GoodRx Holdings, Inc.

Well, ladies and gentlemen, thank you for standing by, and welcome to the GoodRx third quarter 2020 earnings call. As a reminder, today's conference call is being recorded. I would now like to introduce your host for today's call, Whitney Notaro, Vice President of Investor Relations. Ms. Notaro, you may begin.

Thank you, Operator. Good morning, everyone, and welcome to GoodRx's earnings conference call for the third quarter of 2020, our first call as a public company. Joining me today are Doug Hirsch and Trevor Bezdak, our co-founders and co-chief executive officers, and Karsten Vorman, our chief financial officer. Before we begin, I'd like to remind everyone that this call will contain forward-looking statements. All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. including statements regarding management's plans, strategies, goals, and objectives, our market opportunity, our anticipated financial performance, and the expected impact of COVID-19 on our business. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties, and other important factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statement. Factors discussed in the risk factor sections of our quarterly report on Form 10-Q for the quarter ended September 30, 2020, and our final IPO prospectus filed with the SEC on September 24, 2020, and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements 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 these statements, even if subsequent events cause our views to change. In addition, we may also reference certain non-GAAP metrics, which are reconciled to the nearest GAAP metric in a company's shareholder letter, which can be found on the overview page of our investor relations website at investors.goodrx.com. I'd also like to remind everyone that a replay of this call will become available there shortly as well. With that, I'd like to turn the call over to Doug.

Thank you, Whitney, and thank you, everyone, for joining us this morning. I hope you and your families are safe and well. We are pleased to report our first quarterly results as a public company. I want to thank our new shareholders for their confidence in our company and our covering analysts for performing such thoughtful and thorough research. I'd also like to thank the amazing GoodRx team for all their hard work and especially throughout our recent IPO. As this is our first earnings call, I want to spend a few minutes emphasizing what drives us to build America's best consumer healthcare platform. I will then turn the call over to Trevor, who will address key highlights from the quarter and trends in our business. Then, Karsten will discuss our financial results and guidance. GoodRx helps Americans get the healthcare they need at a price they can afford. Trevor and I started GoodRx to provide affordable and accessible healthcare, information and guidance to demystify an incredibly complex industry and perhaps most importantly, to simply help people who have nowhere else to turn. For too many, healthcare in the U.S. is expensive, complicated, and confusing. Every year, Americans pay more out-of-pocket costs and face new insurance hurdles and restrictions. Too many families are uninsured or underinsured, forcing them to make painful sacrifices just to stay healthy. Lack of affordability in healthcare is a key reason why Americans don't get the care they need, which causes massive negative impacts across our entire nation. We believe GoodRx can solve these problems. We can provide a better way for people to understand, access, and afford quality healthcare. This is what drives us every day. We're on the heels of a presidential election where healthcare policy became the single most important issue facing our nation. Much of our economy remains on hold because of the COVID-19 pandemic, while our medical professionals work heroically to provide care. The world is relying on our healthcare industry to provide accessible vaccines and treatments to protect lives and the global economy. I am proud to be joined by a growing team of talented, passionate colleagues who are focused on providing assistance to Americans through this pandemic, unemployment, changes to insurance, and federal and state laws. We have come a long way in the decades since Trevor and I started GoodRx. I'm proud to report that we've reached a number of major milestones in the last few months. We reached $25 billion in cumulative consumer savings. We extended Hey Doctor, our telehealth service. to offer online medical professional visits for over 150 conditions in all 50 states at a price that is often less than a typical insurance copay. We introduced affordable home delivery for hundreds of prescriptions, and we launched GoodRx Helps, our philanthropic initiative, to provide free medications at more than 20 clinics across America. There's still so much that needs to be done to fix America's broken healthcare system. We believe that the pandemic has accelerated long-needed changes to the way Americans find and receive healthcare. Millions of Americans have embraced telemedicine home delivery. Millions more are turning to the Internet to learn about their care and their choices available to them. Across the healthcare ecosystem, long hidden information is flowing more freely and patients are being empowered to own their healthcare journey. Providers are learning that treatments and prescriptions don't work if patients can't afford them. The old model is broken and Americans are ready to embrace a new, better way to stay healthy. We intend to run toward this opportunity. We will continue to invest our strong cash flow in our platform, product, user experience, and brand with the goal of creating the best consumer experience and major improvements to healthcare affordability and access for all Americans. We are building much more than a company. We are building the leading consumer-focused digital healthcare platform in the United States. Our impact will ultimately be measured by the lives we positively impact and the care we provide. We have never been more motivated. And with that, I'll turn it over to Trevor.

Thank you, Doug. Consistent with our historical performance, we continued to deliver strong, profitable growth at a very fast pace. In the third quarter, we delivered record monthly active consumers in our prescription offering, record revenue and adjusted EBITDA, and strong growth in our subscriptions, manufacturer solutions, and telehealth offerings. Total revenue for the quarter grew 38% year-over-year to $140.5 million. Prescription transactions revenue grew 30% year over year to $124.4 million, driven by 29% year over year growth in our monthly active consumers. Other revenue grew 170% year over year to $16.1 million, reflecting strong growth in our subscription, manufacturer solutions, and telehealth offering. And we delivered adjusted EBITDA of $53.2 million, representing an adjusted EBITDA margin of 37.8%, and year-over-year growth of 23%. Consumer-facing markets are being rapidly transformed by technology, driving greater transparency and convenience, and creating a clearer connection between value and cost. The healthcare market is no exception. GoodRx is at the forefront, pioneering healthcare's transformation. Our approach has always been consumer-first, and we've created the trusted brand to guide individuals throughout their healthcare journey. We're only just beginning our efforts to become the first stop on any healthcare journey. Our expanding suite of offerings, deep brand-building investment, and differentiated content is accelerating consumers' understanding of how we help. We will continue to increase our engagement with healthcare providers, particularly around affordability, adherence, and access solutions. We aim to accelerate this trajectory, launching new services and optimizing existing products as we continue to grow our business and expand into new categories. We're focused on providing value to our consumers and are fortunate to have a platform that positively impacts both consumers' and key stakeholders in the healthcare ecosystem. We deliver value to consumers through our mobile-first offerings that make access to healthcare simple and more affordable. We help people fill prescriptions that they may otherwise not have filled. We provide telehealth visits that allow access when care may have been avoided due to cost, long wait times, or COVID concerns. We drive greater medication adherence, faster treatment, and better patient outcomes, all of which create a healthier, happier population. We deliver value to healthcare professionals by providing information and strategies for their patients' financial burdens of prescriptions or treatments. We improve patient outcomes by increasing medication adherence. We deliver value to pharmacy benefit managers, pharmacies, and pharmaceutical manufacturers by helping them reach more consumers who seek their services and products. We operate in a massive industry with a combined total addressable market of over $800 billion. The annual prescription market in the U.S. alone, including prescriptions left at the counter, is estimated to exceed $500 billion. The telehealth opportunity is estimated at $250 billion, and our manufacturer solutions business has a potential annual addressable market of over $30 billion. In the third quarter, our team continued to deliver value to our consumers and strengthen our relationships with stakeholders in the ecosystem, increasing our penetration in these large markets. During the quarter, we helped a record 4.9 million monthly active consumers save money on their prescriptions through our prescriptions offering, allowing consumers to save money on their medications by simply presenting GoodRx at one of the 70,000 pharmacies where GoodRx is accepted. We continue to have strong relationships with our pharmacy and PBM partners and have recently launched an additional PBM on our platform. We continue to focus on user experience to ensure we can provide consumers with prices, savings, and information through a simple, easy-to-use, and convenient digital interface. Our proprietary platform now aggregates over 200 billion prescription prices from a variety of different healthcare sources every day. With GoodRx, consumers can efficiently and conveniently search for their medication, choose from a list of prices of various pharmacies near them, and save money on their prescription medication. Our relationships with consumers and pharmacies continue to strengthen, and repeat activity exceeded 80%. The GoodRx network strengthens with every transaction. Our leading platform and trusted brand allows us to reach more consumers. This increased volume drives improved pricing and consumer savings, strengthening engagement and expanding unit economics. This allows us to continue to expand our platform and enhance our products, creating a hard-to-replicate virtuous cycle and a deep competitive moat. Our prescription offering continues to deliver solid growth with strong revenue and consistent unit economics. Every time a consumer uses GoodRx to save money, from the first prescription fill to subsequent refills, we earn a fee from our partners, creating alignment between the value we deliver to consumers and the lifetime value they generate for it. Our prescription offering has demonstrated resilience during this challenging time as the COVID-19 pandemic continues to impact the economy. We believe our prescription offering continues to be impacted by the pandemic as many consumers continue to cancel or defer non-urgent physician visits. However, we have seen a significant quarter-over-quarter increase in our prescriptions offering and in a number of our monthly active consumers as people have begun to resume typical healthcare purchases. The continued incredibly fast growth of our prescription offering demonstrates our value proposition and the large market in which we operate. As we already mentioned, we're working closely with our pharmacy partners on additional programs to drive value for both them and their consumers. One highlight is our flu vaccine program, where we're working with retailers to drive additional flu vaccine participation as well as consumer savings. We've grown our program from two pharmacies in 2019 to eight pharmacy chains this year. It will likely be a big year for flu vaccinations at pharmacies, and we're happy to help facilitate and look forward to expanding this program in the future. Our subscription offerings had a successful quarter as well. We closed a multi-year extension of our relationship as the exclusive prescription savings program for Kroger, the largest grocery chain in the U.S. The Kroger RX Savings Club, powered by GoodRx, offers access to lower prescription prices at Kroger pharmacies. To date, the program has provided hundreds of thousands of customers with exclusive access to discounts on commonly prescribed generic medications. We are very excited to continue this fruitful relationship with Kroger and plan to invest more in marketing and this product with this extension. We continued to enhance the user experience of GoodRx Gold, a GoodRx program where subscribers pay a monthly fee to access even lower prices at participating pharmacies. Gold offers over 1,000 prescription medications that are available for under $10, with savings of up to 90% off standard list prices. We've been focused on better integrating this program into our platform and optimizing acquisition and conversion, which resulted in accelerating new subscriber momentum. As the pandemic has made it more challenging for Americans to visit retail pharmacies, we launched prescription mail-order services for Gold, enabling Americans to receive medications by mail in just days. Today, we offer more than 300 common medications by mail for less than $10, which improves access, saves patients money, and offers needed convenience when leaving home is not an option. We also added mail-order services to Hey Doctor, our low-cost online telehealth service. In addition, Hey Doctor expanded to provide care for Americans in all 50 states and grew the number of conditions we treat. The combination of convenient online provider visits and our new mail-order service gives Americans access to medical professionals and medications all through an integrated online experience at a time when they need it most. Finally, we increased our focus on providing assistance to reduce the cost of brand prescriptions for Americans. We launched more than 30 integrated programs with manufacturers as we continued to grow our manufacturer solutions offering. We also launched care portals for several brands. This new functionality provides additional ways to help patients find both savings and resources to help manage their conditions. Overall, we are very pleased with our results for the third quarter, the growth of our offerings, and the continued progress we're making with our various products and services. We see exciting growth potential as we continue to attract new consumers through our existing offerings and launch new services to improve healthcare affordability and access for all Americans. As we extend our platform, we are helping more people at different stages of the consumer healthcare journey, delivering more value to our consumers, and generating higher consumer lifetime value. And with that, I'll turn it over to Karsten.

Thank you, Trevor. Good morning to everyone, and thank you for joining us today. Our third quarter results highlight the unique combination of scale, growth, and profitability our business provides, strong unit economics, the large markets in which we operate, and our ability to execute and generate strong cash flow. Total revenue for the quarter was $140.5 million, growing 38% year over year, driven by continued growth in our prescriptions offering as well as our newer offerings. Prescription transactions revenue grew 30% year over year to $124.4 million, driven by a 29% year over year increase in our monthly active consumers. As a reminder, monthly active consumers represent the number of unique consumers who use GoodRx to save on their prescription in a given month, and it does not include consumers of our other offerings. When presented for a quarter, monthly active consumers represent the average of the calendar months in the quarter. Other revenue grew 170% year-over-year to $16.1 million with strong growth in all of our other offerings, subscriptions, manufacturer solutions, and telehealth. This reflects our ability to deliver value to consumers at various points in their healthcare journey as well as our ability to create multiple entry points into our growing platform. Cost of revenue is $7.5 million or 5.4% of revenue compared to $3.4 million and 3.3% of revenue in 3Q19. This increase was driven by provider costs related to our telehealth offerings driven by an increase in the number of online provider visits and an increase in outsourced and in-house personnel-related consumer support expense to support our growth. We continue to deliver strong gross margins at the mid-90s levels. Product development and technology expenses were $15.8 million compared to $7.8 million in the comparable period last year. This increase was primarily due to continued investment in the team and product, as well as an increase in stock-based compensation, including awards made in connection with our IPL. Excluding stock-based compensation and various items related to acquisitions, adjusted product development and technology expense was 8.9% of revenue compared to 7.1% of revenue in 3Q19. As Doug said, we plan to continue to invest in our products and platform with the goal of creating the best consumer experience, continuing to scale our existing offerings, and developing new offerings to help more consumers in different stages of their healthcare journey, delivering more value to them and increasing the lifetime value we generate. Sales and marketing expenses were $65.1 million compared to $45.0 million in 3Q19. We increased advertising spend by $13.3 million year over year and continued to build a strong team, including hiring our first chief brand officer, all with the goal of increasing our consumer base and building the GoodRx brand, which we believe will yield positive returns for us long term. Adjusted sales and marketing expense as a percent of revenue was stable year over year, making up 43.3% of our revenue in 3Q20 compared to 43.9% last year. After reducing advertising spend in certain channels in the second quarter of 2020 due to the impact of COVID-19, as many consumers avoided visiting healthcare professionals and pharmacies in person, We increased our advertising spend in the third quarter as more consumers resumed their interaction with the healthcare system. We will continue to evaluate the impact of COVID-19 on our business and actively manage our consumer acquisition spending according to market conditions. General and administrative expenses were $108.5 million compared to $4.1 million in the third quarter of 2019. The majority of this increase, $98.1 million, was due to stock-based compensation related to the co-CEO awards made in connection with the IPO, which I'll provide more detail on shortly in the context of guidance. Excluding stock-based compensation and other items, adjusted G&A as a percent of revenue is 4.6% compared to 3.2% in 3Q19, with the incremental cost primarily related to our IPO and associated with starting to operate as a public company at the end of September. We incurred a net loss of $50.0 million in the third quarter. Again, this was due primarily to stock-based compensation of $106.8 million in the quarter, $98.1 million of which related to the co-CEO grants made at the time of the IPO. Adjusted net income was $35.6 million compared to $23.2 million in 3Q19. Adjusted EBITDA grew 23% year-over-year to $53.2 million. Adjusted EBITDA margin continued to be strong at 37.8%, reflecting our ability to deliver profitable growth due to compelling unit economics of our business and repeat activity on our platform. Our adjusted EBITDA margin decreased approximately 460 basis points year over year due to the growth of our telehealth business and continued investments in product development and technology, as well as in our general and administrative infrastructure, all of which I've discussed. On a quarter-over-quarter basis, our adjusted EBITDA margin decreased 220 basis points, primarily due to an increase in advertising spend, which we pulled back in the second quarter due to COVID, as I previously mentioned. We continue to generate strong cash flow with net cash from operating activities of $32.7 million for the quarter. On the capital investment front, our main investments related to the non-recurring, one-time build of our new headquarters in Santa Monica, with approximately $13 million spent to date, net of tenant improvement reimbursements, and additional investments in our platform and product. We expect to substantially complete construction of our new headquarters by the end of this year. We ended the quarter with $1.1 billion of cash and cash equivalents after netting approximately $1 billion from our IPO and private placement in September. I'll now turn to guidance. As we begin our journey as a public company, we want to ensure that we provide clarity and transparency to our shareholders while maintaining our long-term focus as well as our ability to make the right investments to maximize value for our consumers, the company, and our shareholders. To balance these priorities, we'll be providing guidance on total revenue and adjusted EBITDA margin. We are committed to being transparent about both our performance as well as our investments in the years to come so shareholders are informed and understand our operating decisions. For the fourth quarter, we expect revenue of approximately $148 million, reflecting 31% year-over-year growth. This would translate to full-year total revenue of approximately $545 million, representing year-over-year growth of 40%. While we won't be providing guidance for monthly active consumers regularly, we did want to provide our short-term expectations on this call since our business is still impacted by COVID-19 and because this is such an important driver of our prescription offering. For that reason, we expect our quarter-over-quarter growth of monthly active consumers to be approximately between 4% and 5% for the fourth quarter. Remember that consumers of our other Non-prescription transactions offerings, like for example our high growth subscriptions offering, which delivers two times the contribution, do not contribute to our monthly active consumer figure. Final note on revenue. While we won't be providing guidance for each revenue line item, but just for total revenue, we expect the other revenue line to continue to gradually make up a higher percentage of our revenue. Looking at stock-based compensation, we expect stock-based compensation related to the co-CEO grants we made in connection with the IPO to be approximately $275 million in the fourth quarter compared to $98 million in the third quarter. This will bring total expense recognized for this grant to $273 million out of the total expense of $533 million. The performance-based portion of this grant will be fully recognized by the end of the year as the price target criteria for vesting have been met. The remaining $160 million is time-based and will be recognized over the following 15 quarters on a graded vesting basis, with the expense moderately front-loaded. We plan to provide quarterly updates related to the grant until they're fully expensed or become material. Turning to adjusted EBITDA margin, we expect it to be between 30% and 31% for the fourth quarter, translating to a full-year adjusted EBITDA margin of approximately 36.5%. We plan to make significant marketing investments in the fourth quarter to continue to grow our brand. This, coupled with a shift in the timing of certain marketing investments from the third quarter, is a primary driver of the lower adjusted EBITDA margin in the fourth quarter compared to our year-to-date margin. As Doug said, we are building the leading consumer-focused digital healthcare platform in the country. and plan to invest our strong cash flows in our platform, product, user experience, and our brand with the goal of creating the best consumer experience and improved healthcare affordability and access for all Americans. This is a scale platform with a rare combination of high growth and profitability. We benefit from a strong brand, first mover advantage, and a decade of experience and relationships that benefit all key stakeholders in our ecosystem. and we believe we've only just begun to scratch the surface of a massive market opportunity. We're pleased with our third quarter results, and we're excited about our future. Thank you for joining us on our mission to help Americans get the health care they need at a price they can afford. We look forward to sharing our progress in the quarters to come. And with that, I'll now turn the call over to the operator for questions.

Thank you. Ladies and gentlemen, to ask a question, you will need to press star 1 on your telephone. We ask that you please limit yourself to one question and one follow-up question. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Ricky Goldwasser with Morgan Stanley. Please go ahead.

Hi, good morning and congratulations on your first quarter of the public company. When we look at the performance, I mean, clearly monthly active consumers is now above pre-pandemic levels, and you're seeing momentum in subscriptions growth. It's picking up. But to your point, as we think about the metric, subscribers are not included in the member, in your metrics. in your ability to negotiate and scale. So can you maybe help quantify for us the subscription growth? What would the gross monthly active consumer metrics look like if we normalize for the ads and the subscription side?

Good morning, Ricky. Thank you very much for the question. Let me have Karsten speak to this question.

Hey, Ricky. Great to speak with you again. Ricky, we're very excited about our subscription plans because they're a natural extension of our successful prescriptions offerings and they allow us to deliver more savings and value to our consumers while increasing the LTV as evidenced by their 2x year one contribution. And they allow us to create a really tight relationship with the consumers throughout their healthcare journey. We're not disclosing specific subscriber counts or mixed by plan, meaning Gold versus Kroger on an ongoing basis. But I can share that Gold plans continue to show high positive growth and great momentum. We've integrated the Gold experience onto our platform and added additional features like mail order as well. Mail order is added during the third quarter specifically. We also agreed to a multi-year renewal with Kroger, which means we'll make more marketing and product investments going forward. We're really excited about those offerings. The subscription side went, but again, aren't disposing specific numbers on them.

Understood. So when we think about this new mail order offering and we think about the opportunity within your user base, can you maybe give us some data around what percent of users feel chronic medication that over time could convert to mail solutions?

Sure. And thank you again for that question also. Carson, is there, you know, do you want to answer that in regards to the mail exchange specifically?

I think the more general question, first of all, is chronic versus acute.

Yeah.

And I think in general, like the industry, we skew towards chronic as you'd expect. With respect to the intersection of chronic and mail order more broadly, I think that as evidenced by some of the analyst reports that have even come out over the last few days, mail order continues to not be the dominant mode for users to get subscriptions. And I think Trevor will likely want to address mail order in a little more detail.

Yeah, what I would say on mail is, you know, in the U.S., you know, mail order penetration is pretty low. The, you know, COVID, I think, is more of an accelerator, you know, you would imagine would be more of an accelerator for that than almost anything else. And yet, you know, you look at this year and it hasn't changed mail penetration much. For us at GoodRx and what we're trying to provide to, you know, you know, to consumers, you know, we just want to meet consumers where they are. You know, we want to provide consumers, you know, what they're looking for. And so, you know, we want to work with our partners, you know, like the retail pharmacies and mail, you know, and those retail pharmacies by mail and other partners so that, you know, where consumers want to use mail and where it's the appropriate solution, they're able to get it.

Thank you. Our next question will come from Heath Terry with Goldman Sachs. Please go ahead.

Great. Thank you. I was wondering if you could give us a little bit of a sense around the progress with Haydock as well as the marketplace itself. I realize things are still very early stage, but if you could – maybe disaggregate for us a little bit the growth that you're seeing in the two parts of your telemedicine platform. That would be really helpful. And then as we look at this quarter and beyond, especially as we see cases rising, how much of a factor do you continue to see sort of delayed medical visits or delayed procedures being taken and having on overall prescription and particularly the generic prescriptions that are such a big part of your business having an impact on that in this most recent quarter as well as the quarter that we're in now.

Thank you very much for the question. I'll be glad to answer sort of about the telehealth, about the marketplace, and then about COVID impact. When we look at telehealth, this is continuing to be a great area of growth. We're seeing positive momentum with Hey Doctor on a month-over-month basis, on a quarter-over-quarter basis. We've really done a lot of expansion. We've increased the number of conditions treated to 25, and we've expanded the offering to all 50 states. And then, as we mentioned, You know, we've added mail order options, and we've also increased the cross-sell numbers from telehealth to our prescription offerings. You know, when we look at telehealth, we are, you know, we see it both as an additional way for us to acquire customers into the broad set of services we offer, as well as being sort of part of this additional expansion of our mission to provide affordable, convenient healthcare across all of healthcare. You know, we continue to make product investments in telehealth, make this like a great user experience for consumers. You know, we want to enable Americans to have access to affordable doctor visits, to get prescribed medication, and to have that all be complete integrated experience. You know, and, you know, it allows us really to be with the consumer at sort of a broad set of points in their healthcare journey. To the marketplace, you know, we launched the marketplace in late March for providers, and we added labs in April. This was something that had been on our product roadmap, but then because of COVID, you know, we accelerated this development of it. We wanted to make sure consumers had options when it came to getting the care they need. In the third quarter, we continued to add additional partners and grow our marketplace. You know, although this is still, you know, in an early stage, this is part of our broad effort to access and get, you know, a take rate on a broader set of health care. like we do around the prescriptions area. So this marketplace gives the GoodArts consumers a much broader provider choice and conditions than covered by HeyDoctor, and it addresses areas not addressed by HeyDoctor. So we plan to keep adding services there, adding providers to our marketplace, and introducing some new ways to monetize that large consumer base, like sponsored listings and other partnerships. It's also, again, like Tel-Alt, just another entry point into the broader set of, you know, our offerings. So I'd like to also speak about the impact of COVID a bit more generally. Like we said, you know, what we have seen is consumers, you know, have certainly, you know, COVID certainly caused consumers to not visit doctors and pharmacies as much as normal. You know, the pharmacy space, I believe, has impacted less than almost any other industry. And our 80%, you know, and so I'd say that factor as well as our 80% plus repeat activity rate has made us continue growing at a really good, really, you know, really good rate even during COVID. You know, and COVID has accelerated a number of trends sort of that we predicted and sort of fit into this roadmap we've had around sort of where the – you know, where the industry and where sort of consumers getting healthcare is going. You know, but I would say as the impact of COVID hopefully decreases at some point in the future, you know, there is upside there, you know, but we are not making sort of real assumptions, any real assumptions here that that happens anytime soon. We're assuming sort of status quo. But, you know, hopefully for the country it's better than that. Great. Thank you very much. Thank you.

Thank you. Our next question will come from Doug Anmuth with JP Morgan. Please go ahead.

Great. Thanks for taking the questions. You're two years into your Kroger partnership, and you talked about recently extending the contract for multiple years. Could you just talk about the potential to work with other large retail pharmacies on a subscription basis? And then just on sales and marketing, we know it ramped pretty aggressively in 2019 and then in early 2020, and then kind of slowing some with COVID-19. Just curious how you're thinking about that going forward. I know it's early, obviously, to talk about next year, but assuming that we're in a somewhat better place, just how you're thinking about that.

Thanks. Great. Thank you, Doug, very much for the question. For your first question, we've really enjoyed working with Kroger. That, I believe, has been a very successful program for both us and them. And, you know, we are excited for it to continue growing, excited for, you know, our continued and expanded partnership there. We want to work with all of our, you know, the retail pharmacies on different programs to help them. You know, so one that I would want to highlight is our flu vaccine program. you know, so in the flu vaccine program, this is where we are going, um, working with pharmacies to help expand availability and help consumers get good, you know, uh, access, you know, access to, to, to good pricing on flu vaccination. You know, that's a program we've expanded from two pharmacies in 2019 to eight pharmacies, uh, this year. And, you know, just to meet this, uh, increased demand for flu vaccines in the current environment. And what I'd say is that's an example of where we want to find the right programs for each of our partners to help drive what's important for them, you know, and, you know, highlight what's really special and good about each of these partners to consumers. So we want to meet, you know, work to find the right programs for each partner. On the sales and marketing spend, and how we forecast that in this, you know, maybe in this year and in the future years. What I would say there is, you know, I'd first maybe highlight where we are currently on sales marketing, which is, you know, this has been a sort of complex year for marketing spend. You know, like the media environment has changed significantly in this period. And I want to sort of compliment our marketing team that we've been able to spend into this period and do with great performance even in an environment where a lot of things are changing. So as we look though at Q4, we plan to make significant marketing investments in the fourth quarter and beyond to continue to grow our brand. And, you know, we also anticipate there's some seasonal customer acquisition opportunities that often occur at startup plan years. So we will continue, you know, continue spending, continue making investing in marketing, you know, Q4 and beyond. And, you know, I'd say, you know, just maybe lastly, you know, we really plan to continue to build our brand, increase awareness, enhance our offerings You know, we have been able to drive this really strong long-term profitable growth, and we are very focused on, you know, driving that long-term growth, increasing our penetration in these sort of multi-hundred-billion-dollar markets of prescription, telehealth, manufacturing solutions. You know, we're scratching the surface of the opportunities. So, you know, we're definitely leaning into all these opportunities. You know, and, sorry, lastly, the – You know, on that marketing spend, the other thing I guess I'd highlight is, you know, even in that challenging environment, even increased spend, you know, we've been able to keep marketing sort of our acquisition costs below an eight-month payback, you know, even at increasing spend levels. So thank you for the question. Thank you.

Thank you. Our next question will come from Ross Sandler with Workways. Please go ahead.

Hey, guys. Congrats on the first quarter out of the gate. I guess a question on the total addressable market. So we heard a lot of questions around this since the IPO process kicked off. And, you know, just wanted to kind of hear your guys' take on TAM. You know, at the high end, you've got $5 billion U.S. generic scripts flowing through retail pharmacies. At the low end, you've got $300 million or so cash pay annual scripts. So that's a pretty wide range. How do you guys think about the TAM for your core scripts business? Thanks.

Yeah. Thank you, Ross, for the question. Appreciate it. You know, when we look at our users, you know, most of our users have insurance. So 75% plus of our user base today has some normal insurance. And a significant portion of those are on Medicare, which is often the best insurance someone's going to get. So generally what I'd say is that we don't actually think cash pay is sort of a relative segment. That when we look at... broadly these are and this is all Americans that we're serving. You know, I think when we've even looked at the market, you know, just since we began, you know, I think looking back, you know, health plans have only become more complex, you know. We only now have more, you know, three-tier plans, four-tier plans, you know, And the reality is you have quantity limits, narrow networks, utilization management, you know, like prior authorizations, all of which makes access to prescriptions challenging for people. And so within prescriptions, you know, there is a large opportunity. And, you know, that $5 billion, you know, 5 billion scripts is much more the set of services we can offer. I mean, you look at some of the some of this also of where we're helping, you know, and it's really the broad set of descriptions where we can help. In addition, you know, we are very focused on the broader healthcare market. You know, how do we help Americans get access to convenient, affordable healthcare broadly, you know, which is really the need that Americans have. And so I, yeah, I hope that answers the question and

Thank you. Our next question will come from Justin Post with Bank of America. Please go ahead.

Great. Thank you. I just wanted to ask, as we just come off of an election and people are kind of learning the company, what health care policies are you focused on on a federal level, and would you foresee any changes under a Biden administration we should be thinking about? Thank you.

Thank you, Justin.

Doug, could you speak to this? Sure, I'd be happy to. You know, one of the nice things about GoodRx in the history we've had is we've been here for about a decade, and I can recall back in 2010 when we first got started, it was prior to the ACA, Obamacare, and at the time there was a lot of feedback that there would be significant changes that would make health care so much more easy for Americans to access. And obviously our company has existed long through Obamacare, and to be honest, what we've seen consistently over the course of the last decade is Despite whatever administration, whatever sort of executive order is floating around at the moment, the reality is that the burden on Americans just continues to increase. There have been so many policies and so many attempts, and yet I feel like it's often lost in the shuffle. There are just so many gaps in healthcare policies and what has been done to date. We're very focused ultimately on just helping the consumer and really driving solutions for them. Any politicians who engage with us is fantastic and helps consumers, but we're going to be there no matter what to fill in those gaps and make sure that consumers get the care they need at a price they can afford.

I'll just add that with a new administration, we don't anticipate any legislative concerns for business. We're really fundamentally aligned with the political objectives of driving affordability and access to health care for Americans. And so we don't foresee any issue.

Got it. Maybe one follow-up, you know, because vaccine is so important next year, but how would you expect, you know, people being outdoors more and just normalization of activity in stores and pharmacies, how would that affect your business next year? How would you think about that?

Yeah. Um, the, uh, when we look at this, I mean, this is sort of the, what I, what I spoke to previously on the consumer, um, you know, on the impact of COVID the, there is an impact to consumers, you know, current, you know, both earlier this year, as well as now on going to their physicians, getting prescriptions. You know, at the very beginning of COVID, you know, we saw people really not going to their physicians. Now people are going to physicians, but they're not going to physicians for sort of non-urgent care. And that does have an impact. You know, obviously, we're still growing at a very fast rate, even through that. That said, it is good. You know, there is upside if that, you know, if that, amount of going outdoors, you know, if people are going outdoors, if any of these things have positive effects, you know, this is all better for just the economy in general, our business. But, you know, we've kind of modeled in some, you know, I feel like Carson can speak to this, but, you know, there is a – Carson, maybe do you want to speak to the current thoughts of what's there? Sure.

Yeah, I appreciate the question. So as we contemplate it from a modeling perspective more broadly, we model in a gradual recovery. We've seen some of that happen already, some from 2Q into 3Q and benefited from that. So if there is a significant lockdown, that could impact us. But we also haven't at present assumed that the V-shape incredibly steep recovery is likely, if that's helpful. Great. Thank you.

Thank you. Our next question will come from Nick Jones with Citigroup. Please go ahead.

Great. Thanks for taking the questions. Can you touch on the manufacturer solutions? You mentioned 30-plus new partnerships. Can you talk about, I guess, how they view the GetRx channel as an advertising channel and then maybe talk about the rate of consumers searching for branded drugs that are maybe looking for generics and just don't know it or actually looking to try to get a discount on a branded drug? Thank you.

Thank you very much, Nick, for the question. We continue to increase our focus on providing assistance to reduce the cost of brand prescriptions for Americans. We want to serve consumers as they try to save across all of healthcare, which includes prescriptions, which includes all of the different types of prescriptions that a consumer can get. In Q3, we really continued to build out that team, focused on that area, and as we spoke to and you mentioned, we rolled out more than 30 integrated programs with approximately 20 manufacturers, and we've also launched several of these new care portals for some additional and a new piece of functionality, which has driven this sort of really strong year-over-year revenue growth, along with helping consumers, this is also one of our highest margin offerings. These are really high intent consumers who are already searching for brand drugs on our platform. About 20% of our 15 million plus monthly visitors are looking for savings on brand drugs. And that's really... not changed as sort of a portion of the user base looking for brands versus generics. You know, it really has just scaled relative to that overall growth. You know, and we're able to help consumers save on these brand medications. And, you know, to what you're asking on how they perceive it, you know, we're delivering a lot of value to these pharmaceutical manufacturers by helping them reach these sort of purchase-ready consumers at the right time. And this – what's also good about, I think, this line of business is – you know, there's no incremental cost of acquisition to us. You know, these are searches on our platform that are already there. These are, you know, these are users who are just trying to use GoToX to help them find affordable, convenient healthcare. And these are, you know, now we're able to sort of just make that user experience better for them and, you know, also enable, you know, enable the growth of this area. You know, we do have a lot of additional resources inventory, I guess, you know, and call it left across our platform to sell. So, you know, a lot of, you know, huge room for expansion here. And while we're not breaking out this, you know, the other revenue interest components, the year-over-year growth was in line with what we provided originally. And, you know, we expect this area to keep being a great area moving forward. Great. Thank you. Thank you very much.

Thank you. Our next question will come from Jalendra Singh with Credit Suisse. Please go ahead.

Thanks, and good morning, everyone. Congrats on your first quarter as a public company. My first question, regarding the sequential increase of around 477,000 monthly active consumers you saw in the quarter compared with decline in second quarter of around 455,000, Can you talk about how many of these monthly active consumers you gained sequentially in third quarter were part of that cohort which you lost in 2Q versus how many are completely new users? Any color around that?

Thank you. Thank you very much for the question. Karsten, would you like to speak to this?

Sure thing. And thanks for the question, Jalinder. Great to talk to you again. We're happy with the increase in MACs, or monthly active consumers, which hit an all-time high of $4.9 billion in 3Q20, and with the overall growth of our offering. MACs increased in the third quarter as activity in the prescription market primarily improved as consumers started to go back to their doctors. And on a year-over-year basis, MACs grew significantly up about 29%. And of course, that's a comparison to a non-COVID quarter. I think your question is more specifically related to Q over Q growth, where we saw MAC growth grow 11%. We generally haven't gotten specifically into retention slash attrition, but as you can imagine, given the reopening of the economy, we believe that a significant number of our users with the reopening with reopening our new users, but we're confident as well that a certain number of them may have been folks who delayed or otherwise elected not to see either their healthcare providers or go to pharmacies during the height of the COVID period in 2Q. Trust that's helpful, and yeah, appreciate the question.

Yeah, and then a quick follow-up. I know you guys just announced this partnership with Know Your Meds. Can you talk about how that integration will work, how many consumers that integration provides you with, and what is reflected in your guidance with respect to that partnership with Know Your Meds?

Sure. You know, this is just one of many partnerships we have in the ecosystem. You know, we have a goal of reaching more consumers, you know, at a time, at just any time where they're sort of accessing different healthcare solutions to help them save on prescriptions, medications. So, you know, we really just look at across opportunities. We really look where can we increase our reach through scaling existing marketing channels, creating new marketing channels, partnering with affiliates in the ecosystem. You know, and so we are broadly looking around at opportunities of that nature and, you know, hope each of them provide some incremental value. almost more importantly, provide just, you know, a really good consumer experience to people where they're able to, you know, really access the information they need when they need it, you know, across the healthcare journey. All right. Thanks.

Thank you. Our next question will come from Mark Mahaney with RBC. Please go ahead.

Thanks. I want to ask about manufacturer solutions. You talked about launching 30-plus new partnerships. Any more color on those? How many total partnerships do you have now? Is there something in the process that's allowed you to launch these new partnerships more quickly than they were in the past? Is there a reason to think that these new partnerships could be more material than the ones you've had to date? Thanks a lot.

Thank you, Mark, very much for the question. We see general growth in this area. We're in a situation where – on the manufacturer's solutions where we're not just getting the benefit of the growth of our overall platform. There's a huge amount of growth here just because this is an area where we have a huge number of users. 20% of our 15 million plus monthly visitors are coming to look for savings on these brand drugs, and we've not really monetized at all. this much in the past. I mean, we only monetize like a really small portion. So we're really also just sort of getting now monetizing across those existing set of people. So we've been adding these 30. A large reason for that is just us building a strong team there. We've really built an experienced team. We've grown that team. We have been rolling out additional premium customized solutions, but mostly this is just about focus. You know, we hired Bansi Nagji from Kessin, who was their Chief Business Development, Chief Strategy Officer. We invested in more technology here. We have premium solutions like Patient Navigator. So, you know, we anticipate this, you know, continuing to grow quickly in the future, just like it has in this past year, past quarter. Okay. Thank you. Thank you very much.

Thank you. Our next question will come from Eric Sheridan with UBS. Please go ahead.

Thanks for taking the question. Maybe if I could just zoom out for a minute. You know, obviously we're seeing a little bit of margin pressure over the shorter term as you deploy some of the investments you've talked about in the past to position the business the long term. Could you just refresh investors on what you see as some of the key investments you have to make over the next couple quarters against your broader long-term goals and how people should think about the tradeoff between growth and margin volatility in the coming quarters. Thanks so much, guys.

Thank you very much, Eric. Yeah, let me have Carsten speak to this question.

Sure. Always good to talk to you. We plan to make significant marketing investments in the fourth quarter and also beyond, of course, to continue to grow our brand and in anticipation of the seasonal consumer acquisition opportunities that occur at the start of plan years. The When we think of that in terms of increased investment, the marketing is just one component though. We're also making increased investments in product and technology supported by our detailed product roadmap at the same time. And those are really the key drivers of lower adjusted EBITDA margin for the fourth quarter compared to our 2020 year-to-date margin or to our 3Q20 margin specifically. I think you also need to keep in mind that the fourth quarter will be our first full quarter operating as a public company. And there are, of course, new costs associated with that, like an increase in D&O, auditor fees, various other things that have an impact on margin. We expect to continue making these product and marketing investments and, of course, having public company expenses going forward into next year, too. With respect to all of that, the reason we're doing it, of course, is we have a huge TAM. I think a question came up earlier related to TAM, and we talked about the fact that we feel like we continue to be massively underpenetrated in it with a lot of room for expansion. So in terms of your growth versus spend tradeoff, we believe that we're going to continue to make efforts to penetrate more deeply into that TAM, and as a relative market share leader, it's in our interest to make sure that we can grab as much of it as we can. Okay.

And what I want to add there is, oh, sorry, but I'll just add, we're just scratching the surface. We are super focused on capturing this larger opportunity of being the digital health platform for all of healthcare, and we are going to deliver on this product vision that we have to provide that. So we're really focused on building great product and building brands. Thank you very much.

Thank you. Our next question will come from Charles Rye with Cowan. Please go ahead.

Hey, thanks for taking the question, guys, and congrats on your first quarter here. I wanted to ask about the monthly active consumers and if there's any kind of color you can kind of give about – you mentioned earlier that your Golden Kroger members are double the contribution to your revenues – than the typical prescriptions customers. But even within that group, you know, is there a cohort? Like what's sort of the average number of scripts someone's filling, you know, either in a month or in a quarter? And does that skew to, you know, is there a subset or kind of heavy users versus, you know, people who kind of occasionally use it?

Thank you. Thank you very much for the question. You know, let me actually pass this to Carson, so you can speak to it specifically.

Sure, and thanks, Charles. I think there are a couple things. Like any business, we have different users with different rates of utilization. But again, going back to the concept we discussed earlier, as with most businesses in the space, we benefit from a reality of having, number one, a significant number of chronic medications that our users are buying, a majority, in fact, Number two, an over 80% repeat transaction rate. So those things are critical and are what allows us to drive the unit economics we've discussed earlier, like the, for example, eight-month payback on marketing spend. With respect to subscriptions specifically, we look to subscriptions to be a way of continuing to push incremental value for users. The subscriptions offering, while it has a monthly fee associated, offers even lower drug prices. And despite that, we've still, as you mentioned, been able to generate a 2x LTV in the first year off that subscriptions business. So hopefully that's relatively helpful in terms of giving you perspective on how our user base and its usage applies in our case.

Yeah, that was helpful. And you said there's obviously the eight-month payback on marketing spend. I guess when you think about marketing, then are you targeting within the active consumers that spend directly to get people who are more likely users to use more, or are you really kind of focused on trying to attract always – obviously you want to always attract new users, but is there sort of a division within how you kind of look at marketing?

Yes, you know, I'd say we do, you know, we have a pretty sophisticated, I believe, marketing operation. You know, there's certain types of marketing that are really general in nature. You know, so if we're running television, for example, you know, that's generally going to get us sort of just the wide set of all these sort of healthcare users and prescription users. Whereas on the digital, we may be able to focus, as you said, on people and on particular products that are even more chronic in nature. So we do spend more or less on digital campaigns relative to the type of prescription user we think they are. But we try to just optimize that as best we can. But a lot of the marketing we do is more general in nature and isn't sort of too targeted in that fashion.

Great. Thank you.

Thank you very much.

Thank you. Our next question will come from Lloyd Wamsley with Deutsche Bank. Please go ahead.

Thanks. I've got a couple. First, can you talk about any changes you're seeing in the competitive environment, any competitors stepping up advertising or any impact from new pharmacy discount cards that you're seeing? And then secondly, can you just talk about some of the other potential areas of healthcare you see yourself potentially adding product around for price transparency over, like, the next five-year period, leveraging the existing user base. Anything you can share there would be great. Thanks.

Thank you. Thank you very much, Lloyd. You know, on the competitive side, you know, we really spent a decade, you know, building this brand that's trusted, consumer first. We have a 90 MPS score. We have this platform that's scalable, sensible, steep network relationships, integration. You know, everything we've done, you know, has just built a deeper competitive moat for us, you know. And what we've seen is, you know, we have not seen sort of any competitors that have really impacted our business in any way sort of historically or currently. You know, there are cases where we're seeing sort of some increased increase advertising, but we don't from people in this space. But I feel like that's what we've sort of seen the last decade of, you know, people, you know, putting some type of solutions, but us really being able to capture the vast majority of gains in this space, you know, just due to the scale, the data, pricing power, just the products. And a lot of this also lets us you know, business now build these better and new products. You know, we're able to build new products that make the consumer experience better, you know, and offer more and more tools to consumers to go navigate their healthcare, navigate affordability, as well as lets us make more money from each of those users. You know, so this really does create this virtuous cycle that has made us sort of the far leader in healthcare in helping consumers save money on their health care, and that's what we continue to see in looking forward. Relative to health care in general, as I mentioned, the TELS marketplace has been, and this marketplace that's now expanded into labs and other areas is sort of the beginning of where we have expanded in these areas. We see a large set across healthcare or services where consumers are struggling to afford them. And so we aim to provide help across the broad set of these. So we'll be rolling out more and more products to address these needs sort of in a much sooner timeframe than the five-year period. All right. Thank you, guys.

Thank you very much.

Thank you. Our next question will come from Lee Horowitz with Evercore ISI.

Great. Thanks for the question. Maybe one more on mail order, given a number of announcements from both partners and competitors recently. Ultimately, how important do you think that short e-commerce-like delivery windows are to seeing greater adoption of mail order delivery? And do you believe that these shorter delivery windows can potentially be done profitably?

Thank you very much. Yeah, as I sort of spoke to on mail order, mail order still is really a small portion of prescriptions. And I think you really can't think of something that would accelerate adoption more than COVID, causing people to often not want to go places or not be able to go places. And yet you look at the end of the year and it looks like that male adoption as a percentage of U.S. prescriptions has not really changed much. I think the faster delivery is a factor, but I actually would say I don't think it's the critical factor. I think it's one factor out of many. than make it so that in a lot of situations it's just not the preferred solution for consumers. I think there are other issues such as just general onboarding, general sort of experience of getting those prescriptions. There was an analyst yesterday just trying low consumer interest in general. And so I think it's a variety of factors that will be required to make that work. But for us, we want to meet consumers where they are. You know, where consumers have, you know, want mail, we want them to be able to get mail, whether that's, you know, from a retail pharmacy providing that as mail or other partners. You know, we want to meet consumers where they are, provide them the services they want, and our business works well in all these different environments.

Great. Thanks. And one follow-up, if I could, Carson. Circling back on the vaccine a bit, can you expand a bit on how you're thinking about modeling the COVID recovery? You talked about not a feed-like recovery, but specifically, with the vaccine now generally expected in the second quarter of next year, can you comment at all on whether this vaccine timeline was consistent with your prior view, or if your expectations around the pace of recovery and the proliferation of the vaccine have changed at all given the news earlier this week? Any color there would be helpful. Thanks so much.

Surely, I think first of all, with respect to fourth quarter, it doesn't really change anything, obviously. And in the longer term, I think we'd expected a gradual recovery, where the economy would be fully open into next year, regardless. So I think the vaccine more than anything else reaffirms that that reality will manifest itself versus being a significant shift to our expectations, our expectations generally. So again, I think for 4Q, I think the vaccine doesn't impact and I think our views on guidance continue to be entirely like we discussed. And I think in general, looking forward into the coming year, we're excited to see the economy potentially reopening further but we also modeled in a reopening, generally speaking. So, I don't expect it to have a dramatic impact beyond what we're thinking about.

That said, we certainly have not assumed that, you know, there's a couple factors when we look at the impact of COVID. You know, one is sort of access to healthcare in general, which has been pretty good, you know, that there's been access to pharmacies sort of broadly throughout this period. Second is access to healthcare providers, which was really constrained and now is also quite good. The thing that's kind of we've sort of assumed and have kind of continued to assume takes well is just like people just feeling comfortable going to get healthcare, you know, so the people going to get, you know, those non-urgent things, people having their annual physical and finding out they have low blood pressure, you know, high blood pressure and going to get the medication for it. So those sort of a lot of new starts related to that, you know, those just take, we just think that takes a while for that to come back. You know, Hopefully, it is possible that a vaccine or the effects of a vaccine cause that to really happen sooner than we imagine. And that sort of activity in general goes back in a sort of more meaningful way to normal in next year. But even the vaccine news is amazing. But we certainly feel like we don't know enough of when that happens, what happens, when things are distributed to make any real assumptions. The one other thing I'd say is just about vaccines in general. I think this is a great opportunity for pharmacies. As I spoke to you about the flu vaccine program where we've gone from two partners you know, last year to aid partners this year. You know, we really want to help the pharmacies drive additional volume into that. We want to help the public health side of this to help people get these vaccinations, you know, and help consumers to get these to help their quality of life. You know, and there's probably a similar opportunity, you know, at some point here around, you know, around the COVID vaccines. where, you know, hopefully, you know, depending on the type of vaccine, the pharmacies can be a really important distribution partner for those. And then we want to make sure consumers are able to get those, get access to them, and, you know, get people into pharmacies to get them, you know, to help people through that period. And then hopefully recovery does happen faster than any of us have expected historically.

Thank you. Our next question comes from Aaron Kessler with Raymond James. Please go ahead.

Great. Thank you, guys. Maybe just quickly on kind of converting your customers. Our survey work has shown pretty high brand awareness for GoodRx. How are you thinking of converting more of these customers that have obviously heard of GoodRx but maybe not customers yet? And then maybe thoughts on working with employers to promote GoodRx, especially as they move more towards high-deductible plans as well. Thank you.

Yeah, so in terms of converting customers and brand, you know, we think we, you know, we think we have lots more to do on brand awareness. You know, we think we have actually extremely high brand awareness among healthcare professionals, you know, that among pharmacists it's almost sort of everyone, among sort of physicians, you know, two out of three, you know, more than two-thirds of physicians sort of, you know, no good or X, most of those recommend it to their patients. I mean, it's a really good brand awareness among the healthcare professionals, but we think there's actually a huge amount of additional room to gain around brand awareness among consumers. You know, when we think of what our, you know, competition is, that earlier question, the real competition we have is people not knowing that that there's this opportunity in general to, to get, you know, to save on prescriptions, to save on healthcare and to, to be shoppers. So, you know, most consumers just don't know that there are tools to help them navigate our complex healthcare system. And, you know, we really believe we can help them. 70% of consumers don't, don't know the prescription prices can vary. And everyone just thinks everything kind of thinks the same. So this is a, there's a great opportunity there. You know, so we're, You know, we're obviously focused on converting customers, on increasing uses by customers, but we still think there's so much additional awareness we can gain across the user base. In terms of employers, you know, we're not focused on employers. You know, I think we are focused on consumers. So when we look at the market, you know, something we think we are uniquely good at is speaking to consumers about their healthcare experience, providing tools to consumers for their healthcare experience, you know, and really reaching their, you know, there are plenty of companies that are good at working with employers, but we think we're really uniquely good at working with consumers in healthcare, and that is our focus. And then, you know, in terms of HTHPs, you know, when we look at our users, you know, our users have all forms of insurance. You know, 75% plus of our users do have insurance. you know, more than a third of those have Medicare. You know, so this is not, you know, it's not just an HVAC user. Across all of commercial insurance, you know, we see good usage. So we really want to deliver value to users across their healthcare journey. We really want to continue to invest, you know, in our product, build great new products, add more entry points, add more services. You know, it's just a really big opportunity. So We're super excited about sort of the progress we've made in Q3, you know, and just all the work we're doing now to, you know, increase awareness, increase, you know, extend the platform and just increase penetration broadly across sort of the broad set of consumers and offer them, you know, make everyone's healthcare experience better in America. Got it. Thank you. Thank you very much.

Thank you. And today's final question will come from Stephanie Davis with SVB. Please go ahead.

Hey, congratulations on a strong first public order at the gate, guys.

Thank you very much.

Could you comment on CMS's transparency and coverage rule, and how would you think about the puts and takes of increased price transparency, not just on the market, but maybe on your competitive dynamics in specific?

Sure. And thank you, Stephanie, very much for the question. You know, we are really in favor of anything that increases transparency. You know, when we see as to the, you know, what regulators, what the public, what lawmakers, what people want, you know, people want, you know, transparency, you know, and they want lower out-of-pocket costs for consumers. And so we think we are entirely, those are the things we want. Those are the things I think the country wants. And we think we are really aligned with that. In regards to specifically sort of the new rules around transparency, which there are a variety of, this is something we definitely want and think is good. We think it opens up new opportunities in some other portions of healthcare. And we think it's only good for us and our business, our ability to deliver these solutions for consumers. And I think that fits into just our overall Overall, our goals as a business, you know, our overall goals are to deliver affordable healthcare for all consumers to help them navigate this, to be this leading digital platform for all of healthcare. And it's just a huge opportunity. And, you know, we are, you know, at the early, early, early points of it. So we're excited that larger trends are also pushing in the same direction of you know, more pricing, more transparency being available. And so, you know, we're excited to capture these new opportunities as well as, you know, just continuing the strong profitable growth we've been able to deliver in the businesses that we're in.

Thank you so much. Now I have a quick follow-up for Karsten just to give him some airtime too. On the 4Q guidance, holding all else equal implies a pretty healthy sequential step down in that. Is there anything to call out that drove up MAC and 3Q, or is it just some uncertainty around the pandemic driving that 4Q MAC metric?

Sure. Thanks for the question, Stephanie, and thanks for giving me an opportunity here to talk.

Very important.

We continue to see the impact of COVID-19 on our prescriptions offering realistically, primarily through the impact of doctor visits and access that Trevor talked about a little bit, Monthly active consumers in the third quarter increased about 11% QOQ as activity in the prescription market improved. When we think about that, the third quarter is a bit of a rebound quarter, though, because 2Q is just such a tough one for COVID. And because of that, I think we got the benefit of a bit more rebound in that quarter than the gradual improvement that we're forecasting going forward. As we look forward, we still see nice growth, 4% to 5% MAC growth going forward, which translates to about 20% YOY, even as we see the economy open up in a more gradual fashion and not sort of instantaneously. Of course, that also assumes things on the COVID front stay fairly constant. I think the other reality is that total revenue growth, we expect to have growth significantly faster in part because of the rapid growth of our other revenue lines, and frankly in part because the recurring nature of prescriptions, the fact that we continue to benefit from most of the growth in this space, given we're the largest relative market share player, and the general reality of all of our offerings intersecting in a way that's helpful, meaning that telehealth is an entry point for prescriptions and vice versa, All of those things are helping us to drive even faster revenue growth than MAC growth. I think the other thing, too, which I should probably remind folks of generally is that MACs are the users of our prescriptions offerings. So things like subscribers, et cetera, those counts do not form a part of the core MAC count, which is part of the reason you AC revenue per MAC growing, and it's also part of the reason as the subscriptions offering continues to expand quite quickly, why we've modeled out our MAC count for the fourth quarter like we have. Hope that's helpful, Stephanie, and thanks again for the great question.

Ladies and gentlemen, thank you for participating in today's question and answer session as well as today's conference call. This concludes today's program. You may now all disconnect and have a wonderful day.