Q2 2025 GoodRx Holdings Inc Earnings Call
Hello and welcome to good. RX second quarter 2025 conference call and webcast.
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I will now turn the conference over to Aubrey Reynolds. You may begin.
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Good morning everyone, I'm sorry for the delay.
welcome to gutter X's earnings conference call for the second quarter 2025
Joining me today are Wendy Barnes, our Chief Executive Officer, and Chris McGinnis, our Chief Financial Officer.
Before we begin, I'd like to remind everyone that this call will contain forward-looking statements.
All statements May 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, or market opportunity, our financial uh anticipated financial performance.
Underlying 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 consumer, direct price points, and our integrated Savings Program.
Our e-commerce strategy and our Capital allocation priorities.
These statements are neither promises nor guarantees but involve known and unknown risks uncertainties and other important factors.
Filings with the Securities and Exchange Commission could cause actual results performance or achievements to deferred materially for the mo from those expressed or implied by the forward-looking statements made on this call.
Any such forward-looking statements represent Management's estimates as of the date of this call. And we disclaim any obligation to update the assignments. Even if subsequent events calls are used 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 and the company's earnings press release, which can be found on the overview page of our Investor Relations website at investors.gov.
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 Wendy.
Thank you Aubrey and thanks to everyone joining us our business continues to deliver strong adjusted ebit. De margins. And our team is executing on a number of fronts that we believe will help deliver long-term growth opportunities.
During the second quarter, we remained focused on the key initiatives designed to better position. The company for sustainable long-term growth to highlight a few informal, manufacturer Solutions, we continue to strengthen key relationships with former manufacturers while also expanding our share of wallet across their Market access consumer, marketing and hcp budgets.
Our monetization per brand has increased significantly year-over-year. As we demonstrated our return on investment for Brands and helped grow pharma's direct patient engagement strategies for Access and affordability.
These efforts, drove 32% year-over-year, Revenue growth during the quarter, we believe this offering will continue to perform at similar levels, throughout the rest of 2025, especially bolstered by recent trends of top Pharma companies. Adopting direct to patient and consumer act pricing models.
In prescription Marketplace, we made strong progress to align with our Retail Partners. Since we last spoke, we have signed several retailer Partnerships where our discounted pricing is presented to Consumers on the Pharmacy. Counter also, we launched e-commerce Solutions within additional retailer and are in contract discussions for several more. We look forward to announcing more detail Behind These Partnerships in the coming weeks.
We are pleased to have new partners for our integrated Savings Program and we have expanded the program to service brand medications. In addition to generic across multiple PBM partners. And finally, we announced during the quarter that we launched our condition subscription product for erectile dysfunction, which allows us to deepen our engagement with consumers directly while maximizing our return on existing capabilities.
I will discuss these in Greater detail in a few minutes but first, I want to formally welcome Laura Jensen, as our new Chief commercial officer and president of Pharma Solutions in this role, she will lead the company's Pharma manufacturer Solutions offering as well as overseas strategic initiatives aimed at growing and enhancing Partnerships across the pharmaceutical industry.
Our former Chief commercial officer. Dorothy GL is retiring after 35 years, in healthcare leadership positions, but will continue for a transitional period of time to ensure a seamless shift of responsibilities key relationships and pipeline opportunities.
Prior to joining good. RX Laura LED growth strategy for both Amazon, Pharmacy and pillpack spearheading Innovative Partnerships with Pharma manufacturers and prescribers to improve how patients access and manage their medications.
She is established relationships with executive level leaders in Pharma and bring to track record of creating integrated experiences that drive, efficiency and improved patient outcomes. We believe that Laura is well, positioned to deepen our impact. Accelerate growth in this critical area of the business and expand Solutions in an ever-changing landscape.
With respect to the healthcare landscape, change has become a constant with positive and negative impacts on our business.
We continue to believe that we are well positioned to respond to such changes, deliver value across the pharmacy ecosystem, and grow our business. Over the long term, negative developments impacting our business in the short term include the Rite Aid bankruptcy and a decline in volume of one of our integrated savings programs with a PBM partner. With respect to Rite Aid, during our last earnings call, we did not have line of sight into the bankruptcy process, the plan for store closures, or other pertinent details regarding the transition of patient files. Therefore, we explicitly excluded any impact from our earnings guidance.
Beginning in May the process unfolded rapidly with several pbms removing rated from their networks, causing immediate cessation in the associated claims volume. This was followed by closures of over 800 stores between June and July. Given the speed with which this process occurred, we are working to recapture displaced consumers, both through Direct Communications where available and in partnership with acquiring Pharmacy retailers recapture does take time. However,
In volume at 1 of our PBM Partners. As we have previously, discussed the first generation of our ISP offering is focused on coverage generics and is operated through pbms who decide how to implement and manage the program.
While this PBM Partners restructure of their ISC program has created volume headwinds. For us, we believe that ISP remains important and valuable ISP and generics has represented a tremendous entry point for good, orac Solutions and pricing, But as time progresses We Believe significant opportunity will come by way of brand drugs. Understanding the sheriff's, spend these drugs represent for plan sponsors in this way ISP will continue to be a growth engine and complement to our Pharma manufacturer Solutions, strategy,
The core of our prescription Marketplace remains strong and where proactively broadening our Revenue, mix and deepening Pharmacy Partnerships to reduce the risk of similar disruptions in the future.
The foundations we are building with retailers, continue to position us for long-term growth at a time when Prescription Savings are top of mind. At the same time, we've seen significant developments in the broader Healthcare landscape. In July Congress, passed a budget. Bill that amongst many other Provisions Cuts funding for Medicaid and individual exchange products.
This legislation also, tightens eligibility requirements and increases the frequency of Medicaid coverage. Determination
According to the Congressional, budget office, these changes could leave nearly 10 million people, uninsured. A rise of nearly 40%. We understand the challenges facing those who will lose coverage and emphasize that the need for good or access more critical than ever to ensure such individuals have access to Affordable medications. Additionally, several health plans have reported higher than anticipated medical utilization during 2025 this suggests that the trend of rising costs increasing premiums and reduced coverage is likely to continue in 2026 and Beyond. In fact, CMS recently announced that the 2026 Part D national, average monthly bid amount is up 33% year-over-year.
And finally, we remain engaged with government entities, as they explore models to reduce brand drug pricing directly to Consumers.
Our existing large portfolio of discounted consumer, direct pricing for brand drugs, places us in a very strong position to be a solution of choice.
As millions of Americans seek affordable Alternatives, We Believe good RX remains and will continue to become an increasingly valuable complement to insurance by helping them access. The medications they need consistent with our commitment to increase our government Affairs engagement. We are actively advocating for policies that expand access to Affordable medications.
Now, let's dive into more detail on our business update.
Our prescription Marketplace continues to make progress in deepening our Pharmacy relationships and delivering more economic and strategic value to pharmacies. We do this by focusing on 2 core strategies, Pharmacy Counter Integrations and e-commerce
Pharmacy, Counter Integrations, expand good. RX as presence to the physical Pharmacy, Counter, as an ally to Pharmacists and technicians by helping patients with prescription access and affordability. In real time, we expanded to multiple new Pharmacy Partners this quarter and expect more announcements on additional Partners soon.
Our e-commerce solution integrates into the pharmacy management system to enable consumers to pay online and pick up in-store. Thereby making the front-end adjudication more efficient and saving time at the counter while focusing on reducing the number of abandoned Scripts.
We launched e-commerce Solutions within additional retailer during the quarter and are in contract discussions for several more.
We are highly focused on digital integrating into all aspects of the prescription workflow as a longer term strategy to remove friction in the process.
We are also excited about the launch of good. RX Community Link a new offering designed specifically for independent pharmacies that provides predictable pricing and favorable. Economics, we recognized independent pharmacies are a Cornerstone of Healthcare in many communities and they need bespoke solutions to address complex reimbursement, models and competitive pressures in the industry.
Community Link offers independent pharmacy the ability to directly contract with GoodRx, which leverages a cost-plus model based on the national average drug acquisition cost. This provides direct control over pricing and favorable margins.
It also offers the ability to opt in to our integrated Savings Program which may offer more favorable rates than traditional commercial insurance reimbursement and provides access to our point of sale discounts.
It's demonstrating successful results for participating pharmacies.
This type of direct, Pharmacy engagement represents how good our X goes to Market with Pharmacy durability front of mind.
In the second quarter, we also launched our first subscription service for erectile dysfunction. We observed that consumers regularly turn to good RX for ways to save on Ed medications and now they have access to a single solution that provides Comprehensive Care by bundling. The clinician visits prescription and delivery into 1 low cost offering we're redefining, what? Accessible care can look like and streamlining. The prescription Journey from beginning to end, making it easier for consumers to access Ed treatments within a platform. They already Trust.
We are pleased with the early results and intend to expand into additional conditions before the end of the year, with weight loss management and hair loss upcoming.
Furthermore, we also launched a new Prescription Savings subscription offering that is being sold at the pharmacy counter. Our first retail partner went live in the second quarter and we expect other retailers to follow suit in tandem with other Pharmacy Counter initiatives discussed earlier.
our farmer manufacturer Solutions, delivered strong results, during the second quarter with 32% year-over-year, Revenue growth,
We are focused on expanding our integrated access and affordability Solutions with Pharma partnering with even more Brands and delivering meaningful return on investment for Pharma partners.
Our monetization per brand has increased significantly, which is driven by our independently validated Roi and by the scale of our platform and quality of our audience.
This is particularly true as we support farmer Brands and their direct to Patient strategies. A key Focus for many top manufacturers.
1 area, we are specifically focused on is our consumer. Direct pricing model as many farmer Brands build consumer direct strategies. We are a natural partner of choice, given the size and quality of our audience and demonstrated consumer and hcp engagement.
I'm particularly enthusiastic about the intersection of our Pharma Manufacturing Solutions offering and our HCP efforts.
Our HCP audience and engagement are significant in the second quarter alone. We had over 750,000 HCPs active on our platforms. We believe this scale gives us a unique opportunity to help facilitate pharma's access to prescribers.
We now have the capabilities to deliver a customizing engagement with our expansive hcp audience, for targeted pharmaceutical offers which are now incorporated into our 2026, selling plans. We see significant upside for our Pharma offerings to grow and deliver meaningful value to both hcps and Pharma manufacturers due to the quality of our audience and targeting precision.
I want to reiterate our focus on controllable and durable strategic initiatives that position good RX for long-term sustainable growth.
We are executing against these inclusive of signing direct Retail Pharmacy, Counter Partnerships.
Growing our brand farmer portfolio, evolving our ISP program and go-to-market strategy, and looking into 2026, creating an expanded HCP product, in addition to exploring and expanding the integration of Gutter X pricing into EHR and digital workflows. I am also convicted and confident in our executive leadership team's ability to execute on our strategic plan amidst a challenging healthcare environment.
I will now turn the call over to Chris to discuss our second quarter results.
Thank you, Wendy, and good morning, everyone, for the second quarter. Total revenue is $203.1 million, up 1% versus the prior year. This is in line with our expectations when excluding the impact of RAID, which, as a reminder, the guidance provided in May excluded the impact on Friday.
the erosion of the ISP program that Wendy noted earlier, and the impact from raid where the primary reason for subscription transaction Revenue, decline 3% versus the prior, excuse me, versus the prior year and for the decline in monthly active consumers,
We expect monthly active consumers to decline in the short term. However, we are reassessing this metric as a measure of the health of our business.
For example, when we convert a consumer from a traditional retail counter transaction to a consumer direct price point, we no longer include the transaction in our Mac account, nor do we report any corresponding metric under the Pharma manufacturing Solutions. Offering in this example, the resort the result is a purported decline in our monthly Active consumer, when the business is actually performing as intended.
Higher in 2025.
During the quarter, we took certain actions to reduce costs while aligning our resources to a more focused set of key strategic priorities.
This realignment is intended to increase Guilford, operating efficiencies, which will continue to contribute positively to our overall adjusted Ava and adjusted. Eva margin.
For the second quarter adjusted Eva of 69.4 million rows 6% versus the prior year, which constitutes an adjusted even a margin of 34.2%, which is an improvement of 160 basis points over the same period last year.
Our balance sheet remains strong.
We closed the quarter with 281.3 million of cash on hand.
And during the quarter, we deployed approximately 46.4 million to repurchase 10.2 million shares of our stock that an average price of $4.53 per share.
Given our stock price. We continue to believe that stock repurchases are a creative
And a good method to return excess cash to shareholders, at the end of the second quarter, approximately 143 million of capacity remained under our 450 million, share repurchase program.
Turning. Now to our outlook for the remainder of the year as Wendy noted last quarter, we were unable to estimate the impact of Rite Aid and therefore specifically excluded any impact from the previous guidance ranges.
Well, I'm certainly remains we are now including the impact from raid as well as the erosion of 1 of our ISP programs into our updated guidance.
In spite of the headwinds from these 2, exogenous events, which is expected to be approximately 35 to 40 million of projected Revenue loss in 2025. We expect that our full year of Revenue will increase from 2024 with Q3 Revenue expected to be lower than Q4.
Despite lowering our Revenue projections, we expect that full year, adjusted Evo will be in the range of 265 and 275 million which represents approximately 2 to 6% growth compared to 2024.
Overall, we had a solid Financial quarter. I'm highly encouraged by the results of farmer manufacturer Solutions, offering driving towards 30% or higher Revenue growth in 2025,
And while lowering Revenue expectations due to external factors is disappointing. Our Core Business will remain strong and the fact that our adjusted ebit arrange continues to Encompass a portion of our previous range is a testament to our leadership team and the focus on the right strategic initiatives and operating efficiencies
We are also optimistic that investment into these strategic initiatives will drive durable profitable future growth while solving real pain points for the consumers and the pharmacy ecosystem.
With that, I'll turn the call back over to Wendy.
Thank you, Chris.
Over the course of my first 6 months, I want to reiterate my commitment to strengthening our leadership team continuing to evaluate our core capabilities and engaging with key Partners to solve real business problems. And to develop a new strategic initiative, new strategic initiatives, rather to drive sustainable future growth.
I'm confident that we are making meaningful progress on these commitments. We have the right leadership team in place to navigate the evolving prescription medication. Landscape, while focusing on delivering operational. Efficiencies that will improve our long-term trajectory
We've also made meaningful progress on initiatives that create value for each of, our core stakeholders by delivering aligned, economic value with our phies, building strong momentum with Pharma manufacturers to enable medication. Access and affordability investing in tools, that improve hcp, workflows and engagements, and delivering a better consumer experience while providing access to Affordable medications. When I look at the progress, we have made along with the broader macro macroeconomic and Healthcare environment. I can say with confidence that good. Our X is in a strong position to reduce friction and deliver. Meaningful value to consumers in the pharmacy ecosystem, I will now turn the call over to the operator for questions.
Thank you, ladies and gentlemen, as a reminder to ask the question, please press star 1 on your telephone and then wait for your name to be announced.
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We ask that you limit yourself to 1 question and 1, follow-up.
Please stand by while we compare the Q&A roster.
Our first question comes from the line of Lisa Gil with JP Morgan. Your line is open.
Well, thanks very much. Good morning. Thanks Wendy for for all of the the details. Um, can you maybe just spend an incremental minute around ISP, um, 1, you know, maybe talk about some of the, the new Partnerships that you were talking about and then secondly, um, you talked about potentially going to employers directly. Um, how should we think about the timeline of, of the, turnaround of of ISP where it could become a positive? Contributor again, to good RX,
I think I've been as crisp and a little more tempered about the expectation around ISP, while it is a critical product to how we reach commercial lives. There is no question that in partnering with PBM, that is the fastest and most expeditious access to commercial lives.
We also know that the ability for our good RX competitive cash price to always surface as a complement to the funded, um, uh, price point at the point of sale doesn't always come through and that capacity. And so for that reason, we're a little more metered as to the expectation, um, that we should get out of that program. Having said that your spot on with your leave-in, pointing to brands, that is a, um, a certain value, add to the program in that this auto wrap that we refer to it, internally of brand drugs, many of which, of course, we point to through our um, Pharma manufacturer Solutions growth. They in fact, provide coverage at the point of sale for these same, uh, commercial lives for brands that are otherwise, not covered on their plan. And so for that reason, the engagement from PBM Partners around adding, this is a complement to their already. Integrated offering has been quite High, you've heard us talk about it a couple of times, but we've now
Actually executed um uh contractual wording to do that with several Partners as to the second part of your question on additional Partners, we have added. Um, denovo, that in fact is true, we're pleased with that progress. I hope to have more, uh, definitive and combined, uh, public announcements as to who those are, um, upcoming. But at present, um, we're just simply comfortable suggesting, we've added, uh, more to our portfolio of partners for the time being
Chris, is there anything else you'd add know? I just I think I would reiterate the fact that this is a very important program. It's strategically still has real Merit um in terms of why it exists and I think um from a financial perspective uh you know there's there's positive contribution coming not only with respect to adding new partners and expanding the access to overall lives available to us uh but also working continuing to work with our PBM Partners as to the implementations on the ones that currently exists. Uh and that I think as Wendy noted just expanding it to Brands and direct to employer all represent upside on this program which remains important.
Chris do you just remind us like what's in the numbers for 25 and how much of this would actually be, you know, more of a 26 type of opportunity.
I, I think I would think about it more as a 26 opportunity. I think where we are now is we've, we've taken, uh, the guidance down as obviously, um, in terms of, you know, the the, the, the 35 to 40 million that reflects all of everything, we've known as it's currently running today, right? So roughly half of that is associated with ISP give or take. Uh so I think, you know, adding additional partners and expanding the program would represent upside but I think likely that's 26.
Okay, perfect. Thank you.
Yep, thank you.
Please stand by for our next question.
Our next question comes from the line of Michael churny with the re Partners your line is open.
Uh, good morning and thanks for taking the question. Maybe if we can dive in a little bit, I manufacture Solutions, I I appreciate the color on the other challenges of the business manufacturing Solutions. Obviously, you had a really strong quarter. Do you talk a little bit more about how you think of the combination of um the offensive growth and targeted pushes you've made versus the health of the End Market and how we should think about the bridge getting to that increase. Uh, I think you said Chris 30% plus Revenue growth for the year. Thank you.
Thank you for the question. Um, you're right, we're we're pretty pleased with how manufacturers Solutions has performed. Um, the numbers, of course, speak for themselves but we feel highly convicted after the 30 plus um for the full year um which we've, of course, included in our explicit guidance. In this call. I think what we've seen happen ties nicely to some of the commentary. You've heard us mentioned previously, which is, you know, when we first engage with the manufacturer who perhaps um hadn't worked with us before on a brand point of sale buy down, typically we will have 1 or a portfolio of drugs inside um 1 particular disease state with the Pharma partner. We're then turning around these Roi studies that um candidly are just producing an outside comparative result to what they can achieve um through their own brand.com activity. And this is a combination of either the brand point of sale by down and or a combination of embedding their affordability program.
The like, so it's it's across the board, some involve all of those things. Some involve only aspects.
And then when we return these Roi studies, that that support not only positive Roi, but candidly outsized, new brand to RX therapy growth. Then what we're finding is we're expanding, um, into other portfolios within those same manufacturers. And when you zoom out a little bit and think about the regulatory environment that we're now sitting in where this Administration is pointing heavily towards direct to Patient channels. We're well positioned to take advantage of that with these same manufacturers and potentially with others who may have been on the fence, um, about doing, uh, a point of sale program to begin with. And we've been actively engaged, not just with the Pharma Partners, but also, um, in DC, which was part of our commitment, um, to this group to be able to engage more heavily and to, to influence what we think is the right answer, um, ultimately, for the consumer Market.
Chris, is there anything from a a number standpoint you would add? Yeah, I would say, you know, Mike, thanks for the question. I mean, this is as I said in my script and we I can't underscore enough, how excited we are about this part of the business. It's, it's, it's a part of the business that I think, is undervalued as a 30 plus percent grower, we have direct line of sight to 30%, which is why I said 30% or higher. So, we have a real strong conviction around that. Um, as we talked about last quarter, the the, the revenue cycle here is a little bit lumpy, as you're bringing those sales on, but the conversations with Pharma, um, continue and and really
They are increasingly uh as Wendy noted around direct to Patient engagement, and we've got a great platform to bring that to Market. So, um, I think we've got, you know, High conviction around line of sight to 30 and really Beyond
Thanks and just 1. Quick question. I know you don't guide below ebita. But how should we think about your expectations? Your focus for Capital deployment? For the remainder of the year you had elevated share purchases in 2 Q. Should we think about that being another level that you would continue to pursue?
Share repurchase program, uh, you know, short of some other, you know, better and higher use.
Got it. Thank you.
Yep, thank you.
Please stand by for our next question.
Our next question comes from the line of John Ransom with Raymond James. Your line is open.
Hey, good morning. Um
Wendy just kind of more of a kind of structural question, you know, as you guys have pivoted to Cost Plus and and certainly, I understand that's good for the retailers. Do you find that the comparative pricing versus what the PBM is already? Negotiated is less competitive than it was. And so maybe just the market for cash. Pay Scripps. Has been compressed a little bit by that dynamic.
Yeah, no, it's an interesting question.
Picking up on something that it is in fact, objectively true. So with Cost Plus costs at point of sale have in fact, gone up, that's true. And so as a result there has been, um, you know, a bolus of scripts that have pushed back onto the funded benefit as compared to cash. Um, and, and also candidly, we've contributed a bit to that in that, we really needed to rebalance, the pharmacy economic, and by doing so, we paid the pharmacies a bit more such that, they are motivated. And, and actually want to, um, you know, receive these scripts and service these scripts, but still candidly at a competitive price for the consumer. But,
But in some instances um the price has gone up. That's true. Um I think that's a fair observation.
To rethink how? I mean, I just noticed less Mass Market commercials from you, but what is the company's updated messaging? Uh, especially as you push into branded? It seems like some of the stuff I've seen is still kind of good, RX 1.0. Um, hey you can check your app and it might be a cheaper price. But what what's the thought about migrating? The messaging and maybe getting a little more punch for the uh, dollars you're spending thanks?
Yeah, gosh, I it's a really timely question, John. I think we've alluded to, um, guys keep me honest here, but we've talked about having additional marketing spend in the back half of the year that continues to be the plan we are um, weeks out on the precipice of a brand relaunch and refresh. Um that I think you'll find to be um a bit punchier. It will certainly be more pervasive than our messages today in Market. It's been a good 3 years.
Since we've heavily invested in the brand, having said that, we have continued to enjoy the number 1 brand position with consumers, um, and hcps. But certainly resting on your laurels, doesn't get you very far. So we agree. Um, it has been a purposeful campaign and build, I'm excited. Um, for the broader Market to see and receive it, um, I I would leave you with give it a couple weeks and and you'll see it um, in and around um, many places. And and then we would certainly welcome your feedback um uh, once you see it in Market,
Yeah, do you guys gonna have like meme coins? You can buy your drugs with meme coins or something to really? Yeah, 2025 yeah. No, no Bitcoin, no cryptocurrency to, to get drugs. No, not quite, not catchy, but Chris, I think you were, you were gonna say, well now, there's a good idea. So I, I do think our our spend will be slightly elevated in the second half compared to first half. And I think is Wendy noted. It'll come as a non listen, I'll leave the marketing sort of expertise to guys, like Ryan Sullivan on our team who who are just world class at it, but we will both invest in our brand itself uh and but also in growth initiatives. So we'll have sort of 2 different types of marketing spend. That will really be specific in the back half some, you know, the brand initiatives will be out there and then as as we sort of get to a announcement, then on some strategic initiatives, we'll, we'll spend some money to support those growth and it's just think about subscription offerings and coming, you know, offerings around, you know, weight loss. Ed, we really haven't leaned into those yet from a marketing perspective. And so when those launched, I think you would
See some spend of support those as well. Yeah. Um, before we get off these question, I, I would be remiss John without also pointing out. Um, you heard me mention, um, additional Pharmacy Counter programs and deepening those relationships. There is an aspect of that, that involves purposeful marketing spend again, where we believe the consumer is most engaged. Um, and often is already motivated. Has a script and is ready to transact. And so, for that reason, um, we've had
Purposeful spend um uh in the previous months and will continue through the back half of the year to to firm up those counter programs as well.
All right. Thank you.
You're welcome.
Please stand by for our next question.
Our next question comes from the line of Charles Wright with TV Cohen, your line is open.
Oh yeah, thanks for taking the questions. Uh, I'd like to go back to the, to the guidance, uh, change here. So, you know, I think at the midpoint it is something like 35 to 40 million of Revenue.
Um is is that and that would be about 4 and a half percent. I think for the midpoint, you know, of course we talked about uh last quarter Rite Aid was, you know, under 5%. Um but here you're talking about 4 and a half percent, which includes both the impact from ISP and rate Aid.
If I recall, I think this predates you guys, but, you know, I think the estimate for ISP was only about 30 million uh, of Revenue contribution. Uh, I I I think it was either for last year or maybe for this year. So what I'm trying to understand is of this uh the guidance adjustment, is this more Rite Aid? Or is this more ISP? And if it's writing if it's not, all right Aid? Um you know what what do you think the the remaining exposure relative to that would be potentially or do you feel like you have really sized it uh appropriately here?
Friday either, there was about 400 store closures in June, we saw some, you know, some other immediate sort of as as Wendy noted cessation with some of the programs with Rite Aid. So there was sort of this initial impact, uh, with the rapid nature of the store closures. Uh, there's there's likely, a pool of of, uh, of consumers that went to their local pharmacy, just to find that it wasn't there anymore. And may have, you know, transferred the script themselves. So there's a lot to unwind there. But to your question directly on the numbers, I would think about it about half and half. Uh, we put a range on it because there's still some impact. We're, we're doing everything we can from a contactability and others to ensure that we're, we're recapturing the highest possible and I think that we'll continue to do that and part of the, the brand, and the marketing is all tied into this, right? Which is to reinvigorate the brand to make sure that those who came to us as consumers and elected to do business with us, will continue to come back to us. And look, I think there's Tailwind, um, you know, coming in 2026. Anyway, if you look at the, the, the PDP,
Premiums that were announced by CMS. They're up 33%. This is, you know, I know that's not the commercial Market but you're seeing other payers talk about high utilization. I think that likely ends up being um some of the things that we just talked about is that is that John asked on the prior question around, you know the cost of gone up. I think that people have gone back to the benefit. Uh this year I think they'll come back to the cash benefit next year. I think you hear other manufacturers. Like Novo talked about the importance of cash programs I think.
You've seen some large payers talk about the importance of cash program. So I actually think there's Tailwind for this to come back and I think as we reinvigorate the brand and go after marketing, spend, I think you'll see customers like whatever Rite Aids losses were, I think will recapture those over the longer term.
Well, so just coming behind you. Chris, I, the the your question also was. And have you fully accounted for both of these things in this year? The answers? Yeah, yeah, yeah. That's that's, that's baked into the revised, uh, revenue and, uh, adjusted it a guidance.
Okay, thank you. And and then Wendy. If I could follow up, you know, you mentioned earlier about, you know, the opportunities when we think about more, you know, broadly in the market of direct to Consumer option. Uh, obviously the the president has talked about wanting something similar to that with the mfn pricing, when you look at the landscape of basically where drugs list price sit, what what percent of drugs do you think? If we're, if they were to go to the mfn price would be reasonably affordable because I I believe you guys had said once that or or again, maybe this predates uh both of you but sort of when the cash price gets Beyond 200250 a month, it it really is not that attractive to Consumers. Uh, so you know what, you know, when you look at sort of the portfolio of drugs out there, you know, is there a large swath of brand drugs? And I guess this is relevant for ISP wrap as well. Um just you know what how how big is that opportunity in the uh in the drug? Spend out there. Thanks.
Yeah. No, I appreciate the question. Um, look, I think my ability to completely speculate on what that opportunity represents is is would be somewhat difficult at least to given the looseness, my adjectives of the director from the administration at present, but there's no question that consumer sensitivity around. What a cash and or out-of-pocket price. Um, uh,
Represents from a walkway standpoint at point of sale. I think it's much higher than most of us really would otherwise logically surmise and we're seeing that play out with glp, ones is a great example. Um with what uh the average consumer is willing to pay from a cash price so I would leave you really more with this observation that mfn or know that it's really more about the Delta between what the price would have been absent. Having a more um and purposeful negotiated cash price. That feels like a win for the consumer and favorably reimburses the pharmacy. So I, I would anticipate that there continues to be quite a bit of opportunity, even with higher cost Brands, even if that lowest cost that ends up being supported by Pharma with us and or others. Um, even exceeds the 250 price point, I think it still represents a meaningful opportunity for consumers at the point of sale.
Great. Thank you.
Thank you.
Our next question comes from the line of Stan Bernstein with Wells Fargo, Securities. Your line is open.
Uh, yes. Hi. Good morning and thanks for taking my questions. Uh, on the subscription line. You saw some declines in the second quarter, uh, anything to call out in terms of why goal subscription slipped and did you see any offsets from the, uh, recently? Launched erectile dysfunction subscription product. Thank you.
Let me take that 1 or
I, you're right. Yes, gold. Um, has declined. I think our Counterpoint to that, however, is our push into subscriptions, which is, um, candidly just say more, uh, purposeful, um, component of that entire grouping that we would, um, put gold in with subscriptions being encompassed into that. So, we started with erectile dysfunction, we've been pretty pleased with the progress thus far as we think about additional programs before end of year, I did note both, uh, weight loss and hair loss upcoming with candidly more behind that. But we think that those 2 represent the most meaningful opportunities in the near term. We also know that our marketplace with the consumers that are already sitting um in and around our ecosystem. I mean roughly, you know, 300 million um, annual visits to our various platforms and comparatively to a lot of these other um subscription type model services.
2 to 3 times, uh, the number of consumers engaged with us, as through these other more partitioned offerings, we think it should represent a meaningful opportunity to hopefully return, um, uh, to growth on those numbers of subscribers in our subscription services.
Got it. Thank you.
You're welcome. Please stand by for our next question.
Our next question comes from the line of Craig. Hartenbach with Morgan Stanley, your line is open.
Hi. This is Jay on for Craig um on the um 35 to 40 million impact. So given the I guess lower Revenue Outlook. Can you give us more color on the specific comp controls or margin lovers um that are being used to to maintain the even the margins?
Yeah. I mean it comes in a it's it's a little bit of a calm uh, complexity. But part of it is um,
You know, the ISP programs have a little bit lower Revenue per fill. So, uh, in a, in a way, you know, when you Loop the mix shift from, uh, higher margin at the counter scripts, the fact that the price points have gone up and the Cost Plus models, uh, I think by definition are a little bit higher in, you know, contributing to the, to the revenue, uh, per Bill, uh, numbers and metrics. Um,
So, I, you know, I I those are the big factors. I mean, it's it's, uh, it's, it's
Um, and in terms of cost controls that you asked about, so, um, we we took action obviously and you know, part of that was uh, you know, an unfortunate reduction in our Workforce, but others was just re re re reallocating certain technology in related resources, around strategic initiatives and refining those uh, to the to the current restrict.
IC initiative set. So it's just a more focused approach and, um, you're seeing it come through, I think I think we're on a, on a run of maybe, you know, 2 years straight of increasing, the, the margin percentage on a year-over-year, comparative basis, um, which we we continue to do, and we'll continue to focus on. Um, you know, we have a, you know, we want to be a good stewards of shareholder money and make sure that we're operating the business as an efficient, you know, efficiently as possible.
Yeah, I would just add, um, you know, part of what Chris and I committed to early on um uh, this year when we first um, engaged with all of you is that we would um, take a hard look at, not only the combination of strategic initiatives, we were focused on, but our colleagues in the number of people focused on pulling those initiatives through and that those that really didn't align to these core initiatives, that we've continued to speak of, um, in these earnings calls that we would either redeploy in support of, um, or eliminate roles that really weren't in service to the broader Strategic Mission. Uh, we have done that, um, uh, in combination with this broader executive leadership team, um, and it will just be part of our, um, ongoing discipline as a leadership team.
It's helpful and um as a follow-up um are you seeing any shifts in consumer Behavior or prescription sale rights? That could impact platform usage in the remainder of the year? Thanks a lot.
I'm sorry, can you ask that question? 1 more time.
Yeah. So um are you seeing any shifts in like consumer Behavior or prescription filled rates that could impact platform usage in the remainder of the year?
Nothing comes to mind. I'm kind of looking around the room here to to to think through any um, no. I I would just reiterate what I said which is, you know, I think the the the fact that consumer prices are up because likely pushed more into uh the benefit in the short term and we're seeing that I think you're seeing that as a part of the explanation for our Max coming down or Max Count's coming down.
Specific behavior other than I think the Dynamics around the the the the prices that people are paying at the counter.
Thank you.
Please stand by for our next question.
Our next question comes from the line of golinda Singh with truist Securities. Your line is open.
Thank you, and thanks for taking my questions. I want to double click more into the volume reduction at 1 ISP and apologies if you already covered this, but was it due to changes in PBM, Behavior, or customer Behavior, or any structural changes. Just trying to better understand? What gives you the confidence that this would not spread into your other ISP Partnerships. Any proactive actions you can take on your part to manage these potential headwinds in the future.
yeah, look, I think we've been, you know, pretty candid about
Is and what it isn't. Um, so, uh, you know, in some sense I would say the notion that, um, you know, the good RX price may not always win even when it's more competitive, his betting known candidly, it's part of this problem. Um, but it's still a compelling product that you want to get in front of commercial lives. So for that reason, you've seen us continue to lean into additional Partnerships and while I appreciate the question on. So how should we think about scaling it going forward? I think about it. Really in 2 ways 1 it's about adding more commercial lives to make sure that we can continue to grow the re
Of this product we've done that and we're continuing to do that while also noting in tandem, uh, the pullback of our win rate, uh, with 1 particular partner. However, part 2, as I think about this is the additive brands that I noted, um, in the, uh, transcript, to kick off the call. And so we do see an ability for this product to continue to grow, but if I add 1/3 element, it would be this, which is look, there's always going to be an element of favor to the PBM. And so for that reason, for this product, to truly realize its full potential, it has to be implied through the employer and or client at some point they've got to mandate that the cash price always win. Um, and so for that reason, you've heard us, talk about engaging more on the ploy on the employer side potentially, with broker Coalition. Um, and we are building out a group to do, uh, exactly that. So, that really is, uh, more the bolstering
Um answer to your question which is how do we ensure that this product truly realizes its full potential? That's how we're going to do it. Um, and that really is more of a 2026 solve. As we get this true strategy in Market,
Yeah, that makes sense. And then my follow-up. Um, actually, I'm following up on Stan's question around the recent launch of, uh, Ed subscription plan and plans to expand into other categories, such as weight loss and hair loss. How are you thinking about competition in those categories when some DTC incumbents in the space have been making big push is a strategy more about leveraging existing platform as it's like, traffic and band. Do you have to invest meaningfully to start having impact in those markets?
You know, it's a great question. Let me start by saying, uh,
you're not wrong, and
noting that
Effectively tapping into the consumers who are already searching for these drugs on our site represents. Again, a 2 to 3 times opportunity that those competitors. I'm presuming, we're talking about the same ones uh currently enjoy. So we're certainly starting um, from a better point, I would say to to springboard, um, off of these types of launches. However, your your observation is also correct that competitors. Do spend a meaningful amount on marketing. Um, on these same programs, you've seen us be a bit more tempered. There it is. Part of our consideration as we think about these future categories, I think you'll see us get more creative. Um, but again, we do have the benefit of taking advantage of consumers who are already in front of us. So, um, naturally, our ability to attract a consumer, I think, um, comes with a, um, slightly lower cost of acquisition to do. So, uh, but you will see us lean into
To marketing around, uh, future programs as well.
Great. Thanks a lot.
Please stand by for our next question.
Our next question comes from the line of Stephen valiquette with Missoula Securities. Your line is open.
Maybe it's in a 20 25% or something like that. Just for you know a rule of thumb just to help us you know, think about that. Um and then kind of tied into that. You also mentioned last quarter and again that you were under index to write Aid um just you know in hindsight doesn't matter as much now but you just remind us why you think that is but also is there anything about that, you know mechanically that might make it, you know more challenging for you to recapture the scripture. You do have with writing maybe they were just more tied in with other cash pay services or something like that. Just trying to understand that angle as well. Uh thanks.
Yeah, let me, let me take those in sort of reverse order. I, I don't think there's anything unique about, the raid customers that make it either harder or easier to recapture. I think it's just, um, you know, these are consumers that were out looking for affordable Solutions, um, to access medications, you know, they're just so, I don't think there's anything about that. I think as we go out and we think about, you know, future, you know, brand initiatives and, you know, the, the ability to contact these individuals and bring them back to the platform. I think they'll naturally come back to the platform. Um, they may not be even aware, they're no longer using their good ex coupon depending on where they've landed, um, or whether they've been switched or however that works. So our job is to bring them back and make sure they've got the most affordable price uh to do that in terms of um, our assumptions built in. But I think we haven't given a number but uh I I see I think your directionally correct in terms of how you're thinking about our assumptions. Uh, based on some historical. It's not an exact science. We don't need exact
Exactly know, um, because we're not, we don't have the primary file. We, we, we have ways to sort of, you know, trace them and connect the dots back, but it's not an exact science. So, your assumptions are sort of generally, uh, correct.
I would also add that we do those, that we have contractible information for, we have directly marketed communicated to them, and given them an option as to where, you know, they could take that. Um, next, uh, Phil, if you will additionally for those that we don't have contactability for, we do have through our digital platforms, very clear message, messaging around. Hey, is your Pharmacy closed? Let us help you. Um, so we are leaning in in every way possible, uh, to recapture, um, uh, these loss consumers
Okay. All right, that's helpful. Thank you.
Thank you.
Ladies and gentlemen, due to the interest of time, our final question will come from the line of Daniel gross light with City. Your line is open
Hi guys, thanks for taking the question. Um, you know, there's obviously been a lot of disruption in N National Retail chains and store closings and and the ride a bankruptcy which, which has been well covered on this call. But I'm curious where you're seeing volume throughout, uh, flow through to, uh, with those store closings. And in particular, are you seeing more volume going towards independence and you know, in conjunction with that you you launched Community Link last
Program curious if you can maybe provide an update on on the uptake you're seeing within Independence and Community Link. Thank you.
Yeah, no, appreciate it and 1 and thank you for the acknowledgement of community link. Look, I will say, for write a specifically I think it's too early to know whether or not Independents have been an outsized recipient of that volume, um, from our Partnerships with um,
Uh, larger chains, I will say thus far some of the ger retailers have been um, at least from traffic that they've shared with us. Um, have certainly done well, um, with some of this movement, of course, CVS bought a number of those files too. But the timing knowing that again, June July was really the boldest of those store closures. Particularly if someone would say on a, you know, 90-day fill the the short answer is it's a little too soon to know where we think those are going to go, um, to the other point of your question. However, on specifically, um, Community Link look, uh, we just think it's the right answer. I I, I'm really pleased to be able to support this program. Um, just knowing, you know, that those pharmacies often are an island in the uh, rural environments in which they exist. Sometimes the only um, entry and access point to care what we do know, uh, with those that have contracted directly with this, thus far, that their profitability is up meaningfully, we're incredibly proud.
Only to our larger retail chain. But uh, you know, more pointedly to those smaller Community pharmacies that are for the most part underwater on all of these brands.
Got it. Thank you.
You're welcome.
Thank you.
Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect