Q3 2024 GoodRx Holdings Inc Earnings Call

Operator: Hello, ladies and gentlemen, and thank you for standing by, and welcome to the GoodRx third quarter 2024 earnings call. As a reminder, today's conference call is being recorded.

Hello, ladies and gentlemen, and thank you for standing by and welcome to the good Rx third quarter 2024 earnings call. As a reminder, today's conference call is being recorded I would now like to introduce your host for today's call RP Reynolds director of Investor Relations Mr. Reynolds.

Aubrey Reynolds: I would now like to introduce your host for today's call, Aubrey Reynolds, Director of Investor Relations. Ms. Reynolds, you may begin.

Speaker Change: You may begin.

Aubrey Reynolds: Thank you, Operator. Good morning, everyone, and welcome to Goodrx's Earnings Conference Call for the third quarter, 2024. Joining me today are Scott Wagner, our Interim Chief Executive Officer, and Karsten Voermann, our Chief Financial Officer.

Okay.

Thank you operator.

Speaker Change: Everyone and welcome to better access earnings conference call for the third quarter 'twenty 'twenty four.

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

Aubrey Reynolds: 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 and industry, including ongoing changes in the pharmacy ecosystem, our value proposition, our long-term growth prospects, our direct and hybrid contracting approach, Collaborations and partnerships with third parties, including our point of sale cash programs, and our integrated savings program, our e-commerce strategy, and our capital allocation priorities.

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.

Anticipated financial performance.

Underlying trends in our business and industry, including ongoing changes in the pharmacy ecosystem.

[noise] proposition, our long term growth prospects are direct and hybrid contracting approach collaborations and partnerships with third parties, including our point of sale cash programs and our integrated savings program, our E Commerce strategy and our capital allocation priorities.

Aubrey Reynolds: These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties, and other important factors. These factors, including the factors discussed in the risk factor section of our annual report on Form 10-K for the year ended December 31, 2023, and our other filings with the Securities and Exchange Commission, could cause actual results, performance, or achievements to differ materially from those expressed or implied by the forward-looking statements made on this call.

These statements are neither promises nor guarantees.

I have known and unknown risks uncertainties and other important factors.

These factors, including the factors discussed in the risk factors section of our annual report on Form 10-K for the year ended December 31st 2023, and our other filings with the Securities and Exchange Commission could cause actual results performance or achievement is it for a materially from those expressed or <unk>.

Like all the forward looking statements made on this call.

Aubrey Reynolds: Any such forward-looking statements represents 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.

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 called our views to change.

Aubrey Reynolds: In addition, we will be referencing certain non-GAP 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 in 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.

Speaker 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 in the overview page of our Investor Relations website at investors <unk> com.

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

Scott Wagner: With that, I'll turn it over to Scott. Thanks, Aubrey, and thanks to everyone for joining us today to discuss our third quarter results. Our 2-3 top line was where we expected, and adjusted eventful margin came in higher than we anticipated. Suggested EBITDA grew 21% relative to this period last year.

Speaker Change: With that I'll turn it over to Scott.

Scott Wagner: Thanks, operator, and thanks to everyone for joining us today to discuss our third quarter results. Our Q3 top line was where we expected an adjusted EBITDA margin came in higher than we anticipated.

Scott Wagner: Adjusted EBITDA grew 21% relative to this period last year.

Scott Wagner: I'd like to start the call by reminding everyone of the Goodrx value proposition, what we're seeing in the industry, and highlight a few themes around the business. And then Karsten will get into our financials. We believe our Goodrx value proposition and market position are strong and, I would argue, are increasingly relevant in a world with more and more attention in healthcare being paid to patient affordability and ease of access. Let me touch on three quick points about how Goodrx benefits our customers and partners. First, Goodrx has a huge consumer and healthcare provider audience that really values what we do, reflected by our notably high net promoter scores.

I'd like to start the call by reminding everyone of the good Rx value proposition, what we're seeing in the industry and highlight a few themes around the business and then carsten will get into our financials.

Scott Wagner: We believe our <unk> value proposition and market position are strong and I would argue are increasingly relevant in a world with more and more attention and healthcare being paid patient affordability and ease of access let me touch on three quick points about how good our ex benefits our customers and partners.

First <unk> is a huge consumer and health care provider audience that really values, what we do reflected by our notably high net promoter scores that gives us the ability to drive and direct high volumes in prescriptions over $100 million in 2023 to pharmacies and the pharma manufacturers that's both <unk>.

Scott Wagner: That gives us the ability to drive and direct high volumes of prescriptions, over 100 million in 2023, to pharmacies and to pharma manufacturers. That's both important and unique. Second, Goodrx is well positioned as a complement to health insurance. We estimate that over 90% of our users have some form of insurance and still use Goodrx because insurance formularies are getting more restrictive, patient and employer costs continue to rise via both co-pays and deductibles, and more and more authorizations are being put in place that add friction and require more time from both patients and physicians. Goodrx helps consumers fill the gaps in their insurance, assessing coverage, finding an affordable price, and taking friction out of the time-consuming authorization process.

Scott Wagner: And unique second.

Second <unk> is well positioned as a complement to health insurance, we estimate that over 90% of our users have some form of insurance and still use get Rx because insurance formularies are getting more restrictive patient and employer costs continue to rise via both copays and deductibles and more and more authorization.

Scott Wagner: Or being put in place that friction and require more time from both patients and physicians. Good Rx helps consumers fill the gaps in their insurance assessing coverage timing at affordable price and taking friction out of the time consuming authorization processes.

Scott Wagner: Third, Goodrx's relationships with pharmacies, PBMs, healthcare providers, and consumers all make Goodrx extremely relevant to pharma manufacturers. Manufacturers are leveraging Goodrx to do truly unique things, like our point of sale cash discounts that can give them tighter, more direct relationships with patients, and importantly, grow volume.

Third <unk> relationships with pharmacies, pbms healthcare providers and consumers all make good R X extremely relevant to pharma manufacturers manufacturers are leveraging <unk> to do truly unique things like our point of sale cash discounts that can give them tighter more direct relationships with patients.

And importantly grow volumes in.

Scott Wagner: In a world where there's increasing attention on medicine affordability and access, we feel good about where we sit in the healthcare ecosystem, likely stronger and more relevant than several years As we look at Q3 in the near term financial outlook, and what we're seeing in the business, it really is a tale of two cities. On the plus side, we're making progress with brand manufacturers and brand medication. Our pharma manufacturer solutions offering is expected to deliver about 20% year-over-year top-line growth in the fourth quarter as brand manufacturers are using Goodrx for unique cash, co-pay, and assistance programs to reach patients and physicians.

Speaker Change: In a world, where there is increasing attention on medicine affordability and access we feel good about where we sit in the healthcare ecosystem likely stronger and more relevant and several years ago.

Speaker Change: As we look at Q3 in the near term financial outlook and what we're seeing in the business.

Speaker Change: Really is a tale of two cities on the plus side, we're making progress with brand manufacturers and brand medications are pharma manufacturer solutions offering is expected to deliver about 20% year over year top line growth in the fourth quarter as brand manufacturers are using good R X for unique cash co pay assistance.

Speaker Change: Grams to reach patients and physicians.

Scott Wagner: This market's big. We estimate a $7 billion plus SAM. In addition, we're extending our Integrated Savings Program, or ISP, to include uncovered brand medication. We believe Goodrx provides a durable and distinctive way for manufacturers to reach patients and physicians and to clean up some of the pricing variability and cloudiness that plague the industry. We're encouraged by both our progress and our long-term potential.

Speaker Change: This market is big we estimate a $7 billion plus Sam.

Speaker Change: In addition, we're extending our integrated savings program or ISP to include uncovered brand medications.

Speaker Change: We believe good Rx provides a durable and distinctive way for manufacturers to reach patients and physicians in the clean up some of the pricing variability and cloudiness that plagued the industry. We're.

Speaker Change: We're encouraged by both our progress and our long term potential at.

Scott Wagner: At the same time, the retail pharmacy environment remains unsettled, which is affecting the near term growth of our prescription transaction centered largely around generic. Retail pharmacy chains including CDS, Rite Aid, and Walgreens are closing store locations to improve profitability, and some are renegotiating reimbursement rates with PBMs and pursuing other avenues to drive up their margins. We believe this industry resettling in retail pharmacy is a short term dynamic that isn't permanent, but does cause turbulence for our prescriptions market.

Speaker Change: At the same time, the retail pharmacy environment remains unsettled, which is affecting the near term growth of our prescription transaction business centered largely around generics.

Speaker Change: Retail pharmacy chains, including Cvs Rite aid and Walgreens are closing store locations to improve profitability and summer renegotiating reimbursement rates with Pbms and pursuing other avenues to drive up the margins. We believe this industry reset of laying in retail pharmacy is a short term dynamic there isn't permanent.

Speaker Change: Does cause turbulence for our prescriptions marketplace.

Scott Wagner: We believe our success at engaging retailers in direct contracts, where we now have eight of our top 10 retailers working with us directly in some form, as well as our ability to deepen relationships with PBMs and leverage them as a sales channel for IISP offering, will lay the foundation to exit this period of turbulence on solid I'd like to share some additional color on both of these two cities to continue with the analysis. Starting on the positive in pharma manufacturer solutions, we saw solid year-over-year top-line growth in the third quarter, consistent with what we indicated in Investor Day, excluding the impacts from VitaCare.

Speaker Change: I believe our success of engaging retailers and direct contracts, where we now have eight of our top 10 retailers working with us directly in some form.

Speaker Change: As well as our ability to deepen relationships with pbms and leverage them as a sales channel for ISP offering will lay the foundation to exit this period of turbulence on solid footing.

Speaker Change: I'd like to share some additional color on both of these two cities to continue with the analogy.

Speaker Change: Starting on the positive and pharma manufacturer solutions, we saw solid year over year top line growth in the third quarter consistent with what we indicated at Investor day, excluding the impacts from site of care for.

Scott Wagner: We're pleased with our strategic progress to bring all brand affordability programs on to GoodRx. As we've talked about before, brand medications have unique challenges that complicate the patient's journey, cost often being one of the biggest. We found that pharma is increasingly looking for innovative solutions to deliver affordability options to consumers, and they're turning to Goodrx because we have the reach and scale to get them in front of a high intent audience and to help drive conversion. We estimate that more than 85% of our users already have a prescription in hand and are looking for ways to afford it.

Speaker Change: We're pleased with our strategic progress to bring all brand affordability programs on Dakota Rx.

Speaker Change: As we've talked about before brand medications have unique challenges complicate the patient journey.

Speaker Change: <unk> often being one of the biggest we filed that pharma is increasingly looking for innovative solutions to deliver affordability options to consumers and they are turning to <unk>, because we have the reach and scale to get them in front of a high intent audience and to help drive conversion, we estimate that more than 85% of our users are.

Speaker Change: Do you have a prescription in hand.

Speaker Change: Looking for ways to afford it.

Scott Wagner: Our offering to brands are now threefold. First, we help brands surface their copay cards and patient assistance programs to high-intent Second, we create clear and affordable cash prices for brand medication that often isn't covered by insurance. And third, we now offer e-commerce capabilities that allow brands to integrate their direct-to-consumer experiences into our platform. We're seeing strong momentum around our point of sale cash programs and believe the impact of these programs will only get bigger in the future. As a reminder, these programs lower the cash price of branded medication for consumers immediately at the checkout counter with very little friction and are increasingly being used by manufacturers to serve more patients and to grow their revenue.

Speaker Change: Our offering to brands are now three full <unk>.

Speaker Change: First we help brands surface their co pay cards and patient assistance programs to high intent patients.

Speaker Change: We create clear and affordable cash prices for brand medications that often is it covered by insurance and third we now offer e-commerce capabilities that allows brands to integrate their direct to consumer experiences into our platform.

Speaker Change: We're seeing strong momentum around our point of sale cash programs and believe the impact of these programs will only get bigger in the future. As a reminder, these programs lower the cash price of branded medication for consumers immediately at the checkout counter with very little friction and are increasingly being used by manufacturers to serve more patients.

Scott Wagner: Over the past several months, we've announced partnerships with Boehringer Ingelheim for its Humira Biosimilar, ARS Pharmaceuticals for Nefi, the first needle-free epinephrine, Pfizer for its entire portfolio of menopause hormone therapies, and Vibus for its weight management medication Qsimia. For each of these, discounted cash prices are easily accessible via Goodrx. We're now up to 72 signed point of sale cash programs for brands over twice the number of deals we began 2024 with. The reason for the rapid growth is that these point-of-sale programs work. Manufacturers drive incremental prescriptions, which translates into more revenue. Pharmacies often receive a higher reimbursement rate than if the transaction ran through a benefit plan.

Speaker Change: And to grow their revenue.

Speaker Change: Over the past several months, we've announced partnerships with Boehringer ingelheim for its Humira biosimilar.

Speaker Change: RFS pharmaceuticals for Daphne.

Speaker Change: The first needle free epinephrine.

Speaker Change: Either for its entire portfolio of menopause hormone therapies and vivus for its weight management medication qsymia.

Speaker Change: For each of these discounted cash prices are easily accessible via <unk>.

Speaker Change: We're now up to 72 sign point of sale cash programs for brands over twice the number of deals we began 2024 with.

Speaker Change: The reason for the rapid growth is at this point of sale programs work manufacturers drive incremental prescriptions, which translates into more revenue pharmacies, often receive a higher reimbursement rate than if the transaction ran through a benefit plan and of course consumers are delighted by the savings.

Scott Wagner: And of course, consumers are delighted by the.

Scott Wagner: Here's a real time customer story to show how these things come together. The other week, my mother-in-law, Kathy, received a prescription for a Dexcom G7 diabetes. Kathy rolled up to her neighborhood pharmacy, I'll withhold the name, and was informed that her insurance plan, I'll also withhold the name, didn't cover the G7, and it would cost her $600 a month. Kathy's quote in her email to my wife, Well, I guess I'll have to keep sticking myself. Fortunately, Dexcom is one of our 72 cash programs and G7 devices are offered via Goodrx for $185 cash price. One of our more progressive retail partners made it super easy for Kathy.

Speaker Change: Here's a real time customer story to show how these things come together.

Speaker Change: The other week my mother in law, Kathy received a prescription for a desktop G seven diabetes unit.

Speaker Change: Kathy rolled up to a neighborhood pharmacy or withhold the name and was informed that her insurance plan I'll also withhold the name didn't cover the G seven and it would cost or $600 a month cafes quote an E mail to my wife.

Kathy: I guess I'll have to keep sticking myself.

Speaker Change: Fortunately <unk> Com is one of our 72 cash programs G. Seven devices are offered <unk> for $185 cash price.

Speaker Change: One of our more progressive retail partners made it super easy for Kathy.

Scott Wagner: Kathy got her medicine and also happened to switch her pharmacy.

Speaker Change: Kathy got her medicine and also happened to switch your pharmacy, when we talk about filling the gaps in insurance removing friction for patients to adding value to the system just is what it looks like.

Scott Wagner: When we talk about filling the gaps in insurance, removing friction for patients and adding value to the system, this is what it looks like.

Scott Wagner: We're also excited about our new e-commerce solution, which just launched with O Pill, the first over-the-counter birth control pill. This new capability allows consumer health and pharmaceutical brands looking to provide a frictionless experience for consumers to integrate their offerings directly into the Goodrx platform. Not only are we creating new ways for consumers to buy their medications directly through Goodrx, but this is our first partnership with an over-the-counter... Which is an incremental addressable market we're exploring over the past year. We've seen a shift towards health care brands, creating direct to consumer experience. And the Goodrx e-commerce solution could enable us to integrate many of these offerings directly into our platform, providing valuable opportunities for both us and our partners.

Speaker Change: We're also excited about our new E Commerce solution, which just launched with <unk>. The first over the counter birth control pill.

Speaker Change: This new capability allows consumer health and pharmaceutical brands looking to provide a frictionless experience for consumers to integrate their offerings directly into the good R X platform.

Speaker Change: Not only are we creating new ways for consumers to buy their medications directly through <unk>, but this is our first partnership with an over the counter brands, which is an incremental addressable market. We're exploring over the past year, we've seen a shift towards health care brands, creating direct to consumer experiences and the good Rx ecommerce solution.

Speaker Change: Enable us to integrate many of these offerings directly into our platform, providing valuable opportunities for both us and our partners.

Scott Wagner: Similarly, we're also working with Hy-Vee and other retail pharmacies so consumers can soon pay over time with a firm via the Goodrx platform. This is part of our broader e-commerce strategy to streamline the consumer experience and help people access their medications by delivering a more affordable payment solution and helping them reach their deductible. Ideally, this will make the entire purchasing process simpler for patients, for retailers, and also for healthcare plans and their employees.

Speaker Change: Similarly, we're also working with Hy Vee and other retail pharmacies. So consumers can soon pay over time with a firm via the good R. X platform. This is part of our broader ecommerce strategy to streamline the consumer experience and help people access their medications by delivering a more affordable.

Speaker Change: <unk> solution and helping them reach their deductible ideally this will make the entire purchasing process simpler for patients for retailers and also for health care plans and their employees, we feel great about the trajectory in pharma manufacturer solutions and the potential growth in this business going forward.

Scott Wagner: We feel great about the trajectory in pharma manufacturer solutions and the potential growth in this business going forward. At our investor day in the spring, we shared a 20% or more revenue growth rate target for pharma manufacturer solutions. As Karsten will discuss, we see our Q4 results coming in at about that same level.

Speaker Change: At our Investor day in the spring, we shared a 20% or more revenue growth rate target for pharma manufacturer solutions as Carsten will discuss we see our Q4 results coming in at about that same level.

Scott Wagner: Turning to what's a bit more challenging in the near term, results in our prescription marketplace were more mixed. We've been consistently adding market share over the past several quarters, and our Integrated Savings Program, or ISP, offering is performing well. However, our core direct consumer prescription offering does face some near-term retail pharmacy headwinds, as we've mentioned previously. On the positive side, ISP, which provides consumers with a valuable complement to their health insurance and leverages PBMs to bring us new users, has been performing in line with our expectations. Our core ISP program, running for its second year now, focuses on providing patients the lowest possible price we can on covered medications, typically generic.

Speaker Change: Turning to what's a bit more challenging in the near term results in our prescription marketplace were more mixed.

Speaker Change: We've been consistently adding market share over the past several quarters and our integrated savings program. Our ISP offering is performing well however, our core direct to consumer prescription offering does face some near term retail pharmacy headwinds as we've mentioned previously.

Speaker Change: The positive side, ISP, which provides consumers with a valuable complement to their health insurance and Leverages pbms to bring US new users has been performing in line with our expectations. Our core ISP program running for its second year now focuses on providing patients the lowest possible price we can uncover.

Speaker Change: Medications typically generics.

Scott Wagner: We're excited about the Integrated Savings Program WRAP, or Off-Formulary Brand Deals, which we've begun signing and are expected to launch in early 2025. These programs will allow patients to benefit from low Goodrx prices where medications, typically brands, are not covered by their benefit plan, which is a growing portion of the market. We believe this capability, having a cash or copay offering for uncovered brand medication, should be a core component of every single funded plan. And we look forward to working with our plan and PBM partners to make this a reality in 2025 and beyond.

Speaker Change: We're excited about the integrated savings program wrap are off formulary brand deals, which we'd begun signing and are expected to launch in early 2025.

Speaker Change: These programs will allow patients to benefit from low good R. X prices were medications typically brands are not covered by their benefit plan, which is a growing portion of the market. We believe this capability, having a cash or co pay offering for uncovered brand medications should be a core component of every single.

Speaker Change: Funded plan and we look forward to working with our plan and PVM partners to make this a reality in 2025 and beyond.

Scott Wagner: While we're excited about the higher growth areas like ISP, our prescription marketplace continues to be impacted by challenges in the retail pharmacy environment. Multiple chains are closing locations and some are renegotiating reimbursement rates with PPMs in an effort to improve profitability. In prior quarter, we talked about Rite Aid store closures impacting revenue by about $5 million in the second half of 2024. We've seen approximately two and a half million dollars of impact in the third quarter. The Walgreens and CVS store closures are indicative of the pressures retailers face. While these retailers store thinning isn't expected to be as impactful to us on a store basis as Rite Aid's continued, more concentrated closure.

Speaker Change: While we're excited about the higher growth areas like ISP.

Speaker Change: Our prescription marketplace continues to be impacted by challenges in the retail pharmacy environment multiple chains are closing locations and some are renegotiating reimbursement rates with pbms and an effort to improve profitability.

Speaker Change: In prior quarter, we talked about Rite aid store closures impacting revenue by about $5 million in the second half of 2024, and we've seen approximately $2 $5 million of impact in the third quarter.

Speaker Change: The Walgreens and Cvs store closures are indicative of the pressures retailers face. While these retailers store thing isn't expected to be as impactful to us on a store basis is rite Aid's continued more concentrated closures all pharmacy retailers are taking actions to increase their revenue and margins.

Scott Wagner: All pharmacy retailers are taking actions to increase their revenue and margins. With all this going on, it's important to take a step back and note that Goodrx provides invaluable support to retailers in three important First, we invest over half of our revenue into sales, marketing and technology to capture and drive more prescriptions and more consumers to pharmacy. Second, we follow our partner pharmacies leads on how they'd like to contract with us, whether direct to Goodrx or still working through PBX. Our direct and hybrid contracting enhances retailers ability to merchandise. As I mentioned, we now have some form of direct contracts with eight of 10 of our top pharmacies and over 30% of our volume now flows through hybrid indirect contracts, in part because of the share game we picked up at some of these direct retailers.

Speaker Change: With all this going on it's important to take a step back and note that <unk> provides and valuable support to retailers in three important ways first we invest over half of our revenue in the sales marketing and technology to capture and drive more prescriptions and more consumers to pharmacies.

Speaker Change: Second we follow our partner pharmacies leads on how they'd like to contract with us whether direct to good Rx or still working through Pbms are direct and hybrid contracting enhances retailers' ability to merchandise as.

Speaker Change: As I mentioned, we now have some form of direct contracts with eight of 10 of our top pharmacies and over 30% of our volume now flows through hybrid indirect contracts in part because of the share gain we picked up that some of these direct retailers.

Scott Wagner: Third, and finally, we believe our ISP programs, particularly the WRAP programs that focus on brand drugs, reduce patient script abandonment, lead to more filled prescriptions, and may improve a retailer's overall economics in meaningful ways.

Speaker Change: Third and finally, we believe our ISP programs, particularly the wrap programs that focus on brand drugs reduce patient script abandonment lead to more filled prescriptions and may improve our retailers overall economics in meaningful ways.

Scott Wagner: So what does this mean? Well, in the short term, retailers are looking at all avenues to improve their margins. Since the start of the year, we've all heard in the industry about increasing numbers of store closures, larger pharmacy losses and negotiations on funded reimbursement. However, in the long term, retail pharmacies will ultimately need to attract and serve consumers with a clear value proposition that combines physical retail with online capability. We believe that the longer term consideration should ultimately be a tailwind for Goodrx, although the wind will swirl at times.

Speaker Change: So what does this mean in the short term retailers are looking at all avenues to improve their margins since the start of the year. We've all heard in the industry about increasing numbers of store closures larger pharmacy losses in negotiations on funded reimbursements. However in the long term retail pharmacies will ultimately need to attract.

Speaker Change: And serve consumers with a clear value proposition that combines physical retail with online capability.

Speaker Change: We believe that the longer term consideration should ultimately be a tailwind for <unk>, although the wind will swirl at times.

Scott Wagner: Before I hand it off to Karsten, I'd like to reiterate this Tale of Two Cities. We're getting great traction with brand manufacturers, and it's showing up in the results. Obviously, the short term retail landscape has changed quite a bit over the past 100 days in terms of store closures and retail PBM negotiations. But as these normalize, we see a continued path for durable growth in core PTR, as articulated at invest. For those building models, obviously, you're going to want visibility into what that pacing will look like in 2025. The reality for us right now is that the goalposts are pretty wide, with brand medications and our pharma manufacturer solutions offering on track to provide 20% plus year-over-year top line growth and strong market momentum.

Speaker Change: Before I hand, it off to Carsten I'd like to reiterate this tale of two cities theme, we're getting great traction with brand manufacturers and it's showing up in the results. Obviously the short term retail landscape has changed quite a bit over the past 100 days in terms of store closures and retail PVM negotiations, but as these normal.

Speaker Change: <unk>, we see a continued path for durable growth in core PTR as articulated at Investor day.

Speaker Change: For those building models, obviously youre going to want visibility into what that pacing will look like in 2023.

Speaker Change: The reality for US right now is that the goalposts are pretty wide with brand medications in our pharma manufacturer solutions offering on track to provide 20% plus year over year top line growth and strong market momentum.

Scott Wagner: Core PTRs experiencing some short-term choppiness relative to recent quarters, higher single-digit percentage year-over-year growth Given the external desire for precision guidance, we'll keep refining our expectations over the rest of the year and to share more refined expectations with everybody on a year-end call, consistent with our prior practice.

Speaker Change: Core PCR is experiencing some short term choppiness relative to recent quarters higher single digit percentage year over year growth rate.

Speaker Change: Given the external desire for precision guidance, we'll keep refining our expectations over the rest of the year and to share more refined expectations with everybody on our year end call consistent with our prior practice with that I'll hand, it over to Carsten.

Scott Wagner: With that, I'll hand it over to Karsten.

Karsten Voermann: Thank you, Scott. I'll review our third quarter financial results before turning to guidance. During the third quarter, revenue and adjusted revenue were at the midpoint of the guidance we provided on our second quarter earnings call in August, and adjusted EBITDA margin was higher than we anticipated. Adjusted EBITDA was up 21.5% year over year, despite the challenges in the retail pharmacy space. Q3 total revenue increased 8% and adjusted revenue increased 3% year over year to $195.3 million due to growth in our prescriptions marketplace as well as farmer manufacturer solutions. The third quarter of last year also included a total of $2.1 million of revenue from the Kroger Savings Club subscription offering and $2.5 million of revenue from the VitaCare offering within manufacturer solutions, neither of which contributed revenue this quarter.

Carsten Borgen: Thank you Scott I will review, our third quarter financial results preferred turning to guidance during the third quarter revenue and adjusted revenue at the midpoint of the guidance. We provided on our second quarter earnings call in August and adjusted EBITDA margin was higher than we anticipated adjusted EBITDA was up 21, 5% year over year.

Speaker Change: Despite the challenges in the retail pharmacy space.

Speaker Change: Q3, total revenue increased 8% and adjusted revenue increased 3% year over year to $195 $3 million due to growth their prescriptions marketplace as well as farmer manufacturer solutions. The third quarter of last year also included a total of $2 1 million of revenue from the Kroger savings.

Speaker Change: <unk> subscription offering.

Speaker Change: $2 $5 million of revenue from the <unk> care offering within manufacturer solutions.

Speaker Change: Neither of which contributed revenue this quarter.

Karsten Voermann: Moving on to the revenue lines, prescription transactions revenue grew 4% year over year to $140.4 million, primarily due to a 7% increase in monthly active consumers, and despite Rite Aid closure impact of $2.4 million. Subscription revenue declined 8% as expected to $21.3 million, largely due to the sunset of the Kroger Savings Club, which contributed $2.1 million in the third quarter of last year. Pharma Manufacture Solutions revenue increased to $28.1 million, which represents 77% year-over-year growth. As a reminder, Q3 2023 Pharma Manufacturer Solutions Revenue included a $10 million contract termination payment related to VitaCare that was recognized as a reduction of revenue.

Speaker Change: Moving on to the revenue lines prescription transactions revenue grew 4% year over year to $144 million.

Speaker Change: Primarily due to a 7% increase in monthly active consumers anticipate rite aid closure impact of $2 4 million.

Speaker Change: Subscription revenue declined 8% as expected to $21 $3 million largely due to the sunset of the Kroger savings club, which contributed $2 $1 million in the third quarter of last year.

Speaker Change: Farmer manufacturer solutions revenue increased to $28 1 million, which represents 77% year over year growth.

Speaker Change: As a reminder, Q3 2023 pharma manufacturer solutions revenue included a 10 million dollar contract termination payment related to Veda care that was recognized as a reduction of revenue. Excluding this payment we still saw a year over year growth as we continue to expand our market penetration include.

Karsten Voermann: Excluding this payment, we still saw year-over-year growth as we continue to expand our market penetration, including ongoing growth in our brand drug point-to-sale discount programs and more than offset the approximately $2.5 million reduction in revenue contribution relative to the third quarter of last year from VitaCare shuttering. Net income was $4.0 million compared to a net loss of $38.5 million in the third quarter of 2023. Adjusted net income was $31.9 million up from $25.5 million in the third quarter of 2023. Adjusted EBITDA increased 21.5% year over year to $65.0 million. Adjusted EBITDA margin was 33.3% and was up 520 basis points year over year.

Speaker Change: Ongoing growth in our brand drug point of sale discount programs and more than offset the approximately $2 $5 million reduction in revenue contribution relative to the third quarter of last year from a care shuttering.

Speaker Change: Net income was $4.0 million compared to a net loss of $38 $5 million in the third quarter of 2023.

Speaker Change: Net income was $31 9 million up from $25 $5 million from the third quarter of 2023.

Speaker Change: Adjusted EBITDA increased 21, 5% year over year to $65.01 billion.

Speaker Change: Adjusted EBITDA margin was 33, 3% and it was up 520 basis points year over year.

Karsten Voermann: The significant year-over-year improvement was primarily driven by top-line growth and savings from the restructuring of our Vitacare pharma manufacturer solutions offering in the second half of 2023. This marks another quarter of increasing adjusted EBITDA margin, up from 31.7% in the first quarter and 32.6% in the second quarter. It also consistently follows adjusted EBITDA growth of 18% year over year in Q1 and 22% in Q2. We generated net cash provided by operating activities of $86.9 million in Q3, compared to $60.3 million in the prior year period. The increase in cash provided by operating activities was driven by an increase in net income after adjusting for non-cash items and changes in operating assets and liabilities.

Speaker Change: The significant year over year improvement was primarily driven by topline growth and savings from the restructuring of our vital care pharma manufacturer solutions offering in the second half of 2023.

Speaker Change: This marks another quarter of increasing adjusted EBITDA margin up from 31, 7% in the first quarter and 32, 6% in the second quarter and also consistently follows adjusted EBITDA growth of 18% year over year in Q1 and 22% in Q2.

Speaker Change: We generated net cash provided by operating activities of $86 9 million in Q3 compared to $63 million in the prior year period.

Speaker Change: The increase in cash provided by operating activities was driven by an increase in net income after adjusting for noncash items and changes in operating assets and liabilities.

Karsten Voermann: Our balance sheet is robust, and we ended the quarter with $423.8 million of cash and cash equivalents, and $500 million of outstanding debt. Our revolving credit facility is untapped except for letters of credit, and had $91.7 million of unused capacity as of September 30, 2024, representing total liquidity of $515.5 million. Our capital allocation priorities are unchanged and will continue to focus on high return investments and maximizing value for shareholders.

Speaker Change: Our balance sheet is robust and we ended the quarter with $423 8 million of cash and cash equivalents and $500 million of outstanding debt.

Speaker Change: Our revolving credit facilities untapped, except for letters of credit and had $91 7 billion of unused capacity as of September 32024, representing total liquidity of 515 5 million.

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

Karsten Voermann: Okay, moving on to guidance. For the fourth quarter, we expect revenue and adjusted revenue to come in at around $200 million. This would put full-year revenue and adjusted revenue at just under $795 million, which would result in approximately 6% year-over-year growth in revenue and roughly 4% growth year-over-year on an adjusted revenue basis. We see the approximately $200 million of fourth quarter revenue and adjusted revenue being made up of approximately $164 to $165 million of prescriptions marketplace revenue, which is prescriptions transactions revenue and subscriptions revenue. That represents an approximately 2% decline year-over-year for prescriptions marketplace revenue.

Speaker Change: Okay moving onto guidance.

Speaker Change: For the fourth quarter, we expect revenue and adjusted revenue to come in at around $200 million.

Speaker Change: This would put full year revenue and adjusted revenue of just under $795 million.

Karsten Voermann: As a reminder, on the subscriptions revenue line, Kroger Savings Club contributed approximately $1.6 million of revenue in the fourth quarter of 2023 and is not contributing revenue this year due to the sunset of the program in July. And we anticipate approximately $2.5 million of Rite Aid store closure effects impacting the prescription transactions revenue line in the fourth quarter, consistent with our estimate from our prior earnings call, which pointed to approximately $5 million of total Rite Aid impact in the second half of 2024. Our expected growth would be positive without the anticipated Kroger Savings Club and Rite Aid impact.

Karsten Voermann: We see pharma manufacturer solutions coming in at approximately $29 to $30 million of revenue, representing about 20% growth, consistent with our expectations for the pharma manufacturer solutions offering we laid out during our investor day. We expect other revenue to be approximately $5 million flat for the fourth quarter of 2023. The full year roughly 4% adjusted revenue and 6% revenue growth is at around the low end of our 6 to 12% three year compound annual revenue growth rate we discussed at our investor day, in part because of the expected approximately $5 million right age store closure impact.

Karsten Voermann: Also, as a quick reminder, full year 2024 growth is also tempered by approximately $16 million more revenue included in 2023 from the offerings we shuttered, VitaCare and Kroger Savings Club, than they contributed in 2024. From a margin perspective, we expect adjusted EBITDA margin to be about 34% in the fourth quarter. For the full year, we expect $255 to $260 million of adjusted EBITDA, up over 17% from 2023, based on our expectations of a high degree of adjusted EBITDA flow-through from top-line growth and our continued focus on cost structure and efficiency generally. Our full year 2024 expectations represent over 32% adjusted EBITDA margin, up more than 340 basis points from 2023, and we believe demonstrates the inherent adjusted EBITDA margin growth potential of this business.

Karsten Voermann: Now that we've talked about 2024 outcomes, I expect many people listening would appreciate a view on 2025, particularly the folks out there who are building and updating their models. We're not formally guiding now because we're still doing our 2025 planning, but we do want to be helpful. On the one hand, we have clear views on our pharma manufacturer solutions revenue for 2025. As client discussions progress, and commitments and bookings for 2025 are locked in. We are confident that we'll see 20% plus year over year growth in pharma manufacturer solutions in 2025 versus 2024. On the other hand, with retail pharmacies struggling, the goalposts for our prescriptions marketplace, and especially prescription transactions revenue, remain fairly wide.

Speaker Change: We're not formally guiding now because we're still doing our 2025 planning, but we do want to be helpful. On.

Speaker Change: On the one hand, we have clear views on our pharma manufacturer solutions revenue for 2025 as client discussions progress and commitments and bookings for 2025 are locked in.

Speaker Change: We are confident that we will see 20% plus year over year growth in pharma manufacturer solutions in 2025 versus 2024.

Speaker Change: On the other hand with retail pharmacy struggling the goalposts for prescriptions marketplace, especially prescription transactions revenue remained fairly wide.

Karsten Voermann: Incorporating these two dynamics, we believe total Goodrx revenue will grow in 2025 relative to 2024. And we expect that revenue growth to be somewhere in the single digit percentage range. We expect adjusted EBITDA margins to continue to increase as we drive flow through from incremental revenue higher, continuing our trajectory of EBITDA growth. Because of the wide range and potential outcomes, we encourage everyone to model 2025 revenue conservatively and will provide updates as our prescriptions marketplace visibility improves.

Speaker Change: Incorporating these two dynamics, we believe total good R X revenue will grow in 2025 relative to 2024, and we expect that revenue growth to be somewhere in the single digit percentage range. We expect adjusted EBITDA margins to continue to increase as we drive flow through from incremental revenue higher continuing our trajectory of EBITDA growth.

Speaker Change: Because of the wide range of potential outcomes, we encourage everyone to model 2025 revenue conservatively and we'll provide updates as our prescriptions marketplace visibility improves.

Operator: With that, we'll turn over to the operator for questions. Certainly. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please limit yourself to one question. One moment while we compile the Q&A roster.

Speaker Change: With that we'll turn it over to the operator for questions.

Speaker Change: Certainly as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, please limit yourself to one question one moment, while we compile the Q&A roster.

Stephanie Davis: And our first question will be coming from Stephanie Davis of Barclays. Your line is open, Stephanie. Hey guys, thank you for taking my question.

Speaker Change: And our first question will be coming from Stephanie Davis of Barclays. Your line is open Stephanie.

Stephanie Davis: Hi, guys. Thank you for taking my question and Scott Congrats on in luxury brand points ahead of Thanksgiving.

Scott Wagner: Scott, congrats on the muddler-in-law brownie points ahead of Thanksgiving. I had some questions on Mansell because although we talked a lot about the prescription transaction part of the business, when I look at the guidance for Q and the preliminary for 2025, that's where most of the delta is versus my numbers. So for my first question, can we just kind of delve into, did we miss model that and got kind of carried away? Or is anything changing and how you're thinking of the ramp up in the Mansell business?

Speaker Change: I had some questions on menthol, because although we talked a lot about the prescription transaction part of the business when I look at the guidance for Q and a preliminary for 2025.

Speaker Change: For most of the Delta is versus my mom berries.

Speaker Change: For my first question can we just kind of delve into this.

Speaker Change: The model that got carried away or is anything changing in how you are thinking of the ramp up in the manpower business.

Scott Wagner: Hey Stephanie, thanks. Relative to Mansoll, I think the trajectory at 20% growth, you know, that we're certainly guiding to in the fourth quarter, and when you adjust Vitacare is really what Q3 did, represents kind of a nice steady run right now. And it's accelerating, you know, if you're backing it up a couple quarters, growth in that business was in the big single digits. And I was on that call, I was on this call saying, we're going to really focus on cash, copay, access, all the affordability things that are really our sweet spot. And that's what we've been doing.

Speaker Change: Yeah.

Speaker Change: Anthony Thanks.

Speaker Change: Relative demand saw.

Speaker Change: I think the trajectory.

Speaker Change: 20% growth.

Speaker Change: We're certainly guiding to in the fourth quarter.

Speaker Change: And when you adjust by the care is really what.

Speaker Change: Q3 did represents kind of a nice steady run rate now and it's accelerating if you're backing it up a couple of quarters growth in that business within the mix single digits and I was on that call I was on this call, saying, we're going to really focus on co pay access all of the afore.

Speaker Change: Stability things that are really our sweet spot.

Scott Wagner: And it's nice to be able to come back and say we're getting consistent traction on it.

Speaker Change: And that's what we've been doing and it's nice to be able to come back and say, we're getting consistent traction on it.

Charles Rhyee: And one moment for our next question. And our next question will be coming from Charles Rhyee of T.D. Cohen, your line is open. Yeah, thanks for taking the question. Trying to understand a little bit about, you know, the choppiness here in the retail market, understanding that, you know, stores are closing, obviously, with some big chains here. You know, you had sized the rated impact of $5 million last quarter. Obviously, the, you know, I think they've announced a few more store closures since. How much of this choppiness at this point could be from, like, a Walgreens and, you know, at this point, you know, it seems like you're waiting until February to kind of guide here, but as you're doing your planning, you know, you talked in the past about getting more contact information with patients.

Speaker Change: And one moment for our next question.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: And our next question will be coming from Charles <unk> of Cowen. Your line is open.

Charles <unk>: Yes, thanks for taking the question.

Charles <unk>: So now I'll, just add a little bit about the choppiness here in the retail market understanding that the stores are closing obviously was a big change here.

Charles <unk>: Size, the weighted impact of 5 million last quarter.

Speaker Change: Obviously, the I think they've announced a few more store closures.

Speaker Change: How much of the Choppiness at this point it could be from like a walgreens.

Speaker Change: At this point.

Speaker Change: It seems like you're waiting until February to kind of guide here, but as Youre doing your planning.

Speaker Change: You've talked in the past about getting more contact information with patients.

Scott Wagner: You know, what are your efforts here in terms of being able to outreach to members or to consumers to help them, direct them to find new pharmacies to continue using Goodrx? And any kind of metrics that you can share in terms of your ability to divert patients from closed stores so far? Thanks.

Speaker Change: What are your efforts here in terms of being able to outreach to members or to consumers to help them direct them to find new pharmacies to continues a good horizon.

Speaker Change: Any kind of metrics that you can share in terms of your ability to divert patients from closed stores. So far thanks.

Scott Wagner: Yeah, hey, Charles, it's Scott. So a couple points at both the questions and the statements through there. You know, one is over the last 100 days, there's announcements across the industry on both Footprint and some, you know, retail PBM interactions. And everything that we're articulating, you know, kind of incorporates our best knowledge of that. And, and again, even next year, broadly, we're, you know, seeing continued growth in Goodrx overall, when we, you know, mix everything together. Now, to your point on directing, whether it's cross pharmacy footprint, or things that we can do, you know, my example, you know, nothing like the personal example, I don't know what earnings call.

Scott Wagner: Yeah, Hey, Charles it's Scott.

Speaker Change: So a couple of points.

Speaker Change: Both the questions and the statements through there.

Speaker Change: One is over the last 100 days there is.

Speaker Change: Announcements across the industry on both footprint.

Speaker Change: <unk>.

Speaker Change: Retail TBM interactions.

Speaker Change: Everything that we're articulating kind of incorporates our best knowledge of that.

Speaker Change: And again, even next year broadly, we're seeing continued growth and good <unk> overall.

Speaker Change: Overall, when we mix everything together now to your point on directing whether it's cros pharmacy footprint or things that we can do.

Scott Wagner: But it's a very real one, that plays out a whole bunch of different, you know, times per week, where we're able to deliver value to somebody, you know, in this case, it happened to be my mother in law, but that really needed this diabetes unit. And it was our brand program that enabled her to get it, she was not going to pick up this medication. We got her an affordable price. And honestly, it moved her entire pharmacy relationship from one chain to another, because one of the partners made it super easy to get visibility and pickup.

Scott Wagner: And I think if we scale that out, and look at the business, that is what gives, honestly, me and us a little bit of systematic comfort where there's this huge need still in the world where almost a billion scripts are at the counter, out of that scripts that are left at the counter due to affordability, a little under 100 million of them, 100 million are brand medications. And the GoodRx platform is really the place that people go to, and they're looking for affordability. And it creates a whole bunch of ways that not only can we serve patients, but again, we can drive incremental economics into retailers.

Scott Wagner: So we've got the pieces in place to do that.

Lisa Gill: And, you know, despite the things in the foot in, in the overall footprint that we're working through, the sort of structural value is there, And one moment for our next question. Our next question will be coming from Lisa Gill of J.P. Morgan. Lisa, your line is open. Thanks so much. Good morning. I just want to follow up on two things. So one, just curious about the ISP uptake for 25 and the contracts that you've signed there and maybe the visibility. And then Karsten, I know you don't want to give guidance, but you talk about 20% plus growth and manufacturing and, you know, revenue with single digits.

Karsten Voermann: Does that mean that the rest of the business is very low single digits as we think about next year? And I appreciate Scott's comments that, you know, we want to keep it conservative at this point, but just want to make sure that I understand what you're saying.

Karsten Voermann: Hi, Lisa, this is Karsten. So taking those in reverse order, I think the first comment I'd make is that, yes, for next year, the the growth we're seeing. 20% plus for manufacturer solutions, which is consistent with what we said at investor day, that that growth is now becoming clearer and clearer. We're deep in the selling. And have the ability to watch bookings roll in and contracts and so on. So that absolutely forms the majority of the growth going into next year. I think the goalposts on the. Subscriptions Marketplace side of the business, so our PTR and subscriptions line are just wider, given what Scott's been talking about around what's going on in pharmacy in particular, and so on that side in particular, we're being more conservative than on the other side.

Karsten Voermann: This is probably the best way to articulate it, but the Farm to Mind Solve business is chugging along exactly as we want.

Karsten Voermann: With respect to the first part of your question in connection with ISP, I think we're very excited about our ISP WRAP program layering on next year incrementally to our core ISP program. And as a reminder for folks, ISP WRAP is ISP focused on off-consumers formulary medication, so brand drugs, et cetera. And the reason we're excited about it is, number one, it has the potential for a high win rate, given that we're not competing with a copay, we're competing with what the consumer would otherwise pay, which could even be a UNC rate. And number two, the ability to provide off-formulary medication is also valuable to our brand pharma partners.

Karsten Voermann: I think what's tricky at this point, and the reason that we are being conservative, is prior to the launch of these programs, while they're very exciting, you don't have a trajectory to look at to predict how they're going to roll out. So that's most of the basis, I think, of what we're looking at for next year, Lisa.

Scott Schoenhaus: Thank you. One moment for our next question. Thank you. Our next question will be coming from Scott Schoenhaus of KeyBank. Your line is open, Scott. Question. So you talked about the challenging choppiness in the retail environment. I believe you entered into a direct contracting method with Kroger.

Scott Wagner: Just kind of wanted to hear an update on how that's going to give us a sense of how you can attack these retailers in a direct contracting method in 2025. And then can you give us a sense, you did a good job on the investor day on giving us a sense of the breakdown between ISP versus direct contracting versus hybrid. Can you give us a sense of where those benchmarks are relative to your initial guidance for 2025? Thank you. Yeah. Hey, Scott. Scott, I'll start and maybe Karsten will add some detail. So broad context, of our total volume mix, not the retail footprint, but our volume mix, a little over 30% of our volume is now directly contracted.

Scott Wagner: And so obviously a little less than 70% is still relative or still working through our PBM network. And again, the broad point is we're following each of our retailers lead. and how they want to engage with us. And really the decision that they go through is what how do they want to manage their funded business?

Scott Wagner: And how do we fit in relative to that, but we're following a retailer What we're able to do with, honestly, regardless of contracting, but we have more latitude when we end up going direct to retailers, is to actually help them manage their holistic category. Again, back to the example I gave, take relative price points, not only across retailers, but Amazon, plus some of the direct mail, separate pharmacy models that are popping up in certain categories, and be able to help a retailer promote, manage offerings to certain categories. Whether it's cold and flu season with a particular retailer that pops a ton of volume, or manage price point on particular drugs and geographies or regions, it's good old fashioned marketing and merchandising across not only generics, but again, brands that help retailers not only meet a need at the counter, but more importantly, fulfill a mission of being a destination for medicine.

Stan Berenshteyn: One moment for our next question. And our next question will be coming from Stan Berenshteyn of Wells Fargo Securities. Your line is open. Hi, thanks for taking my questions. In the prepared remarks, you mentioned that pharmacies are increasingly negotiating contracts with PBMs. Can you just comment, how widespread are these negotiations? And do you have a sense of the extent to which take rates could be pressured from the revised contracts? Thank you.

Karsten Voermann: Hey Stan, it's Karsten here. We believe that the renegotiation process is pretty standard in one sense insofar as pharmacies and PBMs arm wrestle over what margin is going to look like pretty much every year and pretty much through every contract cycle. I think what's different this time is that the pressure that pharmacies are under force them and also act as catalysts for them to be more aggressive with the PBMs. As Scott said earlier, we've factored everything we know into the numbers we've articulated, including the preliminary views on 25 at this point as well. I think there is a possibility that if pharmacies and PBMs in their arm wrestling end up with pharmacies increasing their reimbursement rates a little and with PBMs decreasing the amount of admin fee they collect a little bit, given as Scott just said a moment ago, just shy of 70% of our volumes are still coming in through PBMs. We would see potentially a little bit less flow through on that, but at this point, it's really a bit too early to say, which is why we're taking a relatively conservative stance on our perspective going into next year.

Scott Wagner: And I'll chime in. The discussion that we're having with retailers, that's happening on a day-in, day-out basis, we're now at least starting to have a conversation on the overall category. which is, you know, not great to be very micro unit level and everybody's going back and forth on it. But how do you look at this category? What need are you solving, again, for patients at the counter and gaps in insurance? And how are you filling that? And there's ways that a lot more economics can flow to retailers as we continue, honestly, to operate at that level, and particularly through, particularly through brands, which, again, is a way to create a whole bunch of incremental economics to retail that they're not getting today.

Scott Wagner: And more importantly, you're doing what you're supposed to be doing, which is driving traffic, delighting people, adding shoppers into the store. And, you know, that's a little bit of the overall longer term or strategic view. But, you know, if you've looked at some of our press releases, we're doing some really neat things with Hy-Vee, who's a super innovative retailer, around pre-order, pickup in store, that kind of bring all these kinds of things together to really make a better, honestly, overall pharmacy experience.

Sean Dodge: And, you know, while we're going through some of the things in the footprint, we're also trying and advancing them at different paces on some of these broader topics with our retail One moment for our next question. Our next question will be coming from Sean Dodge of RBC Capital Markets. Your line is open, Sean. Yeah, thanks. Good morning. Maybe just going back to the the ISP rollout. Scott, you said you're in your second year of this now. Is the pace of adoption proceeding pretty similarly across all of your PVM partners there? Or are some of them going a bit faster than others?

Scott Wagner: And then if there are ones going faster, why is that and the ones going slower? Is it just cautiousness on their part that's driving that? Or there's some technical or other kind of constraints or barriers that they're running into? Yeah, not surprisingly, you know, it's a it's a mix across the PBM, PBM environment. And if you if you take a step back, what, what what need is this solving? I think there's real demand from employers, who obviously are the real payers of all of our health care, to have a capability for their members, you and you know, you and I and everybody else.

Scott Wagner: And we're continuing to round out the benefits and hopefully next year, not only with our PBM partners, but even more so with plans and employers, having honestly, that direct connection to Goodrx to ride alongside somebody's insurance plan, because that's really the benefit of what Goodrx does.

Jailendra Singh: Thank you. One moment for our next question. Our next question will be coming from Jailendra Singh of Truist Securities. Your line is open. Good morning, and thanks for taking my questions. I want to ask about your PMS business. Looks like you're seeing some good momentum there.

Scott Wagner: Can you provide any update on what you are seeing in terms of pharma companies' willingness to spend and sign on, considering all the cautious commentary we've heard from some of the CROs and other pharma services companies we cover? I understand that Goodrx is working off a small base, and the solution is a pay-as-you-go structure for the pharma client. But has there been any change in conversation? And does your guidance assume any benefit from a potential budget flush you might see at these pharma companies in Q4? Thanks.

Scott Wagner: So, broadly, here's what's really nice about what we're doing. Goodrx has – we have 350 million unique visits a year from people coming to Goodrx looking for affordability. 20 percent of those are on brand medication. And when we look across our brand drug pages relative to the brand.com, we get between one and a half and 5x the traffic of a brand.com. Just think about that. And we don't, you know, that's got no direct marketing, we're not doing anything for that. It literally is just people coming to our brand drug pages looking for an affordability solution.

Scott Wagner: And so the last year has been about just meeting that need, particularly through cash, co-pay assistance, and some surround on those pages. And a good measure of success is the fact that these brand cash point of sale programs, like the Dexcom example that I, you know, described in the call, we entered the year with 20 odd, somewhere in the 20s. We now have 72 of these programs in place. And the great thing about these programs is these stack and compound. And we're obviously in discussion to continue to grow that number and integrate all of the assistance programs that these different brands have, really with workflow riding on Goodrx.

Scott Wagner: So I think I feel, I feel good about the trajectory of where manufacturer solutions is on the face of the P&L. Honestly, when I think about those macro numbers, I get more excited. And, you know, in all honesty, get anxious and excited about making that number go up bigger because those are really big and compelling numbers with a need. And, you know, we're continuing to work with brands to bring all their assistance programs onto Goodrx.

Karsten Voermann: And Jailendra, just to answer the other part of your question, we're not really relying on any sort of budget flush outcomes in relation to the, in relation to the numbers we put out there for the fourth quarter.

Craig Hettenbach: And one moment for our next question. Our next question will be coming from Craig Hettenbach of Morgan Stanley. Your line is open, Craig.

Jae Jin Ahn: Hi, this is Jae Jin Ahn for Craig. Thanks for taking my question. With the growth in pharma manufacturing solutions and development with GLP-1s, I was wondering whether you can refresh your thoughts on the market opportunity. And what are your thoughts on compounded GLP-1s on the platform and if that would impact conversations with the branded partners? Thank you. Oh, yeah. So same big market stat. In the third quarter, we got 1.9 million unique price page views on Goodrx. So effectively 2 million unique views in the quarter for GLP-1s. That is a huge number. And again, that's on brand drug price.

Scott Wagner: So we're working with Lilly and Novo in ways to, you know, surround that environment and so obviously the growth of Mansall has some nice pickup from from GOP ones in even our posted growth rates. But when you look at that level of activity and think about this category evolving, as affordability continues to become important, and we build up these e-commerce capabilities like we just described, Goodrx has the ability to have a very affordable price where you can see inventory at a retailer, reserve it, and either pick it up in store or have it sent to your house.

Scott Wagner: And now we're talking to Lilly and Novo about how can those kind of programs reside, but you know it's just continued opportunity around a lot of people coming to Goodrx looking for affordability.

Scott Wagner: You asked about compounding. We have stood very clearly on the side of working with branded pharma, Lilly and Novo, and have not worked with compounders in contrast to a whole bunch of other people in the system. largely and 100% because we're trying to work on these programs with Lillian Novo, and the brands themselves, and have, in all transparency, you know, turned away things that we could do with compounders, out of an effort to build for the long term, I think these direct to consumer capabilities on the brands that I do think the market in the world really wants.

Karsten Voermann: And one moment for our next question. Our next question will be coming from Allen Lutz, Bank of America. Your line is open now. Hi, good morning and thanks for the questions. One for Scott or Karsten. How widespread are Goodrx Hldg. Hey, Allen, this is Karsten. So a couple things. First of all, I think you said, what are we seeing? And is it endemic? And why is it happening? And then impact on us, if I follow correctly. So first of all, what we're seeing is that the hearing is that pharmacies are more aggressive reimbursement rates and admin fees.

Karsten Voermann: And the why is because of the situation they're in, right? They desperately need the margin. And need to start shifting the balance a little bit from the PBM side to the pharmacy side in terms of total profit pool capture. I think in terms of the pharmacies involved, I think the larger pharmacies are flexing their muscles and leveraging this, and the larger pharmacies are where a lot of the volume is. So from that perspective, as Scott said too, the majority of our prescription transactions revenue and transactions still flow through PBMs. So if the PBMs are making a bit less, that has the potential for flow through impact on us.

Karsten Voermann: And that's factored into what we talked about with respect to our preliminary views on 2025. So already factored in.

Scott Wagner: I think in terms of more broadly, though, your question, the reality is, is that as we continue to direct contract more, as we continue to focus on brand medications and the opportunity to drive value from branded medications into pharmacies in the way Scott talked about, and the ability to partner with them more broadly, that creates opportunities for us to accept ourselves out of a trend that that allows us to be differentiated and create incremental value for pharmacies, particularly as we continue to direct There's one one quick add.

Scott Wagner: Our usage growth is healthy. So at the fundamental individual consumer level, we're having, you know, clean growth and usage that's not changing. And so as we're, as the industry goes forward, what you're seeing is almost again, the category relative to insurance, because we at Goodrx are still driving consumer usage growth. We're growing share in the discount card category and have been consistently doing so over the past several quarters. And so the dynamic is really a marginal one as these things play out relative probably to insurance. That's kind of how the I think answers your take rate question.

Speaker Change: We're growing share in the discount card category and have been consistently doing so over the past several quarters.

Speaker Change: And so the dynamic is really a marginal one as these things play out relative probably to insurance.

Speaker Change: That's kind of how the I think answers your take rate question.

Karsten Voermann: I think your point, Scott, the the validator of the fact that consumer pricing remains compelling and Goodrx usage remains compelling is among other things, the macros you've seen in the recently ended quarter that we're reporting on now at 7%.

Speaker Change: I think the airplanes Scott.

Speaker Change: Validate or of the fact that consumer pricing remains compelling and good Rx usage remains compelling as among other thing the macros you've seen in the recently ended quarter that we're reporting on now at 7%.

Daniel Grosslight: And one moment for our next question. Our next question will be coming from Daniel Grosslight of Citi. Your line is open, Daniel. Hi, thanks for taking the question. I'd like to get an update on the Kroger Direct contract. I think when we last spoke about this, you mentioned that it was going a little bit slower than anticipated, and maybe some education, the pharmacist needed to be made to let them know that you can take Goodrx now. So curious if that has started to take off a little bit better now. And I think last time you disclosed this in a chart, it looked like about 1% or so of your claims are from Kroger.

Speaker Change: And one moment our next question.

Speaker Change: Yes.

Speaker Change: Our next question will be coming from Daniel gross night of Citi. Your line is open Daniel.

Daniel Gross: Hi, Thanks for taking the question I have to get an update on the Kroger direct contract.

Speaker Change: Think when we last spoke about this you mentioned that it was going a little bit slower than anticipated and maybe some.

Speaker Change: Education, the pharmacist needed to be made.

Speaker Change: I know that you can take <unk> now so curious.

Speaker Change: That has started to take off a little bit better now and I think last time you disclosed this.

Speaker Change: Chart and looked at about 1% or so of your claims are from broker how fast do you think that can get up to where they are kind of overall market share is now.

Scott Wagner: How fast do you think that can get up to where they're going to overall market share?

Scott Wagner: It's Scott, thanks. I'd rather not talk about super specific metrics at a individual retailer level. We're working with Kroger and having Kroger present, and we are driving a lot of views to Kroger within our environment. And, you know, I'd say the KPIs at an early stage are probably where we expected. And we hope and look forward to continuing to bring all those retail capabilities that, you know, I've been talking about or that you're seeing, for example, with things like we're doing with Hy-Vee to Kroger. Thank you.

Speaker Change: It's Scott Thanks, I'd, rather not talk about Super specific.

Speaker Change: Metrics at a individual retailer level.

Speaker Change: We're working with Kroger.

Speaker Change: Pen having.

Speaker Change: Kroger President and we are driving a lot of views to Kroger.

Speaker Change: Within our environment and I'd say the Kpis at an early stage are probably where we expected.

Speaker Change: And we hope and look forward to continuing to bring all those retail capabilities that I've been talking about or that you're seeing.

Speaker Change: For example, with things like we're doing with IV to Kroger.

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

George Hill: Our next question will be coming from George Hill of Deutsche Bank, George your line is Yeah, good morning, guys, and thanks for taking the question.

Speaker Change: Our next question will be coming from George Hill of Deutsche Bank George Your line is open.

Speaker Change: Yes.

Scott Wagner: I'll say kind of maybe a two-part question here is number one, I guess, could you update us on the biosimilar strategy as it relates to Humira and your partnership with Boehringer, and whether you're kind of seeing any traction or whether there's been any meaningful contribution there to speak of? And then I guess, Scott, kind of like the last one's a big picture question. As you talk about the RX choppiness, and we all know about the retail pharmacy environment, but kind of the backdrop for drug utilization remains pretty strong, especially in Q3 and looking into Q4.

Speaker Change: Morning, guys and thanks for taking the question maybe a two part question here is number one I guess could you update us on the Biosimilar strategy as it relates to Humira and your partnership with Boehringer, and whether youre kind of seeing any traction or whether theres been any meaningful contribution there to speak of and then I guess, Scott kind of like the last one is a big picture question as you talked about the Rx Choppiness and we all know about the retail pharmacy environment.

Scott Wagner: So kind of just like, I guess I would ask, what can you guys do to close the gap between what you guys feel like you're seeing and the kind of the macro backdrop?

Scott Wagner: Thanks. Relative to Humira and BI and the biosimilar, again, one of now our 72 point-of-sale cash programs that, again, up from 20 at the beginning of the year, it's awesome, I mean, you know, across categories, whether you're a brand that has competition in the brand or generic space, whether your brand is off formula or has, you know, certain gaps in coverage, whether, again, it's a biosimilar or an OTC competing in that way, we're meeting the need for affordability. And so, you know, the BI biosimilar, you know, is an awesome proof point for that category that we think can and should grow, again, for the broader need of, you know, we got one and a half to five X the traffic of every brand.com page, and there's, you know, 80 to 100 million brand scripts that are sitting at the counter, all that left every year due to affordability.

Eric Sheridan: There's a lot of upset here. And one moment for our next question. Our next question will be coming from Eric Sheridan of Goldman Sachs. Your line is open, Eric. Great. Thanks for taking the question.

Scott Wagner: I guess taking a step back, when you think about the strategic priorities and or the investment priorities for the business, looking out towards 2025, we've talked a lot about the headwinds the industry faces from the retail footprint on this call. Are there any things within your control where you feel you want to sort of clarify or sum up ways in which you can sort of reposition the platform or maybe educate the consumer more deeply on the savings they get capitalized on? That could possibly outrun or counteract Transcripts provided by Transcription Outsourcing, LLC. Access Grants 2021 The Goodrx promise of affordability and transparency is super powerful.

Speaker Change: Looking out towards 2035, we've talked a lot about the headwinds the industry faces from the retail footprint on this call are there any things within your control, where you feel you want to sort of clarify or some up ways in which you can sort of repositioning the platform and maybe educate the consumer more deeply on the savings they get capitalized on that good.

Speaker Change: Possibly outrun or counteract.

Speaker Change: Some of the retail footprint, we have and maybe how does it fit into your broader priorities for 25. Thanks, Yeah. Thanks, Erik you're giving me a plugged a retail really because.

Speaker Change: The good Rx promise.

Speaker Change: Of affordability and transparency super powerful and so.

Scott Wagner: And so back to that, you know, almost a billion scripts and 80 to 100 million brand scripts that are left. We're creating a way that particularly brand pharma can get an affordable price to people, whether it's a direct cash price or whether it's all the various copay programs that they have that are honestly only understood by a small amount of consumers, all of that living on Goodrx. And the discussion that we're having and really want to have with retail is bring those to the counter. That plus everything else holistically, bring those programs to the counter.

Speaker Change: Back to that almost a 1 billion scripts and $80 million to $100 million brand scripts that are left.

Speaker Change: We're creating a way that particularly brand pharma <unk>.

Speaker Change: Can get an affordable priced people, whether it's a direct cash price or whether it's all the various co pay programs that they have that are honestly only understood by a small amount of consumers all of that what living out of <unk>.

Speaker Change: And the discussion that we're having and really want to have with retail is bringing those to the counter.

Speaker Change: That plus everything else holistically bring those programs to the counter and worthy only company, that's really investing in technology to help people preorder.

Scott Wagner: And we're the only company that's really investing in technology to help people pre-order. Can you should you be able to pick it up in store or get it sent to your house? Can I pay up front? It's turning this into a consumer product experience that will help retailers manage their workload at the counter and get them better economics and again capture a lot of incrementality.

Speaker Change: Can you should you be able to pick it up in store or get a sense for your house.

Speaker Change: I pay upfront, it's turning this into a consumer product experience that will help retailers manage their workload at the counter and get them better economics, and again capture a lot of incrementally.

Speaker Change: I pay up front, it's turning this into a consumer product experience that will help retailers manage their workload at the counter and get them better economics and again capture a lot of incrementality.

Speaker Change: Okay.

Daniel Clark: And one moment for our next question. And our next question will be coming from Michael Cherny of Lerink. Your line is open.

Speaker Change: And one moment for our next question.

Thank you for watching!

And one moment for our next question.

Speaker Change: And our next question will be coming from Michael Cherny of Leerink. Your line is open Michael.

Speaker Change: And our next question will be coming from Michael Cherney of Lerink. Your line is open, Michael.

Scott Wagner: Thank you, this is Dan Clark, I'm for Mike. Just a question on 25, in your kind of core prescriptions business, how are you thinking about changes to, you know, Medicare Part D plans, particularly a lower out-of-pocket cap, and does that impact your business? Sure. Thanks for the question. I'll speak to this one quickly because it's a topic I think that we've addressed a couple times. The out-of-pocket max applies to a tiny proportion of Medicare users. I think you all can look this up empirically too, the tiny percentage that actually have historically spent enough to hit the cap.

Speaker Change: Great. Thank you this is Dan Clark on for Mike.

Thank you for watching!

Speaker Change: Great, thank you. This is Dan Clark. I'm for Mike. Just a question on 25 in your kind of core prescriptions business. How are you thinking about changes to, you know, Medicare Part D plans, particularly a lower out-of-pocket cap and just any impact to your business? Thank you.

Speaker Change: Question on 'twenty.

Speaker Change: And you're quite prescriptions business, how are you thinking about changes to Medicare part D plans, particularly a lower out of pocket.

Speaker Change: But just any impact here. Thank you.

Speaker Change: Sure. Thanks for the question I'll speak to this very quickly.

Speaker Change: Sure, thanks for the question. I'll speak to this one quickly because the topic I think that we've addressed a couple times

Speaker Change: Because the topic I think we've addressed a couple of times.

Speaker Change: The out of pocket Max.

Speaker Change: Fly has to a tiny.

Speaker Change: The out-of-pocket max applies to a tiny proportion of Medicare users. I think you all can look this up empirically, too, the tiny percentage that actually have historically spent enough to hit the cap. So with Medicare being sub-30% of...

Speaker Change: Proportion of Medicare users I think you all can look this up empirically to that kind of percentage that actually have historically spent enough to hit the cap. So if Medicare being sub 30% of the users on good Iraq and with a couple of percent of them hitting the cap. This is like.

Scott Wagner: So with Medicare being sub-30% of the users on Goodrx, and with a couple percent of them hitting the cap, this is like... This is a pretty minute potential impact, especially when you consider that folks don't know if they're gonna hit the cap until they do in many cases. So they still have a rationale and basis for using Goodrx in the meantime. So I think from our perspective, this is not a top ten worry for us by any means.

Speaker Change: The users on GoToRex and with a couple percent of them hitting the cap. This is like

Speaker Change: A pretty minute potential impact, especially when you consider that folks don't know if theyre going to hit the cap until they do in many cases, so they still have.

Speaker Change: a pretty minute potential impact, especially when you consider that folks don't know if they're going to hit the cap until they do, in many cases. So they still have a rationale and basis for using GoodRx in the meantime. So, I think from our perspective, this is not a top 10 worry for us by any means.

Speaker Change: Our rationale and basis for using good Rx in the meantime, so I think from our perspective. This is this is not a top 10 worrying for us by any means.

Scott Wagner: And I would now like to turn the call back to Scott for closing remarks. I appreciate everybody being with us on the call. Thanks for the questions, and we will talk to everybody soon. Thank you.

Scott Wagner: And I would now like to turn the call back to Scott for closing remarks.

Thank you for watching!

Speaker Change: And I would now like to turn the call back to Scott for closing remarks.

Scott Wagner: I appreciate everybody being with us on the call. Thanks for the questions and we will talk to everybody soon thank you.

Speaker Change: I appreciate everybody being with us on the call. Thanks for the questions, and we will talk to everybody soon. Thank you.

Operator: And this concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change: And this concludes today's conference call. Thank you for participating you may now disconnect.

Speaker Change: And this concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you for watching!

Thank you for watching!

Speaker Change: Okay.

Speaker Change: [music].

Thank you for watching!

Speaker Change: Good.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Yeah.

Speaker Change: [music].

Speaker Change: Yes.

Operator: Thanks for watching!

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Sure.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Yes.

Speaker Change: [music].