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spk13: Ladies and gentlemen, thank you for standing by, and welcome to the GoodRx second quarter 2021 earnings conference call. As a reminder, today's conference is being recorded. I would now like to introduce your host for today's call, Whitney Notaro, Vice President of Investment Relations. Ms. Notaro, you may begin.
spk10: Thank you, Operator. Good morning, everyone, and welcome to GoodRx's earnings conference call for the second quarter of 2021. Joining me today are Doug Hirsch and Trevor Bezdek, our co-founders and co-chief executive officers, Karsten Bowerman, our chief financial officer, and Bansi Nagy, our president of healthcare. 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, our manufacturer solutions offering, 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 for many future results, performance, or achievements expressed or implied by the forward-looking statement. Factors discussed in the risk factors section of our quarterly report on Form 10-Q for the quarter ended June 30, 2021, an annual report on Form 10-K for the year ended December 31, 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 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 the replay of this call will become available there shortly as well. With that, I'll turn the call over to Trevor.
spk09: Thank you, Whitney, and thanks to everyone for joining us this morning. I'm proud to report another quarter of strong performance for GoodRx. Our track record of strong, profitable growth continued in the second quarter, with revenue growing 43% year over year, a rapid reacceleration relative to average growth of approximately 31% for the trailing 12 months through March. This combined with an adjusted EBITDA margin of 30.9% makes us what many call a rule of 70 company, much better than a traditional rule of 41, which we believe is unique at our size and in our space. Revenue grew to a record $176.6 million, even while we believe the backlog of undiagnosed conditions continued to grow. In fact, in our prescription transactions offering, our monthly active consumers grew a solid 36% year over year. Adding subscribers to that figure, our aggregate prescription-related user growth was above 40% year over year. These positive results were fueled by our ability to extend our platform, from our historical focus on prescription discounts to today, where we impact almost 20 million Americans a month, including healthcare professionals who make up about 17% of our website visitors, and have built successful subscriptions, pharma manufacturer solutions, and telehealth offerings that are growing rapidly. almost doubling and tripling respectively in the case of the first two. A growing extensible platform is the foundation allowing us to continuously offer even more valuable services to our healthcare providers and consumers. For example, our Surescripts relationship, which Doug will discuss further, allows us to serve healthcare providers and their patients by providing real-time drug discount pricing in electronic health record systems that delivered almost 2 billion prescriptions last year. Another example is our strategic agreement with GoHelp, which marks an exciting first step into the insurance marketplace space for us. And within GoodRx Gold, our subscription program that provides two times the LTV of our prescription transactions offering, we now offer Gold at Rite Aid's over 2,000 pharmacies. We continue to be excited about the rapid evolution of our prescription transactions offering as well. Between it and our subscriptions offering, We helped a record 7.5 million consumers save on their prescriptions by using CoderX at one of our 70,000 participating pharmacies. We also expanded the marketplace with the addition of additional PDMs to our network. I couldn't be more pleased with our results or the progress we are making toward our goal of reinventing digital health. As Carson will discuss shortly, we expect nearly 40% revenue growth in the third quarter. The strength of the relationships we've built with healthcare providers, pharmacists, and pharmacies pharma manufacturers, and most importantly, consumers, in combination with our highly accessible platform and offering, puts us in a great position for years to come. With that, I'll turn the call over to Doug, who will speak to some recent successes that further our mission to help Americans get the healthcare they need at a price they can afford.
spk04: Thank you, Trevor. For almost a decade, GoodRx has focused on building the strongest consumer brand in healthcare. We have developed trusted relationships with millions of Americans who in turn recommend us to their friends and family because we offer simple, honest solutions to the frustrations and complexities of U.S. healthcare. People rely on GoodRx as an advocate they can turn to for help. We know that most patient journeys involve a visit to a doctor's office or clinic, and we recognize the essential role doctors, pharmacists, and medical professionals play in determining the best treatment. They know as well as we do that prescribing a treatment a patient can't afford isn't really a treatment at all. That's why physicians have embraced GoToX since our inception. Put simply, we help healthcare providers do what they do best, help their patients. Working with healthcare providers is a large part of what we do. Our products and services help providers find affordable solutions for their patients, reducing the time they spend searching on their patients' behalf. As Trevor mentioned, just this month, we announced an exciting new integration with SureScripts, the nation's leading health information network, to provide real-time drug discount pricing and electronic health records. By working with SureScript, which delivered nearly 2 billion electronic prescriptions last year, we can help providers make more informed decisions and address patient prescription cost concerns at the point of care. We also work with offices and clinics around the country to provide GoodRx educational content for their patients, with hundreds of thousands of healthcare providers distributing our collateral. Remarkably, over 2 million prescribers have a patient who has used GoodRx. and about 80% of surveyed prescribers have recommended GoodRx to their patients. All told, healthcare professionals represent more than 17% of the people who visit the GoodRx website, and we're delighted that healthcare providers reward GoodRx with an NPS of 86. We believe that our alignment with providers and our mutual dedication to helping their patients is a fundamental and flourishing part of our success. But there's one area where doctors and patients alike have consistently asked us for more help, brand name prescriptions. GoodRx has helped millions of Americans to now be able to widely afford generic prescriptions, but brand prescriptions often remain unattainable to consumers due to cost. Pharma manufacturers want to provide affordability options, but even with the $30 billion they spend annually to reach consumers, directly or through providers, they struggle to gain awareness and improve access and adherence for their medications. With our scale and reach across consumers and providers, we help address this challenge by delivering innovative solutions that connect doctors, patients and pharma manufacturers in a more efficient and effective way. In less than a year, our pharma manufacturer solutions team has reimagined the way patients and providers learn about, afford, purchase, and stay on brand name prescription treatments. We focus on three shared areas of need, boosting awareness of pharma manufacturer savings programs among patients and prescribers, improving patient access to these programs, and increasing adherence to the brand medications that patients need to stay healthy. With awareness, access, and adherence front of mind, we believe we are creating novel and easy ways for, on the one hand, consumers and physicians to directly engage, enroll, and qualify for pharma manufacturer programs and resources, and on the other hand, for manufacturers to support both the patient and the physician through all stages of the healthcare journey. With that, I'll now turn it over to Bansi for our initial feature presentation on our exciting and rapidly growing pharma manufacturer solutions offering.
spk20: Thank you, Doug. I'll start on slide three. Pharma manufacturer solutions is GoodRx's fastest growing offering with the most attractive economics. This compelling suite of solutions creates a highly effective way for pharma manufacturers to reach patients and providers, leveraging our almost 20 million monthly visitors made up of both consumers and healthcare providers, as well as the 20% of searches on our platform that are for brand drugs. In fact, Our analysis shows that among the top 100 branded medications, GoodRx has an average of 10 times more traffic to the drug savings page for these brands on our site compared to the same brand savings page of the manufacturer's own websites. As a reminder, branded medications present consumers and HCPs with a unique set of challenges when compared to generic medications, as they are often much more expensive with or without insurance. To help address this, we built pharma manufacturer solutions to partner and innovate with drug manufacturers. In the last two years, we have scaled this offering rapidly, growing year-to-date revenue nearly three times year-over-year with highly attractive economics and delivering over 150% net revenue retention, meaning we have grown revenue from the same clients more than 50% compared to the same period last year, a statistic we're very proud of and that we believe evidences the value we provide manufacturers. We work with 19 of the top 20 U.S. farmer manufacturers and with approximately 100 brands across the more than 550 manufacturers in the U.S. Approximately 85 percent of the revenue related to this offering is substantially flat fee-based, making the revenue model both very attractive and highly predictable. More specifically, our substantially flat fee-based model consists of fixed commitments, typically for a term of one year. that have paid out over the term of the agreement. In a few slides, I will show why we are so optimistic about our growth opportunities ahead, which build on our success today. Turning to slide four. While we are best known for a decade's worth of experience saving consumers money, we've also built broad and deep relationships with providers. Our good Rx for providers users appreciate our easy to use solutions that help their patients support to start and stay on their therapies. 17% of the visitors to our website are HCPs, and more than 2 million prescribers have had a patient who has used GoodRx. Our surveys show we have built our brand awareness among healthcare providers up to an impressive 88%, with 80% of providers recommending GoodRx to their patients. We've also found that 93% of healthcare providers say that their patients' access to medication improved when using GoodRx, and 87% said that their patients' adherence increased. This translates to a high net promoter score of 86 from healthcare providers. We believe our trusted brand, increasing scale and reach, and deep relationships with stakeholders throughout the healthcare ecosystem uniquely position us to be the leading healthcare platform to connect healthcare providers and their patients with pharma manufacturers information, access, and affordability solutions. We continue to help consumers financially, saving them over $30 billion today. This is not just about saving money for consumers, be they insured or uninsured. For many, this is often the difference between someone's ability to start or stay on their medication. We do all of this in a seamless, intuitive way for consumers, leading to a very high net promoter score of 90. All of these dynamics offer an unparalleled platform for pharma manufacturers to reach the bottom of the funnel, reaching both highly engaged healthcare providers and consumers who are searching for affordability solutions. Looking at slide five, Let's set the stage with the problem. Brand medications tend to be expensive, and insurance coverage is often complicated and restrictive. Sixty-nine percent of consumers have made personal sacrifices in order to pay for their medications, and 70 percent of HCPs cite high cost as the primary reason patients do not pick up prescriptions. Pharma manufacturers spend an estimated $30 billion annually to address these and other challenges, either to reach consumers directly or by healthcare providers. Even with this large span, these challenges persist, and manufacturers are looking for ways to more effectively improve this dynamic. Several factors, not just COVID, have exacerbated the challenges for manufacturers and shifted the way in which they communicate with HCPs. As of September 2020, in-person HCP pharma sales access had fallen by 70% when compared to pre-pandemic level. As a result, manufacturers are shifting their spend from offline to digital channels. Manufacturers' ability to digitally reach their intended audience is hindered by changes in the Internet advertising landscape, such as IDFA and the move to a cookie-less world. HCPs are critical, not only because they make the prescription decisions, but also as a key resource for helping patients navigate difficult and often stressful decisions throughout the patient journey. Costs are going up. Branded medications have increased 78% since 2014. 30% of all prescriptions are left unfilled due to cost. While many manufacturer-sponsored programs exist, patients have low awareness of their existence, and thus their utilization is very low. Further, these challenges also impact HCPs. They know affordability is a critical topic for their patients, and providers and their staff spend significant time every week navigating administrative tasks related to drug access and or trying to help their patients get access to these programs. Moving on to slide six. Pharma manufacturers deploy strategies across three key stages of the patient journey, awareness, access, and adherence. They deploy their awareness strategies through an array of channels with decreasing efficiency given some of the deployment challenges we just discussed. To improve access, manufacturers have developed strategies primarily focused on affordability. These programs include copay cards, which buy down a commercially insured member's copay amount funded by the manufacturer. In addition, they provide sample drug programs and operate large call centers to help address challenges patients and physicians face. Manufacturers are also heavily focused on increasing adherence, long a holy grail in the industry. While forgetfulness can play a role in adherence, it is more commonly overshadowed by how people feel once they are on their medications and questions about how better they should remain on therapy. Pharma manufacturers have been working to solve these challenges for quite some time. and have deployed both digital and call center-based solutions to try and address non-adherence. Turning to slide seven. GoodRx understands the patient journey, given our extensive experience in the prescription market. With that knowledge as our foundation, we've been reimagining the way patients and HCPs interact with the healthcare system. We currently operate solutions across the awareness, access, and adherence patient journey, and continue to innovate more solutions. These offerings are data-driven and draw from a decade's worth of insights and learnings about our consumer and HCP audiences. By leveraging our almost 20 million monthly visitors, GoodRx's audience has the attractive profile that manufacturers seek to reach. Our awareness solutions primarily focus on targeted, high-quality content. GoodRx has a highly regarded editorial team focused on prescription medications and whose work consistently ranks in the top of search results. Written content is a great solution for many consumers, but we also recognize that consumers are increasingly leveraging video as a medium to explore and digest content. Hence, we recently acquired HealthyNation. With its award-winning staff and extensive library of premium clinician-reviewed videos, HealthyNation complements and deepens our capabilities, offering highly relevant and credible video content shot with experts in their respective fields and spanning more than 90 conditions across 150 health categories. GoodRx now offers pharma manufacturers numerous ways to leverage highly relevant content to help drive their awareness initiatives. Turning to access solutions, as our site visitors navigate to find drug savings, we offer pharma manufacturers an ability to fully integrate their affordability programs via our easy-to-use patient navigator platform, driving both engagement and utilization. Our adherence solutions offer manufacturers the ability to leverage our direct communications and deliver relevant data-driven ways to help patients get on and stay on therapy. These solutions include text and email messaging, as well as the technology-enabled nurse chat functionality to address adherence challenges patients face. Moving on to slide eight. By driving awareness, access, and adherence with our multichannel approach, we help healthcare providers who use GoodRx and their patients to achieve better outcomes. manufacturers are able to encourage use of their innovative and life-saving products and services, increasing LTB at a compelling ROI. By way of example, 2020 Programs is one of our customers, a top 20 manufacturer, delivered them an ROI of more than 8x across five brands. Our net revenue retention with that customer is 170% year-to-date. With the help of GoodRx, consumers are easily able to find authoritative educational resources on medications and conditions, including written and video content. Our visitors can also seamlessly access fully integrated savings and support solutions, such as via our partnership with Sanofi, a top 10 manufacturer. This encompasses the Sanofi portfolio of insulin branded drugs and leverages our patient navigator, access and affordability integration, enabling a consumer to find, register, and receive the discount offer that can be used at any pharmacy. Commercially insured members pay zero, while uninsured patients pay a $99 cash price for Sanopi products. This is a great example of our ability to help both uninsured and insured patients. Additionally, healthcare providers see multiple benefits. We're a highly valued resource where they recommend to their patients our trusted educational resources and affordability solutions. This both reduces time spent searching for information on the patient's behalf while also increasing the chances of medication adherence. All said, we are able to offer extremely effective solutions that deliver value to manufacturers, consumers, and healthcare professionals. Turning to slide nine. While we are proud of the tremendous progress, we are still in the early stages of the pharma manufacturer opportunity. Today, we have relationships with just 10% of the estimated 550 manufacturers serving the U.S. market, creating an opportunity for us to continue to scale. We made the strategic decision to target the top 20 farmer manufacturers, as they represent almost half of the $30 billion TAM. We are proud to have successfully secured relationships with 19 of the top 20 manufacturers and have already set our sights on the enormous upside potential ahead as we continue to penetrate these accounts to increase our 4% sell-through of the roughly 1,000 brands represented in this cohort. We also had an opportunity to increase the number of solutions each brand deploys with us. Currently, our customers average three solutions per brand, up 2x year over year. We also continue to innovate and increase the number of solutions we offer. I'll close with slide 10. We are excited about the trajectory of pharma manufacturer solutions. It is not only the fastest-growing offering, but also has the most attractive economics at GoodRx, and we believe we are in the early innings. With our year-to-date top-line growing approximately 3x year-over-year, most of which drops to the bottom line, we certainly beat any rule-off benchmarks. Our innovative solutions help address awareness, access, and adherence challenges faced by manufacturers, patients, and healthcare providers, seamlessly creating a win-win environment for all stakeholders. Our existing relationships are sticky, and the offering has been able to not only deliver rapid growth, but also an impressive net revenue retention in excess of 150%, representing expansion with existing customers. We have a significant opportunity to not only further penetrate the top 20 pharma manufacturers, but also into the long tail of 500 or so other manufacturers. We believe we are well positioned to capitalize on the macro shift to an increasingly digital mix. Pharma manufacturers increased their digital ad spend by 43% in 2020. We look forward to helping even more manufacturers and more brands support patients and their physicians through the healthcare journey. We will continue to invest in scaling our commercial and product innovation efforts to take advantage of this opportunity. With that, I'll turn it over to Karsten to discuss our second quarter financial results as well as our guidance.
spk08: Thank you, Bansi, and good morning, everyone. From time to time, we plan to focus on other areas of GoodRx and provide incremental feature presentations. In the meantime, I'm excited to speak about our second quarter results. This was another strong quarter for our business. We continued to deliver record revenue at attractive margins while growing the number of consumers we serve across our platform and adding incremental PBMs. During the quarter, we increased our reach to over 7.5 million Americans through our prescription-related offerings, with max growing 36% year-over-year to a record 6.0 million, and subscription members reaching over 1.5 million members in connection with our 1.05 million subscription plans. We continue to successfully drive consumers to our subscription offering, with our subscriptions growing 86% year-over-year to over 1 million across our two subscription programs, GoodRx Gold and the Kroger RX Savings Club powered by GoodRx. Including family plans, each subscription represents, on average, approximately 1.5 Americans. Our pharma manufacturer solutions offering continues to grow at a rapid pace, and we are extremely excited about this amazing opportunity that Bansi and team are pursuing with great momentum. Finally, Care continues to be a growth engine for us with its exceptional user experience. The rebrand from Hey Doctor to GoodRx Care, in combination with the continued work on cross-platform integrations, and a unified user experience are delivering strong results, with over 40% of telehealth visits now converting into Gold subscriptions. More broadly, approximately 60% of care visits are driving incremental revenue through our other offerings, up from 30% earlier in the year. We believe these types of cross-platform integrated experiences will continue to enhance our ability to cross-sell going forward, increasing the stickiness and LTV of our users. We're excited to announce a number of new collaborations we believe will further extend our reach and deliver more value to consumers across more stages of their healthcare journey. In the second quarter, we entered into an agreement with SureScript to be the prescription cash discount price provider for its nationwide network, connecting virtually all electronic health record systems, pharmacies, and health systems. With this new integration, prescribers using SureScript's real-time prescription benefit will be able to provide uninsured patients and patients whose price information isn't readily available from their PBM or health plan with drug discount pricing from GoodRx so they can make more educated decisions about their care. Integrating GoodRx discount pricing will support getting cost information into the hands of patients and increasing our provider-to-consumer reach. As Trevor mentioned, we also entered into a strategic agreement with GoHealth, a leading health insurance marketplace and Medicare-focused digital health company, to help more Americans get the health care they need at a price they can afford by bringing Go Health's Medicare enrollment and engagement solutions directly to the millions of Americans who visit GoodRx monthly. GoodRx consumers who want to explore Medicare coverage options and understand potential benefits or savings will be able to access this information on the GoodRx platform, while Go Health consumers will also have access to GoodRx prescription discounts. Through this agreement, we will be able to help the millions of GoodRx consumers who are eligible for Medicare find and enroll in the best Medicare coverage plan that fits their needs. We will also expand our reach by giving GoHealth members access to affordable choices to further improve health outcomes. This marks an exciting step into the insurance marketplace space, which can create significant value for the consumers on our platform, given that many of them have third-party payer coverage and many of our users would like GoodRx to provide these services and advice in this area. GoodRx Gold continues to grow rapidly as we expand the program's network, reach, and benefits. During the quarter, we entered into multiple collaborations to deliver more value to more consumers across the nation. We strengthened the Gold network by adding Rite Aid's 2,000-plus locations to our subscription savings program, substantially growing the footprint of participating pharmacies delivering greater savings on prescriptions nationwide. In addition, we are developing strategic relationships with enterprise-level companies to build on our mission of providing Americans with access to affordable and convenient health care. This quarter, we announced we are working with DoorDash and USAA to provide Dashers and USAA's 13 million members with discounted access to gold. With a gold membership, Dashers and USAA members can pay $10 or less for over 1,000 prescription medications, connect with a healthcare provider from home for a low rate, and receive free mail delivery for certain prescriptions. As Bansi highlighted earlier on the call, we continue to make impressive progress with our rapidly growing pharma manufacturer solutions offering, streamlining access to patient savings programs on the GoodRx site by working directly with leading manufacturers. With the expansion of our integrated patient savings programs, consumers can now seamlessly qualify and register for copay cards for certain drugs within the GoodRx experience. We are excited to help consumers access these affordability solutions and create innovative ways to connect with consumers and manufacturers. Moving to our second quarter results, revenue for the quarter was $176.6 million, growing 43% year over year. Prescription transactions revenue grew 32% year-over-year to $144.9 million, driven by a 36% year-over-year increase in our monthly active consumers, which reached a record $6.0 million. This was partially offset by a year-over-year decrease in prescription transactions revenue per MAC, solely related to script cycle, which, as discussed in prior calls, has lower revenue and contribution per consumer. GoodRx prescription transaction economics have otherwise remained consistent. 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, pharma manufacturer solutions, and telehealth. When presented for a quarter, monthly active consumers represent the average of the calendar months in the quarter. The second quarter MAC number does not include RxSaver MACs. Typically, we begin including MACs in the first full quarter post-acquisition, which would be the third quarter of 2021. RxSaver's prescription transactions revenue and MAC count are small relative to GoToRx's scale. This quarter, we disclosed subscription revenue for the first time, which had previously been disclosed as part of our other revenue and which grew 125% to $14.3 million. We finished the quarter with over 1 million subscription plans and over 1.5 million Americans benefiting from our subscription offerings since our family subscriptions generally serve multiple consumers. Our subscriber count and subscription revenue should provide a more holistic view of our growing consumer base and reflect 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 while creating even more predictable revenue for us. It addresses similar consumer needs and generally offers even greater savings on prescription medications. Many times, consumers go through the same funnel when 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 both consumers and GoodRx generally generate more value when this happens. As we continue to grow our subscription offering and it contributes more meaningfully to our financials, we expect to increase conversion from MACs to subscribers, which should result in stronger consumer relationships and in more value over time. Looking at our total prescription-related offerings, we had 6.0 million MACs in our prescription transactions offering and over 1.5 million members associated with our 1.05 million subscriptions. In addition to monetizing MACs and subscribers, we were able to further monetize a portion of the millions of visitors on our platform with offerings such as telehealth and pharma manufacturer solutions, delivering more value to consumers and increasing the scale of our prescription-related offerings. Other revenue, which now excludes subscriptions revenue, grew 136% year over year to $17.4 million, primarily driven by growth in pharma manufacturer solutions, which makes up a significant majority of other revenue, as well as growth in telehealth. The growth reflects the incredible demand for these 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. Our prescription transactions and subscription offerings continue to face headwinds related to COVID-19. While we've seen moderate sequential improvements since the beginning of the year, new therapy starts and prescription volumes remain below normal levels, and the backlog of misdiagnoses continues to increase, now at over $1.2 billion, according to IQVIA. Turning back to their second quarter performance and moving down the P&L, cost of revenue is $11.1 million, or 6.3% of revenue, compared to $6.8 million and 5.5% of revenue in 2Q20. The increase was driven by an increase in outsourced and in-house personnel-related consumer support expense to support our growth, and increases in hosting expenses, merchant fees, and allocated overhead. Product development technology expenses were $29.6 million compared to $12.0 million in the comparable period last year. This increase was primarily due to continued investments 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 expense was 11.3% of revenue compared to 8.7% of revenue in 2Q20. We continue to invest in product innovation to create the best consumer experience possible, scale our existing offerings, and develop 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 $88.4 million compared to $51.9 million in 2Q20. We increased advertising spend by $24.4 million year over year and continue to invest in our incredible team with a 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 expenses of percent of revenue grew year over year, making up 46.7% of our revenue in 2Q21 compared to 41.6% last year as we proactively reduced advertising spend in the comparable period in 2020 at the onset of the COVID-19 pandemic. General and administrative expenses were $39.6 million compared to $6.3 million in the second quarter of 2020. The majority of this increase, $24 million, or approximately 72%, was due to stock-based compensation expense relating to the non-recurring co-CEO awards made in connection with the IPO. Excluding this and other adjustments including non-cash and M&A and financing-related items, Adjusted G&A as a percent of revenue is 5.0% compared to 4.1% in 2Q20, with the incremental cost primarily associated with starting to operate as a public company at the end of September. Net income grew 14% year-over-year to $31.1 million, which was impacted by a $37.3 million tax benefit as well as by stock-based compensation expense of $40.7 million in the quarter, $24 million of which related to the non-recurring co-CEO grants made its time of the IPO. Adjusted net income grew 9% year-over-year to $35.1 million. Adjusted EBITDA grew 11% year-over-year to $54.6 million. Adjusted EBITDA margin continued to be strong at 30.9%, 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%. Our adjusted EBITDA margin decreased by approximately 910 basis points year over year due to an increase in sales and marketing spend as a percent of revenue compared to the second quarter of 2020, in which, as I mentioned earlier, we proactively reduced our sales and marketing spend at the onset of the COVID-19 pandemic. The decrease was also due to continued investments in product development technology, the growth of our telehealth offering, and investments in our general and administrative infrastructure as we began operating as a public company. We continued to generate strong cash flow with net cash from operating activities of $34.9 million for the quarter. And now, turning to guidance. For the third quarter of 2021, we expect revenue of $193 to $197 million, reflecting 37% to 40% year-over-year growth. We believe this growth will be driven by a triple-digit increase in other revenue, based on the continued momentum in our pharma manufacturer solutions offering and in our subscription revenue, combined with continued growth in prescription transactions revenue. On the adjusted EBITDA front, we expect an adjusted EBITDA margin of approximately 30% for the third quarter. We continue to expect our non-prescription transactions transaction revenue offerings, which are reflected in subscription revenue and other revenue, to make up a higher percentage of our total revenue. In the second quarter, those items made up 18% of total revenue, an increase of approximately 150 basis points compared to the first quarter, and we expect that to increase by another approximately 200 basis points to reach approximately 20% of total revenue in the third quarter. This means prescription transaction revenue, which is driven by MACs, We'll make up a smaller share of total revenue as more visitors and MACs convert to subscribers and as we continue to grow our pharma manufacturer solutions. We're excited that we delivered strong second quarter revenue above the high end of our guidance range and returned to pre-COVID revenue growth of 40% plus. We continue to have strong confidence in the outlook for our business. However, based on the general uncertainty around the evolution of the pandemic, we will not be updating our full year guidance at this time. Moving on to our recent acquisition and to some tax topics. First, subsequent to the second quarter, we closed the acquisition of RxNext, a prescription technology company that we acquired to support our prescription transaction offering. They have unique technology that will allow us to partner with health plans and PBMs in new ways to better service their members on funded benefit plans. Similar to our RxSaver and Healthy Nation acquisitions, RxNext does not immediately contribute material revenue to GoodRx. In fact, RxNext generated less than $1,000 of revenue year-to-date. The platform will augment our existing prescription transactions offering via innovative technology and domain expertise, enabling long-term growth. Our assumptions related to RxNext are reflected in our revenue and EBITDA guidance. Since the company is practically pre-revenue, our forecasts and guidance include no revenue and no max from RxNext in 2021. We expect the company to generate revenue at some point in mid to late 2022 and to start scaling in 2023. Second, and before I conclude, one note on our income tax provision or benefit. While the tax benefit in the second quarter is meaningful, we do not expect it to be recurring. However, we continue to expect unpredictability in our future tax provision or benefit amounts due to multiple elements and estimates that impact the interim income tax accounting calculations. One of the most significant elements is excess tax benefits or deficiencies resulting from stock awards. This element is challenging to forecast as it's generally driven by factors outside of our control, such as the stock trading price and the decision of employees relating to their award. This is one of the reasons we are presenting adjusted net income and adjusted tax. We are very pleased with our strong second quarter results, including the re-acceleration of our revenue growth to 43% year-over-year, reaching $176.6 million, and our adjusted EBITDA margin of 30.9%. As Trevor said, combining our growth and margin makes us a rule of 70-plus company, which is quite a unique achievement at our large scale. Our 36% monthly active consumer growth and the extension of our reach to over 7.5 million Americans which includes those served by our higher LTV subscription offering, reflect how big we have become. What excites us most, however, is how brighter growth prospects for the future are. We're prepared to be there for consumers as they resume their interactions with the healthcare system and start clearing the diagnosis backlog over the next few quarters. We believe that we are uniquely positioned to capitalize on what would be a new, more digital, normal in health care as one of the most trusted brands in health care with our high consumer NPS and our consumer centric philosophy. We see innumerable opportunities to further disrupt the industry with new products that reimagine health care, making it more affordable and convenient for even more Americans. We are building the leading consumer focused digital health care 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. 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.
spk13: Thank you. To ask a question, you will need to press star, then 1 on your telephone. To withdraw your question, please press the pound key. We ask that you limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from the line of Stephanie Davis with SVB Lorinc. Your line is now open.
spk16: Hey, guys. Congrats on the solid quarter. And I just want to say I applaud the change in messaging. I really appreciate some of the greater color you guys gave on the manufacturer solution.
spk09: Thank you. Thank you very much.
spk16: We see marketing spend increase pretty dramatically across the direct-to-consumer health tech space this quarter, just given some cost increases at the large digital ad players. So I was hoping we could dig a little bit more into your marketing channel mix and maybe talk about how we could see that shift going forward in light of some of your partnership announcements this quarter.
spk09: Thank you very much, Stephanie, for the question. We're extremely proud of our great results in the second quarter with record revenue, users, and adjusted EBITDA. When it comes to marketing spend, we're continuing to see very strong performance and business strength with consistent payback periods, even with increasing marketing spend. You know, one of the keys for this great payback period is that our most significant source of traffic and consumer acquisition is unpaid, word of mouth referrals, especially by prescribers. 2 million of whom have a patient who has used GoodRx, and 80% of whom recommend GoodRx. It's now easier than ever for healthcare professionals to recommend GoodRx with our recent SureScripts agreement that will put our GoodRx prices in the majority of EHRs in the U.S. We're also doubling down on our research and content efforts as we believe the right content and insights further empower consumers, increase engagement, drive customer acquisition, and propel even faster growth in our manufactured solutions offerings. As we spoke about, we also acquired Healthy Nation earlier this year and are investing in this in-house as well. In addition to this, we continue to test new direct consumer channels as well as investing in our B2B efforts like our recent strategic agreements with great companies like DoorDash and USAA. I'll also add that search and Facebook do not make up a material piece of our user acquisition. We have great diversification on user acquisition between paid and unpaid and across the paid channels. And, you know, as I said, unpaid is the largest channel.
spk16: Now, for a follow-up on the flip side of that question, are you starting to see some of these digital health players have inbounds about advertising on the GoodRx platform? And where is that today in terms of folks that advertise on your platform? That seems like a pretty big opportunity in light of some of the increases in cost for Facebook and Google AdWords.
spk09: Yes, definitely. You know, we have relationships with many of the health tech leaders, and we see many opportunities for all sorts of creative and lucrative partnerships. With our 20 million visitors, we offer an incredibly effective way to reach consumers and healthcare professionals and to support them as they navigate the healthcare system. That can be through integrated solutions like pharma manufacturer solutions. It can be through strategic agreements like the Go Health Agreement we've discussed, which I can also speak more of, or in other ways that help us deliver on our mission to be a trusted advocate. Thank you very much.
spk13: Thank you. Our next question comes from the line of J. Linda Singh with Credit Suisse. Your line is now open.
spk18: Hi, this is Adam on for J. Linda today. Thanks for taking the question, and congrats on the quarter. Going back to the agreement you entered into with GoHealth, I appreciate the opportunities within the context of that partnership specifically, but I'm curious if this marks the beginning of you guys becoming more embedded within the overall insurance infrastructure and not just in Medicare, but with commercial plans as well. Will this RxNext acquisition help facilitate that, if so, or how should we be thinking about that?
spk09: Thank you very much, Adam. While GoodRx helps consumers with many healthcare challenges, insurance is a category we haven't directly addressed. The reality is about 75% of our users have insurance, with over 30% on Medicare. We have almost 20 million visitors who come to our platform each month, and this is another example of us being their trusted advocate, further delivering on our mission to help more Americans get the healthcare they need at a price they can afford. The GoHealth agreement delivers more value to our users, and also opens a new acquisition channel. Our agreement allows us to help more of our consumers who are Medicare eligible find and enroll in the best Medicare plan that fits their needs, and it expands our reach by giving Go Health members access to the affordable choices offered by GoodRx to further improve their health outcomes. As you noted, this marks an exciting step into the insurance marketplace, which can create significant value for us and for consumers on our platform. And this is also only one of many platform extensions you should expect to see as we take our large and growing audience of users and help them navigate their entire healthcare journey. I'd also like to speak to RxNext. RxNext is a prescription technology company that we acquired. They have unique technology that lets them work with health plans and PBMs in new ways to better service their members on funded benefit plans. As Karsten mentioned, They are a pre-revenue company with no immediate impact to our financials, but they have a few incredibly smart people building interesting things, and we can take their domain expertise and technology and roll out new solutions that further grow the scale of our business. Thank you very much.
spk13: Thank you. Our next question comes from the line of Mark Mahaney with Evercore ISI. Your line is now open.
spk12: I want to ask about the pharmaceutical manufacturers' solutions program. investment opportunities. You know, this presentation was very helpful, and you clearly have laid out what should be a really large market opportunity. You should be well positioned against it. You talk about it having very attractive economics. You're tiny now, I mean, against that market opportunity. So part of me wonders why you aren't more aggressively investing against that opportunity. And so the crude question would be, you know, if you were going to put $10 million against investing against that opportunity, how would you spend it? Like, talk about how you invest and spend against what's a really large opportunity? And then second, please, the uncertainty around COVID and not having full-year guidance. Is there something in particular that's different that you're seeing in the business that gives you greater uncertainty than happened earlier this year? What is it that's – which part of the business seems to be uncertain, more uncertain than normal? And what's obviously been very uncertain last year that makes you not want to give – full year guidance. Thanks.
spk09: Thank you very much for the question. I want to briefly highlight GoodRx for providers as I speak about manufacturers. As GoodRx for providers complements what we offer to consumers and is an important part of our pharma manufacturer solutions offering. Since our inception, GoodRx has worked closely with healthcare providers to help patients. A significant portion of users on our platform are providers, and over two million prescribers have a patient who has used GoodRx. We have a brand awareness of 88% among healthcare providers, and 80% of HCPs recommend GoodRx to their patients. GoodRx for providers is our easy-to-use solutions that providers use to help their patients afford to start and stay on their therapies. We provide them with digital tools to easily communicate savings to their patients. We offer access to real-time GoodRx prices. We've discussed a bit the agreement with SureScripts, which is a great example with nearly 2 billion scripts delivered to their system last year. We provide HCPs with educational materials that they can share with their patients. We also have in-office presence in over 400,000 physicians' offices. All of this translates to a high net promoter score of 86 with healthcare providers who use our services. This drives growth in our prescription-related offerings and also allows us to address the full $30 billion of TAM in our pharma manufacturer solutions offerings. And we offer solutions both through GoodRx providers and GoodRx for consumers. And we are continuing to work on enhanced functionalities and new features specific to HCPs, such as the ability to request drug samples or virtual pharma sales rep visits. Speaking to investment in manufacturers, this is an area we care about greatly and that we are investing in. So I'll highlight that we bought Healthy Nation, which was a meaningful investment. And we're also spending on both product and content efforts to support this growth of this business. I'm now going to hand it over to Carsten to speak to your question around COVID.
spk08: Hey, Mark. It's Carsten here. Great to speak with you again. As we think about COVID and more generally, as Trevor said, we're really pleased about the results we've had to date. Very excited about the second quarter. And we feel like we've got the greatest market strength we have ever had, and no competitors have taken share from us at all. So we're continuing to become bigger and stronger in our space. With respect to COVID specifically, shifting to that, we're providing guidance for another strong quarter in Q3. We're looking at 37% to 40% year-over-year growth at attractive margins in the range that we've given. I think longer term beyond that, Our forecast and guidance assumes that volume will continue to increase through the quarter and the second half. We've seen that sequential growth Q over Q so far through the year, and we expect it to continue to do that. If that slows down a little, it will simply increase the backlog and store up future growth potential for us. Realistically, given the timing and magnitude of the inflection that will be associated with COVID, and hopefully that will be an inflection up, Heck, we've seen five or six different models from different cell site analysts, among others, predicting different COVID evolutions. We didn't see the value in updating our full-year guidance and narrowing the range yet, but we're highly confident in the third quarter and our 37% to 40% growth. Okay. Thank you very much.
spk13: Thank you. Our next question comes from the line of Charles Rhee with Cowan. Your line is now open.
spk17: Yeah, Guy, thanks for taking the questions. Wanted to focus a little bit back onto manufacturer solutions and, you know, really just a couple, two questions around that. You know, of the 20% of people that visit GoodRx with a branded script and that have led to being used, you know, how many of those people have used it that's gone to a Fannium Pharma manufacturer that you have a relationship with the manufacturer?
spk09: Thank you for the question. Bansi, I'll let you speak to manufacturer solutions.
spk20: Hey, Charles, it's Bansi. Could you clarify your question? I'm not sure I fully got it.
spk17: Yeah, I'm just trying to find out right now, you know, because you've signed a number of agreements, but, you know, tied to those agreements, like how many of the people currently have you been able to direct, you know, that have had a search for a branded drug where you were able to get them to a manufacturer that you have a relationship with?
spk20: Yeah, what I can tell you is we're just extremely effective at getting those people a solution that's right for them and helping navigate them through our platform to the best available manufacturer solution that suits their circumstances. Particularly the solution I call Patient Navigator has been extremely effective at that, and that's why we've got such high growth in that part of the business.
spk17: And can you talk a little bit more what the economics are? You highlight them being attractive economics, but, you know, when I think back to companies like, you know, WebMD, right, and when there was a public company, and they would talk about, you know, having kind of preferred, you know, relationships with manufacturers, you know, the help guide, and it would be, I think it was on their website, it wasn't a physician platform. So, you know, the low value is having some type of banner ad or, you know, TV commercial advertising. But, you know, more attractive economics would be, you know, providing, you know, medical content to patients looking for things. You know, here, you know, obviously it's a lot more direct and you're really, you know, getting a good lead generation on patients that likely have a script or are looking for help on that. Can you talk about how the step-ups in value that this is relative to other forms of advertising and how are you – can you just give a little bit more on how to think about that as we think about modeling and the guidance you've given for this segment?
spk20: Yeah, I'm going to take the first part of that question. I'm going to hand it off to Karsten to sort of help you think about structuring the economics and modeling. First of all, we've got about, as I mentioned, about 85% of our business is more in the sort of fixed fee-based deal. And we like that model because it gives us a chance to get value for the integrated solution we create with the manufacturer directly. So, you know, with that, there's usually... a setup fee, and a monthly fee we receive over the term of the contract, typically a year, which means we're fully engaged with the manufacturer in helping tweak and customize to their specific needs. We do have a part of our business that is more CPM, traditional CPM orientation, which might be what you're sort of alluding to when you were referring to other participants in the market. Obviously, that's part of the market we're in, and we think that's important also. Ultimately, what we're trying to do is reach an appropriate patient, interacting with an appropriate physician, and we think our programs are highly effective, and that's demonstrating some of the ROIs that we have with our clients.
spk08: Hey, Bansi, and hey, Charles. This is Karsten here. With respect to the economics, the thing that's really exciting for me as a CFO about this business is not just the fact that it's growing so fast, sort of 4x year over year to 3x year over year, It's also the fact that the costs associated with it are so de minimis. Basically, we already have the 20 million visitors to our platform or the almost 20 million visitors to our platform coming in monthly. And we already have the platform available to be able to place these different tools for manufacturers onto. So the really exclusive incremental cost is fancy sales team who goes out and brings these deals in. The rest of it essentially drops the bottom line. The rest of it is nearly all of it, as you can imagine. given the only real cost here is sales cost and allocated overhead. So it's a very profitable business for us.
spk09: Yeah, what I'll add is pharma manufacturers spend $30 billion to reach buyers and consumers, and we are extremely well positioned to further penetrate that whole TAM. We offer an unparalleled platform to reach patients and physicians through all stages, awareness, access, adherence. GoodRx is the unrivaled source for affordable prescription solutions in America for consumers and providers. We generally have 10x more web traffic for a given medication than the pharma manufacturer has on their own site. We have almost 20 million monthly visitors, millions of brand drug searches on our platform. HCPs and consumers don't trust us. The GoodRx audience embodies the profile the manufacturers are seeking to reach. We think we're highly differentiated in the marketplace. The value and distinctiveness of the solution set is being recognized by the manufacturer customers. as evidenced by the 3X growth in this business year over year and the ongoing trajectory. And our trusted brand, increased scale and reach, and deep relationships across the healthcare ecosystem position us to be the leading healthcare platform to connect people with this pharma manufacturer information, access to portability solutions. Thank you very much for the question.
spk13: Thank you. As a reminder, we ask that you limit yourself to one question. Our next question comes from the line of Ross Sandler with Barclays. Your line is now open.
spk03: Hey, just a quick follow-up on that last question. You guys said that you're ramping revenue per account by like 50%. So is that like more impressions or more leads that you're driving, or is that you're adding additional brands per account, and that's where the uptick comes from? Just any clarification on that would be great. And then shifting gears to the overall P&L. So you guys used to have about a 40% to 50% EBITDA margin a couple of years ago, and we've invested a lot to build out these new other businesses, most of which has come in the form of sales and marketing deleverage. So, I mean, if we just look high level, do we think we're kind of troughing on your overall EBITDA margin here in 21? And, you know, should we think of it as, you know, Maybe we were kind of over-earning before when we were at that 50% level, or could it migrate back up now that we're coming through a lot of the build-out of the other businesses? Just any thoughts high level on the trajectory of your margins would be great. Thanks a lot.
spk09: Thank you very much for the question. As we've spoken to a bit during this call, we have record revenue, record profit, record users. You know, that growth in users, growth in solutions, you know, that is driving this. You know, this is not a, you know, advertising business. This is strategic solutions with these pharma manufacturers to drive volume. We do have more users. We've talked about how we have this large portion of the brands, but, you know, a large portion of the pharma manufacturers. But each of these pharma manufacturers have a large number of brands. So as we've shown success, we grow that, and now we're perfectly well positioned to expand out, add more brands, add more spend at those brands. That's why you see this 150% net revenue retention and this 3X year-over-year growth in this business, so extremely high performance. And this is truly just the beginning. We have 4% brand presentation with the top 20 manufacturers, but relationships with 19 of them. So we've done the hard work and now we're expanding out. We're also investing more in the overall team and expanding out outside the top ones. So I'll hand it back to Carson for the second part of your question.
spk08: Thanks, Trevor. Yeah, appreciate the question, Ross. I think with respect to EBITDA and adjusted EBITDA margins, again, second quarter was 54.6 million representing about 30.9, so call it 31% margin which is slightly above our guidance of 30%. It's down about one percentage point sequentially, about nine percentage points, as you said, year over year. The YOY element of it was driven by an increase in sales and marketing spend primarily as a percent of revenue compared to the second quarter of 2020. In that quarter, we kind of proactively reduced sales and marketing at the onset of COVID. And we also continued... There's a second factor in the margin impact to make investments in product development technologies as well as in G&A to some degree as we began operating as a public company. So given we're building a leading consumer-focused digital healthcare platform in the U.S., we plan to continue to invest heavily at this stage. The growth opportunities are just so big. So we'll invest our strong cash flows in our platform, product, user experience, and the brand, so and marketing and sales. What's the goal of creating the best possible experience we can, given that the market is so massive? That said, your question's more around timing, I think, than around exclusively adjusted EBITDA margin. And I think you used the word troughing, and I think it's a good word to use, because as we continue to scale, a large number of the investments we make effectively are pretty fixed. Like whether we have twice as many visitors So close to $40 million instead of close to $20 million a month to our platforms. That doesn't necessarily drive up our product development and technology expense at all, for example. So I think we continue to believe the margins will expand as we move forward and as we continue to scale the business. This is just a great opportunity right now to double down and grow and continue to serve more Americans.
spk13: Our next question comes from the line of Justin Post with Bank of America. Your line is now open.
spk14: Great. Thank you. I'll just ask one as we're getting through time, and I also appreciate the new disclosures. So I get a lot of questions on Amazon. Just wondering, and it looks like they are offering more services via Prime, but anything new you're seeing from Amazon, specifically around inside Rx activity in retail, and any changes in the adoption of mail order that you're seeing in the industry? Thank you.
spk09: Thank you very much. Good morning, Justin. In our entire history, no competitor has had a material impact on our growth trajectory. Companies have tried to copy our model or tried different models, but none have been able to impact our business. Amazon has been trying to grow a pharmacy delivery business. We believe they have not been successful. Mail order prescriptions only make up about 5% of fill count in the U.S. Even through COVID, mail has remained a small piece of overall volume and is now starting to decrease its COVID eases. As we said in the past, we believe there are PrimerX card, the InsiderX program you're referencing, was launched to enable Amazon Pharmacy to display third-party cash prices, not because they're trying to send consumers to competing retailers to fill their prescriptions, which is a departure from their model. Since November, from what we have seen in third-party surveys and prescription volume data and heard from industry participants, we have observed almost no usage of the PrimerX discounts at retail. We also now have seen third-party data suggesting they only have a few hundred users a month. Our business has reached record revenue, record profit, and record users, and no competitive efforts have impacted our views of our prospects. Great. Thank you. Thank you for the question.
spk13: Thank you. Our next question comes from the line of John Ransom with Raymond James. Your line is now open.
spk05: Hey, good morning, team. One of the market concerns this quarter was the fairly weak third-party app data of your site. And I know Carson, you and I have talked about the fact that you guys are mailing out more physical cards. So maybe you could talk about the disconnect there, and also do you have some number on the use of the physical cards this quarter versus in prior years?
spk17: Sure.
spk09: Our platform gives all Americans the knowledge, choice, and care they need to stay healthy. Sometimes those users come to us when they're about to fill a prescription or access telehealth, but often they are at a different stage of their healthcare journey. For those users, we provide great information and tools that help them make better healthcare decisions. That means there is not always a correlation between online traffic or app downloads and our user count or financial results. We are building relationships with our consumers that translate into the record high brand awareness we have seen with consumers and the 88% awareness we spoke of that we now have with HCPs. A great example of this is our vaccine guide. which we launched in the first quarter to help consumers at a critical time. We built an amazing product, and it generated significant traffic to our platform and increased awareness of the GoodArts brand. But not all of those visitors immediately became Macs or subscribers or downloaded our app. This was just the beginning of our relationship with them. The same goes for a lot of the great content our amazing team of economists, pharmacists, and researchers produce that is broadly used by both consumers and healthcare professionals. This effort is important for building our brand, driving awareness, empowering consumers, and establishing our relationship with them, but it may not immediately translate to in-period conversion. In addition to these factors, a significant portion of our business is recurring with 80% plus repeat activities, and these repeat users come back to our platform with different frequencies. I'll speak briefly. You mentioned cards and physical materials. We do have presence in 400,000 provider offices, which we are very proud of. Some of those are online, some offline, you know, but all of this is part of a really diversified marketing mix, you know, without concentration in any particular area. In addition to these, you know, I'll also add traffic and activity on our platform continues to be strong. Our platform has significant scale and reach with almost 20 million visitors on average year to date and our 7.5 million combined maximum subscribers in the second quarter. This approach of being a trusted advocate for consumers is already paying off with our record second quarter results, and we believe it will pay off even more significantly over time as awareness continues to build and translates into future growth.
spk05: Oh, and by the way, you guys sent me three cards this quarter, so I'm good. You don't have to send me any more.
spk09: Thank you. Thank you.
spk13: Thank you. Our next question comes from the line of Doug Anmuth with J.P. Morgan. Your line is now open.
spk07: Great. Thanks for taking the questions. Just wanted to talk about MACs a little bit. I think the 2Q MACs may have come down a little bit just from the March level, so I was just hoping you could provide a little bit more context kind of on what you're seeing maybe on a monthly basis through 2Q and just how you're thinking about that into 3Q and And then also just on the corporate opportunity, given the DoorDash and USAA deals, just curious how big of a priority it is for you here in building out more of these kind of relationships and just how we should think about the economics there for gold. Thanks.
spk09: Thank you. I'll speak to the second part of your question, and then I'll hand it to Carson for the first. We are excited to offer the value and benefits of our gold subscription product. to more consumers through great companies like USAA and DoorDash. Good Earth Gold is growing very fast. Subscriptions grew almost 2x year-over-year to over 1.5 million subscription members we have today. Remember, subscribers have a higher LTV and we have a much tighter relationship with them as we continue to deliver increased value. These two agreements are great examples of how we can reach even more Americans, including those in the gig economy through DoorDash and those in active service or veterans through USAA. Historically, most of our new subscribers came through direct consumer marketing or through upsells from our existing prescription user base. We think there's a great opportunity to increase our reach and help even more consumers through B2B relationships. We're just getting started with our business development efforts around gold, and we see these as great avenues to continue to quickly grow the program. I'll hand it over to Carsten to speak to your question regarding Max.
spk08: Hey, Doug. This is Carson talking. Great to speak to you this morning again. A couple things on MACs. I think the first thing is that the growth in MACs that we've shown year over year or Q over Q, respectively, is positive. You have to remember MACs are an average of the counts in each month and a quarter. So, we have seen, if you look at it through that lens, we've seen MAC count increase, again, from fourth quarter into first quarter into second quarter. So we're very excited about that progress and the increase in count of our max. I think the other thing to say is that the reality is in the prior quarter, we still had some of the effects left of the pull forward in demand that happened at the beginning of COVID because that then creates a pattern where those fills recur at the same time as the pull forward originally occurred. So you saw some of that in March, but that said, if you look at Average Mac now versus Average Mac in the first quarter, we're up significantly on that. So we're very, very happy with that outcome, especially given the reality that we've grown subscriptions so much at the same time. Their subscription count now at a little bit over a million at 1.05, and the users served by subscriptions up at about 1.5 million. on top of the MAC count. So that's completely in addition to bringing the total number of Americans served by GoodRx through some form of our prescriptions offerings to a full 7.5 million, which is an absolute all-time high here.
spk07: Okay. That's great. Thank you.
spk13: Thank you. Our next question comes from the line of Sean Dodge with RBC Capital Markets. Your line is now open.
spk06: Thanks. Good morning. Maybe digging into the margins a little more, Kirsten, you mentioned again the shifting revenue mix towards the other businesses. If we think about the longer-term implications of that, the economics on the manufacturer solutions, as Bansi highlighted, are great. But on the subscription business, could you talk maybe just a little bit more about how margin on subscribers compare to max when you are successful in converting a max to a subscriber? What's the margin impact from that?
spk09: Thank you. Karsten, could you speak to this also?
spk08: Sure, yeah. I think when you look at our subscriptions, we're really excited about them generally. The subscriptions business is, for us, great because it creates more visibility and it's got higher LTV than our base business. And it's, of course, great for our users because they're benefiting from even lower pricing. Again, one of the reasons it's got the higher LTV is ties in part to the margins. It ties in part also simply to the frequency of use. You get that subscription fee either every month or get it prepaid in advance. So highly visible, highly recurring, as we said. And that can be a little different from our core prescription transactions business insofar as depending on what your fill frequency is, you may have 30-day fills or 90-day fills. We may not have as much frequency as monthly in that business, whereas for sure we do in our subscriptions business. From a margin perspective, when you think about it, the subscriptions business is pretty exciting for us because other than bringing you on as a subscriber, once you're on and using us, the contribution you provide and the revenue you provide effectively drops pretty much entirely to the bottom line. The platform's built, you as a subscriber are on board, you're using our services, And from that day forward, there isn't a significant amount of OPEX generated or a significant amount of COGS generated. And that's one of the beauties of this business is that the fixed cost structure allows us to continue to grow margins as we scale. Is that helpful? Yeah, yeah, very helpful. Thank you.
spk13: Thank you. Our next question comes from the line of Ricky Goldwasser with Morgan Stanley. Your line is now open.
spk15: Yeah, hi. Good morning. I had a follow-up question on the guidance and then just a question on the manufacturer business. Just to clarify on the guidance, one, are you reiterating your prior guide or just providing 3Q guide? And if you also can remind us, what are you assuming for flu in the fourth quarter? I think you talked about it in the past, but I just want to make sure that we're thinking about this correctly. And then on the manufacturer solutions, I mean, one of the things I think that stood out in your letter to shareholders was sort of the cross-selling opportunities that are materializing in the different businesses. So when you think about manufacturer solutions, what are the opportunities, are there opportunities that you're seeing to cross-sell also to the subscription business? Or not just subscription, just to the prescription revenue stream.
spk09: Thanks. Carsten, could you answer Ricky's question?
spk08: Sure, I will, and then I'll bring Basia in for the end of it on Mansol. But great to speak with you, Ricky. I think, to the first part of your question, we haven't pulled our full-year guidance, and we're also not changing it or changing the range. We are providing specific guidance for the third quarter. Again, that's the 37% to 40% year-over-year revenue growth, which we're extremely excited about. And it's just to be expected to be around 30% again. We continue to have strong confidence in the outlook for the business broadly, just given the sequential growth we've seen in volumes over the last few months and quarters. Our plan guidance assumes that prescription volume will continue to increase through the third quarter, through the rest of this quarter that we're currently in, and the rest of the second half as well. Given the timing and magnitude of the potential inflections of COVID, that's one of the reasons we're not updating now. I think there's just so much diversity in thought there. that either narrowing the range or trying to pick a point that's different from before at this point would be pretty tricky. With respect to the specifics around flu, I think we expect that to be more normalized this year. At present, I'm still seeing a lot of articles talking about, number one, the increase in sort of acute volume starting to happen, and number two, I think we still anticipate that we'll see more normalized business. Heck, All of us are in the same room here at GoodRx again, and that hasn't happened for a long time. And while it's great for all of us to be in the same room, we're excited about that, on the other hand, those are exactly the kind of things that drive cold flu season. And I'll turn over to Bansi on the Mansol side.
spk09: Yeah, this is Trevor. I'll actually take the second part of the question. Whether you need to fill a prescription for a brand or generic, renew it for good or ex-care, we offer a diverse set of services to customers. Our efforts are to find more ways to be relevant and helpful to consumers and healthcare professionals. You can see how successful that cross-sell has been and can be from care following the rebrand. Cross-sell went from 10% last year to 30% earlier this year to 60% now because the experience is so delightful and positive and the experience is getting unified. And so we anticipate even greater cross-sell opportunities and successes as we continue, which only helps make the LTV better for users who come to us and makes the consumer experience better across our platforms.
spk15: And are you seeing the same sort of opportunity on the branded side? It just seems like it's such a large market opportunity. I mean, clearly the co-pays are higher, but it seems that that's where there's an opportunity to add savings to consumers.
spk09: Absolutely. I'd say when we spoke in Greece, we've talked about how 20% of searches are for brand drugs. These are users who come to GoodRx to get access to affordable health care. and they go into brand drugs, those can then be serviced by our pharma manufacturer solutions where we help consumers and healthcare professionals on that healthcare journey. So the pharma manufacturer area of cross-selling is one that's almost the easiest. In addition, this speaks to what Nancy spoke about where we typically have 10x the traffic on you know, our drug pages versus, you know, a brand manufacturer's site. So we can capture more of the basket for users of how to help them save on prescriptions and healthcare generally. And within prescriptions, as you said, many of those are brand drugs.
spk13: Thank you. Our next question comes from the line of Vikram Kasavabala with Baird. Your line is not open.
spk01: Hey, good morning. Thanks for taking the question. I just had a quick one on ScriptCycle. You talked about the lower prescription revenue per MAC that comes from that business. Just curious if you had any updated thoughts on the opportunity to close the monetization gap there relative to the traditional GoodRx user, the potential timing around that opportunity. Thanks.
spk09: Thank you very much. We've spoken about ScriptCycle in the past. It's a different model serving a bit of a different market. you know, I think what I'll hand it over to Carsten to speak about general take rate generally, you know, and how that performs, which I think may be a reasonable way to give more insight into the question you're asking.
spk08: Sure. Hey, Vikram. This is Carsten. I think a couple things. So one of the things that's interesting about that business is that, among other things, it doesn't really have CAC associated with it. So, Because we partner up with retailers to provide the ability to save on cash pay, we don't really bear that cost. So there's no real tack, which means even at somewhat lower margins, it's pretty much riskless to us and pretty much an attractive business for us because the dynamics on it are just so good. With respect to sort of take rates more broadly and revenue per MAC more broadly, The unit economics and the prescription transactions offering have been very consistent, increasing a little bit over time. And the reason that's so sustainable is because we keep on driving more and more volume to our PBM partners. And that volume is incremental to them. It goes almost directly to their bottom line, given they're highly fixed-cost players. And the evidence of the value is really that we continue to add new PBMs, again, a couple even in the last quarter. So from that perspective, we continue to believe that we're going to be able to sustain and potentially increase the PTR per MAC, the prescription transactions revenue per MAC further. With respect to script cycle specifically and whether that will ultimately converge with our existing business, I think given the models are so different, again, given the fact that we're not supporting the marketing for that and just benefiting from the resulting LTV or contribution stream over time, I suspect that business will never reach as high margin levels as, say, our core businesses, PTR for MAC, but we do continue to evaluate opportunities to enhance our margin profile in it as well.
spk13: Thank you. Our next question comes from the line of George Hill with Deutsche Bank. Your line is now open.
spk19: Yeah. Good morning, guys, and thanks for taking the question. I guess, Carson, just something that came out of your prepared commentary earlier that struck out with me was you talked about working with incremental PBMs in the quarter. I guess I'd be interested to hear you talk a little bit more about kind of what is the value add of adding kind of more PBMs at the margin, and I don't know if there's anybody that you can name. You also talked about expanding Rite Aid and adding them into the gold product. I guess can you talk about whether or not you see more opportunities to expand and add additional pharmacy partners there?
spk08: Sure, I'll jump in here. I think, first of all, on George, with respect to adding PBMs, we haven't named other than the ones that are the top ones in our financial notes. So I won't go to specific names, but we, again, added a couple just this last quarter, which we're super excited about. And while each incremental PBM doesn't make a ton of difference anymore, there are still some pluses because all of them have unique and better pricing on some portion of their formulary. So even if the addition doesn't make as big a difference as it might have made if we still had single-digit counts of PBMs instead of being very deep into the double digits, the benefit is there from an immediate economic perspective for our users in terms of being able to save even more money. Along with that, the immediate benefit of being able to save even more money, we believe that the concept of a marketplace is important to us insofar as When we have that marketplace, it creates and catalyzes competition to drive prices for our users down further. And that, in turn, frankly, as the user prices drop further and further, we get to keep a little bit of that, and that does good things for our take rate as well. We're extremely excited also to have Rite Aid join up in gold. I think having that gold network continue to expand and the reflection on our brand that that represents that, We have yet another pharmacy who's interested in partnering with us with a strong brand, 90 NPS with consumers, an incredibly high degree of trust we've engendered, and pull our strong brand onto their brand is really a reflection of how much value that brand really has and how big an asset we've created. So we look forward to more partnerships like that, and we continue to be extremely excited for about the gold program generally, given the economics it has that we talked about a little earlier.
spk13: Thank you. Our next question comes from the line of Kevin Caliendo with UBS. Your line is now open.
spk02: Great. Thanks for taking my question. I want to understand the economics around subscribers and max and the conversion over. The math around your revenue per Mac is higher than what you get for a subscription. So I'm trying to understand where the conversions are coming from that would make it beneficial to GoodRx. If you're a very high Mac user, it would make sense to go to a subscription model. Is that what you're seeing? Are you seeing subscriptions happen across your user base, sort of new users who maybe haven't used it as much or... potentially subscribers who aren't necessarily at the average usage rate.
spk09: Yeah, I'll let Carson answer this as we're getting to the end of time.
spk08: Sure, I'll be quick, so maybe we can squeeze in one more, too. Kevin, great to talk to you this morning. With respect to subscriptions, The main reason subscriptions have higher LTVs, again, because of frequency, meaning we're getting that money every month no matter what. And with respect to our MACs, while they have higher prescription transaction revenue per MAC in many cases and on average, they're not necessarily coming in each month depending on whether they, say, have 90-day fill profiles. So frequency is a really big factor for us. Along with frequency... To the other part of your question, we're seeing more and more folks go directly into subscriptions. We've integrated the subscriptions offering on the app, so when you look up a drug price, you see right away that the drug price is cheaper in the subscription program, and often that very first fill you're doing can be big enough from a savings perspective in the Delta versus our prescription transactions offering to pay for your subscription for a month. So a lot of users are coming in directly that way. Beyond that, we see the use of subscriptions being pretty well distributed in terms of conversion from max to subs, again, because we've priced it so aggressively to make it attractive for almost everybody to do that, not even in consideration of the other non-prescription benefits like health services at discounted levels and other things we offer.
spk02: Great. Thanks. That's actually very helpful. Thanks so much.
spk13: Thank you. This concludes today's question and answer session. I will now turn the call over to Trevor Binstack for closing remarks.
spk09: Thank you, Operator. We are very pleased with our strong second quarter results. From our record revenue to record profit and record users, our business is stronger than ever. The reacceleration of our revenue growth to 43% year over year, in combination with our attractive adjusted EBITDA margin of 30.9%, makes it the rule of 70 companies. which is an undeniable point of differentiation. We're excited to further strengthen GoodRx for providers through our recently launched integration with SureScripts. Our over 2 million prescribers have a patient who has used GoodRx. We have in-office presence in over 400,000 physicians' offices, and about 80% of prescribers recommend us to their patients. And this new integration can help even more providers and their patients at the point of care. We are also rapidly scaling our pharma manufacturer solutions offering and delivering innovative solutions that connect doctors, patients, and pharma manufacturers more efficiently and effectively. We've grown year-to-date revenue nearly 3x year-over-year with net revenue retention of over 150% year-over-year. Today, we work with 95% of the top 20 manufacturers and have already set our sights on the enormous upside potential ahead. What excites us most, however, is how we are working to develop the most significant digital brand in healthcare that gives us the capability to deliver new services and improve care and affordability for Americans. Our success amplifies our opportunities. As we grow, we can further leverage our scale and data, allowing us to drive deeper consumer savings and higher usage. It also drives richer engagement and lets us expand our subscriptions, pharma manufacturer solutions, and telehealth offerings, and provides a platform for additional offerings, all so we can reach more consumers across the stages of the healthcare journey. I am incredibly proud of the effort and dedication of our team, and their ability to relentlessly innovate and reimagine the future of healthcare. We are empowering Americans with the knowledge, choice, and care they need to stay healthy, regardless of income or insurance status. We've made tremendous progress over the last decade, but it is just the start. We believe the runway and opportunities we intend to capture are massive. Thank you for joining us on this journey.
spk13: Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.
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