive addition, with Dorothy demo as our Chief commercial Officer, and we welcome to Andrew Let's get back as our Chief marketing Officer, and promoted several high performing executives, including Mike Walsh, who is now our president and EVP of prescription market.

Scott W. Wagner: These are all fantastic executives who are helping the business execute with speed and quality. Our team has a nice balance of health care and consumer Internet expertise, a combination that I believe enables us to create elegant and distinctive experiences for our 25 million plus consumers and add real value in health care.

Ben Carson: These are all fantastic executives, who are helping the business execute with speed and quality. Our team is a nice balance of health care and consumer Internet expertise a combination that I believe enables us to create hello, again and distinctive experiences for our 25 million plus consumers.

Ben Carson: And add real value in health care.

Scott W. Wagner: During the first quarter, we continued to see positive momentum in the business, both financially and operationally. Q1 year-over-year adjusted revenue growth accelerated to 8%, up compared to our Q4 growth rate, and our Q1 adjusted EBITDA margin was 31.7%, up 280 basis points year-over-year, with adjusted EBITDA growing 18% year-over-year. This financial performance is the direct result of our efforts in executing against our priorities over the last 12 months. Looking ahead, we expect adjusted revenue growth to continue into Q2 and for the full year 2020.

Ben Carson: During the first quarter, we continued to see positive momentum in the business, both financially and operationally Q.

Ben Carson: Q1 year over year, adjusted revenue growth accelerated to 8% up.

Ben Carson: Compared to our Q4 growth rate and our Q1 adjusted EBITDA margin was 31, 7% up 280 basis points year over year with adjusted EBITDA growing 18% year over year.

Ben Carson: Financial performance is the direct result of our efforts and executing against our priorities over the last 12 months.

Ben Carson: Looking ahead, we expect adjusted revenue growth to continue into Q2 and for the full year 2024, we anticipate adjusted revenue to be between 808 hundred $10 million for the full year 2024, with adjusted EBITDA of over $250 million. We believe we are gaining momentum from a top line.

Scott W. Wagner: We anticipate adjusted revenue to be between $800 and $810 million for the full year 2024, with adjusted EBITDA of over $250 million. We believe we're gaining momentum on the top line and adjusted EBITDA. We're expecting high flow through from incremental top line growth to cash flow, which we believe puts us on track to return to a rule of 40 company. Karsten will speak to our outlook in more detail. However, I will say I'm confident that our priorities are the right ones to deliver growth and contribute to shareholder value creation. With that, I'll hand it over to Karsten.

Ben Carson: And adjusted EBITDA standpoint.

We're expecting high flow through from incremental topline growth to cash flow, which we believe puts us on track to return to a rule of 40 company.

Ben Carson: Carsten will speak to our outlook in more detail. However, I will say the confident that our priorities are the right ones to deliver growth and contribute to shareholder value creation with that I'll hand, it over to Carsten.

Karsten Voermann: Thank you, Scott. I'll speak briefly about our 1Q24 financial results before turning to guidance. In summary, during the first quarter, revenue and adjusted revenue were in the upper end of the guidance range we provided on our Q4 earnings call in February, and adjusted EBITDA margin was a beat, exceeding the guidance we provided. Total revenue and adjusted revenue for the quarter increased 8% year-over-year to $197.9 million, primarily driven by organic growth in prescription transactions revenue, including expansion of our integrated savings program, as well as growth in pharma manufacturer solutions

Carsten: Thank you Scott I'll speak briefly to our 124, our financial results before turning to guidance in summary, during the first quarter revenue and adjusted revenue or in the upper end of the guidance range. We provided on our Q4 earnings call in February and adjusted EBITDA margin with a beat exceeding the guidance we provided.

Carsten: Total revenue and adjusted revenue for the quarter increased 8% year over year to 197 $9 million.

Carsten: Primarily driven by organic growth in prescription transactions revenue, including expansion of our integrated savings program as well as growth in pharma manufacturer solutions.

Karsten Voermann: I'll also note that the first quarter of last year included more revenue from Kroger Savings Club subscription offering, which we're sunsetting in July 2024, as compared to this year's Q1. And Q1 2023 also included revenue from our Vitacare offering within Manufacture Solutions, which we restructured last fall and did not contribute any revenue at all in this Q1. To quantify this impact on growth, Kroger Savings Club and VitaCare together contributed approximately mid-single digit billions of dollars more revenue in the first quarter of 2023 than in the first quarter of 2024. The point here is that on a like for like basis, growth is even stronger.

Carsten: I'll also note that the first quarter of last year included more revenue from Kroger savings club subscription offering which are sunsetting in July 2024, as compared to this year's Q1 and Q1 2023 also included revenue from Arvada care offering with a manufacturer solutions, which we restructured it.

Carsten: Fall and did not contribute any revenue at all in this Q1.

Carsten: To quantify this impact on growth Kroger savings club and <unk> together contributed approximately mid single digit billions of dollars more revenue in the first quarter of 2023 and in the first quarter of 2024. The point here is that on a like for like basis growth is even stronger.

Karsten Voermann: Moving on to the revenue lines, prescription transactions revenue grew at 8% year-over-year to $145.4 million, which was primarily driven by a 10% increase in monthly active consumers. On our 4Q23 earnings call, we discussed that an immaterial impact from the change outage was incorporated in the Q1 guidance we provided. At the time of the call, we'd had a couple of days of impact. While we were back up and running quickly, the outage persisted more broadly across the industry for multiple weeks, impacting benefit plans, pharmacies, and others.

Carsten: Moving on to the revenue lines prescription transactions revenue grew 8% year over year to $145 $4 million, which was primarily driven by a 10% increase in monthly active consumers.

Carsten: On our <unk> 23 earnings call, we discussed an immaterial impact from the change outage was incorporated in the Q1 guidance we provided.

Carsten: At the time of the call we'd had a couple of days of impact.

Carsten: We were back up and running quickly.

Carsten: Persisted more broadly across the industry for multiple weeks impacting benefit plans pharmacies and others.

Karsten Voermann: On our 4Q23 earnings call, we discussed the immaterial effects of the change outage, which were incorporated in the Q1 guidance we provided. We were back up and running quickly, and having now had time to evaluate the continuing impact, we believe the full year 2024 quantification is likely to also be immaterial in the low single-digit millions of dollars, including the outage's effect on refills.

Carsten: On our <unk> 23 earnings call, we discussed the immaterial effects of the change at edge, which were incorporated in the Q1 guidance. We provided we are back up and running quickly and having now had time to evaluate the continuing impact we believe the full year 2020 for quantification is likely to also be immaterial in the law.

Carsten: Low single digit millions of dollars, including the outages effect on refills.

Karsten Voermann: Subscription revenue declined 6% as expected to $22.6 million due to the wind-down of Kroger Savings Club. Kroger Savings Club revenue was almost $2 million less in the first quarter of 2024 than in the prior year period, and our own gold offering was essentially flat quarter over quarter. As I mentioned a moment ago, we expect a continued wind-down of Kroger Savings Club subscribers from now to July, and given the relative subscription fee is much higher for Goodrx Gold than for Kroger Savings Club, the wind-down will be more impactful on the total number of subscription plans than subscription revenue.

Subscriptions revenue declined 6% as expected to $22 6 million.

Carsten: Due to the wind down of Kroger savings club.

Carsten: Kroger savings club revenue with almost $2 million less in the first quarter of 2020 for it than in the prior year period, and our own gold offering was essentially flat quarter over quarter as I mentioned, a moment ago. We expect the continued wind down of Kroger Safeway club subscribers from now to July and given the relative subscription fee is much higher for.

Carsten: Good Rx gold than for the Kroger savings clubs, the wind down will be more impactful to the total number of subscription plans and subscriptions revenue.

Karsten Voermann: Pharma manufacturer solutions increased 20% year over year to $24.5 million, driven by organic growth as we continue to expand our market penetration, including continued growth in our point-of-sale programs, which more than offset the low single-digit million-dollar reduction in revenue from VitaCare. The net loss was $1.0 million compared to a net loss of $3.3 million in the first quarter of 2023. Adjusted net income was $32.6 million compared to $29.5 million in the first quarter of 2023. Adjusted EBITDA increased 18% year-over-year to $52.8 million. The Adjusted EBITDA margin of our guidance rate to $31.8 million.

Carsten: Pharma manufacturer solutions increased 20% year over year to $24 $5 million driven by organic growth as we continue to expand our market penetration, including continued growth in our point of sale programs, which more than offset the low single digit million dollar reduction in our revenue from Vida care.

Carsten: Net loss was $1.0 million compared to a net loss of $3 3 million from the first quarter of 2023.

Carsten: Adjusted net income was $72 6 million compared to $29 5 million in the first quarter of 2023.

Carsten: Adjusted EBITDA increased 18% year over year sorry.

Carsten: I think the adjusted EBITA margin.

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Guidance rate of 31, 7% and was up quarter over quarter and up to.

Carsten: 280 basis points year over year.

Karsten Voermann: The year-over-year improvement was primarily driven by top-line growth and run rate savings from the restructuring of our Vitacare Pharma Manufacturer Solutions offering in the second half of 2023. We generated net cash provided by operating activities of $42.6 million compared to $32.3 million in the prior year period. Our capital allocation priorities are unchanged, and we'll continue to focus on high-return investments and maximizing value for shareholders. Our balance sheet remained strong, and we ended the quarter with $533 million in cash and cash equivalents on the balance sheet and $658 million of outstanding debt.

Carsten: The year over year improvement was primarily driven by topline growth and run rate savings from the restructuring of our BARDA care pharma manufacturer solutions offering in the second half of 2023.

Carsten: We generated net cash provided by operating activities of $42 6 million.

Carsten: Compared to $32 $3 million in the prior year period.

Carsten: Our capital allocation priorities are unchanged and we will continue to focus on high return investments and maximizing value for shareholders.

Carsten: Our balance sheet remains strong and we ended the quarter with $533 million in cash and cash equivalents on the balance sheet and $658 million of that stack.

Carsten: Ending debt.

Carsten: During the quarter, we executed approximately $155 million of share repurchases at an average price of approximately $7.26 per share on a blended basis.

Carsten: As of March 31, 2024, we had $295 million of unused authorized share repurchase capacity under our $450 million share repurchase program approved by our board of directors during the first quarter of 2024.

Karsten Voermann: During the quarter, we executed approximately $155 million of share repurchases at an average price of approximately $7.26 per share on a blended basis. As of March 31, 2024, we had $295 million of unused authorized share repurchase capacity under our $450 million share repurchase program approved by our Board of Directors during the first quarter of 2024. These revolving credit facilities are untapped except for letters of credit and had $92 million of unused capacity as of March 31, 2024, representing total liquidity of $625 million. Now, turning to guidance.

Carsten: Our revolving credit facility of untapped, except for letters of credit and had $92 million of unused capacity as of March 31, 2024, representing total liquidity of $625 million.

Now turning to guidance.

Karsten Voermann: Our outlook for Q2 revenue and adjusted revenue is approximately $200 million, representing approximately 5% year over year growth. We expect revenue and adjusted revenue to be identical in the second quarter because we believe the third quarter 2023 adjustment to revenue in relation to the pharma manufacturer solutions restructuring related to VitaCare was one time and non-recurrent. Similar to my commentary earlier on 1Q24's results, we expect our 2Q24 growth to be tempered because of the VitaCare offering we restructured last fall and Kroger Savings Club, which was sunsetting in July, which together contributed approximately mid-single-digit millions of dollars more revenue in the second quarter of 2023 than they'll contribute in the second quarter of 2024.

Carsten: Our outlook for Q2 revenue and adjusted revenues of approximately $200 million Rep.

Carsten: Representing approximately 5% year over year growth, we expect revenue and adjusted revenue to be identical in the second quarter, because we believe the third quarter 2023 adjustment to revenue in relation for pharma manufacturer solutions restructuring related provided care was onetime and nonrecurring.

Carsten: Similar to my commentary earlier on <unk> 2000, <unk> results, we expect our <unk> 24, a growth to be tempered because of the better care offering we restructured last fall and Kroger savings club, which are sunsetting in July which together contributed approximately mid single digit millions of dollars more revenue in the second quarter of 2023.

Carsten: And they will contribute in the second quarter of 2024.

Karsten Voermann: For the full year 2024, we continue to expect revenue and adjusted revenue to be identical and expect them to come in between $800 and $810 million, representing approximately 6% growth on an adjusted revenue basis at the midpoint. Like 1Q24 and 2Q24, the anticipated full-year 2024 adjusted revenue growth rate has been tempered by approximately $15 million of full-year top line impact associated with the deprioritization of VitaCare, which contributed to revenue and adjusted revenue in 2023 but is not contributing at all in 2024, as well as the anticipated sunset of the Kroger Savings Club. Also, we expect contra revenue related to consumer incentives to increase by almost $10 million this year.

Carsten: For the full year 2024, we continue to expect revenue and adjusted revenue to be identical and expect to come in between 800 $810 million.

Carsten: Representing approximately 6% growth on an adjusted revenue basis at the midpoint.

Carsten: <unk> 24, and <unk> 20 for the anticipated full year 2024, our adjusted revenue growth rate has been tempered by approximately $15 million of full year top line impact associated with the de prioritization of Veda care, which contributed to revenue and adjusted revenue in 2023, but it is not contributing at all in 2020.

Carsten: For as well as the anticipated sunset of the Kroger savings cloud.

Karsten Voermann: In aggregate, this $25 million of top line impact is reflected in our full year 800 to $810 million revenue and adjusted revenue guidance, as is the ongoing full year effect of the change outage with its low single digit million dollar impact I mentioned earlier. We expect our prescriptions marketplace portion of our anticipated 2024 adjusted revenue growth to be about $25 to $35 million. As a reminder, our prescriptions marketplace is made up of prescription transactions, subscriptions, and other revenue.

Carsten: Also we expect contra revenue related to consumer incentives to increase by almost $10 million. This year in aggregate. This $25 million of topline impact is reflected in our full year $800 million to $810 million revenue and adjusted revenue guidance as is the ongoing full year effect of the change out.

Carsten: With its low single digit million dollar impact I mentioned earlier.

Carsten: We expect our prescriptions marketplace portion of our anticipated 2024, adjusted revenue growth to be about 25% to $35 million.

Carsten: As a reminder, our prescriptions marketplace is made up of prescription transactions subscriptions in the other revenue.

Karsten Voermann: We expect pharma manufacturer solutions to contribute about 10 to $20 million to our anticipated 2024 adjusted revenue growth. This implies a year over year growth rate for a pharma manufacturer solutions offering that exceeds the growth rate of the digital pharma ad spend market, which has been in the low teens percent the last few years. Based on what we've seen historically, we expect there to be seasonality and some quarter over quarter variability in each of our prescription marketplace and pharma manufacturer solutions offerings, and potentially in our business more broadly.

Carsten: We expect pharma manufacturer solutions to contribute about $10 million to $20 million to our anticipated 2024 adjusted revenue growth.

Carsten: A year over year growth rate for our pharma manufacturer solutions offering that exceeds the growth rate of the digital pharma AD spend market, which has been in the low teen percentages the last few years.

Based on what we've seen historically, we expect there to be seasonality in some quarter over quarter variability in each of our prescription marketplace in pharma manufacturer solutions offerings.

Karsten Voermann: That said, given our scale relative to the very large TAMS for our prescription marketplace and our pharma manufacturer solutions offering, we're confident in the anticipated 2024 growth trajectory and our guide of $800 to $810 million in revenue and adjusted revenue. From a margin perspective, during the last few quarters, we've delivered adjusted EBITDA margins in the high 20% range and most recently in the low 30s in Q1. We expect adjusted EBITDA margin to be in the low 30% range again in the second quarter and expect to achieve over $250 million of adjusted EBITDA for the full year, 15% from 2023, based on our expectations of a high degree of adjusted EBITDA flow-through from revenue growth and our continued focus on the cost structure and efficiency generally. With that, I'll now turn over to the operator for Q&A. Thank you.

Carsten: And potentially in our business more broadly.

Carsten: Said, given our scale relative to say, a very large tam for a prescription marketplace and our pharma manufacturer solutions offerings. We're confident in the anticipated 2024 growth trajectory and our guide of 800 data at a $10 million.

Carsten: Revenue and adjusted revenue.

Carsten: From a margin perspective during the last few quarters, we've delivered adjusted EBITDA margins in the high 20% range and most recently in the low thirties in Q1, we.

Carsten: We expect adjusted EBITDA margin to be in the low 30% range again in the second quarter and expect to achieve over $250 million.

Carsten: EBITDA for the full year of 15% from 2023 based on our expectations of a high degree of adjusted EBITDA flow through from revenue growth and our continued focus on the cost structure and efficiency generally.

Speaker Change: With that I'll now turn it over to the operator for Q&A.

Operator: Thank you. And as a reminder, ladies and gentlemen, to ask a question, simply press star 11 to get in the queue and wait for your name to be announced. And we ask that you please keep your questions to one. Please stand by while we compile the Q&A roster. One moment, please. And again, that is star 11 to get in the queue.

Speaker Change: Thank you Anna Sorry reminder, ladies and gentlemen to ask a question simply press Star one wanted to get in the queue and wait for your name to be announced and we ask that you. Please keep your questions to one please standby, while we compile the Q&A roster.

Operator: One moment, please.

Operator: One moment please.

Operator: And again that is star one one and to get in the queue.

Operator: No moment.

Operator: Yes.

Operator: One moment please.

Operator: Yes.

Operator: Now our first question comes from Michael Cherny with Lyrinc Partners. Please proceed.

Operator: Okay.

Operator: No fair question.

Operator: Okay.

Operator: From Michael Cherny with Leerink partners. Please proceed.

Michael Aaron Cherny: Good morning. Congratulations on a good quarter here.

Operator: Okay.

Michael Aaron Cherny: Good morning, Congrats on a good quarter here maybe.

Michael Aaron Cherny: Maybe if I could just ask a question on ISP as you're thinking about the ramping effects thing about the.

Michael Aaron Cherny: Maybe I can just ask a question on ISP. As you think about the ramping effect, think about the integrations that you've had so far with the PBMs you're working with. Where have been the greatest opportunities where you've seen the greatest contribution? And in terms of the guidance for the rest of the year, how do you see ISP ramping as a percent of volumes, a percent of growth? Any other additional color we can look into as you think about where this goes over time would be great. Thank you.

Michael Aaron Cherny: Integrations that you've had so far with the Pbms youre working with where have been the greatest opportunities where you've seen the contribution and in terms of the guidance for the rest of the year, how do you see.

Michael Aaron Cherny: ISP ramping of the either percentage of volume as a percent of growth.

Speaker Change: Additional color we can look into as you think about where this goes over time would be great. Thank you.

Karsten Voermann: Hey Michael, it's Karsten speaking here. I think there are two parts to your question. The first part was where we see the opportunity and how we see the rest of the year. With respect to both of those matters, I think we see opportunity in four major areas. The first major area is continuing to add incremental PBMs. The second area is to add incremental plan sponsors from each PBM. The third area is formulary expansion, so the inclusion of, for example, completely off-formulary medications.

Speaker Change: Hey, Michael It's Carsten speaking here.

Carsten: I think there are two parts of your question. The first part was whereas where we see the opportunity and how do we see the rest of the year.

Carsten: With respect to both of those matters I think we see the opportunity in four major areas. The first major area is continuing to add incremental pbms. The second area is to add incremental planned sponsors from HP IBM. The third area is formulary expansion.

Carsten: So the inclusion of for example completely off formulary.

Karsten Voermann: And then the final area of expansion is that there are still certain retailers who haven't been elected to participate in ISP. Of those, for us, the really big ones are around expanding the number of sponsors associated with a particular PBM and formulary, and, of course, adding new PBMs, because that creates a big positive effect indeed, even though we already have PBMs covering approximately 60% of US lives. With respect to trajectory through the rest of the year, traditionally, we would see ISP be expected to shrink in its contribution as the year progresses because folks hit their deductibles, for example, and have less need for ISP at certain points in the year.

Carsten: Medications and then the final area of expansion is that there's still certain retailers, who haven't elected to participate in ISP.

Carsten: For us the really big ones are around expanding the number of sponsors associated with particular, PVM and formulary and of course, adding new pbms because that creates.

Carsten: A big positive effect, indeed, even though we are there already have pbms covering approximately 60% of U S lives with respect to trajectory through the rest of year traditionally we would see ISP.

<unk>.

Carsten: Be expected to shrink and its contribution as the year progresses, because folks hit their deductibles.

Carsten: For example, and have less need for ISP at certain points in the year I think what we're noticing now is that that is probably going to be less of an effect in 2024 because of the growth factors that are described namely pbms continuing to add members in that formulary.

Karsten Voermann: I think what we're noticing now is that that is probably going to be less of an effect in 2024 because of the growth vectors I described, namely PVMs continuing to add members and add formulary, in particular, that are in our already existing PVM base of business today. So I think the seasonality that we've historically talked about will likely be less pronounced or not that pronounced at all this year relative to what we would have expected and saw, for example, last year. Hopefully, that's helpful.

Carsten: In particular that are in our already existing PVM base of business today. So I think the seasonality that we've historically talked about will likely be less pronounced or not that pronounced at all this year relative to what we would've expected and saw for example last year hopefully that's helpful.

Operator: Thank you. One moment for our next question, please. And it's from Jailendra Singh with Truist Securities. Please proceed.

Speaker Change: Great. Thanks.

Speaker Change: Thank you one moment for our next question. Please.

Gi Lan: And he's from Gi Lan dressing with <unk> Securities. Please proceed.

Jailendra P. Singh: Thank you and good morning, and thanks for taking my questions. First, a quick clarification around changing healthcare. You guys call it impact being ongoing. Just want to make sure, is the risk that impact could be higher than low single digit in millions?

Gi Lan: Thank you and good morning, and thanks for taking my questions first a quick clarification around change healthcare you guys called impact being ongoing just wanted to make sure is there a risk that impact will be higher than low single digit millions.

Speaker Change: But then my main question is that.

Scott W. Wagner: But then my main question is that, you know, MAC and PTR per MAC trends in the quarter: MAC was ahead, and PTR per MAC was slightly below compared to at least street expectations. Just curious, how would you describe trends on those metrics compared to your internal expectations? And any color you can provide around PTR per MAC in the quarter; were there any puts and takes from ISP impact or direct contracting pharmacy? And how should we think about the trend there for the rest of the year?

Mac and beat the audit, but macro trends in the quarter Mac, what ahead, Pts micro slightly below compared to at least street expectations.

Speaker Change: <unk>, how would you describe trends on those metrics compare to your internal expectations and any color you can provide around <unk> in the quarter were there any puts and takes from ISP impact our direct contracting pharmacy and how should we think about the trend data flow for the year.

Scott W. Wagner: Hi, it's Scott. Thanks. On change, this won't be a persistent issue that's going through the rest of the year. But think relative to the last time we were on with everybody, you know, there was an outage, we got our own service back up. But obviously, I think change has lasted longer than anybody else in the industry would have thought throughout the quarter. And so there were, you know, persistent effects that were really centered more around Q2, both around the Jailendra, and on PTR for Mac. I think we did see some small single-digit degradation in Q1 on a year-over-year basis, but you saw, for example, in 4Q that it was up by a similar amount.

Scott: Hi, Scott Thanks.

Speaker Change: One change.

Scott: This won't be a.

Scott: A persistent issue that's going through the rest of the year, but big relative to the last time, we were on with everybody. There was there was an outage we got our own service back up but obviously I think change has lasted longer than anybody else in the industry would've would've thought throughout the quarter and so there were.

Scott: Persistent effects that are really centered more around Q2.

Scott: Both around the system in the industry in general and then.

Scott: Some things that it did.

Scott: Certain amounts of cards on file at with with retailers, but the punch line is as we go into the second half it shouldnt be a big thing, but it.

Scott: It obviously has has been.

Scott: There has been meaningful for the industry in Q2, I'll, let kersten handle your your Mac and Peter your question each lender on <unk> I think we did see some.

Scott: Small single digit degradation in Q1 on a year over year basis.

Scott: You saw for example in <unk> that it was up by a similar amount I think PTR per Mac has been relatively linear over the past few quarters has gone up a little on some down a little on some.

Scott W. Wagner: I think PTR per Mac has been relatively linear over the past few quarters. It's gone up a little in some, down a little in some. I think there's no specific driver related to ISP or direct contracting that I'd necessarily point to on that. Both of those things have been in effect for several quarters now as this PTR per Mac has continued to fluctuate within a very narrow range.

Scott: There's no specific driver related to ISP or direct contracting that it necessarily point to.

Scott: On that both of those things have been in effect for several quarters now adverse PTR per Mac has continued to fluctuate within a very narrow range.

Speaker Change: Thank you.

Speaker Change: Thank you one moment for our next question.

Operator: Thank you. One moment for our next question, and it's from the line of Stephanie Davis with Barclays. Please proceed. Hey guys.

Speaker Change: And he is from the line of Stephanie Davis with Barclays. Please proceed.

Hey, guys. Thank you for taking my question, you mentioned talking to the midterm targets at the upcoming analyst day, and if I do the math and I scrub out the headwinds that you've had in the quarter and year to date, you get to a low double digit for both rate is there any reason to think there is something unique in this.

Speaker Change: Year or this quarter that would make that higher than your longer term trend.

Stephanie July Davis: Stephanie, I think the dynamic of a marketplace just inherently says that in a given quarter, you know, a growth rate might, you know, might, might bounce around in a range. And that's kind of what we're going to lay out for everybody with more detail than, you know, 30 seconds or a minute on a conference call. So we'll lay that out, but appreciate the math and and what it means for us.

Speaker Change: Stephanie I think the dynamic.

Speaker Change: Our marketplace, just inherently says in a given quarter.

Speaker Change: Our growth rate.

Speaker Change: Might bounce around in a range and that's kind of what we're going to lay out for everybody with more detail then.

Speaker Change: 30 seconds or a minute on a conference call. So we'll lay that out but I appreciate the mast and and what it what it means for us.

Stephanie July Davis: But I think to specifically answer your question, it could be just the dynamics of a marketplace where, you know, you just do have some degree of variance and lapping year over year things that can happen. But overall, longer term, they, you know, that's the zone or the goalposts that the business can operate in.

Speaker Change: But I think to specifically answer your question it could be just the dynamics of a marketplace where you.

Speaker Change: You just do have some degree of variance and lapping year over year things that can happen, but overall longer term.

Speaker Change: That's the zone are the goalposts that the business can operate it.

Speaker Change: Thank you.

Daniel R. Grosslight: Thank you. One moment for our next question, and it is from the line of Daniel Grosslight with Citi. Please proceed. Hi, thanks for taking the question.

Operator: Thank you. One moment for our next question, and it is from the line of Daniel Grosslight with Citi. Please proceed. Hi.

Speaker Change: Thank you one moment for our next question.

Speaker Change: And he is from the line of Danielle <unk> with Citi. Please proceed.

Danielle: Hi, Thanks for taking the question Scott I think you mentioned that now over 20% of.

Danielle: The volume is coming through direct contracts I'm curious, where do you think that trends over the next year or so do you think you'll ever get to kind of the majority of our volume flowing through direct contract and maybe if you can comment on how that might change your relationships or dynamic with Fiat.

Danielle: With the Pbms.

Scott W. Wagner: I think the most important point to note is that we're following our retail partners as we go through this journey. And what that dynamic means is that in some cases, we're going to have, you know, a portion or all of the volume being direct. And in some cases, we're going to work in our hybrid models, and it's going to be both.

Danielle: I think the most important point to note is that we're we're following our retail partners as we go through this journey.

Scott W. Wagner: And again, the point is we're following where retailers are going and meeting the needs of, frankly, the value chain, in general. And so I don't, I don't want to throw out a number because I think, again, this is something where we're kind of following the value chain as it goes, which is great. And there will be both in the system for a long, long time.

Danielle: And what that dynamic means is that in some cases, we're going to have.

Danielle: A portion or all of the volume being direct.

Danielle: And in some cases, we're going to work in our hybrid model.

Danielle: It's going to be both and again the point being we're following where retailers are going and meeting the needs of frankly the value chain.

Danielle: In general and so.

Danielle: I don't.

Danielle: I don't want to throw out a number.

Danielle: Because I think again this is something where we're.

We're kind of following the value chain as it goes which is.

Danielle: Which is great and theres going to be both in the system for a long long time.

Scott W. Wagner: I think that's the biggest point to think about in relation to your PBM commentary or questions. The PBMs, we're going to have a business relationship with the PBMs for a long, long time for all the reasons that, you know, that we had one at the inception of this business, which is, it's a way of working together, adding incremental lives. ISP is obviously, you know, a new evolution where the Goodrx benefit, which is really off insurance, is being brought closer to plans, not just in integrated savings, but I do think and hope that over the next, you know, not just quarters, but a couple years, integrated savings is going to evolve into a series of different efforts that sort of bridge that gap. And we're going to do that hand in hand with our PBM partners.

Danielle: That's the biggest point.

Operator: Thank you. One moment for our next question, please. And it comes from the line of Lisa Gill with J.P. Morgan. Please proceed.

Danielle: You could think about on it.

Danielle: And relative to your ppm commentary your question.

Danielle: The pbms.

Danielle: We're going to have a business relationship with the Pbms for a long long time for all the reasons that.

Danielle: We had one at the inception of this business, which is it's a way of working together, adding incremental lives ISP is obviously.

Danielle: A new evolution, where the good Rx benefit which is really off insurance is being brought closer to plans not just an integrated savings, but I do think and hope that over the next not just quarters, but a couple of years integrated savings is going to evolve into.

Danielle: A series of different efforts that sort of bridge that gap and we're going to do that hand in hand, with our <unk> partners.

Yeah.

Speaker Change: Got it thank you.

Speaker Change: Thank you.

Speaker Change: For our next question please.

Speaker Change: And it comes from the line of Lisa Gill with JP Morgan. Please proceed.

Lisa Christine Gill: Thanks very much. Good morning.

Lisa Christine Gill: Hi, Thanks, very much good morning.

Lisa Christine Gill: I just wanted to understand a few things on the retail side and the answer to the first question. When you talked about growth in ISP, you talked about retail participation or the retailers today that arent participating and then secondly.

Lisa Christine Gill: Companies like CBS have talked about moving towards cross plus reimbursement and I'm just curious as to what that means to your model if anything.

Speaker Change: As they move forward and then if I can just squeeze one in just as a clarification.

Speaker Change: The EBITDA was $6 million higher than consensus in the quarter.

Speaker Change: Is there any reason was that different than what you were projecting internally.

Speaker Change: Just thinking about the flow through from the rest of the year of that beat versus the street in the first quarter.

Lisa Christine Gill: I just want to understand a few things on the retail side. In the answer to the first question, when you talked about growth in ISP, you talked about retail participation. Are there retailers today that aren't participating?

Speaker Change: So.

Speaker Change: Lisa Thanks, Let me go in reverse order.

Lisa Christine Gill: On top of mind so.

Lisa Christine Gill: The EBITDA beat and flow through it's actually great.

Lisa Christine Gill: I mean, it really is an outcome.

Lisa Christine Gill: Turning to growth and good flow through as.

Lisa Christine Gill: As things are happening so EBITDA great.

Lisa Christine Gill: And secondly, large companies like CVS have talked about moving towards cross-plus reimbursement, and I'm just curious as to what that means for your model, if anything, as they move forward. And then, if I can just squeeze one in just as a clarification, EBITDA was $6 million higher than consensus in the quarter. Is there any reason why it was different than what you were projecting internally, just thinking about the flow-through from the rest of the year of that beat versus the street in the first quarter?

Lisa Christine Gill: Terms of the cost plus.

Lisa Christine Gill: Situation.

Lisa Christine Gill: Again.

Scott W. Wagner: So, hey Lisa, thanks. I'm going to go in reverse order, top of mind.

Lisa Christine Gill: Well no cost.

Lisa Christine Gill: Cost plus is a different way for a retail pharmacy.

Lisa Christine Gill: Pricing itself relative to the Pbms.

Scott W. Wagner: So, the EBITDA beat and flow-through is actually great. I mean, it really is an outcome of a return to growth and good flow-through as things are happening. So, EBITDA, great. In terms of the cost-plus situation, you know, again, as you well know, Cost Plus is a different way for a retail pharmacy to price itself relative to the PBM. But the need for value relative to people's insurance doesn't change at all.

Scott W. Wagner: And so not just our own value and the Goodrx value prop, which is really being able to add value relative to gaps in insurance that still exist in a cost-plus world, gosh, and it might even be enhanced, depending upon how retailers are operating. And I'm going to tease our investor day a little bit, but the best way to actually talk about this is to show it. And there's a set of drugs where if you go into Goodrx and you're looking at price points of different drugs across retailers, there's several on cost-plus models today, and there are several that are not or in the traditional world, and nobody can tell the difference. And there's a fundamental benefit of Goodrx that applies across both. So I think that's a cost-plus thing. We'll dive into that more next week with everybody.

Lisa Christine Gill: But the need for value relative to People's insurance.

Lisa Christine Gill: It doesn't change at all.

Lisa Christine Gill: So not just our own value and the good Rx value prop, which is really being able to add value relative to gaps in insurance that still exists.

Lisa Christine Gill: In a cost plus world gosh that might even be enhanced depending upon how retailers are operating in.

Lisa Christine Gill: I'm going to I'm going to tease, our investor day, a little bit, but the best way to actually talk about this is to show it and there is a set of drugs, where if you go onto <unk> and Youre looking at price points are different drugs across retailers.

Lisa Christine Gill: There is several on cost plus models today and there are several that are that are not or in their traditional world and nobody can tell the difference and there is a fundamental benefit of good Rx it applies across both so that's.

Lisa Christine Gill: I think thats the cost plus thing will dive into that more next week with everybody on retail acceptance. Yes. The answer is a couple of several retailers.

Scott W. Wagner: On retail acceptance, yes, the answer is that several retailers are working through the dynamics of ISP, which, as you might expect, have to do more with their funded contracts than it necessarily does with ISP. But we and our PBM partners, in particular, are working through that with retailers. So there's nothing... Fundamentally different about retailers who are in or not; it has to do more with the balance of the program relative to their funded books.

Lisa Christine Gill: Our working through the dynamics of ISP, which as you might expect has to do more with their funded contracts than it does necessarily ISP, but we in our ppm partners in particular are working through that with retail so.

Lisa Christine Gill: There is nothing.

Lisa Christine Gill: Fundamentally different about retailers, who are in or not it has to do with more of the balance of the program relative to the unfunded book.

Lisa Christine Gill: Great. Thanks so much. I'll see you next week.

Speaker Change: Great. Thanks, so much Chelsea next week.

Operator: Thank you. Thank you. One moment for our next question, please. And it's from the line of Charles Rhyee with T.D. Cowan. Please proceed.

Chelsea: Thanks. Thank you one moment for our next question. Please.

Charles Rhyee: Yeah, thanks for taking the question. I wanted to ask a little bit more, you know. I think you talked about sort of the big areas for growth, particularly in ISP, among them, right, the types of transactions, particularly off-formulary generics. Can you talk about sort of what the process is with the various PBMs on, you know, how those decisions are made and maybe if you have an estimation of what percentage of the formulas you are using today, you know, is there a formal process in there, or is it just as they are testing through it and trying to get a little bit more sense on that, and then I think when you read the guidance for EBITDA of 250 million, did I Just to clarify that, thanks. Charles, let me.

Charles: And he is from the line of Charles <unk> with TD Cowen. Please proceed.

Charles Cowen: Yes, thanks for taking the question.

Charles Cowen: I wanted to ask a little bit more I think you talked about sort of the big areas for <unk>.

Charles Cowen: Growth, particularly in ISP is.

Charles Cowen: Long term rate the types of transactions, particularly off formulary generics can you can you talk about sort of what the processes with the with the various pbms on how those decisions are made and.

Charles Cowen: Maybe if you have an estimation of.

Charles Cowen: What percentage of the formulary as you are.

Charles Cowen: Being used for today.

Charles Cowen: Thermal process in there or is it just as they are testing through it and.

Charles Cowen: I'm, just trying to get a little bit more sense on that and then just a clarification I think when you reiterated the guidance for EBITDA.

Charles Cowen: EBITDA of $250 million did I hear that you expect greater than $250 million for the year, just just to clarify that thanks.

Scott W. Wagner: Charles, let me, hopefully, hit the mark with my answer to this. I understand your question is about the process of how we're ramping or working through with the PBMs, and I would say this is a mutual effort between a couple of people on our end and a couple of people on theirs, actually flowing through the trials and then actually looking at some of the price points and data. And what that means is that we're doing it together, but it's very much an incremental rollout, I think, in a manner that we've tried to communicate to people.

Speaker Change: Charles Let me.

Charles Cowen: Hopefully I hit the Mark with my answer to this.

Charles Cowen: Okay.

Charles Cowen: I'm understanding your question is the process of how we're ramping our working through with the Pbms.

Charles Cowen: I would say this is a.

Charles Cowen: Our mutual effort with couple of people R&R and in a couple of Q4, there's actually.

Charles Cowen: Slowing through lives and then actually looking at some of the price point and data and what what that means is that.

Charles Cowen: We're doing it together, but it's very much a.

Charles Cowen: And.

Charles Cowen: Mental rollout.

Charles Cowen: Thank you the matter that we've tried to communicate to people and again on this one we are following the lead of our ppm partners. So I think the punch line audit as we're working together.

Scott W. Wagner: And again, on this one, we are following the lead of our PBM partners. So I think the punchline on it is we're working together, and it has, if you might think about it, been a step-by-step and an incremental approach to all of this. And I'll let Karsten address the EBITDA question. Yeah, that's an easy one, Charles.

Charles Cowen: And it has if you might think about it as a step by step and an incremental approach to all of these and I'll, let carsten.

Carsten: And I'll, let Carson address the EBITA question, Yes, that's an easy one Charles on the EBIT side, Yes, we did say, we expected to achieve over $250 million of adjusted EBITDA.

Karsten Voermann: On the EBITDA side, yes, we did say we expected to achieve over $250 million of adjusted EBITDA, so approximately greater than 50% YOY.

Carson: Approximately greater than 50% Y O y.

Speaker Change: Okay. Thank you.

Karsten Voermann: Thank you. One moment for our next question, please. And it's from the line of Stan Berenshteyn with Wells Fargo Securities. Please proceed. Hi, thanks for taking my call.

Speaker Change: Thank you one moment for our next question. Please.

Speaker Change: And he is from the line of Stan Bernstein with Wells Fargo Securities. Please proceed.

Speaker Change: Hi.

Stan Bernstein: Thanks for taking my questions.

Stan Bernstein: Maybe on pharma manufacturing solutions, you have called this out as an area of focus seems like Q1 was a bit stronger than what you had guided for any anything to call out in terms of upside to the expectations what drove that and then perhaps related to this can you just give us some updates on the sales pipeline here the type of traction you're seeing within the segment. Thanks. So much.

Operator: Yeah, this is great. And I look forward to going into more detail on this whole area next week. I think what you're seeing is the results of an effort that, you know, we were talking about at the end of last year about honeing in on what we're really good at and distinctive at. And in pharma land, that's access solutions and, in the parlance, which is, there are all of these co-pay and patient assistance programs that every brand runs, and they all act differently. When you embed that workflow into Goodrx, the whole system works better, right?

Stan Bernstein: Yeah. This is Greg and look forward to going into more detail on this whole area next week.

Greg: I think what Youre seeing is the results of <unk>.

Greg: <unk> that we were talking about at the end of last year.

Greg: We're going to hone in on what we're really good at and distinctive.

Greg: With these.

Scott W. Wagner: In many cases, we get 5 to 15 times the organic page views at a brand than the natural brand does. And so if you think about us being the destination for affordability, there's real value for each brand connecting their affordability programs through Goodrx. And when we talk about access, that's pretty much what it is.

Stan Bernstein: These brand partners and.

Stan Bernstein: In pharma land.

Stan Bernstein: Access solutions in the parlance, which is there.

Stan Bernstein: All of these co pay and patient assistance programs.

Stan Bernstein: Every brand runs and they all act differently when you embed that workflow integrate Rx the whole system works better in many cases, we get.

Stan Bernstein: Five to 15 times, the organic page views at a brand that natural brand does and so if you think about us being the destination for affordability boy.

Stan Bernstein: Boy Theres real value for each brand connecting their affordability programs through good our acts and when we talk about access that's pretty much what it is.

Scott W. Wagner: And the effort last year was really honing our discussions with marketers on those things, and, you know, it's starting to bear fruit. I think by the numbers, Q1 was up 20% year over year. Obviously, you know, this is a selling cycle. So the growth rates are going to bounce around a little bit, but I believe, because I've been in conversations with not only our teams but a lot of these brand pharma companies over the last quarter, there's real value we add here. There's real value we add that's scalable. And, you know, I would hope that this trajectory is going to continue.

Stan Bernstein: The effort last year was really honing our discussions with.

Stan Bernstein: With marketers on those things and it's starting to bear fruit.

Stan Bernstein: By the numbers Q1 was up 20% year over year.

Stan Bernstein: Obviously this is a selling cycle. So the growth rates are going to bounce bounce around a little bit but.

Stan Bernstein: I believe because ive been in conversations with <unk>.

Stan Bernstein: Not only our team, but a lot of these brand pharma companies over the last quarter. There is real value we add here.

Stan Bernstein: Real value add thats scalable.

Stan Bernstein: I would hope that this trajectory is going to continue.

Operator: Thank you. One moment for our next question, please. And it's from the line of Scott Schoenhaus with E-Bank. Please proceed.

Speaker Change: Thank you one moment for our next question. Please.

Speaker Change: And it is from the line of Scott Sean House with Keybanc. Please proceed.

Scott Anthony Schoenhaus: Hey, team, thanks for taking my question. So I want to talk about gross margins. They really accelerated here to almost 94%. We haven't seen that since the grocer issue two years ago. And you know, you called out in the press release the restructuring impact on the pharma business. Should we expect these kind of gross margins going forward? And is there any more room to squeeze out, you know, more cost savings out of the pharma mansell business? Thanks.

Speaker Change: Hey team. Thanks for taking my question. So I wanted to talk about gross margins. They really accelerated here almost 94% we haven't seen that since the grocer issue.

Speaker Change: Two years ago, and you know you called out in the press release, the restructuring impact on the pharma menthol should we expect these kind of gross margins going forward and is there any more room to squeeze out of.

Speaker Change: More cost savings out of the pharma menthol business. Thanks.

Karsten Voermann: Thanks, Shane. I'm going to make two points about this. I'm going to tie on to Scott's last point on Pharma Mansol because it directly connects to this point. So Scott was talking about the Pharma Mansol growth rates at sort of 20%. And I think what everyone needs to remember is that on a like for like basis, last year's quarter included revenue from Vitacare, which we restructured out, but it's not in this year.

Speaker Change: Thanks, Dan I'm going to make two points on that taking that plan to Scott's last point on pharma <unk> solved because it directly connected to this point. So Scott was talking about the current <unk> growth rates.

Speaker Change: 20% and I think whatever needs to remember is that on a like for like basis last years.

Speaker Change: Quarter included revenue from Vida carriage, we restructured out that's not in this year. So on a like for like you see a growth rate that if anything and thats forward looking basis might be a bit higher second point I'd make is with respect to gross margin.

Karsten Voermann: So on a like for like basis, you see growth rates that, if anything, in a forward-looking basis, might be a bit higher. The second point I'd make is with respect to gross margin, which ties in because the cost of revenue that went away went away in connection with that Vitacare restructuring as well. That is now gone. So again, revenue is gone on a like for like basis, but costs are also gone. And that's one of the reasons Scott and the rest of the team elected to undertake the restructuring because we felt like it would be a perpetual, not just a one-time, increase in gross margin as cost of revenue drops.

Speaker Change: And two because the cost of revenue that went away went away in connection with that Medicare restructuring as well that has now gone. So again revenue gone kind of like for like basis by cost also gone and Thats one of the reasons Scott and the rest of the team elected to undertake the restructuring is because we felt like.

Speaker Change: B.

Speaker Change: A perpetual not just a one time increase in gross margin as cost of revenue drops.

Karsten Voermann: Greg, is that something that we should expect structurally to continue throughout the rest of the year? Absolutely, yes, it's a sure thing.

Speaker Change: Great is that something that we should expect structurally to continue throughout the rest of the year.

Karsten Voermann: Absolutely yes is the short answer. That cost of revenue-generating offering is gone. So the answer is absolutely yes, Sam. And I'll pile on that question and Karsten's comments. I think you are seeing the value of Goodrx relative to brands now, which is starting to show up in the numbers financially, both the growth rate trajectory and margin flow through, and the ability to help this, you know, accrete to profitable growth that, you know, it's nice to be at this point.

Speaker Change: Absolutely, yes is the short answer that call.

Speaker Change: Cost of revenue generating offering is gone.

Speaker Change: The answer is absolutely yes.

Speaker Change: And.

Speaker Change: Ill pile on.

Speaker Change: Just that question in Carson's comments.

Speaker Change: I think you are seeing.

Speaker Change: Hi.

Speaker Change: The value of good Rx relative to brands that we're just starting to show up in the numbers financially both growth rate trajectory and margin flow through and the ability to help this.

Speaker Change: To profitable growth.

Speaker Change: Nice to be at this point.

Operator: Thank you. One moment for our next question, please.

Speaker Change: Thank you.

Speaker Change: For our next question please.

Speaker Change: And it's from the line of Jack Wallace with Guggenheim Partners. Please proceed.

Speaker Change: Hi, This is mitchell on for Jack.

Mitchell: So you bought back over 21 million shares in half two.

Scott Wagner: $95 million of repurchase authorization remaining just trying to understand how you're thinking about capital deployment for the rest of the year and.

Operator: Repurchasing shares Opportunistically still at the top of the list and is there anything else you're considering thank you.

Karsten Voermann: Sure. I'll take this one. This is Karsten.

Operator: Sure I'll take this one this is carsten.

Karsten Voermann: Youre totally right about the share repurchases were very focused on taking advantage of situations, where we view the stock is cheap. So that's the basis for what we've done historically going forward. How are you going to take your question as what else might we be doing them.

Karsten Voermann: You're totally right about the share repurchases. We're very focused on taking advantage of situations where we view the stock as cheap. So that's the basis for what we've done historically. Going forward, I'm going to take your question as to what else might we be doing on the capital side to deploy capital. And I can tell you that Scott and the team are not, at this point, contemplating any M&A and are not contemplating any material investments that would reduce our ability to produce cash flow on behalf of investors at all.

Karsten Voermann: The capital side to deploy capital and I can tell you that Scott and the team alright at this point not contemplating any M&A and not contemplating any material investments that would reduce our ability to produce cash flow on behalf of investors at all so I think on a forward.

Karsten Voermann: So I think on a forward-looking basis, the two elements that potentially could continue to exist are if we continue to see the stock as cheap, to your point, we'll do something about that. And the other element is that we have opportunities to repay debt.

Karsten Voermann: Looking basis.

Karsten Voermann: Two elements that potentially continue to exist or if we continue to see the stock is cheap to your point, we will do something about that in there and the other element is that we have opportunities to repay debt and as interest rates have increased we continue to evaluate those very carefully in the context of that.

Karsten Voermann: Of refinancing.

Speaker Change: Great. Thank you.

Operator: Thank you. One moment for our next question, please. And it's from the line of Sean Dodge with RBC Capital Markets. Please proceed. Yeah, thanks.

Sean Dodge: Thank you.

Sean Dodge: For our next question please.

Operator: And he is from the line of Sean Dodge with RBC capital markets. Please proceed.

Sean Dodge: Yes. Thanks.

Sean Dodge: Scott maybe going back to your comments around ISP being rolled out in increments when it comes to expanding to new employers of sponsors are expanding the drugs and included.

Sean Dodge: Are covered under the ISP are those changes pbms want to make more around the beginning of plan years are those things that can be kind of phased in in increments over the course of a year.

Scott W. Wagner: It's, I'm going to grab it first, if that's okay, Sean. It's sort of both, is the short answer. I think we originally anticipated that we'd see significant impacts at the start of the year, but in my commentary related to the IFP seasonality question, they were less pronounced than we might have expected. Historically, one of the reasons for that is exactly this point that we continue to see lives come on, for example, and other benefits of ISP occur even during the year. So that was the basis for my comment that seasonality is flatter, less downward sloping than we might have otherwise expected on ISP.

Sean Dodge: I'm going to grab it first if thats a great shot at sort of both is the short answer I think we originally anticipated that we would see significant impacts at the start of the year, but in my commentary related to <unk>.

Scott W. Wagner: <unk> now the question being less pronounced than we might have expected.

Scott W. Wagner: Historically, one of the reasons for that is exactly this point that we continue to see.

Scott W. Wagner: Lives come on for example.

Scott W. Wagner: And other benefits of ISP occur even during the year. So that was the that was the base.

Scott W. Wagner: For my comment that that seasonality is flatter less downward sloping than we might have otherwise expected on ISP.

Speaker Change: Okay, great. Thank you.

Speaker Change: One moment for our next question.

Operator: Thanks. One moment for our next question. Any calls from the line of Allen Lutz with Bank of America, please proceed.

Scott W. Wagner: And it comes from the line of Allen Lutz with Bank of America. Please proceed.

Allen Charles Lutz: Good morning, and thanks for taking the questions. Karsten, thanks for all the color on the ISP opportunities. I want to follow up on that last question. You mentioned a few different opportunities, adding PBMs, adding incremental members, adding formulary, adding retailers. I think in response to the last question, you said there were some members that have come on since last quarter. Has anything else changed since the update in February?

Allen Charles Lutz: Good morning, and thanks for taking the question Carsten. Thanks for all the color on the ISP opportunities I wanted to follow up on that last question. You mentioned a few different it is adding pbms, adding incremental members, adding formulary, adding retailers I think in response to the last question you said theres been some members that have come on.

Karsten Voermann: And then as it relates to retailers that are currently not accepting ISP, is that a large, like what percent of retailers is that? Is that, are there any large retailers in there? And then could retailers come on board over the course of 2024? Thanks.

Allen Charles Lutz: Since last quarter has anything else changed since the update in February and then as it relates to retailers that are currently not excepting ISP is that a lot like what percent of retailers is that is that are there any large retailers in there and then could retailers come on over the course of <unk>.

Karsten Voermann: 24.

Karsten Voermann: Sure, thanks. First of all, the performance of ISP is largely consistent with our modeling, so I'm grateful to our FP&A team for that. It's coming in aligned with expectations, hence you saw us performing aligned with the expectations we set, or a little more, in the business overall, including in PTR. I think in terms of levers.

Speaker Change: Sure. Thanks.

Karsten Voermann: First of all the performance of ISP is largely consistent consistent with our modeling so grateful to our team on that.

Karsten Voermann: It's coming in line with expectations, Hence you saw us performing aligned with the expectations, we set or a little more in the business overall, including an ETR.

Karsten Voermann: I think in terms of levers.

Karsten Voermann: Probably the one I didn't mention earlier that I think is a great area of inflection for us too, and that I might not have expected as much a quarter ago, is our ability to win transactions. So the win rate associated with the app apps we get, as you know, and I think everyone else on the call knows, the way ISP works is a member as a funded benefit goes to the pharmacy, and it goes to the lower cost of Goodrx or what that member might otherwise pay.

Karsten Voermann: Probably the one I didn't mention earlier that I think is a great area of inflection for us too and that I might not have expected as much a quarter ago is our ability to win transactions.

Karsten Voermann: Win rate associated with the App as we get as you know and I think everyone else on the call knows.

Karsten Voermann: The way ISP works as a member is funded benefit goes to the pharmacy and it goes to the lower cost of good Rx or what that number might otherwise pay.

Karsten Voermann: It goes to their funded benefit plan. And as we work with all of the stakeholders in the value chain to optimize ISP, that winner conversion rate ends up getting better. With respect to your question about pharmacy acceptance, a significant majority of the big pharmacies, like, I'm trying to think back, I may not get this perfectly right, but pretty much all of them are in, but we do have a handful of pharmacies that are smaller that we can continue to pick up on.

Karsten Voermann: Two they are funded benefit plan and as we work with all of the constituents in the value chain to optimize ISP that winter conversion rate ends up getting better with respect to your question about pharmacy acceptance.

Karsten Voermann: A significant majority of the big pharmacies.

Karsten Voermann: I'm trying to think back I mean, I get this perfectly right, but pretty much all of them are in but.

Karsten Voermann: We do have.

Karsten Voermann: Rail of pharmacies that are smaller that we can continue.

Karsten Voermann: Continue to pick up on.

Speaker Change: Great. Thank you.

Operator: Thank you. One moment for our next question, please. And it's from the line of John Ransom with RJF. Please proceed.

John Ransom: Thank you.

John Ransom: For next question please.

Operator: And he is from the line of John Ransom with RJ asked please proceed.

John Ransom: Good morning. So one kind of CFO-type question and one kind of bigger picture question. So yeah, looking at PTR per MAC, it's declined every year since 2018 in your legacy business. Is this just following the natural slope of generic deflation?

John Ransom: Good morning.

John Ransom: So one kind.

John Ransom: CFO type questions and one kind of bigger picture question. So the.

John Ransom: And should we expect that to continue going forward? I assume that's the first question. The second question is, I guess I was kind of surprised and a little happy you guys are doing an analyst say. I know you've been teasing this out, but what was the catalyst for wanting to do this analyst say next week? And, you know, just maybe highlight the two or three big themes you're trying to drive home as the story is, you know, certainly the story is in transition. And I think there are some points that could, you know, lead to better elimination. Thanks.

John Ransom: Yes, looking at PTR per Mac, it's declined every year since 2018 and your legacy business or is this just following the natural slope of generic deflation.

John Ransom: And we should expect that to continue.

John Ransom: Going forward I assume that's the first question. The second question is I guess I was kind of surprised in a little happy you guys are doing an analyst day.

John Ransom: <unk> been teasing us out, but what was the catalyst for wanting to do this analyst day next week.

John Ransom: Just maybe highlight the two or three big themes, you're trying to drive home is the story is certainly the story isn't transition and I think there are some points it could.

John Ransom: <unk> lead for better elimination.

Scott W. Wagner: Yeah, hey John, it's Scott. Well, I think the logic for getting together with everybody is to spend three hours laying out the need we serve, the value prop, go through detail in each of the areas that we're doing, and lay out financial goalposts between the marketplace and the bandsaw that we haven't done. You know, speaking, a little selfishly and for myself, but a year in, you know, everybody outside was asking for all those things.

John Ransom: Yeah, Hey, John It's Scott.

Scott W. Wagner: Okay well.

Scott W. Wagner: I think the logic for getting together with everybody is.

Scott W. Wagner: Span.

Scott W. Wagner: Three hours laying out paid the need we serve value prop go through detail in each of the areas that we're doing lay out financial goalposts between the marketplace and Vance all that we haven't done in.

Scott W. Wagner: We were doing it ourselves internally. We're ready to, we're ready to do that consistently with some, you know, visibility on, hey, here's the opportunities and the growth levers that we're working on now. And, you know, it's just, it's nice. It's a great point that we're ready to do this. And with respect to the PTR for MAC question, I think there are a couple of concepts that are pretty important.

Scott W. Wagner: Speaking.

Scott W. Wagner: Selfishly and for myself that our year end.

Scott W. Wagner: Everybody outside was asking for all of those things we were doing it ourselves internally, we're ready to we're ready to do that with <unk>.

Scott W. Wagner: Consistent with some visibility.

Scott W. Wagner: Here's the opportunities and the growth levers that we're working on now here's a set of secondary things that these are going to lead into as they continue to work.

Scott W. Wagner: Some financial goalposts that we can communicate to everybody that.

Scott W. Wagner: We have high confidence in and so the point is the business is ready.

Scott W. Wagner: And it's nice to be able to do that with <unk>.

Scott W. Wagner: I have a day's worth of time and people actually focused on unable to answer questions.

Scott W. Wagner: <unk>.

Scott W. Wagner: It's a nice point that we're ready to do that.

Scott W. Wagner: We don't expect any sort of non-linearity and expect it to be largely flat for the year. You'll probably see the percentages fluctuate around zero, meaning a flat slope, John. So this time it was down a couple percent. Next quarter, it could very well be slightly up. That is contra-revenue in the same sense that for CPG brands, coupons are contra-revenue. So you see a drag this year that's up, sort of call it low double-digit millions, with respect to increased contra-revenue that reduces revenue and, therefore, when divided by MACs, reduces PTR per month.

Scott W. Wagner: And with respect to the PTR per Mac question I think there are a couple of concepts that are pretty important we don't expect any sort of non linearity and expect it to be largely flat for the year, you'll probably see.

Scott W. Wagner: The percentages fluctuate around.

Scott W. Wagner: Zero, meaning flat slope John So this time was down a couple percent.

Scott W. Wagner: Next quarter, it could well very well be slightly up.

Scott W. Wagner: It's not a metric we actively manage to but I will point out two things. One thing is that we have increased or use.

Scott W. Wagner: Consumer incentives in order to drive consumers to take action for example, their first fill or for example, if we see them fill a few times in a chronic script and then look like they might be trading.

Scott W. Wagner: And same thing with the discount on sale number act to bring them back into the fold.

Scott W. Wagner: That is contra revenue in the same sense that for CPG brands coupons are contra revenue. So you see a drag this year, that's up call it low double digit millions.

Scott W. Wagner: With respect to increased contra revenue that reduces revenue and therefore when divided by Max reduces PTR per Mac I think the the Ria.

Scott W. Wagner: I think the reality is we're not spending more; it's just a matter of it shifting out of marketing and into this sort of consumer incentives arena. I think the second point is that when you look back over the time horizon you're talking about, that's also the time horizon when one of our retail partners where we made quite a nice margin, I'm thinking of Kroger here, constituted a significant amount of our business, like 24%-ish, 25%-ish PTR volume. And so I think that was the other factor that created the headwind. But now that that's fully flowing,

Scott W. Wagner: These are not spending more it's just a matter of if it's shifting out of marketing into this sort of consumer incentives arena.

Scott W. Wagner: The second point is that when you look back over the time Horizon you are talking about Thats also a time horizon when one of our.

Scott W. Wagner: Our retail partners, where he made quite nice margin im thinking of Kroger here constituted a significant amount of our business like 24% ish, 25% ish.

Scott W. Wagner: PTR volume and so I think that was the other factor that created a headwind, but now that thats fully flow through rate. It's just the latter one.

Scott W. Wagner: But now that that's fully flowed through, right? It's just the latter one, the contra rev one, that is materially impactful. Hopefully, that's helpful.

Scott W. Wagner: Contra Rev. One that is materially impactful.

Scott W. Wagner: Hopefully that's helpful.

Scott W. Wagner: I'll put in one more. It's a long, long commentary on this, but one last plug for next week. I do want to acknowledge and recognize that externally, the pacing of the company, which we've had feedback from investors on, it's, you know, it's been harder to follow. People are going to come away from their time with us next week, and investors will, with a very clear understanding of this market, this company, here's what we're working on, here's how it translates into financials. And you'll be able to judge sort of what and how that trajectory is, but everybody will come away with transparency and understanding coming out of the next one.

Speaker Change: So I didn't want.

Scott W. Wagner: Long long commentary on this but one last plug for next week.

Scott W. Wagner: I do.

Scott W. Wagner: Why do acknowledge and recognize that externally the pacing of the company, which we've had feedback from investors on that.

Scott W. Wagner: It's been harder to follow.

Scott W. Wagner: People are going to come away from time with US next week at Investor as well with a very clear understanding of here's market Here's a company here's what we're working on here is how it translates into financials and youll be able to judge sort of what and how that trajectory is that everybody will come away with transparency and understanding.

Scott W. Wagner: Coming out of next Wednesday.

Operator: Thank you. One moment for our next question, please. And it comes from the line of John Park with Morgan Stanley. Please proceed.

Speaker Change: Thank you.

John Park: Thank you one moment for our next question. Please.

Operator: And it comes from the line of John Park with Morgan Stanley. Please proceed.

John Park: Hey, guys. Thank you for taking my question I'm here for on behalf of Craig.

John Park: Besides any acceleration on top line growth.

John Park: And that would provide operating leverage in the model are there any productivity or cost initiatives that will drive margin expansion I think you mentioned.

John Park: Going away from Vida care will help with gross margins, but would love any color on that.

Scott W. Wagner: I think you're seeing, it's Scott, and Karsten's going to jump in too. But what you're really seeing is just the power of the model itself, which is, as you return to top line growth, the flow through is great. And, you know, InvitaCare was a very specific action on restructuring something that just wasn't a great use of resources. And, you know, it's great for the business and great for investors.

Scott: You're seeing it Scott Carson is going to jump into.

Scott W. Wagner: But what you're really seeing is just the power of the model itself, which is as you've returned.

Scott W. Wagner: Top line growth.

Scott W. Wagner: The flow through.

Scott W. Wagner: The flow through is great.

Karsten Voermann: This is vital care was the very specific action on.

Scott W. Wagner: Restructuring something that just wasn't a great use of resources.

Karsten Voermann: It's great for the business and great for investors now if you think about our flow through just as we returned to growth youre naturally getting in and I will say, we're we're certainly prudent with resources, but.

Scott W. Wagner: Now, if you think about our flow through, just as we return to growth, you're naturally getting it. And I will say we're certainly prudent with resources, but it isn't that hard. And in some ways, we're looking to lean into things that will continue to drive growth. So, you know, the topic of marketing hasn't come up on the call. But I will say there are things that we're finding and doing that we'll talk about next week, when we'll push the gas out.

Scott W. Wagner: It isn't that hard and in some ways, we're looking to lean into things that will continue to drive growth. So the topic of marketing Hasnt come up on the call, but I will say there are things that we're finding in doing that we'll talk about next week, where we'll push the gas out and the nice thing for everybody listening in the call.

Scott W. Wagner: And the nice thing for everybody listening on the call is that we can do those things. And we can do that, whether it's marketing or soaring, you know, engineering effort in certain areas that we are doing. And guess what? The revenue growth still flows through. Yeah, and in terms of the quant part of your question, I think there are areas where we've, over the past few quarters, shown some efficiency. Like, for example, if you go back and look over a multi-quarter sort of longitudinal perspective, you see incremental marketing efficiencies, even adjusting for the contra revenue that I talked about with respect to John Ransom's question.

Scott W. Wagner: As.

Karsten Voermann: New growth-oriented technology and platform attributes that the capitalization rate on that goes up to, so there are certain dynamics in the business that we would expect to allow us to continue to accrete margin incrementally to just the flow through, particularly as we look forward on a multi-year basis, and we'll talk about that more next week, as Scott alluded to.

Karsten Voermann: It was up two right. So there are certain dynamics in the business that we would expect to to allow us to continue to accrete margin incremental to just the flow through particularly as we look forward on a multiyear basis and we will talk about that more next week as Scott alluded to.

Operator: Thank you so much. One moment for our last question, please. And it comes from the line of George Hill with Deutsche Bank. Please proceed.

Speaker Change: Great. Thank you.

George Robert Hill: Thank you so much one moment for our last question. Please.

Operator: When it comes from the line of George Hill with Deutsche Bank. Please proceed.

George Robert Hill: Yeah, good morning, guys, and thanks for sneaking me in. I guess two quick ones. One question, Karsten, is are you able to unpack from a gross margin perspective for us the impact of 20% of Scripps going to retail direct from 5% a year ago? I think a lot of us are trying to understand the gross margin impact here. And then, Scott, I think a lot of us that are kind of drug supply chain wonks are looking at the Part D program as seeing a lot of disruption next year.

George Robert Hill: Yes, good morning, guys and thanks for sneaking me in I guess two quick ones. One Carsten is are you able to unpack from a gross margin perspective for us the impact of 20% of scripts going to retail direct from 5% in the year ago period, I think a lot of us are trying to do the gross margin impact here and then Scott I think a lot of us that are kind of drug.

Scott: Supply chain work or looking at the part D program is seeing a lot of disruption next year. We've just wondering if you guys would kind of quantify your exposure to that I know you're not supposed to have a lot of direct exposure, but maybe a lot of indirect and kind of how youre thinking that could impact the business next year.

George Robert Hill: We're just wondering if you guys could kind of quantify your exposure to that. I know you're not supposed to have a lot of direct exposure, but maybe a lot of indirect, and kind of how you think that could impact the business next year.

George Robert Hill: Sure, I heard the first part of the question. The second indirect part, would you mind repeating that one for us, George?

Scott: Sure I heard the first part of the question. The second indirect part would you mind repeating that one for a start.

George Robert Hill: So a lot of us are expecting Part D disruption next year. I know that you guys aren't supposed to have a ton of direct exposure to Part D, but I imagine there are probably a lot of beneficiaries who are using the Goodrx card while either in their deductible or to avoid parts of co-pays or what have you. But a lot of those people could wind up bouncing around next year. I was just wondering how you guys are thinking about what will happen in that market. Sure.

George Robert Hill: So so like.

George Robert Hill: A lot of us are expecting part D. Disruption next year I know that you guys aren't supposed to have a ton of direct exposure to part D. But I imagine you're probably there's probably a lot of beneficiaries who are using the good R X card, while either in their deductible or to avoid parts of co pays or what have you.

George Robert Hill: A lot of those people could wind up bouncing around next year. Just wondering how you guys are thinking about what happens in that market.

Karsten Voermann: Sure. In the interest of time, I'll try and be quick here.

Speaker Change: Sure so.

Speaker Change: In the interest of time, I'll try and be quick here.

Speaker Change: To the.

Karsten Voermann: To the Part D question, I think the reality is that as we continue to analyze all of the potential changes, we haven't found any that we anticipate and that we view at this point as impactful to us and material to us. So I don't think, on that dimension, it impacts our forward-looking view, certainly over the time periods and reference periods that we're looking at. So coming up, call it a couple, three years, so not just next year.

Speaker Change: Part D question I think the reality is that as we continue to analyze all of the potential changes.

Karsten Voermann: We haven't found any that we anticipate and then we view at this point is impactful to us and material to us. So I don't think that dimension.

Karsten Voermann: It impacts our forward looking view certainly.

Karsten Voermann: Over the time periods and reference periods that we're looking at so coming call. It couple of three years. So not just next year. So I think on that dimension.

Karsten Voermann: So, I think on that dimension, there is really nothing to add with respect to direct contracting and margins. The direct contracting hasn't had any kind of a negative material effect on our margins. Like we talked about a little with John on PTR per MAC, there has been a slight downward slope to that over time, but that downward slope isn't really direct contracting. The downward slope is primarily driven by the contra-revenue aspects of marketing shifting from S&M to sort of the couponing or consumer incentives that I mentioned, number one, and number two, the fact that Kroger's volume, which was, again, a little higher margin for us than some other retailers, decreased.

Karsten Voermann: Nothing really to add with respect to direct contracting and margins.

Karsten Voermann: The direct contracting Hasnt had any kind of a negative material effect on our margins like like we talked about a little with John on P. J R per Mac.

Karsten Voermann: There has been a slight downward slope to that over time, but that downward slope isn't really direct contracting the downward slope is primarily driven by the contra revenue aspects of marketing shifting from Amsterdam to sort of the couponing or consumer incentives that I mentioned number one.

Karsten Voermann: Number two the fact that that Kroger volume, which is again, a little higher margin for us and some other retailers.

Karsten Voermann: That the Kroger volume decrease so I think from that perspective, we view direct contracting as effectively.

Karsten Voermann: So, I think from that perspective, we view direct contracting as effectively materially neutral to us. And that's a good thing, because retailers like it more, and from our perspective, we're happy to help them merchandise, drive incremental volume, etc. For us, it's all about the dollars of EBITDA and the dollars of gross margin, and that's exactly what direct contracting helps us drive.

Karsten Voermann: Materially neutral to us.

Karsten Voermann: So good thing because retailers like it more and from our perspective.

Karsten Voermann: We're happy to help them merchandise drive incremental volume et cetera for us. It's all about the dollars of EBITDA and the dollars of gross margin and that's exactly what direct contracting helps us drive.

Operator: Thank you. And this concludes the Q&A session. I will pass it back to Scott Wagner for final comments.

Speaker Change: Thank you.

Scott W. Wagner: Thank you and this concludes the Q&A session I will pass it back to Scott block Mirror for final comments.

Scott W. Wagner: Thanks a bunch. Thanks all. I appreciate it.

Scott W. Wagner: Thanks, so much thanks al.

Scott W. Wagner: <unk> and most importantly look forward to spending time with with people next week.

Scott W. Wagner: I think it'll be super productive.

Scott W. Wagner: And most importantly, I look forward to spending time with people next week. I think it'll be super productive. Just to lay out some more context on the things we're working on with real color on what they are, what that can do, how that can go forward, and, most importantly for investors on the call, the goalposts at a segment level and an overall level that we think you can think about for the business, certainly for the next several years. So we're looking forward to it. Thanks, everybody.

Scott W. Wagner: Just to lay out.

Scott W. Wagner: Some more context on.

Scott W. Wagner: The things, we're working on with real color on what they are what that can how that can go forward and most importantly for investors on the call. The goalposts at a segment level and at an overall level that we think you can think about for the business.

Scott W. Wagner: Certainly for the next several years. So we're looking forward to it thanks everybody.

Operator: And thank you to all who participated. You may now disconnect. Good day, everyone.

Speaker Change: And thank you all who participated you may now disconnect good day everyone.

Operator: Yeah.

Operator: [music].