This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk05: Ladies and gentlemen, thank you for standing by, and welcome to the GoodRx first quarter 2021 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.
spk04: Thank you, operator. Good afternoon, everyone, and welcome to GoodRx's earnings conference call for the first quarter of 2021. Joining me today are Doug Hirsch and Trevor Bedbeck, our co-founders and co-Chief Executive Officers, and Carson Bowerman, 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. These factors may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Factors discussed in the risk factor section of our quarterly report on Form 10-Q for the quarter ended March 31st 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 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 gap metric in the company's shareholder letter, which can be found on the overview page of our investor relations website at investors.gooderx.com. I'd also like to remind everyone that a replay of this call will become available there shortly as well. With that, I'll turn the call over to Doug.
spk12: Thank you, Whitney, and thanks to all of you for joining us this afternoon. I want to take a minute to talk about trust. In healthcare, trust is really, really hard to earn, America's convoluted healthcare system is so complex, frustrating, and opaque that consumers increasingly question the guidance they receive. Am I getting the best care? Do I really need this treatment? Can I afford this? When Trevor and I started GoodRx, we didn't know much about healthcare, but we knew that there was a huge lack of trust. It seemed that the industry's motives rarely aligned with the needs of the patient, leading to complicated terms, hidden information, surprise bills, and lots of bad experiences. We knew that we would build products that put the patient's needs first. So we designed GoodRx to provide simple, easy-to-understand savings and assistance without asking for much in return. We embraced transparency and education as core tenets of our relationship with consumers. We even created a team of patient advocates to help guide consumers to the best outcomes. Fast forward to late 2020. With the miraculous development of multiple COVID-19 vaccines, we recognized our crucial role in the next step of the process. be a trusted resource to help Americans figure out where, when, and how to get vaccinated. The GoodRx COVID-19 Vaccine Guide went from concept to launch in just three weeks. Using government data and working with numerous stakeholders, we built a centralized service that tracks vaccine inventory and appointments at thousands of locations across the nation. We alert over 2.5 million people when eligibility changes in their state or county, and we publish comprehensive information about the virus, vaccines, and treatments people can reference easily. So far, more than 15 million people have visited our vaccine guide since launch. We anticipated the need and leveraged our capabilities to quickly develop a solution that empowered consumers to take action. Our obsession with improving the user experience in healthcare drives the development of everything we do. We're constantly asking our consumers about their healthcare pain points and then imagining ways to address them. We build relationships that turn a transaction into a relationship rooted in trust. This is why GoodRx Gold, our paid subscription program continues to be a strategic priority. Most people join Gold to find even greater savings on prescriptions. Then, we build tighter relationships with members by anticipating and solving additional health care needs. For example, Gold subscribers are presented with mail-order pharmacy options, exclusive discounts on online doctor visits through the GoodRx app, and dedicated customer support as well as a more personalized and customized experience. We believe these types of benefits drive acquisition and conversion, which has fueled subscriber growth and consumer savings. We're proud to say that between the family and individual plans being offered across GoodRxGold and the KrogerRx Savings Club, our 931,000 subscription plans translate to over 1.4 million Americans who benefit from these subscription programs. We are solving more pain points and building trust with more people every day. With 5.7 million monthly active consumers, 1.4 million Americans on nearly 1 million subscription plans, and thousands more using our telehealth services every month, we are clearly on to something. Almost 20 million monthly visitors came to GoodRx this quarter to compare prices, learn about healthcare, reference our vaccine guide, or use our manufacturer solutions platform. And we're just beginning. As the pandemic recedes, we will still be faced with America's existing healthcare crisis, so we are accelerating the development of new products and services to provide better ways for Americans to find the care they need. We're proud to report that consumers have now saved $30 billion using GoodRx while we maintain high MPS scores with both consumers and providers and a 4.8 app rating for GoodRx. This dynamic has driven a value to stakeholders across the entire healthcare ecosystem. We believe we have barely scratched the surface of this opportunity to transform healthcare for all Americans. Consumers' needs are evolving and they are seeking new ways to access their healthcare. Our goal for GoodRx is to be there for them as a trusted resource for each step of the journey. With the strength of our brand, our increasing reach, commitment to our mission, and the value we continue to create for consumers, we believe we are well positioned to win across the $4 trillion healthcare ecosystem in 2021 and beyond. With that, I'll turn it over to Trevor to address key highlights from the quarter and trends in our business. Thank you, Doug.
spk11: I'm proud to report that GoodRx achieved a number of new financial records in the first quarter. We delivered record revenue at attractive margins and increased the number of visitors to our platform. We grew the number of consumers we serve across all of our offerings and ramped up our subscription manufacturer solutions and telehealth offerings. We also acquired two outstanding companies to deepen our capabilities. Healthy Nation, with its award-winning staff, produces video content and hundreds of health and wellness topics enclosed in April. Healthy Nation's content, created in collaboration with doctors and other healthcare professionals, helps us educate consumers from diagnosis to disease management. In April, we also closed the acquisition of RxSaver, a brand we believe is complementary to our own prescription transactions offering. We believe M&A can play an important role in helping us build the leading digital platform in consumer healthcare. Revenue for the first quarter grew 20% year-over-year to a record $160.4 million, even with continued headwinds from COVID-19 and the weak cold and flu season. Other revenue continued to show strong momentum, growing 154% year-over-year reflecting the continued rapid growth of offerings like subscriptions, manufacturer solutions, and all of our other new initiatives. Adjusted EBITDA margin was an attractive 31.8% as we continue to make growth investments in our platform and brand. During the quarter, we helped a record 5.7 million monthly active consumers save on their prescriptions by using GoodRx at one of our 70,000 participating pharmacies. We continue to successfully drive consumers to our subscription offering with our subscriptions growing 96% year-over-year to approximately 931,000 across our two subscription programs, GoodRx Gold and the Kroger RX Savings Club powered by GoodRx. Including family plans, each subscription represents on average more than one American. So we actually have 1.4 million members now benefiting from our subscription offerings. in addition to the 5.7 million monthly active consumers previously mentioned. These paid subscription programs have generated greater value for us than the max to use our prescription transactions offering. Our fast growth in subscribers has been fueled by the new benefits we've added to Gold, as well as a redesigned, integrated user experience, which drove more effective consumer acquisition and conversion. During the first quarter of 2021, we began promoting Gold to our telehealth consumers at checkout, and have seen encouraging adoption numbers. This is just one of many integrations we expect to drive further subscription growth and lifetime value. The success of Gold has captured the attention of others interested in providing GlitterX benefits to their constituents. We have recently entered into a few exciting relationships which extend the reach of GlitterX Gold, including new partnerships with DoorDash to offer additional value to drivers in their platform and Groupon. These offer the value and benefits of our Gold subscription programs to even more consumers, including those in the gig economy. Early results from these collaborations have been positive. In March, we rebranded Hey Doctor as GoodRxCare, a new name and new home for affordable online doctor visits and prescription savings, which you can use whether or not you have insurance. It still takes more than 20 days on average to see a doctor in the U.S., according to an industry survey. With GoodRxCare, patients can complete affordable doctor visits in just minutes. Unlike most B2B telehealth companies, we have a direct relationship with our patients. Our relationships can't be disintermediated by an employer or third-party payer plan shifting its covered persons to another provider. Also, we can integrate other GoodRx services, such as Mailer or GoodRx Gold, directly into the patient experience, which we're doing today. GoodRx Care provides another opportunity to delight consumers, as evidenced by the five-star App Store rating of its predecessor, HeyDoctor. Care is available for over 150 conditions in all 50 states across GoodRx and its marketplace partners. It also creates an additional user acquisition entry point into the GoodRx platform, as consumers may use GoodRx Care or our prescription-related services before then using one of our other offerings. These integrations have meaningful upsides. After integrating GoodRx discounts into HeyDoctor in 2020, we found that more than 30% of HeyDoctor visits drove incremental revenue through our mail order or retail subscription offerings. We believe this integrated experience will enhance our ability to cross-sell going forward, increasing the LTV of our users. Our manufacturer's solutions offering continues to grow at a rapid pace, with momentum from our record bookings in the fourth quarter driving nearly 4X year-over-year revenue growth in the first quarter. With almost 20 million consumers and healthcare providers visiting GoodRx each month, it's no surprise we're seeing this kind of growth. Combining this massive audience with our broad and strong pharma relationships creates the perfect intersection to drive rapid growth in manufacturer solutions. We believe that the pandemic permanently impacted how manufacturers interact with healthcare providers and consumers. Manufacturers are embracing digital channels. More and more of the $30 billion that manufacturers spend annually on advertising to attract patients to their brands has already been redeployed toward interactive platforms. GoodRx offers a targeted and efficient way to reach consumers and their healthcare providers at high ROI, uniquely positioning us to capitalize on the shift to digital. We're particularly excited about our integration with global biopharmaceutical company Sanofi to streamline patient access to their diabetes-related discounts. Within GoodRx, commercially insured and uninsured consumers can find and claim Sanofi manufacturer discounts that can save them hundreds of dollars on life-saving medications. This could save Americans millions of dollars in 2021 alone. During the first quarter, we entered into an agreement to acquire Healthy Nation as part of our continued effort to present best-in-class health information to consumers. Healthy Nation possesses a leading comprehensive library of thousands of premium clinician-reviewed videos on a wide range of health topics. This vast library provides a platform for pharmaceutical manufacturers to reach targeted audiences of high-intent consumers. With Healthy Nation's extensive video library and editorial expertise, GoodRx can offer manufacturers new ways to reach large audiences in a contextually relevant manner. This acquisition aligns with our research and content efforts to further empower consumers, increase engagement, drive consumer acquisition, and propel even faster growth in our manufacturer solutions offering. The Healthy Nation acquisition closed in the second quarter, and we are grateful their team has joined GoodRx. We are very pleased with our first quarter results. the growth of our offerings, and the continued progress we're making to deliver more value to more consumers throughout their healthcare journey. As we near the second half of the year, we look forward to the reopening of our country and believe there will be a new normal when it comes to healthcare. The way consumers seek healthcare is inevitably evolved because during the pandemic, it had to. We expect there to be a permanent shift to telehealth, catalyzed by consumers and not employers or payers, particularly for the low-risk conditions we serve. Many people who did not previously feel comfortable accessing healthcare online are now feeling more comfortable than ever. We believe these engaged consumers will force changes to the way healthcare constituents market to both patients and the healthcare professionals that treat them. Additionally, the way manufacturers interact with consumers, whether directly or indirectly through providers, has changed as many manufacturers were prohibited from sending their sales forces into physicians' offices during COVID. They quickly pivoted. redirecting their ad spend to digital, and learn that their returns can be higher. Consumers are demanding virtual solutions for their health needs more than ever. Meanwhile, as COVID retreats and patients reemerge to treat the almost 1 billion misdiagnoses, they'll find an overwhelmed traditional healthcare system with the same barriers of affordability and access. This makes the space ripe for disruption and innovation, and GoodRx is prepared to lead the charge with new products and services for people who know there has to be a better way. We believe that we are uniquely positioned to capitalize on this new normal as one of the most trusted brands in healthcare with our high consumer MPS and our consumer-centric philosophy. We see innumerable opportunities to further disrupt the industry with new products that reimagine healthcare, making it more affordable and convenient for even more Americans. As we continue to pioneer the transformation of healthcare, we remain focused on increasing our reach, strengthening our relationships with consumers, and continuing to build the trusted brand to deliver on our promise of affordable and convenient healthcare. We look forward to sharing more updates with you in the future. And with that, I'll turn it over to Karsten to discuss our financial results and guidance.
spk02: Thank you, Trevor. Good afternoon, everyone, and thank you for joining us today. Our first quarter results once again highlight the unique combination of scale, growth, and profitability our business provides, our strong unit economics, and the large market in which we operate, and our ability to execute and generate strong operating cash flow. Revenue for the quarter was $160.4 million, growing 20% year over year, even comparing our very strong 1Q20 to the COVID impacted 1Q21, driven by continued growth in our prescription offering, as well as the torrid growth of our newer offerings. Prescription transactions revenue grew 9% year over year to $134.1 million, driven by a 17% year over year increase in our monthly active consumers, which reached a record $5.7 million. This was partially offset by a decrease in prescription transactions revenue per MAC solely related to script cycle, which, as discussed in our last call in March, has significantly lower revenue and contribution per consumer. GoodRx prescription transaction economics have otherwise remained constant. 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 such as subscriptions, manufacturer solutions, and telehealth. When presented for a quarter, monthly active consumers represent the average of the calendar months in the quarter. One additional clarification on the calculation of MACs. Unlike our subscriber count, MACs are not a cumulative number measured by and presented as an ending balance. For a given month, it is the count of unique consumers who use our prescription transactions offering to save money on the retail cash price at a pharmacy. That means that the number of days in a month affects our MAC count. Using the first quarter as an example, February will have a lower number of monthly active consumers compared to January or March when holding all else constant. More specifically, February had 5.3 million MACs and March had 6.1 million MACs, with the length of the month being a key contributor to the increase. though this year, February, was also impacted by the coast-to-coast storm that adversely affected the majority of the U.S., shutting down Texas and other southern central states. In addition, 2020 was a leap year, adding approximately 1% to max in revenue in 1Q20 relative to 1Q21. Since max are averaged over the three months in the quarter, the first quarter will consistently show a lower count all else being equal since there are fewer days than other quarters. Other revenue grew 154% year-over-year to $26.4 million, with strong growth in all of our other offerings, subscriptions, telehealth, and manufacturer solutions. The growth reflects the incredible demand for our offerings, as well as our ability to leverage multiple entry points into our growing platform and monetize at different stages of the healthcare journey, which is growing LTV. As Trevor mentioned, we finished the quarter with approximately 931,000 subscription plans and 1.4 million Americans benefiting from our subscription offerings since our family subscriptions generally serve multiple consumers. We started disclosing our subscriber count last quarter to provide a more holistic view of our growing consumer base and to present another way we monetize a portion of the millions of visitors on our platform. Our subscription offering, which is already a scaled business, extends our successful prescription transactions offering, it addresses similar consumer needs and generally offers even greater savings on prescription medications. Many times consumers go through the same funnel in searching for prescription prices and if they choose the lowest price, they'll often become subscribers without ever having been a monthly active consumer. This is mutually beneficial because we believe that we generally offer consumers more value through our subscription offerings and they also generate higher LTV for us and provide better revenue predictability. As we continue to grow our subscription offering and it contributes more meaningfully to our financials, we believe we'll enjoy increased conversion from max to subscribers, which we believe will result in a higher LTV. Looking at our total prescription-related offerings, we had 5.7 million MACs in our prescription transactions offering and 1.4 million members associated with our 931,000 subscriptions. We had almost 20 million monthly visitors this quarter, aided by the QM-specific lift from our vaccine finder. In addition to monetizing MACs and subscribers, we're able to further monetize a portion of these visitors with offerings such as telehealth and manufacturer solutions, delivering more value to consumers and increasing the scale of our prescription-related offerings. Turning back to our first quarter performance, as we stated on our fourth quarter earnings call in March, the fourth quarter headwinds related to COVID-19 and the weakest cold and flu season we've ever seen continued into 2021 as new therapy starts remained below pre-COVID levels, impacting prescription volumes. We estimate that the non-recurring lack of flu resulting from this winter's COVID precautions had a total negative impact of approximately $5 million on prescription transactions revenue, with the vast majority of this impact felt in the first quarter of 2021. Additionally, we estimate that this had a negative impact of approximately $150,000 max in the first quarter. These figures represent the lack of flu alone, which is incremental to the impact of COVID-19. On a year-over-year comparative basis, there were a number of dynamics at play that impacted the first quarter in a non-recurring manner. 1Q20 was an extremely strong quarter for us relative to the COVID-impacted 1Q21, as the first quarter of the year in a non-pandemic environment is typically seasonally strong, as was the case in 1Q20. Additionally, we saw some modest pull forward of prescription demand at the onset of the pandemic last March, as consumers stockpiled their medications, further impacting the year-over-year comparison. Finally, 2021 had unusual weather conditions extending across the entire South, which affected the first quarter's year-over-year comparison. While the growth of our prescription transactions and subscriptions offering was impacted by headwinds related to COVID-19, we believe we are well positioned to capitalize on the inevitable rebound in doctor visits, prescription fills, and new therapy starts as consumers resume typical healthcare purchases and start clearing the substantial backlog that has built up over the last year. Recent IQVIA data has shown that the $1 billion backlog of 2020 diagnosis visits in the U.S. has continued to grow to over $1.1 billion, so the entirety of the rebound remains ahead of us. We anticipate that the trend of delaying care will reverse in the second half of the year, and we will begin narrowing the gap and clearing this massive diagnosis backlog, benefiting from the realities that diagnoses generally result in prescriptions. Moving down the P&L, cost of revenue is $10.4 million, or 6.5% of revenue, compared to $6.0 million and 4.5% of revenue in 1Q20. The increase was driven by provider costs related to our telehealth offerings due to an increase in the number of online provider visits, an increase in outsourced and in-house personnel related consumer support expense to support our growth, and an increase in overhead allocations. Product development technology expenses were $26.2 million compared to $10.3 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 and after our IPO. Excluding stock-based compensation and related tax and other items associated with acquisitions, adjusted product development and technology expands with 10.6% of revenue compared to 6.7% of revenue in 1Q20. We plan to continue to invest in our product and platform was the goal of creating the best consumer experience, continuing to scale our existing offerings, and developing new offerings, all of which are intended to help more consumers in different stages of their healthcare journey, deliver more value to them, and increase the lifetime value we generate. Sales and marketing expenses were $79.7 million compared to $63.2 million in one Q20. We increased advertising spend by $6.2 million year over year and continued to build a strong team 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 is largely flat year over year, making up 46.3% of our revenue in 1Q21 compared to 46.7% last year. We continue to optimize our consumer acquisition spending in light of COVID-19 market conditions and are actively monitoring doctor visits and new therapy starts. General and administrative expenses were $43.8 million compared to $5.9 million in the first quarter of 2020. The majority of this increase, $30 million or approximately 80%, was due to stock-based compensation expense related to the non-recurring co-CEO awards made in connection with the IPO. Excluding this and other adjustments, including non-cash, non-recurring M&A and financing-related items, adjusted G&A as a percent of revenue is 4.9%, compared to 3.2% in 1Q20, with the incremental cost primarily associated with starting to operate as a public company at the end of September. In the first quarter, net income was $1.7 million, which was impacted by stock-based compensation expense of $46.5 million in the quarter, $30 million of which related to the non-recurring COCO grant made at the time of the IPO. Adjusted net income was $31.8 million. Adjusted EBITDA was $51 million. Adjusted EBITDA margin continued to be strong at 31.8%, reflecting our ability to deliver profitable growth due to the compelling unit economics of our business, and repeat activity on our platform, which remained at over 80%. Adjusted EBITDA margin decreased by approximately 710 basis points year over year due to continued investments in product development and technology, the growth of our telehealth business, and investments in our general and administrative infrastructure, all of which I've discussed. We continued to generate strong cash flow with net cash from operating activities of $45.5 million for the quarter. On the capital investment front, our primary investments were related to the build of our new headquarters in Santa Monica, as well as additional investments in our platform and product. We have completed the construction of our new headquarters with approximately $16 million spent on this project, net of tenant improvement reimbursements, approximately $2 million of which was spent in the first quarter. And now turning to guidance. For the second quarter of 2021, We expect revenue of $172 to $176 million, reflecting 41% year-over-year growth at the midpoint. We believe this growth will be driven primarily by a triple-digit increase in other revenue as momentum in our manufacturer solutions, subscriptions, and telehealth offerings continues. We expect year-over-year prescription transactions revenue growth to be more meaningful compared to the year-over-year growth in 1Q21, given it will be a COVID quarter to COVID quarter comparison. On the adjusted EBITDA front, we expect an adjusted EBITDA margin of approximately 30%. As stated on our previous calls, we will not be providing specific guidance around our user count on a regular basis, but it's worth noting that as long as COVID-19 continues to impact consumer behavior around doctor visits and prescriptions, our MAC and our subscriber growth may be impacted, However, we believe this will be followed by tailwinds from the inevitable clearing of the substantial medical backlog which continues to build, a gap of over 1.1 billion diagnosis visits in the U.S. that did not happen since the beginning of 2020. When this backlog begins to clear and we see pent-up demand, we will be there to help our consumers reengage with the healthcare system. While we are not providing MAC guidance, we want to emphasize that we do expect other revenue to make up a higher percentage of our total revenue in the second quarter than it did in the first quarter. In the first quarter, it made up 16.5% of total revenue, an increase of approximately two percentage points from the fourth quarter, and we expect the proportion of other revenue relative to total revenue to increase in the second quarter so that other revenue will reach approximately 20%. That means that prescription transaction revenue, which is driven by MACs, will make up a smaller share of total revenue as more visitors and MACs turn into subscribers and as we continue to grow our manufacturer solutions and telehealth offerings. Turning to the full year, we're increasing our previous 2021 revenue guidance of $735 to $755 million to $740 to $760 million, reflecting year-over-year growth of 36% at the midpoint. As discussed in our prior earnings call, this assumes The second quarter will still be impacted by COVID-19, and that healthcare activity will begin to pick up in the third quarter as consumers resume more normalized healthcare activity and the substantial backlog of over 1.1 billion diagnoses in the U.S. begins to clear, significantly adding to visit, therapy start, and prescription volumes. For the full year, we continue to expect our adjusted EBITDA margin to be in the range of 30% to 32%. with 2021 laying the foundation for future growth of our platform and our brand as we continue to make the right investments to maximize value for our consumers, our shareholders, and the company. Our assumptions related to Healthy Nation and RxSaver are reflected in our revenue and EBITDA guidance. Neither acquisition will have a material financial contribution or margin impact in 2021. Healthy Nation's revenue will be included in other revenue, and will not be associated with an increase in MACs. RxSaver's revenue will be included in prescription transactions revenue and will not have any MACs associated with it in the second quarter. Typically, we begin including MACs in the first full quarter post-acquisition, which would be the third quarter of 2021. We're in the process of analyzing RxSaver's data to establish whether we can report it consistently with their own MAC reporting, and we plan to provide an update on our second quarter earnings call. We are building the leading consumer-focused digital healthcare platform in the U.S. and plan to continue investing 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. With every transaction, the GoodRx network continues to strengthen. Our leading platform and trusted brand allow us to reach more and more consumers, healthcare providers, and pharmacists. This increased volume drives improved pricing and consumer savings, strengthening engagement and further improving our great unit economics. This allows us to continue to expand our platform and enhance our products, creating a hard-to-replicate virtuous circle in an even deeper competitive mode. 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 in relationships that benefit all key stakeholders in our ecosystem. And we believe we've only just begun to scratch the surface of our massive market opportunity. Thank you for your continued interest in GoodRx. 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.
spk06: 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. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question will come from Ricky Goldwasser with Morgan Stanley. Please go ahead.
spk09: Yeah, hi, good afternoon, and thank you for all the details. So a very quick follow-up on the guidance, and then I'll have a real question. So just to clarify on the guidance, I know you said that the acquisitions are not material, but you raised the revenue guide by about $5 million. So is RxSaver and Healthy Nation accounting for that? And as we think also about your second half guidance, considering that script growth are going to reaccelerate, should we assume that in the second half, prescription revenues are going to go back to a more normalized level, or is that 20% indicative of sort of trends for the remainder of the year, i.e., 80% of total revenue and 20% for the other?
spk16: Thank you, Ricky, for the question. I'll let Karsten speak to the guidance. Hi, Ricky. This is Karsten, and thanks for the great question. As you said, first off, revenue related to Healthy Nation and RxFavor is largely immaterial. So, We'd also considered, when we provided guidance for the full year in March, that we had a high probability of closing the Healthy Nation deal, so it was included in a probability-adjusted or expected value manner in the guidance we provided already back then. Our favor is included in our Q2 and FY guidance as well as Healthy Nation, but again, the financial contribution of both deals is pretty immaterial. We bought them because we're excited about the capabilities they provide for us. Healthy Nations revenue will go into other revenues, similarly to our manufacturer solutions, no association with MACs. And RxSaver revenue will be included in prescription transaction revenue, and it won't have any MACs associated with it initially. In the second quarter, we'd normally add MACs in in the first full quarter that we owned it. And right now, as we said in our prepared remarks, we're looking at RxSaver's data to establish when we'll be able to report it consistently with their own MAC reporting and and we'll update it then. With respect to the question on whether 20% of revenue and other revenue is accurate for the full year, we continue to see other revenue growing as a percentage of revenues. So if you look back to from fourth quarter to first quarter, you'll see that it rose by about 2% from about 16 and a half up. Now we see it growing by a little bit more than 2% again. looking forward, and that's why we say it'll approach 20% for the second quarter. I think we'd expect, given the tear that other revenue is on, growing over 150% year over year, that it will continue to make up a higher percentage of revenue for the full year than it does for the second quarter. So it'll continue to accelerate. Hope that helps.
spk09: It does. And if I may, just kind of like ask the other question. I mean, for Doug and Trevor, you talk about sort of looking to do more acquisitions. Can you maybe share with us just your overall acquisition framework and what type of assets you're looking to add? Thank you.
spk12: Thank you. I'll let Doug speak to this. Hey, Ricky. Thank you. You know, our overall strategy is really focused around, you know, trying to play an important role in accelerating our path to achieving our long-term vision of building the leading digital platform in consumer healthcare. We've historically looked at and done deals that have grown and accelerated our long-term vision and capabilities and have integrated those acquisitions successfully. With our increased scaling capacity, we're going to accelerate those efforts to grow our capacities both organically and inorganically. Given our profile and our leadership position in healthcare, we believe we see many opportunities in digital healthcare. And look, we look at all targets that can advance our mission, and we're really trying to drive telehealth, manufacturer solutions, and our core prescriptions offering. We believe that we're a very attractive platform for high-growth companies to help them scale quickly. And so, look, M&A has been and will continue to be an important part of our growth strategy. We see lots of opportunities, and especially, you know, now that we're as a public company and with the additional resources we have to execute on our M&A.
spk06: Thank you. Our next question will come from Steven Dallekit with Barclays. Please go ahead.
spk03: Oh, thanks. A couple questions here. I guess first, just in addition to your comment that over 2 million Americans sign up for the GoodRx COVID-19 vaccine guide, we have seen some further evidence in the retail channel that big drug chains are getting some nice pull through on traditional generic prescription volume from the COVID vaccine dispensing. which obviously benefits GoodRx as well. So I guess I'm curious, do you have any sense for how much COVID vaccination activity is helping the company, either relative to your own expectations so far in 21, either quantitatively or just qualitatively, if you have any additional color? Thanks.
spk11: Thanks. Yeah, so I'm going to speak, maybe first I'll just speak to the vaccine finder effort that we did and sort of the benefits of that, and I'll let Doug speak to that, and then I'll speak a little more specifically to sort of that pull-through in the pharmacy setting.
spk12: Sure. So, yeah, I'll just give you a little overview of the vaccine guide itself and what we managed to do. Look, our vaccine guide is just another example of the powerful continent tools that we're able to generate to help consumers throughout their healthcare journey. You know, one thing we realized early on was that vaccine information would be fragmented and unclear, and so we built this go-to destination for Americans to learn about the vaccine, track availability, and then find an appointment, most importantly. And we're just Super proud of the product that we built. It covers tens of thousands of vaccine sites. It's generated over 15 million visitors and over 2.5 million alert sign-ups. And this guide is – we just could not be more proud of it because it embodies all of what makes GoodRx. It increases the awareness of both our brand and the value it brings to consumers. It allows us to communicate with additional consumers across the U.S. as they sign up to receive updates. And, of course, a lot of these visitors that came to GoodRx were not traditional GoodRx customers. They're new to GoodRx, and it's just the beginning of what we think will be a fruitful relationship with those folks. So I'll pause there so you can explain this.
spk11: Yeah, so relative to sort of scripts, I mean, I think what we really see is, you know, when you look at the results, I think that's more sort of just revenue, you know, of the pharmacy chains. I think that's a little bit more related to just revenue from the vaccines themselves, where we see really this benefit from the increased distribution of vaccine and, you know, that being, you know, even more so as time is passing here through the pharmacy channel, is that we're starting to see this clearing of this substantial medical backlog. I think recent IQVIA data shows about 1 billion misdiagnoses in 2020, growing to about 1.1 billion in 2021. And so when consumers resume that more normalized healthcare activity and backlog begins to clear, we're there as consumers are reengaging with the healthcare system. So this distribution of vaccine just gives us an opportunity to... deliver more value, the vaccine guide, which has pretty broad access. And, you know, so we think it's a great benefit as people are more in the pharma space in recent years.
spk03: Okay. One other real quick question. There has been some debate in the pharma supply channel regarding generic drug pricing trends, with some conjecture that generic drug price deflation has possibly accelerated so far in 2021. In light of that, the quick question really is whether or not you guys have seen any downward pressure around traditional retail cash prices for generics that would impact your pricing in any way, or are you not really seeing that? Just curious. Thanks.
spk11: Yeah, it's a great question. Thank you so much. Generic price deflation does not generally affect our business. It mostly impacts manufacturers and wholesales, but it's really decoupled from what consumers see. So it's just not an impactful factor to our business. Hope that's helpful.
spk06: Thank you. Ladies and gentlemen, as a reminder, we ask that you please limit yourself to one question. Our next question will come from Jan Lee with Evercore ISI. Please go ahead.
spk01: Great. Thank you, guys. And this is Jan from Mark Mahaney. This is a follow-up to the drug pricing question. I'm wondering, like, what's your kind of thought on the potential impact for the talk about reintroduction of the drug pricing bill, which probably affects the branded side more, and the discussion around revisiting the donut hole. How do you see that kind of impacting your business if that were to carry through? And also, if I may tag along, you mentioned new normal. If you could just flesh out a little bit more on what are you seeing that gives you confidence on the permanent shift to child health? Thank you.
spk11: Okay. Thank you very much for the question. So speaking first on, you know, HR3 and sort of other areas of policy, you know, we have been and continue to be, you know, remain aligned with positive regulatory trends. You know, we provide consumers with price transparency and lower prices, and we improve access to care. Since we founded GoodRx a decade ago, we've seen many proposals, ideas, and policies across administrations. including the rollout of ACA and other initiatives. And with this new administration, we continue to be aligned with the political objectives of driving affordability and access to health care for Americans. The current orders and legislation, including H.R. 3, are primarily focused, just as you said, on the Medicare business and brand drugs. And even if those pass, which is really yet to be determined, we believe they would have very little impact on our business. We actively track all legislative developments, continue to be engaged with policymakers. You know, we really want to be there as a resource to sort of give information about, you know, what can be done to benefit consumers, and we feel really confident about where we are. You know, we've created a sustainable product and system that works. You know, this is a, you know, consumers are getting medication, getting other healthcare affordably and conveniently, and it's aligned with these overall trends. So, In addition, I just note there's a number of legislative changes that we think can have a positive impact on our business. So as an example, I'll speak to sort of the transparency rules that were passed, you know, previously and are starting to come into play and starting to come into force in regards to the hospitals and then the payers. You know, this new information is only sort of helpful to us. as we are expanding and building more tools to address the broader healthcare system. So we're super excited about the sort of availability and coming availability of more data there and think it'll be of great benefit to us. Your second part of your question was about telehealth and sort of why we see a new normal. So, you know, we continue to see positive momentum in GoodRxCare and our marketplace when it comes to both consumer demands and visits. We're also really excited about cross-selling between our telehealth offering and between our prescription-related offerings of the prescription transactions and subscriptions. This is like getting even better as we've rebranded Hey Doctor to GoodRxCare. We're unifying the experience across the platforms. So we're continuing to make these product investments in telehealth to create an excellent user experience for our consumers, helping people get affordable doctor visits, get their prescribed medication, all having it totally integrated. It also, you know, telehealth has provided this extra entry point to our platform that lets us be at the consumer side across a broader set of the healthcare journey. You know, and we believe, as you asked, that there is some permanent shift to telehealth. So we want to be there for them across consumers. But, you know, I think for us, this is all incremental and incremental ability to cross-sell people. And as we cross-sell, we provide these our users with a better consumer value proposition for them, and we increase the LTV, and we're seeing great success in doing that. Really appreciate the question.
spk01: Thank you.
spk06: Thank you. Our next question will come from Sean Dodge with RBC Capital. Please go ahead.
spk14: Thanks. Good afternoon. Maybe going back to the max, you exited the quarter on a much steeper trajectory than it sounds like you began. Carson, you said 6.1 million in March. You pointed out some of the impact things like days and the months can have on that calculation. But if we think about that March number, is that a good jumping off point for kind of how to think about the second quarter? Are there some seasonal aspects or nuances to March that make that unfair to kind of project into April and May and June?
spk16: Hi, Sean. Thanks for the great question, Mrs. Karsten. First of all, I think it is a good jumping-off point insofar as the only thing that's really unique about March is that it has more days, as we talked about in the specifics of the MAC calculation. In general, though, We've begun to see volume increase in Q2 with the vaccine now more widely available. And that's where we continue to guide to over 40% Y over Y growth at the midpoint for the second quarter. And our full year forecast is also much faster than the first quarter's year over year growth was. We assume that doctor visits return to a more normal pre-COVID level in the second half of the year. And we believe our recovery assumptions will materialize because we expect to see the backlog of undiagnosed conditions, the 1.1 billion that Trevor talked about a moment ago, according to IQVIA, start to clear or at least stop increasing, which is basically enough, in the second half of 2021. We think that's going to drive up new therapy starts. So the headwinds we view as becoming tailwinds as the year progresses and as consumers interact with the healthcare system more regularly and catch up on the year of delayed care they faced.
spk11: Okay, great, thank you. Yeah, the only thing I'll just add to that is, you know, There is also the shift that Carson mentioned earlier around other revenue, where other revenue is growing at this extreme, you know, at a very triple-digit rate. So, you know, that is also a portion of that revenue. Got it. Okay. Thanks again. Thank you.
spk06: Thank you. Our next question will come from Stephanie Davis with SVB Mary. Please go ahead. Hey, guys. Thank you for taking the question.
spk07: So the first one I have is about Rx Savers, if you guys would be able to take a closer look at the asset as a transaction. Can you tell us more about the capabilities that it would add and maybe any impact that could have to RevPur if you are expanding on the capabilities potential? Also, I was hoping to hear more about your philosophy when you acquire some of these like-for-like assets and if you plan on keeping the brand the same or eventually rolling the brand and the app into the the broader good Rx umbrella.
spk11: Thank you very much for the question, Stephanie. So we acquired RxSaver on April 30th for $50 million in cash. RxSaver shares our mission of helping Americans get the health care they need, price they can afford, is passionate about making health care more convenient, accessible, affordable. The RxSaver acquisition allows us to extend our reach in prescription transactions by adding a small consumer base and a brand that's known and resonates with a subset of consumers. The company has a talented team and knows the prescription transaction space well. We think they'll be highly complimentary to GoodRx. We do, to your sort of latter part of the question, we intend to keep the brand and believe there are some marketing channels and such that they've used that are potentially things that will be helpful broadly for GoodRx. We're excited to welcome the RxSaver team to GoodRx Relative to Rep or Field, any change would be immaterial. Their business is relatively small here. But I'd say, speaking to philosophy, I think it varies. We've had a series of acquisitions we've done, all of which have been quite successful. Whether we keep the brand, integrate the teams, it is pretty specific to the you know, to the transaction itself and, you know, and what's the work best. And in this case, you know, we'll keep the brand as separate, but we will integrate sort of teams since these are really, really complimentary. But it varies in different cases.
spk07: Super helpful. And if I could sneak in one quick follow-up on the vaccine finder. Because it was such a tailwind of traffic over the past quarter, I was hoping to hear a little bit more about the halo effect and how you're going to be converting some of that traffic into max or subscription users or something else.
spk11: Thank you. I'll speak to that. So, you know, we served approximately 7 million consumers, you know, in the context of this 5.7 million max and the million subscriptions that represent about 1.4 million consumers. We're super excited about that growth. When we look at the vaccine guide, you know, which Doug spoke to a bit, but, you know, provides this amazing vaccine information, it did drive significant traffic to the platform, which, you know, increased awareness of the GoodRx brand. It was a key driver of that increase in visitor count to almost 20 million. But not all of those visitors will immediately become Macs or subscribers. This is just the beginning of our relationship with them. So we definitely do care about that halo of getting people to know about our solutions and then interacting with them more over time. So there could be a lag between an increase in visitor accounts or web traffic and app downloads and that actual conversion to a Mac, a subscriber, or another type of user or revenue on our platform. And our goal is really not to get from visit to conversion as soon as possible. Our goal is to provide value and build relationships so that the consumers choose to use GoodRx over the long run when their need arises. You know, not everybody needs to fill a prescription right now or see a doctor at a given time, but, you know, where we can help consumers with information and resources and be at their side even before they have a specific medical need, we believe they'll choose GoodRx when the need is there. So we're super excited about that we were able to just deliver that service sort of in a time of need for Americans and do, I believe, such a good job of it and just like the long-term benefits it provides us. Thank you very much for the question.
spk06: Thank you. Our next question will come from Charles Rye with Cowan. Please go ahead.
spk00: Yeah, thanks for taking the question. Maybe for Karsten, if you could just help a little bit, I think, to Sean's question. You talked about a jumping off point for MACs at 6.1 million, and clearly from the MAC number you reported, that's kind of 7% up sequentially from If we think about the 20% in the revenue guide kind of implied for second quarter would suggest like $139 million in transaction revenue. That's up about 4%. Can you help us kind of connect the two? Because I guess it gets back to your comments earlier about this backlog of sort of undiagnosed visits that have yet to occur. You know, it sounds like you're really not expecting much of that yet in the second quarter. But as we think about the back half of the year, you know, how much of that is do you think is really recognizable? In other words, given, you know, that's missed business, you know, I would assume there's an assumption that, you know, some of that will just never be recoverable because, you know, just the capacity of our healthcare system in general. But if you could help us kind of connect how to think about those pieces, as we think of our model, because it seems like it would suggest we're having either lower revenue per MAC or, you know, some other dynamic is happening. Thanks.
spk16: Thanks, Charles. Really appreciate the question. First of all, as we've been expecting, we began to see volume increases in Q2 even as the vaccines become more prevalent and widely available. And that's one of the reasons we're guiding to 40% YOY growth at the midpoint or over 40%. YYY growth at the midpoint for the second quarter. With respect to our full year forecast, we do assume doctor visits return to more normal pre-COVID levels in the second half of the year, and we're seeing indicators of that already effectively. To your question on Prescription transactions revenue per Mac prescriptions transaction revenue per Mac is actually up a little bit Versus the prior quarter and total revenue per max of course up quite a bit because our other Revenue is growing so quickly at over 150 percent.
spk06: So both of those numbers are extremely solid at this point Thank you our next question will come from Justin post with Bank of America, please go ahead and
spk15: Great. I think I'll come at it a little bit from an e-commerce angle. Just wondering if you've seen any behavior change with mail order and anything there that could be affecting your business or behavior change with that respect. And then, of course, there has been some concern on Amazon and their kind of latest announcements on new features. Maybe just remind us of your competitive modes and how you're thinking about that. Thank you.
spk11: Yeah. Thank you, Justin, for the question. I'll maybe speak to these together because I think they link together. Amazon acquired PillPack in 2018 and has been trying to grow a pharmacy delivery business. Based on third-party data, they have not been successful. Mail order prescriptions only make up about 5% of fill count in the US. Even through COVID, mail has remained a small piece of overall volume and is now actually starting to decrease as COVID eases. Third-party data indicates that Amazon Pharmacy is not gaining momentum and that their volume remains incredibly small. Amazon also, you know, to your sort of second part of your question, they partnered with InsiderX in November, and that is how they're showing some retail prices that they call PrimeRx. We also partner with InsiderX along with a much broader set of market participants. As we said in the past, we believe the PrimerX card was launched to enable Amazon Pharmacy to display third-party cash prices, not because they actually are trying to send consumers away from Amazon to competing retailers to fill their prescriptions, which is against their fundamental business model. Our view has not changed. Based on our review of Amazon's price comparison tools, we believe it's another attempt at lead generation for mail. And in this time since November, from what we've seen in third-party survey data and heard from industry participants, we've observed almost no usage of PrimeRx at retail. So we do not believe Amazon has, or Mail, these dynamics have impacted our results. It also has not impacted our views of our prospects. In addition, GoodRx is cheaper at Mail about 90% of the time. and offers a lower price at retail almost 100% of the time based on our internal research. I'd have you also remember that 70% of consumers still don't know prescription prices can vary significantly across pharmacies. So if awareness of this topic increases, we believe we will only benefit. So I hope that's a little bit helpful on sort of just where mail has gone overall and speaking to consumers. sort of how little maybe Amazon has affected also the market.
spk15: Great. Thanks. Appreciate it.
spk11: Thank you.
spk06: Thank you. Our next question will come from John Ransom with Raymond James. Please go ahead.
spk13: You know, it's tough to deepen a call to be clever, but I'm going to attempt to be clever, hopefully. You guys will approve of this. So, Carson, as we think about the other revenue growing faster than your traditional generic revenue. How do we think about the long-term effect on gross margin, EBITDA margin, et cetera?
spk16: Sure. Thanks, John, for the good question. And as you think about other revenue, I think that other revenue specifically has two impacts. One, they're going opposite directions. One, increasing and one, decreasing gross margin. I think the dominant one right now is the extraordinarily rapid growth of our subscriptions and our manufacturer solutions offerings. Those offerings in particular are associated with very little cost of sales. In the case of manufacturer solutions, virtually none, since we already have the platform in place and we already have almost 20 million visitors coming to the platform each month to benefit from all those manufacturer solutions offerings. So I think on a net basis, While you do see the impact of telehealth impacting cost of sales a little bit, increasing it, that's largely ameliorated by the effects of the very fast-growing manufacturer solutions and subscriptions line. So I think from our perspective, we don't see gross margin moving significantly. We see the trajectory that we've showcased historically basically potentially continuing in roughly the same form going forward.
spk13: Okay. And then my other question is, as we think about GoodRx Gold prices, I mean, they're roughly half of your kind of best price. So you have the subscription revenue, then you have basically 50%, as far as we can tell, average off your normal transactions. So how do you think about the value of a subscription customer, either through Kroger or through your Just Gold program, versus somebody that pops in and pays a price that's roughly 100% higher? on a kind of apples-to-apples basis.
spk11: Yeah. You know, I'm not sure that those are the price differences between them, but what I would say is that, you know, we're really excited about the growth of GoodRx Gold. You know, we're able to offer consumers more value. We do receive higher lifetime value from those customers, and it drives better revenue predictability for us. You know, we're nearing a million subscription plans. I think we hadn't spoken before about sort of that these represent more than one people, more than one person, because of, you know, that family plans have multiple individuals. So that's almost 1.5 million members. So we, together with our 5.7 sort of million max, you know, we're serving approximately 7 million Americans with our prescription-related offerings. And, you know, we're excited to continue rolling out to those gold members more and more services that make that an even more compelling offering, just like we've been doing over the last several quarters. Really appreciate the question.
spk06: Thank you. And our next question will come from Jalendra Singh with Credit Suisse. Please go ahead.
spk10: Thank you, and hello, everyone. Following up on the previous question on Amazon, Amazon, are you finding that pharmacies and your PBM partners are willing to work more closely with you in light of Amazon's positioning? And in what capacity would that show up in your results? Will PBMs give you better pricing? I assume you already have some of the best prices there.
spk11: Thanks, Jalendra, for the question. Yeah, as we spoke to, you know, we, you know, based on sort of the third-party data and surveys, We've observed almost no usage of the Primer Racks at retail. And on the mail, third-party data suggests it's a very small portion of any mail volume. So it's not necessarily causing any acute impact there that people might drive, I think, as time passes people away. concern about Amazon has only decreased. You know, I'd say that our relationships with pharmacies, you know, we continue to work even more closely with pharmacy partners and PBMs. You know, the major pharmacies, you know, who are primary partners, you know, as well as sort of grocers and smaller chains, you know, we're working on programs with all of them, to innovate and improve various offerings. One way that does come through is improved pricing, which definitely occurs in specific cases. I spoke to just that one stat on pricing relative to that offering, but we want to be always this best price for consumer. We care about sustainably just allowing consumers across the board to get access to affordable, convenient prescriptions without any of the complexities they might otherwise have to face. So we've seen improvements in contracting, pricing, and, you know, in discussions to add, you know, other functionality, other integrations. So lots of opportunities. I'll let Karsten sort of add to that.
spk16: Hey, Jalendra. It's Karsten. I think the one other thing I'd add is you alluded to sort of consumer pricing, I think, in the question as well. of us versus Amazon. And on mail, like 90% plus percent of the time, our pricing is better than Amazon's, according to our data. And just regular retail, we're better priced almost 100% of the time. So no one's been able to touch us in terms of us being able to do exactly what Trevor said, which is offer the best price virtually all the time.
spk10: Okay, just one quick clarification on RxSaver. The fact that RxSaver and GoodRx both follow the multi-PBM model, what is the overlap between your PBM partners?
spk11: Sure, thank you. Yeah, so there are some additional PBM partners as well as some new PBM partners. However, in general, we've continued to add PBMs, improve contracts, and all of those dynamics have stayed the same and we're in an excellent position. Thank you very much.
spk06: Ladies and gentlemen, this concludes today's question and answer session as well as today's conference call. Thank you for your participation. You may now disconnect and have a wonderful day.
Disclaimer