GoodRx Holdings, Inc.

Ladies and gentlemen, thank you for your standby, and welcome to the GoodRx third 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.

Thank you, Operator. Good afternoon, everyone. And welcome to GoodRx's earnings conference call for the third quarter of 2021. Joining me today are Doug Hirsch and Trevor Bezdak, our co-founders and co-chief executive officers, and Karsten 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 statement. Factors discussed in the risk factor sections of our quarterly report on Form 10-Q for the quarter ended September 30th, 2021, an annual report on Form 10-K for the year ended December 31st, 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 metrics in a company's shareholder letter, which can be found on the overview page of our investor relations website at investors.goodrx.com. I'd also like to remind everyone that a replay of this call will become available there shortly as well. With that, I'll turn the call over to Doug.

Good afternoon, everybody, and thank you for joining us today. In September, GoodRx celebrated its 10-year anniversary. Over the past decade, we've worked hard to create ways to help millions of Americans access affordable care. Today, we support patients across each stage of their healthcare journey, delivering superior savings, trusted information, and access to care to millions of Americans. While many companies talk about making the world a better place, making a difference is what we do. GoodRx has now saved Americans $35 billion on their prescriptions, and consumer savings have increased to 80% off the pharmacy cash price. We beat insurance over 50% of the time, and we continue to increase access to brand drugs for our pharma manufacturer relationships. For many of our users, GoodRx is not just about saving money. It's about whether they will be able to buy their medication or their children's medication or not. In fact, we estimate that we have helped patients obtain at least 80 million prescriptions they otherwise may not have been able to afford. We believe that our impact has never been greater and with yet another quarter of record results that our business has never been stronger. Because of GoodRx, millions of Americans can now afford care. Because of GoodRx, millions of Americans are more informed and better prepared to make healthcare decisions from diagnosis to care delivery. And because of GoodRx, millions of patients are empowered to navigate the confusing world of healthcare, knowing they have a trusted advocate by their side. We continue building our broad and deep competitive mode, which is rooted in the trust we've established with patients, physicians, and companies across all of healthcare. Patients trust us, and our consumer NPS of 90 is a testament to the important role we play in their care. Physicians and healthcare professionals trust us with over 2 million prescribers that have a patient that has used GoodRx and a very high provider NPS of 90. Companies look to us as a way to introduce products and services and provide savings to our large and growing audience. We work with more PBMs and pharmacies than ever and have continued to strengthen those relationships. In addition to our 10-year anniversary in September, we also celebrated our one-year anniversary as a public company. we've made meaningful progress towards creating one of the leading digital consumer healthcare platforms over the last year and have substantially expanded our highly extensible platform to address more of the consumer healthcare journey for more Americans. We continue to address more of our TAM by enhancing our prescription savings offering through the acquisitions of Healthy Nation, RxSaver, and RxNext, launching brand drug integrated copay cards, expanding our gold network, entering into distribution agreements with DoorDash, USAA, and others, and establishing or continuing relationships with 95% of the top 20 pharma manufacturers in the U.S. We increased our diagnosis capabilities through the geographical and condition expansion of our telehealth services, rebranded them as GoodRx Care, and created a more unified user experience. We built significant capabilities to support consumers in the research and prevention stage of the healthcare journey through the acquisition of Healthy Nation and the launch of GoodRx Health. And finally, we made an exciting step into the insurance marketplace space through our relationship with GoHealth. This has all been fueled by the passion of our team and unrelenting dedication to our mission. Despite our success, Americans still face rising costs, decreasing life expectancy, and poorer health outcomes. We feel a tremendous sense of urgency to find more ways to help more people, and we believe that our efforts can help reverse those trends. In the coming years, we see more opportunities to help Americans fill more gaps in their healthcare journey including navigating insurance as their trusted advocate, further personalizing the GoodRx user experience, and extending our marketplace. We believe that we are just getting started and have barely scratched the surface of the opportunity to transform healthcare in the U.S. We won't rest until all Americans have access to affordable, high quality, and convenient healthcare. With that, I'll turn it over to Trevor to address key highlights from the quarter and trends in our business.

Thank you, Doug, and thanks to everyone for joining us this afternoon. I'm proud to report another quarter of strong performance. From our record revenue to record adjusted EBITDA and record users, the strength of our business is clear. We grew revenue 39% year-over-year to a record $195.1 million and our adjusted EBITDA to $61.8 million, a margin of almost 32%. These positive results were not only fueled by the strength and continued growth of our prescription transactions offerings, but our ability to expand our platform from our historical focus on prescription discounts. Today we impact millions of consumers and providers in many meaningful ways. We have built successful TAM expanding subscriptions, pharma manufacturer solutions, and telehealth offerings that continued to grow rapidly in the third quarter, more than doubling and tripling year over year respectively in the case of the first two. We believe these offerings will continue to increase the LTV of our millions of users, as well as attract incremental consumers to our extensible platform. Our provider NPS improved to 90 in the third quarter, and our consumer NPS remained high at 90. Our strong growth and attractive margins makes us what many call a rule of 70 plus company, much better than the traditional rule of 40, which we believe is unique at our size and in our space. During the quarter, we increased our competitive moat, by continuing to add new features and improving the user experience across prescriptions and telehealth, increasing our penetration in pharma manufacturer solutions, announcing an exciting agreement with Fetch Rewards to be their exclusive prescription savings provider, and continuing to deliver on our mission to help Americans get the healthcare they need at a price they can afford. We also launched GoodRx Health, which is a new, potentially team-expanding focus area for us that we're particularly excited about. GoodRx Health is our next generation online health resource where doctors, pharmacists, and editorial experts provide authoritative answers to thousands of crucial health questions. The demand for health and wellness information in the U.S. is massive. Millions of users already come to GoodRx every month looking for health information. And with GoodRx Health, we want to increase that number even more. By adding GoodRx Health to our portfolio of resources, we aim to help more Americans at every stage of their healthcare journey. from diagnosis to treatment and care. GoodRx Health allows us to reach more people in more ways through content that empowers them to be advocates for their own health across a wide range of healthcare decisions. GoodRx Health's content focuses on four main areas, health knowledge, financial guidance, drug FAQs, and trustworthy original research. It is powered by a dedicated editorial team, including leading doctors, pharmacists, and editorial experts, and aims to tap into current medical perspectives with the goal of creating the most trusted and most useful health information resource on the internet. We deliver this information in unique formats to help ensure consumers can quickly find the health information they need. GoodRx Health is key to our content strategy. We believe that the addition of GoodRx Health to our platform allows us to increase top of funnel traffic, reach more consumers, strengthen our relationships with our existing users, and create new opportunities to leverage M&A to provide incremental services and further lift LTV as we help address the needs of broader consumer and provider audiences. We believe GoodRx Health will particularly support the great momentum we've had with our pharma manufacturer solutions offering. We see a tremendous opportunity to leverage content to help consumers and providers navigate the complex world of brand medications and increase awareness, access, and adherence. GoodRx Health is key to this content strategy, which we started executing earlier this year with the acquisition of Healthy Nation. We believe that the investments we're making in content between GoodRx Health and Healthy Nation have the potential to continue to drive this offering's steep growth trajectory. During the quarter, we also became the exclusive prescription savings provider for Fetch Rewards, further increasing the reach of our prescription transactions offering. Fetch Rewards over 10 million active shoppers can now find GoodRx prescription savings directly in the Fetch Rewards app, allowing them to seamlessly access GoodRx discounts on medication at over 70,000 pharmacies nationwide. We're excited to partner with Fetch Rewards and offer its millions of users a way to save on prescription medication, and we see opportunities to expand this partnership in the years to come. Fetch Rewards represents another relationship that is additive to the direct-to-consumer acquisition strategy that has already helped us serve millions of Americans since we launched our platform a decade ago. In the third quarter, we helped 6.4 million monthly active consumers and 1.6 million subscription members save on their prescription medications. The combined reach of almost 8 million represents approximately 34% year-over-year growth. Our pharma manufacturer solutions offering has continued to grow incredibly fast with another quarter of over 3x year-over-year growth. This reflects our brand strength with consumers and our deep relationships with the healthcare providers that manufacturers seek to leverage. Approximately 25% of our platform visitors are healthcare providers who have rewarded us with a 90 MBS and over 400,000 doctor offices distribute GoodRx materials, which are some of the reasons why over 2 million prescribers have a patient who has used GoodRx. During the quarter, we continued to increase our pharma manufacturer brand penetration and started building a promising bookings pipeline for 2022. we have entered into an exciting agreement with Cover My Meds to further our pharma manufacturer solutions business. This is a joint go-to-market effort to create custom prescription discounts for consumers supported by the pharma manufacturer. This opportunity includes joint commercialization as well as integrated technology components to create a seamless experience for patients, providers, and pharmacies that provides the patient tools and support most relevant to their specific journey to get on and stay on therapy. CoverMyMeds is a leader in biopharma-supported solutions for patient affordability, and as a leader in consumer affordability solutions, we see this as a natural partnership. We're excited about the progress we're making to help increase consumer awareness, access, and adherence related to brand medications. GoodRx Care continued to resonate with consumers with a 3x increase in demand since the onset of the pandemic and a delightful user experience with five-star app rating. Care focuses on low-cost, prescription-associated conditions, and provides another entry point for consumers to access our highly extensible platform at a critical point in their healthcare journey. Approximately 65% of GoodRx care visits are driving incremental revenue through our other offerings, up from 30% earlier this year. By providing consumers with a quick and easy way to see a licensed medical provider for a range of primary care services, care helps consumers save time and money while keeping them in the GoodRx ecosystem. We believe this cross-sell increases consumer lifetime value. Before I turn it over to Karsten to discuss our financial results and guidance, I'd like to speak to some market trends that have impacted our expectations. The last 20 months of COVID have certainly been unprecedented, and I'm proud to say we have successfully navigated our way through much of the uncertainty. Our third quarter record results are a testament to our ability to succeed and to increase our share of the market. even though COVID's effects have remained longer than any of us expected. With that said, it continues to be challenging to predict healthcare utilization trends amid the pandemic. Earlier in the year, when the country largely reopened after the vaccine became more widely available, we expected that healthcare utilization would rebound to pre-COVID levels and beyond with normal seasonal trends around flu and acute medication returning in the second half. However, what we have seen so far is a continued diagnosis backlog reflecting a lag in certain areas of healthcare utilization recovery, as well as volatility in the recovery pattern, whether due to physician office capacity limits, the emergence of new variants, people electing to further their care, and a variety of other reasons, which we believe are largely temporary. While the exact timing remains uncertain, we continue to believe the unwinding of the diagnosis backlog will serve as a fuel for fast future growth. We are continuing to build a platform that we believe delivers significant value to consumers, In an area of their life that is non-discretionary and critical and believe we are very well positioned when utilization does increase and regular healthcare usage and patterns resume. As we reflect on the quarter and our broader mission, I couldn't be more proud of our strong results and the progress we are making toward our goal of filling more gaps in healthcare. We are just getting started and see exciting opportunities to expand our platform and range of services over time. With that, I'll turn it over to Carsten to discuss our financial results and guidance.

Thank you, Trevor. Good afternoon, everyone, and thank you for joining us today. The third quarter was another strong quarter for our business. We continued to deliver record revenue at attractive margins while growing our consumer and provider base, deepening our competitive moat, and extending our platform. Revenue for the quarter was $195.1 million, growing 39% year over year. Prescription transactions revenue grew by 25% year-over-year to $155.7 million, driven by a 31% year-over-year increase in our monthly active consumers, which reached a record 6.4 million. This was partially offset by a year-over-year decrease in prescription transactions revenue per MAC related to ScriptCycle and RxSaver, which have lower revenue per consumer. GoodRx prescription transaction economics have otherwise remained consistently strong. This is the first quarter that our MAC number includes estimated RxSaver MACs. RxSaver's prescription transactions revenue and MAC count are de minimis relative to GoodRx's scale. The RxSaver MAC count is an estimation due to incomplete consumer information. However, it is immaterial relative to GoodRx's MAC count. 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. Monthly active consumers from acquired companies are only included beginning in the first full quarter following the acquisition. Subscription revenue grew rapidly, up 111% year over year to $16.2 million. We finished the quarter with 1.13 million subscription plans and approximately 1.6 million members benefiting from our subscription offerings, since our family subscriptions generally serve multiple consumers. Our subscription 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. Looking at our total prescription-related offerings, we had 6.4 million MACs in our prescription transactions offering and over 1.6 million members associated with our 1.13 million subscription plans, totaling almost 8 million users across our prescription-related offerings. In addition to monetizing MACs and subscribers, we have been 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 grew a phenomenal 177% year-over-year to $23.2 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 reflected the incredible momentum of our pharma manufacturer solutions offering, as well as continued demand for GoodRx care. Though our prescription transactions and prescription offerings continue to face headwinds related to COVID-19, we've continued to grow revenue, market share and relationships that set the foundation for years of sustainable growth. I'll spend more time discussing recent trends and our expectations for the rest of the year when I speak to our guidance. In the meantime, we'll continue down the P&L. Cost of revenue is $11.3 million, or 5.8% of revenue, compared to $7.5 million in 5.4% of revenue in 3Q20. The increase was driven by an increase in outsourced and in-house personnel related consumer support expense to support our growth and increases in merchant fees, hosting expenses and allocated overhead. Product development technology expenses were $35.1 million compared to $15.8 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 expense and related tax and other items associated with acquisitions, adjusted product development and technology expense was 11.9% of revenue compared to 8.9% of revenue in 3Q20. We continue to invest in product innovation to create the best consumer experience possible and extend our platform to reach more consumers, address more of consumer healthcare, and increase the lifetime value of our users. Sales and marketing expenses were $95.7 million compared to $65.1 million in 3Q20. We increased advertising spend by $21.4 million year over year and continue to invest in our incredible team with the goal of increasing our consumer base in 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 grew year over year, making up 45.8% of our revenue in 3Q21 compared to 43.3% last year when we proactively reduced advertising spend due to the COVID-19 pandemic. General and administrative expenses were $35.9 million compared to $108.5 million in the third quarter of 2020. The decrease was due to stock-based compensation expense relating to the non-recurring co-CEO awards made in connection with the IPO, which was $78.0 million higher in the comparable period last year. Excluding this and other adjustments, including payroll taxes related to stock-based compensation, non-cash and M&A and financing-related items, adjusted G&A as a percent of revenue is 5% compared to 4.6% in 3Q20, with the incremental cost primarily associated with starting to operate as a public company at the end of September 2020. Net loss was $18.1 million compared to a net loss of $50 million in the third quarter of last year and was impacted by stock-based compensation of $40 million, $20.1 million of which related to the non-recurring co-CEO grants made at the time of the IPO, and $19.2 million of income tax expense. The year-over-year change was driven by a $65.1 million decrease in stock-based compensation expense and related payroll taxes, primarily related to the non-recurring COCO awards made in connection with the IPO. This was partially offset by an increase to our tax provision, which was a $19.2 million expense in the third quarter of 2021 compared to a $17.9 million benefit in the comparable period last year. Adjusted net income grew 11% year over year to $39.7 million. Adjusted EBITDA grew 16% year over year to a record $61.8 million. Adjusted EBITDA margin continued to be strong at 31.7%, reflecting our ability to deliver profitable growth due to the compelling unit economics of our business and high repeat activity on our platform. Our adjusted EBITDA margin decreased by approximately 610 basis points year over year, driven by continued investments in product development technology, an increase in sales and marketing spend, and investments in our general and administrative infrastructure as we began operating as a public company. We continue to generate strong cash flow with net cash from operating activities of $48.6 million for the quarter. And now, turning to guidance. For the fourth quarter of 2021, we expect revenue of $212 million to $222 million reflecting 38 to 45% year-over-year growth. We believe this growth will be driven by a continued triple-digit increase in other revenue, based largely on the continued momentum in our pharma manufacturer solutions offering, combined with continued growth in subscription and prescription transactions revenue. On the adjusted EBITDA front, we expect an adjusted EBITDA margin of approximately 30% for the fourth quarter. Looking at the full year, our fourth quarter guidance implies full year revenue guidance of $744 million to $754 million, with a midpoint at approximately the midpoint of our prior guidance range we provided on our first quarter earnings call. On the adjusted EBITDA front, our 30% fourth quarter guidance puts us at the midpoint of the full year 30% to 32% range we provided on that May earnings line as well. As we discussed during our third quarter earnings call, COVID trajectory as well as the second order impact that may potentially reduce acute volumes and the 2021 to 2022 cold and flu season impact like last winter create challenges around predicting results. When we provided our full year guidance during our first quarter earnings call, our assumptions included a return to normal healthcare utilization and customary seasonal trends around acute and flu starting in the second half of the third quarter. We continue to see modest improvements which our record revenue reflects, but we have not seen a return to normal in all areas of utilization, and it is too early to assess the size of the impact of the cold and flu season, which historically contributed materially to our revenue. You may recollect we discussed the flu impact of approximately $5 million last winter. These effects impacted both initial fills and new prescriptions, and they also reduced our refill volume. The COVID and cold flu predictability challenges also contributed to our decision not to update full year guidance during our second quarter earnings call as we discussed then. Both because of the unpredictability of COVID and cold flu activity and the fact that people may defer healthcare visits into the new plan and deductible period starting in January 2022, we believe it is prudent to continue to provide a wider revenue range for the fourth quarter than we may otherwise have. Depending on the trajectories through the rest of the fourth quarter, this unpredictability could impact our results, particularly with respect to prescription transactions and subscription revenue. Our current guidance assumes that as COVID continues to recede, the cold and flu season will revert to higher historical levels and utilization will rise through year-end, though the exact timing and magnitude remain uncertain. We view COVID-related healthcare utilization effects as temporary, and we look forward to the unwinding of the $1 billion-plus and diagnosed condition backlog, which we expect to amplify new prescription and prescription transactions revenue growth in 2022 and possibly beyond. The other reason for our wider guidance range relates to our exciting pharma manufacturer solutions offering. It is already our fastest growing offering at over 3x year-over-year growth and has over 150% net revenue retention with extremely attractive unit economics. Pharma Manufacture Solutions is growing rapidly and has the potential for large deals in the fourth quarter, which is typical in this space. These deals may accelerate growth even further, driving some additional variability in our results. Consistent with the trend in the last few quarters, we expect our non-prescription transaction revenue offerings, which are reflected in subscription revenue and other revenue, to continue to make up a higher percentage of our total revenue. In the third quarter, they made up 20% of total revenue, an increase of approximately 400 basis points compared to the first quarter, and we expect that to increase by 200 to 400 basis points or more to approximately 22 to 24% of total revenue in the fourth quarter. The reasons for this wider range of mixed outcomes are similar to those I described around variability, both in prescription transactions revenue and pharma manufacturer solutions. This means prescription transaction revenue, which is driven by max, will make up a smaller share of total revenue as more visitors and max convert to subscribers and as we continue to grow pharma manufacturer solutions. Before I conclude, one note on our income tax provision or benefit. As you can see, the volatility in our tax provision continues, and after recording a significant tax benefit in the second quarter, we had a $19.2 million tax expense in the third quarter. 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 is generally driven by factors outside of our control, such as the stock trading price and the decision of employees relating to their awards. This is one of the reasons we are presenting adjusted net income and adjusted tax. GoodRx's impact has never been greater, and with yet another quarter of record results, our business has never been stronger. 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. 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. Sure, sir.

Ladies and gentlemen, if you have a question at this time, please press star 1 on your telephone keypad. If your question has been answered or you wish to remove yourself from the queue, press the pound key. We kindly request that you limit to one question. And if you have a follow-up question, you may rejoin the queue by pressing star 1 again. Your first question comes from the line of Elizabeth Anderson with Evercore ISI. Please go ahead.

Thanks so much for the question. I was wondering, you gave some nice color on the impact of COVID in the quarter and sort of what you're seeing in terms of the rebounds and visits. Can you talk to us a little bit more about sort of how – how maybe the trend continued as Delta declined over the course of the quarter. And if you could remind us how you sort of think about usage of GoodRx for perhaps like cold cough and flu type prescriptions versus something that you would think of maybe more as deferred care type situations. Thanks.

Thank you very much for the question. Yeah, Karsten, could you speak to this?

Sure. Hey, Elizabeth, thanks for the great question and great to speak to you again, too. We're really proud of the results we had this quarter with another quarter of record revenue, record adjusted EBITDA, and record users, even with that sort of legacy of COVID still hovering over us to some degree. We think it's a testament to our ability to succeed and increase our market share, even with those kinds of headwinds. And we have seen modest improvements in prescription volumes, which are reflected in the robust sequential growth. And we see the market as a whole slowly inching back toward pre-COVID levels. That said, we expect it to take a quarter or two for prescription volume to return fully to those pre-COVID levels, particularly in relation to acute conditions and new prescriptions, even with our expectations that this year we'll probably see a normal cold and flu season, a more robust one like two years ago as opposed to the one we had last year. It's important to note that For good or excess, not only about total prescription volume, it's also that new therapy starts, the mix of acute versus chronic, and seasonal trends like the cold and flu one. If you recollect, last winter when we talked in our calls, we mentioned that the week cold and flu season cost us about $5 million in revenue, which is significant, of course. The other aspect of it is that after 20 months of lower new therapy starts through COVID, That translates into, among other things, a lower rate of refills too. Again, we think that our results occurred and our record outcomes happened in spite of that reality. As for cold and flu specifically, since you raised that as well, the numbers we're seeing so far look better than last year, but it's a little too early, since they're so small at this stage still, to fully assess the impact. Again, as far as we thought about it from a guidance perspective, With our 38 to 45% year-over-year revenue growth guide, 41.5 at the midpoint for the quarter, we're assuming that cold and flu will be back this year with respect to that. Finally, the other elements that are going to be big are pharma manufacturer solutions and the contribution of subscriptions as well as our prescription transactions revenue. I think we'll see volumes continually increase on the PTR side, the prescriptions transaction side, through the rest of the fourth quarter. And the variability in acute, cold, and flu and seasonal trends are things that we expect that this year will inure to our benefit. The most important point, though, is to reiterate the point Trevor made earlier in the call. When the country largely reopened after the vaccine became available, we expected healthcare utilization to rebound to pre-COVID levels pretty quickly, with normal seasonal trends around cold and flu and acute as well returning pretty quickly in the second half. However, what we've seen so far is a continuing diagnosis backlog that reflects lags in certain areas of utilization as well as general volatility. And it may take a couple more quarters for those to fully smooth out, even with the positive impacts of cold and flu. Hopefully that's helpful. Apologies for the long answer, but there's a lot of meat in that question a little bit.

Thank you. Your next question comes from the line of Jayalendra Singh with Credit Suisse. Please go ahead.

Thank you, Anne. Thanks for taking my question. I actually wanted to follow up on your GoodRx Health platform you have rolled out. I kind of want to better understand the benefits this might generate for pharma manufacturer solution business, help us understand how it differentiates GoodRx. And do you expect to see benefits to your other business as well? And the last part there is that with GoodRx Health Now Live, have you seen incremental interest from manufacturers for your pharma solutions business?

Thank you very much for the question. and I'm excited to speak about GoodRx Health. As we look at what we've accomplished since our IPO a year ago, one of the things we're really excited about is that we've extended our platform to reach consumers across even more stages of the healthcare journey. And so GoodRx Health is another way for us to advance that effort. We have millions of users who are already coming to GoodRx every month to navigate their healthcare, and lots of them are looking for health information. So by adding GoodRx Health, we can increase that number we can help even more consumers navigate more stages of this journey. We find that not everyone has the need to use our prescription-related or telehealth offerings when they come to the platform. But if we can help them in other ways, such as insights and tools, we start building relationships with them, and then we deliver them value over time. So GoodRx Health is this great online health resource. Consumers and providers can find answers to critical health questions, It has over 2,500 videos covering 350 conditions, which we augmented by acquiring Healthy Nation earlier this year. It's already made an impact. We've had 60% year-over-year increase in our content traffic. Our newsletter has now reached 5 million sign-ups earlier this month. To your question about pharma manufacturers, this definitely with GoodRx Health helps drive growth in the pharma manufacturer solution, and that part of our business is doing extremely well, you know, with the 3X, more than 3X year-over-year growth that we've discussed. It helps us increase awareness, access, adherence for brand drugs. To these other areas, it drives volume and acquisition into all areas of our business, you know, and this will continue to help us deliver strong results like this quarter with the record revenue, record profit, record users that we're happy to report.

Thank you. Your next question comes from the line of Sean Dodge with RBC Capital Markets. Please go ahead.

Yeah, thanks. Good afternoon. On the PTR per MAC, the take rate you all have shared has crept up. The increase there, is that just a function of PVM mix? You're driving more volume through PVMs that you have more favorable agreements with, or is this more same-store driven, where you're negotiating more favorable economics, maybe when these PBM contracts come up for renewal. And ultimately, what I'm looking for is just some help, better understanding what kind of runway remains for driving PTR per MAC higher over time. Thanks.

Thank you very much. Karsten, could you speak to this one?

Yeah, I'd love to, and thanks for the great question, Sean. Yeah, GoodRx's unit economics and the prescriptions transactions offering have been pretty consistent and increasing on a trajectory over time. We believe that this is really sustainable because the volume we drive for our PBM partners is largely incremental and goes almost directly to their bottom line. Another good piece of evidence for that is that we've continued to expand our PBM network and our take rate has continued to modestly increase in some mid-teens. Realistically, The PBMs, I think, absent us would have lower revenue and lower contribution as well. If you look at it through the lens of PTR per MAC, as you did, we see PTR per MAC increasing. It was up about 1% quarter over quarter compared to the second quarter, primarily because of PBM mix and continued improved economics. On a year-over-year basis, PTR per MAC looks like it's down, but that's solely due to M&A and elements like ScriptCycle and RxSaver. If you ignore those, PTR per MAC is actually up in the mid-single digit percentage points exactly as you'd suggest that it would be. It's not really a KPI we manage to, but it's one that happens and manifests given the nature of our relationships with our PBMs, the volumes we drive to them and the benefits those volumes give us, and ultimately the strength of the business overall that's leading to drive this volume to our PBM partners. We're really pleased to continue this trajectory, and we expect that we'll maintain our strong unit economics. And so to your question of a little help, I think we would expect that the historical trends that you've seen so far, we'd expect that those historical trends manifest themselves as well.

Thank you. Your next question comes from the line of Stephanie Davis with SBB Learing. Please go ahead.

Hey, guys, thank you for taking my question. You've, you've announced a bunch of partnerships over the past few months, we've had batch, we had share scripts, a bunch going on. So I was hoping you could walk us through how we should think about the follow on impacts of these partnerships, both on the membership side and on the marketing spend side.

So, I appreciate the question. We want to reach consumers across all of the different areas we can. We're really excited about the growth of our prescription land offering. We now have nearly 8 million monthly users made up of 6.4 million monthly active consumers and 1.6 million subscription members. And we're just really always looking for additional ways to reach and help more Americans. So given it's one of the ones you mentioned, we're really excited about the partnership we're announcing this quarter about being the exclusive prescription savings provider for Fetch Rewards. It's the fastest growing consumer loyalty and shopping rewards app in the U.S. This lets us reach their over 10 million active shoppers. So the reach is significant. And those users can now find GoodRx prescription savings directly in the Fetch app. And this is another great relationship that lets us aggregate consumer demand. It's similar to the ones as you're referring to that we entered into with the USAA and DoorDash earlier this year. And so these relationships allow us to continue driving this great growth. We're seeing a prescription late offering where we saw users grow 34% year over year, resulting in this record quarter. When we look at this overall, we see demand aggregation as a whole just being another way to help lower cost of acquisition and reach more consumers through these B2B efforts. And so we're seeing success in these. these partnerships as well as through the other ways we generate demand across the business.

Thank you. Your next question comes from the line of John Ransom with Raymond James. Please go ahead.

Hey there. This is probably for Carson. So in your 4Q guidance, what is the estimate for marketing spend? Carson?

Thank you, Trevor. Appreciate it. Yeah, I think when we look at fourth quarter and we look at the guidance generally, again, the focus was on top line. And from that perspective, I think it's 38 to 45 and about 41, 42 at the midpoint, driven by what we've seen in the trajectory of the business so far. As it relates to marketing spend specifically, we haven't broken that out in the guidance. but we expect to continue to make marketing investments consistently with the ones we made in prior quarters. When we started the year off and were discussing our guidance, even at the end of last year, around this time, we had said that 2021 would be a year in which we invested heavily in product and in marketing in anticipation of coming out of COVID, having the deferred or undiagnosed condition backlog recede, et cetera. And so that was the focus for and the catalyst for continuing to invest in those two areas, marketing and product. I think from where we stand now, too, we're looking at a bunch of effects in the first quarter of next year, potentially. Folks are entering a new deductible plan year. They're making decisions about their health care right now and entering into next year. We see COVID continuing to recede. It took longer than We may have expected and most may have expected this year earlier, but the continued receding of it will continue to provide us with a nice tailwind into next year too. And so we want to put enough marketing behind that in the fourth quarter already to be able to take advantage of it. So hopefully that gives you a bit of perspective on how we're thinking about marketing and teeing up 2022 and beyond.

Thank you. Your next question comes from the line of George Hill with Deutsche Bank. Please go ahead.

Hey, good evening, guys, and thanks for taking the question. Mine is I'm wondering if you are in a position yet to try to quantify what you think the impact of COVID-19 has been in the 2021 fiscal year, and maybe if you're able to think about quantifying how we should think about the diagnosis backlog just as we think about you know, what is the right jumping off point from a user's basis and a prescription's basis as we look for 2022.

Thank you very much for the question. I'll, Carson, also speak to this answer.

Yeah, George, we really see the diagnosis backlog as a pretty huge opportunity, actually. Just today is looking at another chart of physician visits over time, and We're running, according to what I was looking at today at least, physician visit volumes that are pretty much identical to what they were back in 2016, and that's subsequent to them having grown in 17, 18, and 19 before falling off again in COVID. And so I think generally the net effect of all of that on our view of our business going forward in 22 and beyond in particular is is that the unwinding of that backlog just inevitably is going to be a significant tailwind. I think the other impact is that even now, as we go into the fourth quarter, our belief is that the cold flu season will return in more robust form too, just given the opening of the economy generally. With respect to specific 22 guidance, we're not going to do that now. but we are evaluating and analyzing the degree to which both the decreased new prescription starts during COVID and the related refills have impacted the business to get a little bit more perspective for ourselves and for all of you who join these calls with respect to 2022 and how 2022 could be differentially benefiting from a shift back to normalcy, because we do see not just that initial fill, but the associated refills as having been a drag that we've had to fight through to be able to deliver the record numbers that Trevor alluded to on the call earlier today.

Thank you. Your next question comes from the line of Doug Unmut with JP Morgan. Please go ahead.

Thanks for taking the questions. I don't think you talked about SureScripts. I was just hoping you could talk a little bit more about the integration there and how the rollout's going and perhaps how we should think about the timing for some bigger impact there. And then secondly, just on manufacturer solutions, pretty clear the strength within other revenue Just curious how you're thinking about when that business might be able to shift from a mostly fixed fee structure to something that's based more on a CPM model over time. Thanks.

Thanks for the question. So first for SureScripts, we have incredibly deep, longstanding healthcare provider relationships. HCPs were some of the earliest champions of GoodRx. We're extremely proud of these deep relationships that we've built with health care providers over the past decade, and they're a really important driver of consumer awareness. As we've mentioned in the past, there are 2 million prescribers in the U.S. that have a patient that has used GoodRx. And according to our surveys, 80% of physicians recommend us, and GoodRx awareness among physicians is a remarkable 88%. So the agreement with SureScript creates another exciting way to continue to strengthen that physician relationship and make it easier for healthcare professionals to recommend GoodRx. So by working with SureScripts, we can help prescribers make more informed decisions and address prescription cost concerns for uninsured patients and patients whose coverage is not available via SureScripts. With more healthcare professionals and consumers accessing GoodRx prices in a simple and easy way, we're glad to be working with SureScripts to support providers at the point of care. And while it's early, so far we are pleased with the progress of that work with SureScripts. Two manufacturer solutions, our pharma manufacturer solutions offering has continued to grow incredibly fast with another quarter of over 3x year-over-year growth. That reflects the brand strength we have with consumers, our deep relationship with the healthcare providers that the manufacturers are also seeking to leverage. So last quarter we talked about the relationships that we have now with 19 of the top 20 manufacturers. We continue to penetrate those accounts. We're starting to increase sell-through with 1,000 brands additionally that are part of that. And, you know, in the third quarter, we just continued to increase the manufacturer and bandwidth penetration. We're also excited that we're offering these additional solutions, such as the agreement we have with Cover My Meds. And one thing we'd also like to mention on the front of health care providers is They now make up 25% of our website visitors, and the NPS with HCPs has actually increased from the 86 that we were very happy to speak to before to now an NPS of 90 with healthcare providers. Pharma manufacturing solutions are our fastest-growing offering, has extremely high net revenue retention, over 150%, very attractive unit economics. And, you know, we're not trying to optimize rates right now relative to the fixed fee or such. You know, we're trying to get market share. You know, this is a $30 billion TAM, you know, that we can penetrate, you know, that full TAM on both consumer and provider standpoint. And, you know, we're just getting started there, but it's going great and growing very quickly. And we're very pleased with the progress.

Thank you. Your next question comes from the line at Craig Hettenbeck with Morgan Sandley. Please go ahead.

Yes, thank you. It's Craig on for Ricky. You commented that 2021 has been a year of investment. How are you thinking about this into 2022? Does it sustain, or are you anticipating more operating leverage as you roll into next year?

Thank you for the question. Carson, can you speak to this?

Sure, Craig, and thanks, Trevor. Yeah, I think as we look into years to come, we think that marketing will ultimately provide us with incremental leverage going forward. This really ties a lot to unaided awareness levels, among other things, and as unaided awareness levels get better and better, each dollar of marketing spend becomes more and more valuable, and we've seen a very positive trajectory in our unaided awareness levels. which will be the foundation for that, Craig. So from that perspective, I think our long-term view of the business hasn't shifted in terms of being margin accretive both on the marketing side and on the product side, of course, too, since product investments made for just a few users or for many, many users generally take the same amount of investment to produce. So from that perspective, we're definitely looking forward to being able to leverage the business on multiple fronts, We also have other lines of business like the one Trevor was just speaking to, which is manufacturer solutions. And that makes up a bigger and bigger portion of our revenues, and it's effectively nearly all margin, right, because it's just sales cost associated with it. So that ends up pulling up overall margins for the business, too, as its share of revenue increases. And I think one thing that gets forgotten some of the time is that there have been some permanent shifts in how pharma manufacturers address health care professionals in particular companies. Like Trevor said, we have incredibly strong relationships with them, first champions of GoodRx. About 400,000 of them have GoodRx collaterals in their offices. Many, many more use GoodRx, as Trevor articulated too. And all of these folks have one thing in common, which is they don't love pharma detailers coming into their offices, especially in a COVID-rich environment. And that's made a permanent shift to more digitally-based marketing by pharma manufacturers and which we're benefiting from because we have just such amazing HCP access and can offer coordinated messaging that allows pharma manufacturers both to reach the healthcare providers and patients through GoodRx in the same way. So we're just very passionate and very excited about that. And again, to your margin question, it's not only about the OpEx side and leveraging marketing and leveraging tech slash development. It's also about driving margin on the revenue side through the mix in revenue that we'll be achieving in the years to come.

Thank you. Your next question comes from the line of Bikram Kasababola with Beard. Please go ahead.

Yeah, thank you for taking the question. I wanted to ask about the subscription revenues. Obviously, another strong quarter of growth there. But it does look like the year-over-year growth decelerated a little bit versus the last quarter. And so I'm just curious to get your thoughts on how we should think about the progression of growth on that line moving forward. And as you look at the user base today, I mean, what's a realistic mix of subscribers versus max that you think you can achieve over time based on the utilization behavior that you're observing on the platform? Thanks.

Thank you for the question. Yeah, GoodRx serves millions of consumers every month with different solutions. You know, we have prescription discounts, telehealth services, pharma manufacturer solutions, and content insights through GoodRx Health, as we discussed today. And the usage of our platform continues to increase across the board. So we're extremely excited about the strong 68% year-over-year growth in subscribers across Golden Kroger and the fact that we've reached 1.6 million subscription members. We're also excited about the 34% year-over-year growth when combining the monthly asset consumers and the subscribers. And that's how we typically evaluate consumer reach and the scale within our prescription-related offerings. The reason we look at our combined reach is that our goal is really to get users to the product that makes the most sense to them, and we test within our funnel, which is largely a similar funnel for prescription transactions and prescriptions in a way that reflects us trying to get people to the best product for them. So the rate of growth of subscribers will also depend on the pace in which we add benefits like mail and discount telehealth and the pace we expand the gold pharmacy network uh such as how we added rite aid earlier this year and it's just we further extend the gold benefit and reach so we remain extremely excited about the future of gold and our subscription offering as a whole and we plan to continue to deliver additional benefits to the subscriber base to increase the value proposition over time And that's how we think of it as part of this larger growth and the larger ability of us to reach these record users, which helps us reach the record revenue, record profit that we're able to report this quarter.

Thank you. Your next question comes from the line of Stephen Balliquette with Workplace. Please go ahead.

Great, thanks. Good afternoon, everybody. So a couple questions here that are somewhat related. First, from time to time you guys have provided some approximations for the percent of your users that are uninsured versus the percent that may have a commercial and or Medicare prescription drug coverage. So I'm curious if you have any updates on the evolution of those trends and where that stands right now. And also tied into that with the fairly high probability that millions of Medicaid enrollees will likely lose coverage during 22 and into 23. I'm curious how much that is on your radar screen as a potential catalyst for new user growth. Do you have any special levers to capitalize on that population beyond your normal DTC advertising channels? Thanks.

Thank you for the question. I think as we look at the mix, it's relatively unchanged. Even with the slight changes in the population mix in the U.S., as we look at our users, the percentages continue to be about the same. Over 75% of our users have insurance. Relative to Medicaid, as people unfortunately end up in, you know, lose coverage and end up without insurance, without solutions there, that will just help drive more people to look for benefits with us. And so in this case, an unfortunate positive for our business. Speaking to how to capture that, all of the general demand generation efforts we do continue help in a situation like this also. We try to just make sure people become aware of GoodRx in their time of need. And so that happens via the marketing we do. And it happens via the largest ways we acquire customers, which we'd like to just make sure people recall is that the largest portion is an unpaid acquisition. You know, it's people's healthcare providers telling them to use GoodRx as word of mouth. It's just the extremely high satisfaction people get with their solutions. You know, the 90 MPS that consumers are getting. that drives this continual referral at this point of care. And so, unfortunately, in this case, as people fall off Medicaid, it's likely a net benefit to group.

Thank you. Your next question concerned the line up just in post with Bank of America. Please go ahead.

Great. Yeah, I think first I'd love to hear any update on the GoHealth initiative. Are you seeing more activity around Medicare plans And then just high level, you know, some of the legislation around drug pricing. Any thoughts on that on whether there would be any impact to your business or not? Thank you.

Great. Thank you for the question. I'll speak about the Go Health, and then I'll hand it over to Doug to speak about regulation. So on the Go Health side, you know, we've built GoodRx platform and the business to be highly extensible and scalable. Today we offer prescription savings, tele-services, pharma manufacturer solutions, but we see significant opportunities to help fill even more gaps in the consumer healthcare experience. As I mentioned, we're extremely happy in this year since the IPO of how much we have offered consumers additional services along their healthcare journey. And we spoke about how insurance is just this large addressable category that we find very compelling since, as I just said previously, 75% of our users have insurance, over 30% are on Medicare. And of those large set of users, navigating insurance and helping them get on insurance is something we had not specifically addressed before. But in the case of Go Health specifically, we are helping people get on Medicare plans. So the Go Health agreement lets us help Medicare eligible consumers find and enroll in the best Medicare plans for their needs. And we've worked really closely with Go Health to make sure we're delivering a great user experience that guides people through to Medicare plan navigation. Open enrollment for Medicare just started last month, and so far we're very pleased with the traction we're seeing. But this is really only one of many platform extensions we're working on to help this large and growing audience of users that we have navigate even more stages of their healthcare journey. So I would expect people to see even more additions to areas we can address as we move as we continue moving forward here. And now I'll let Doug speak to the other part of your question.

Sure. Thanks again for the question, and thanks for having us. Look, you know, GoodRx has been around for about a decade, and we've seen many proposals and policies across multiple administrations. And with the Biden administration, we continue to be aligned with the political objectives of driving affordability and access to healthcare for all Americans. There's been a ton of discussions, as you know, everything from a policy document to discussions about the reconciliation and build back better plan. You know, and they're primarily focused on Medicare, as you indicated. But within Medicare, they're really focused on a few dozen expensive brand drugs. This administration supports transparency. That's what GoodRx has been about since the day we started. We want to educate patients and give them the information they need. And we believe some regulations in this area, such as data portability rules, are good for Americans and good for our business as well. We actively track these legislative developments. We continue to be engaged with policymakers. In fact, GoodRx is often quoted in policies because we have the ultimate vantage point on consumers, and we feel incredibly confident about where we are, and we don't see any specific impact to our business from any of the legislation that's proposed to date. Thank you.

And that concludes our question and answer session for today. I will now turn the call over back to Mr. Trevor Vestek for closing remarks.

The third quarter was another record quarter for our business. We continued to deliver record revenue at attractive margins while growing our consumer and provider base, extending our platform and accessing a larger TAM. Over the past decade, we have learned a lot about the challenges Americans face when it comes to their healthcare. and we continue to innovate to provide meaningful and impactful solutions. In the coming years, we see tremendous opportunities to continue to help Americans navigate their healthcare journey as their trusted advocate. We believe our trusted brand and the strength of our relationships, in combination with our highly extensible platform and offerings, positions us well to win across the $4 trillion healthcare ecosystem for years to come. Thank you for joining us on this journey.

Ladies and gentlemen, this concludes today's conference call. Thanks for participating. You may now disconnect.