GoodRx Holdings, Inc.

Hello and welcome to GoodRx Second Quarter 2025 Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask the question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising, your hand is raised. To withdraw your question, please press star 1-1 again. I would now like to turn the conference over to Aubrey Reynolds. You may begin. Ladies

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Good morning, everyone. Sorry for the delay. Welcome to GoodRx's earnings conference call for the second quarter 2025. Joining me today are Wendy Barnes, our chief executive officer, and Chris Mingatis, 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, without limitation, statements regarding management plans, strategies, goals and objectives, our market opportunity, our anticipated financial performance, underlying trends in our business and industry, including ongoing changes in the pharmacy ecosystem, our value proposition, our long-term growth prospects, our direct and hybrid contracting approach, collaborations and partnerships with third parties, including our consumer direct price points and our integrated savings program, our e-commerce strategy, and our capital allocation priorities. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties, and other important factors. These factors, including the factors discussed in our risk factor section of our annual report on the Form 10-K for the year ended December 31st, 2024, and our other filings with the Securities and Exchange Commission, could cause actual results, performance, or achievement to differ materially from those expressed or implied by the forward-looking statements made on this call. Any such forward-looking statements represent management's estimates as of the date of this call, and we just claim any obligation to update these statements even if subsequent events cause our views to change. In addition, we will be referencing certain non-GAP metrics in today's remarks. We have reconciled each non-GAP metric to the nearest GAP metric in the company's earnings press release, which can be found on the overview page of our investor relations website at .goederex.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 it over to Wendy.

Thank you, Aubrey, and thanks to everyone joining us. Our business continues to deliver strong, adjusted EBITDA margins, and our team is executing on a number of fronts that we believe will help deliver long-term growth opportunities. During the second quarter, we remained focused on the key initiative designed to better position the company for sustainable long-term growth to highlight a few. In pharma manufacturer solutions, we continue to strengthen key relationships with pharma manufacturers while also expanding our share of wallet across their market access, consumer marketing, and HCP budgets. Our monetization per brand has increased significantly year over year as we demonstrated our return on investment for brands and helped grow pharma's direct patient engagement strategies for access and affordability. These efforts drove 32% year over year revenue growth during the quarter. We believe this offering will continue to perform at similar levels throughout the rest of 2025, especially bolstered by recent trends of top pharma companies adopting direct to patient and consumer-backed pricing models. In prescription marketplace, we made strong progress to align with our retail partners. Since we last spoke, we have signed several retailer partnerships where our discounted pricing is presented to consumers on the pharmacy counter. Also, we launched e-commerce solutions with an additional retailer and are in contract discussions for several more. We look forward to announcing more detail behind these partnerships in the coming weeks. We are pleased to have new partners for our integrated savings program, and we have expanded the program to service brand medications in addition to generics across multiple PBM partners. And finally, we announced during the quarter that we launched our condition subscription product for erectile dysfunction, which allows us to deepen our engagement with consumers directly while maximizing our return on existing capabilities. I will discuss these in greater detail in a few minutes, but first, I want to formally welcome Laura Jensen as our new Chief Commercial Officer and President of Pharma Solutions. In this role, she will lead the company's pharma manufacturer solutions offering, as well as oversee strategic initiatives aimed at growing and enhancing partnerships across the pharmaceutical industry. Our former Chief Commercial Officer, Dorothy Gemmell, is retiring after 35 years in healthcare leadership positions, but will continue for a transitional period of time to ensure a seamless shift of responsibilities, key relationships, and pipeline opportunities. Prior to joining GoodRx, Laura led growth strategy for both Amazon Pharmacy and PillPack, spearheading innovative partnerships with pharma manufacturers and prescribers to improve how patients access and manage their medications. She has established relationships with executive-level leaders in pharma and brings a track record of creating integrated experiences that drive efficiency and improved patient outcomes. We believe that Laura is well positioned to deepen our impact, accelerate growth in this critical area of the business, and expand solutions in an ever-changing landscape. With respect to the healthcare landscape, change has become a constant with positive and negative impacts on our business. We continue to believe that we are well positioned to respond to such changes, deliver value across the pharmacy ecosystem, and grow our business over the long term. Negative developments impacting our business in the short term include the Rite Aid bankruptcy and the decline in volume of one of our integrated savings programs with a PBM partner. With respect to Rite Aid, during our last earnings call, we did not have line of sight into the bankruptcy process, the plan for store closures, or other pertinent details regarding the transition of patient files, and therefore we explicitly excluded any impact from our earnings guidance. Beginning in May, the process unfolded rapidly with several PBMs removing Rite Aid from their networks causing immediate cessation in the associated claims volume. This was followed by closures of over 800 stores between June and July. Given the speed with which this process occurred, we are working to recapture displaced consumers, both through direct communications where available, and in partnership with acquiring pharmacy retailers. Recapture does take time, however. With respect to our integrated savings program, we saw a material decline in volume at one of our PBM partners. As we have previously discussed, the first generation of our ISP offering is focused on covered generics, and is operated through PBMs who decide how to implement and manage the program. While this PBM partner's restructure of their ISP program has created volume headwinds for us, we believe that ISP remains important and valuable. ISP on generics has represented a tremendous entry point for Guttarec Solutions and Pricing, but as time progresses, we believe significant opportunity will come by way of brand drugs. Understanding the share of spend these drugs represents for plan sponsors. In this way, ISP will continue to be a growth engine and complement to our pharma manufacturer solution strategy. The core of our prescription marketplace remains strong, and we're proactively broadening our revenue mix and deepening pharmacy partnerships to reduce the risk of similar disruptions in the future. The foundations we are building with retailers continue to position us for long-term growth at a time when prescription savings are top of mind. At the same time, we've seen significant developments in the broader healthcare landscape. In July, Congress passed a budget bill that amongst many other provisions, cuts funding for Medicaid and individual exchange products. This legislation also tightens eligibility requirements and increases the frequency of Medicaid coverage determination. According to the Congressional Budget Office, these changes could leave nearly 10 million people uninsured, a rise of nearly 40%. We understand the challenges facing those who will lose coverage and emphasize that the need for good are access more critical than ever to ensure such individuals have access to affordable medication. Additionally, several health plans have reported higher than anticipated medical utilization during 2025. This suggests that the trend of rising costs, increasing premiums and reduced coverage is likely to continue in 2026 and beyond. In fact, CMS recently announced that the 2026 Part D national average monthly bid amount is up 33% year over year. And finally, we remain engaged with government entities as they explore models to reduce brand drug pricing directly to consumers. Our existing large portfolio of discounted consumer direct pricing for brand drugs places us in a very strong position to be a solution of choice. As millions of Americans seek affordable alternatives, we believe good are X remains and will continue to become an increasingly valuable complement to insurance by helping them access the medications they need. Consistent with our commitment to increase our government affairs engagement, we are actively advocating for policies that expand access to affordable medication. Now let's dive into more detail on our business updates. Our prescription marketplace continues to make progress in deepening our pharmacy relationships and delivering more economic and strategic value to pharmacies. We do this by focusing on two core strategies. Pharmacy counter integrations and e-commerce. Pharmacy counter integrations expand good are X's presence to the physical pharmacy counter as an ally to pharmacists and technicians by helping patients with prescription access and affordability in real time. We expanded to multiple new pharmacy partners this quarter and expect more announcements on additional partners soon. Our e-commerce solution integrates into the pharmacy management system to enable consumers to pay online and pick up in store, thereby making the front end adjudication more efficient and saving time at the counter while focusing on reducing the number of abandoned scripts. We launched e-commerce solutions with an additional retailer during the quarter and are in contract discussions for several more. We are highly focused on digitally integrating into all aspects of the prescription workflow as a longer term strategy to remove friction in the process. We are also excited about the launch of good are X community link, a new offering designed specifically for independent pharmacies that provides predictable pricing and favorable economics. We recognize independent pharmacies are a cornerstone of healthcare in many communities and they need bespoke solutions to address complex reimbursement models and competitive pressures in the industry. Community link offers independent pharmacy the ability to directly contract with good are X, which leverages a cost plus model based on the national average drug acquisition cost or NADAC to provide direct control over pricing and favorable margins. It also offers the ability to opt in to our integrated savings program, which may offer more favorable rates than traditional commercial insurance reimbursement and provides access to our point of sale discounts, which will now refer to as consumer direct price points with pharma brands, making the medications more affordable for the consumer and economically beneficial for the pharmacy. The intent of this cost plus program is to support favorable margins and our internal data is demonstrating successful results for participating pharmacies. This type of direct pharmacy engagement represents how good are X goes to market with pharmacy durability front of mind. In the second quarter, we also launched our first subscription service for erectile dysfunction. We observed that consumers regularly turn to good are X for ways to save on ED medications and now they have access to a single solution that provides comprehensive care. By bundling the clinician visit, prescription and delivery into one low cost offering, we're redefining what accessible care can look like and streamlining the prescription journey from beginning to end, making it easier for consumers to access ED treatments within a platform they already trust. We are pleased with the early results and intend to expand into additional conditions before the end of the year with weight loss management and hair loss upcoming. Furthermore, we also launched a new prescription and savings subscription offering that is being sold at the pharmacy counter. Our first retail partner went live in the second quarter and we expect other retailers to follow suit in tandem with other pharmacy counter initiatives discussed earlier. Our pharma manufacturer solutions delivered strong results during the second quarter with 32% year over year revenue growth. We are focused on expanding our integrated access and affordability solutions with pharma, partnering with even more brands and delivering meaningful return on investment for pharma partners. Our monetization per brand has increased significantly, which is driven by our independently validated ROI and by the scale of our platform and quality of our audience. This is particularly true as we support pharma brands and their direct to patient strategies, a key focus for many top manufacturers. One area we are specifically focused on is our consumer direct pricing model. As many pharma brands build consumer direct strategies, we are a natural partner of choice, given the size and quality of our audience and demonstrated consumer and HCP engagement. I'm particularly enthusiastic about the intersection of our pharma manufacturing solutions offering and our HCP efforts. Our HCP audience and engagement are significant. In the second quarter alone, we had over 750,000 HCPs active on our platform. We believe this scale gives us a unique opportunity to help facilitate pharma's access to prescribers. We now have the capabilities to deliver a customized engagement with our expansive HCP audience for targeted pharmaceutical offers, which are now incorporated into our 2026 selling plans. We see significant upside for our pharma offerings to grow and deliver meaningful value to both HCPs and pharma manufacturers due to the quality of our audience and targeting precision. I want to reiterate our focus on controllable, sustainable, and durable strategic initiatives that position GoodRx for long-term sustainable growth. We are executing against these inclusive of signing direct retail pharmacy counter partnership, growing our brand pharma portfolio, evolving our ISP program and -to-market strategy, and looking into 2026, creating an expanded HCP product in addition to exploring and expanding the integration of GoodRx pricing into EHR and digital workflows. I am also convicted and confident in our executive leadership team's ability to execute on our strategic plan amidst a challenging healthcare environment. I will now turn the call over to Chris to discuss our second quarter results.

Thank you, Wendy, and good morning, everyone. For the second quarter, total revenue is $203.1 million, up 1% versus the prior year. This is in line with our expectations when excluding the impact of Rite Aid, which, as a reminder, the guidance provided in May excluded the impact from Rite Aid. The erosion of the ISP program that Wendy noted earlier and the impact from Rite Aid were the primary reason prescription transaction revenue declined 3% versus the prior year and for the decline in monthly active consumers. We expect monthly active consumers to decline in the short term. However, we are reassessing this metric as a measure of the health of our business. For example, when we convert a consumer from a traditional retail counter transaction to a consumer direct price point, we no longer include the transaction in our MAC account, nor do we report any corresponding metric under the pharma manufacturing solutions offering. In this example, the result is a reported decline in our monthly active consumer when the business is actually performing as intended. With respect to pharma manufacturer solutions, revenue for the quarter was $35 million, up 32% versus the prior year. This was strong performance resulting in revenue growth in the first half year of 25% compared to the first half of 2024. We are now projecting our pharma manufacturing solutions offering will grow 30% or higher in 2025. During the quarter, we took certain actions to reduce costs while aligning our resources to a more focused set of key strategic priorities. This realignment is intended to increase go-forward operating efficiencies, which will continue to contribute positively to our overall adjusted EBITDA and adjusted EBITDA margin. For the second quarter, adjusted EBITDA of $69.4 million rose 6% versus the prior year, which constitutes an adjusted EBITDA margin of 34.2%, which is an improvement of 160 basis points over the same period last year. Our balance sheet remains strong. We closed the quarter with $281.3 million of cash on hand, and during the quarter, we deployed approximately $46.4 million to repurchase 10.2 million shares of our stock at an average price of $4.53 per share. Given our stock price, we continue to believe that stock repurchases are accretive and a good method to return excess cash to shareholders. At the end of the second quarter, approximately $143 million of capacity remained under our $450 million share repurchase program. Turning now to our outlook for the remainder of the year, as Wendy noted, last quarter we were unable to estimate the impact of Rite Aid, and therefore specifically excluded any impact from the previous guidance ranges. While uncertainty remains, we are now including the impact from Rite Aid, as well as the erosion of one of our ISP programs into our updated guidance. In spite of the headwinds from these two exogenous events, which is expected to be approximately 35 to 40 million of projected revenue loss in 2025, we expect that our full year of revenue will increase for 2024, with Q3 revenue expected to be lower than Q4. Despite lowering our revenue projections, we expect that full year adjusted EBITDA will be in the range of $265 and $275 million, which represents approximately 2 to 6% growth compared to 2024. Overall, we had a solid financial quarter. I'm highly encouraged by the results of Pharma Manufacture Solutions offering driving towards 30% or higher revenue growth in 2025. And while lowering revenue expectations due to external factors is disappointing, our core business remains strong, and the fact that our adjusted EBITDA range continues to encompass a portion of our previous range is a testament to our leadership team and the focus on the right strategic initiatives and operating efficiency. We are also optimistic that investment into these strategic initiatives will drive durable, profitable future growth while solving real pain points for the consumers and the pharmacy ecosystem. With that, I'll turn the call back over to Wendy.

Thank you, Chris. Over the course of my first six months, I want to reiterate my commitment to strengthening our leadership team, continuing to evaluate our core capabilities, and engaging with key partners to solve real business problems and to develop new strategic initiatives, new strategic initiatives rather, to drive sustainable future growth. I'm confident that we are making meaningful progress on these commitments. We have the right leadership team in place to navigate the evolving prescription medication landscape while focusing on delivering operational efficiencies that will improve our long-term trajectory. We've also made meaningful progress on initiatives that create value for each of our core stakeholders by delivering aligned economic value with our pharmacies, building strong momentum with pharma manufacturers to enable medication access and affordability, investing in tools that improve HCP workflows and engagement, and delivering a better consumer experience while providing access to affordable medications. When I look at the progress we have made, along with the broader macroeconomic and healthcare environment, I can say with confidence that Gutterex is in a strong position to reduce friction and deliver meaningful value to consumers in the pharmacy ecosystem. I will now turn the call over to the operator for questions.

Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star one one on your telephone and then wait for your name to be announced. To withdraw your question, please press star one one again. We ask that you limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question comes from the line of Lisa Gill with JPMorgan. Your line is open.

Well, thanks very much. Good morning. Thanks, Wendy, for all of the details. Can you maybe just spend an incremental minute around ISP? One, maybe talk about some of the new partnerships that you were talking about, and then secondly, you talked about potentially going to employers directly. And how should we think about the timeline of the turnaround of ISP where it could become a positive contributor again to Gutterex?

Hi, Lisa. Good morning. Thank you for the question. Look, you've heard us talk a little bit about ISP before, and I think I've been, as has Chris, been a little more tempered about the expectation around ISP while in a critical product to how we reach commercial lives. And there's no question that in partnering with PBMs, that is the fastest and most expeditious access to commercial lives. We also know that the ability for our Gutterex competitive cash price to always surface as a compliment to the funded price point at the point of sale doesn't always come through in that capacity. And so for that reason, we're a little more metered as to the expectation that we should get out of that program. Having said that, you're spot on with your lead-in pointing to brands. That is a certain value add to the program in that this auto-wrap, as we refer to it internally, of brand drugs, many of which, of course, we point to through our pharma manufacturer solutions growth, they in fact provide coverage at the point of sale for these same commercial lives for brands that are otherwise not covered on their plan. And so for that reason, the engagement from PBM partners around adding this as a compliment to their already integrated offering has been quite high. You've heard us talk about it a couple of times, but we've now actually executed contractual wording to do that with several partners. As to the second part of your question on additional partners, we have added De Novo, that in fact is true. We're pleased with that progress. I hope to have more definitive and combined public announcements as to who those are upcoming, but at present, we're just simply comfortable suggesting we've added more to our portfolio of partners for the time being. Chris, is there anything else you'd add?

No, I think I would reiterate the fact that this is a very important program. It strategically still has real merit in terms of why it exists. And I think from a financial perspective, there's positive contribution coming, not only with respect to adding new partners and expanding the access to overall lives available to us, but also continuing to work with our PBM partners as to the implementations on the ones that currently exist. And then I think as Wendy's noted, just expanding it to brands and direct to employer all represent upside on this program, which remains important.

Chris, can you just remind us what's in the numbers for 25 and how much of this would actually be more of a 26 type of opportunity?

I think I would think about it more as a 26 opportunity. I think where we are now is we've taken the guidance down as obviously in terms of the 35 to 40 million, if that reflects all of everything we know as it's currently running today. So roughly half of that is associated with ISP, give or take. So I think adding additional partners and expanding the program would represent upside, but I think likely that's 26.

Okay, perfect, thank you. Thank you. Please stand by for our next question. Our next question comes from the line of Michael Cherney with Lerik Partners. Your line is open.

Good morning and thanks for taking the question. Maybe if we can dive in a little bit on the manufacturing solutions. I appreciate the color on the other challenges of the business manufacturing solutions obviously had a really strong quarter. Can you talk a little bit more about how you think of the combination of the offensive growth and targeted pushes you've made versus the health of the end market and how we should think about the bridge getting to that increased, I think you said Chris, 30% plus revenue growth for the year. Thank you.

Thank you for the question. You're right, we're pretty pleased with how manufacturer solutions has performed. The numbers of course speak for themselves, but we feel highly convicted after the 30 plus for the full year, which we've of course included in our explicit guidance in this call. I think what we've seen happen ties nicely to some of the commentary you've heard us mention previously, which is when we first engage with a manufacturer who perhaps hadn't worked with us before, on a brand point of sale buy down, typically we will have one or a portfolio of drugs inside one particular disease state with a pharma partner. We're then turning around these ROI studies that candidly are just producing an outside comparative results to what they can achieve through their own brand.com activity. And this is a combination of either the brand point of sale buy down and or a combination of embedding their affordability programs. So think copay manufacturer assistance and the like. So it's just across the board. Some involve all of those things, some involve only aspects. And then when we return these ROI studies that support not only positive ROI, but candidly outsized that new brand to RX therapy growth, then what we're finding is we're expanding into other portfolios within those same manufacturers. And when you zoom out a little bit and think about the regulatory environment that we're now sitting in, where this administration is pointing heavily towards direct to patient channels, we're well positioned to take advantage of that with these same manufacturers and potentially with others who may have been on the fence about doing a point of sale program to begin with. And we've been actively engaged, not just with the pharma partners, but also in DC, which was part of our commitment to this group to be able to engage more heavily and to influence what we think is the right answer, ultimately for the consumer market. Chris, is there anything from a number standpoint you would add?

Yeah, I would say, Mike, thanks for the question. I mean, this is, as I said in my script, and I can't underscore enough how excited we are about this part of the business. It's a part of the business that I think is undervalued as a 30 plus percent grower. We have direct line of sight to 30%, which is why I said 30% are higher. So we have real strong conviction around that. As we talked about last quarter, the revenue cycle here is a little bit lumpy as you're bringing those sales on, but the conversations with pharma continue and really are increasingly, as Wendy noted, around direct to patient engagement. And we've got a great platform to bring that to market. So I think we've got high conviction around line of sight to 30 and really beyond.

Thanks, and then just one quick question. I know you don't guide below EBITDA, but how should we think about your expectations, your focus for capital deployment for the remainder of the year? You had elevated share of purchases in two Q. Should we think about that being another level that you would continue to pursue?

Yeah, so in terms of that, I think it's a good question. Look, we'll always reinvest in our business. And so as I mentioned, we took some actions in the second quarter to sort of right size the business. But really it was about realigning resources around a more focused set of strategic initiatives, some of which we can't actually talk about yet. So we'll continue to invest in those areas to enable future growth. Nothing outside versus what you're already seeing. I think it's already fit into the run rate, but we'll continue to do that first and foremost. So really no change other than we'll have some on reserve. There are some potential for us to electively spend a little bit more on the back half on some marketing initiatives to kind of also compliment some strategic initiatives that are ongoing as well. But not a lot has changed there. And then look, absent some other strategic use for the cash, like we believe the shares are undervalued today. We'll continue to push cash back into the share repurchase program, short of some other better and higher use. Got it,

thank you.

Yep.

Thank you. Please stand by for our next question. Our next question comes from the line of John Ransom with Raymond James. Your line is open.

Hey, good morning. Wendy, just kind of more of a kind of structural question. As you guys have submitted to Cost Plus and certainly I understand that's good for the retailers, do you find that the comparative pricing versus what the PBM has already negotiated is less competitive than it was? And so maybe just the market for cash pay scripts has been compressed a little bit by that dynamic.

Yeah, no, it's an interesting question. And you're picking up on something that is in fact objectively true. So with Cost Plus, costs at point of sale have in fact gone up, that's true. And so as a result, there have been a bolus of scripts that have pushed back onto the funded benefit as compared to cash. And also candidly, we've contributed a bit to that in that we really needed to rebalance the pharmacy economic and by doing so, we paid the pharmacies a bit more such that they are motivated and actually want to receive these scripts and service these scripts, but still candidly at a competitive price for the consumer. But in some instances, the price has gone up, that's true. I think that's a fair observation.

Okay, and then just another question. Just looking at the marketing spend. I mean, again, it's just true that monthly active users are down. I know you guys think that's not the perfect measure, but is there some opportunity here to rethink how, I mean, I just noticed less mass market commercials from you, but what is the company's updated messaging, especially as you push into branded? It seems like some of the stuff I've seen is still kind of good, our X1.0. Hey, you can check your app and might achieve a price, but what's the thought about migrating the messaging and maybe getting a little more punch for the ad dollars you're spending? Thanks.

Yeah, gosh, it's a really timely question, John. I think we've alluded to, guys, keep me honest here, but we've talked about having additional marketing spend in the back half of the year. That continues to be the plan. We are weeks out on the precipice of a brand relaunch and refresh that I think you'll find to be a bit punchier. It will certainly be more pervasive than our messages today in market. It's been a good three years since we've heavily invested in the brand. Having said that, we have continued to enjoy the number one brand position with consumers and HTPs, but certainly resting on your laurels doesn't get you very far. So we agree. It has been a purposeful campaign and build. I'm excited for the broader market to see and receive it. I would leave you with, give it a couple weeks and you'll see it in and around many places. And then we would certainly welcome your feedback once you see it in market. Yeah, and you guys are gonna have like meme

coins. You can buy your drugs with meme coins or something really. Yeah, 2025. No, no

Bitcoin, no cryptocurrency to get drugs. No, not quite that catchy, but Chris, I think you were gonna say something. Yeah, maybe,

well, that was a good idea.

So

I do think our spend will be slightly elevated in the second half compared to first half. And I think as Wendy noted, it will come as a non- well, listen, I'll leave the marketing sort of expertise to guys like Ryan Sullivan and our team who are just world-class at it. But we will both invest in our brand itself but also in growth initiatives. So we'll have sort of two different types of marketing spend that'll really be specific in the back half. Some of the brand initiatives will be out there. And then as we sort of get to a announceable then strategic initiatives, we'll spend some money to support those growth initiatives. Think about subscription offerings and coming offerings around weight loss, ED. We really haven't leaned into those yet from a marketing perspective. And so when those launch, I think you would see some spend to support those as well.

Before we get off to question, I would be remiss, John, without also pointing out, you heard me mention additional pharmacy counter programs and deepening those relationships. There is an aspect of that that involves purposeful marketing spend. Again, where we believe the consumer is most engaged and often is already motivated, has a script and is ready to transact. And so for that reason, we've had purposeful spend in the previous month and will continue through the back half of the year to firm up those counter programs as well.

All right, thank you.

You're welcome. Please stand by for our next question. Our next question comes from the line of Charles Wright with TV Cohen. Your line is open.

Oh yeah, thanks for taking the questions. I'd like to go back to the guidance change here. So, I think at the midpoint, it is something like 35 to 40 million of revenue. And that'd be about 4.5%, I think from the midpoint. You know, Chris, you talked about last quarter, Rite Aid was under 5%. But here you're talking about 4.5%, which includes both the impact from ISP and Rite Aid. If I recall, I think this predates you guys, but I think the estimate for ISP was only about 30 million of revenue contribution, I think it was either for last year or maybe for this year. So, what I'm trying to understand is, of this, the guidance adjustment, is this more Rite Aid or is this more ISP? And if it's not all Rite Aid, what do you think the remitting exposure relative to that would be potentially, or do you feel like you have really sized it appropriately here?

Yeah, I think we've sized it. So, I would say roughly half and half, right? In terms of the 35 to 40 million we're calling out. And look, there are some, Rite Aid isn't a perfect science. I mean, we don't have the primary file, so it's hard to reconcile exactly what our recapture rate is. We have assumptions around that. We think that, obviously, you're hit a little harder in the near term and we'll recapture those scripts in the back half. So, there is some assumption built around how we're recapturing at what rate. We actually haven't felt the full impact yet from Rite Aid either. There was about 400 store closures in June. We saw some other immediate, sort of as Wendy noted, cessation with some of the programs with Rite Aid. So, there's sort of this initial impact with the rapid nature of the store closures. There's likely a pool of consumers that went to their local pharmacy just to find that it wasn't there anymore and may have transferred the script themselves. So, there's a lot to unwind there. But to your question directly on the numbers, I would think about it about half and half. We put a range on it because there's still some impact. We're doing everything we can from a contactability and others to ensure that we're recapturing the highest possible and I think that we'll continue to do that and part of the brand effort and the marketing is all tied into this, right, which is to reinvigorate the brand to make sure that those who came to us as consumers and elected to do business with us will continue to come back to us. And look, I think there's tailwinds coming in 2026 anyway. If you look at the PDP premiums that were announced by CMS, they're up 33%. I know that's not the commercial market, but you're seeing other payers talk about high utilization. I think that likely ends up being some of the things that we just talked about is that John asked on the prior question around the costs have gone up. I think that people have gone back to the benefit this year. I think they'll come back to the cash benefit next year. I think you hear other manufacturers like Novo talked about the importance of cash programs. I think you've seen some large payers talk about the importance of cash programs. So I actually think there's tailwinds for this to come back and I think as we reinvigorate the brand and go after marketing spend, I think you'll see customers like whatever right aides losses were, I think we'll recapture those over the longer term.

Well, so just coming behind you, Chris, I said that your question also was and have you fully accounted for both of these things in this year? The answer is yes. Yeah, that's baked into the revised revenue and adjusted dividend guidance.

Okay, thank you. And then Wendy, if I could follow up, you mentioned earlier about the opportunities when we think about more broadly in the market a direct to consumer option. Obviously the president has talked about wanting something similar to that with the MFM pricing. When you look at the landscape of basically where drugs, what price set, what price set of drugs do you think if they were to go to the MFM price would be reasonably affordable? Because I believe you guys had said once that, or again, maybe this predates both of you, but sort of when the cash price gets beyond 200, 250 a month, it really is not that attractive to consumers. So when you look at sort of portfolio drugs out there, is there a large swath of brand drugs? And I guess this is relevant for ISPWRAP as well. Just how big is that opportunity in the drug spend out there? Thanks.

Yeah, no, I appreciate the question. Look, I think my ability to completely speculate on what that opportunity represents is would be somewhat difficult, at least given the looseness, my adjective, of the director from the administration at present. But there's no question that consumer sensitivity around what a cash and or -of-pocket price represents from a walk away standpoint at point of sale. I think it's much higher than most of us really would otherwise logically surmise. And we're seeing that play out with GLT-1s as a great example with what the average consumer is willing to pay from a cash price. So I would leave you really more with this observation that MSN or no, that it's really more about the delta between what the price would have been absent, having a more and purposeful negotiated cash price that feels like a win for the consumer and favorably reimburses the pharmacy. So I would anticipate that there continues to be quite a bit of opportunity even with higher cost brands, even if that lowest cost that ends up being supported by pharma with us and or others even exceeds the 250 price point. I think it still represents a meaningful opportunity for consumers at the point of sale.

Great, thank you. Thank you. Our next question comes from the line of Stan Bernstein with Wells Fargo Securities. Your line is open.

Yes, good morning and thanks for taking my questions. On the subscription line, you saw some declines in the second quarter. Anything to call out in terms of why gold subscription slipped and did you see any offsets from the recently launched erectile dysfunction subscription product? Thank you.

Let me take that one. Yeah, you're right. Yes, gold has declined. I think our counterpoint to that however, is our push into subscriptions, which is candidly just a more purposeful component of that entire grouping that we would put gold in with subscriptions being encompassed into that. So we started with erectile dysfunction. We've been pretty pleased with the progress thus far. As we think about additional programs before end of year, I did note both weight loss and hair loss upcoming with candidly more behind that, but we think that those two represent the most meaningful opportunities in the near term. We also know that our marketplace with the consumers that are already sitting in and around our ecosystem, I mean roughly 300 million annual visits to our various platforms and comparatively to a lot of these other subscription type model services, two to three times the number of consumers engaged with us as through these other more partitioned offerings. We think it should represent a meaningful opportunity to hopefully return to growth on those numbers of subscribers in our subscription services.

All right, thank you.

You're welcome.

Please stand by for our next question. Our next question comes from the line of Craig Hattenbach with Morgan Stanley, your line is open.

Hi, this is Jay on for Craig. On the 35 to 40 million impact, so given the, I guess, lower revenue outlook, can you give us more color on the specific cost controls or margin levers that are being used to maintain the EBITDA margins?

Yeah, I mean, it comes in, it's a little bit of a complexity, but part of it is, the ISP programs have a little bit lower revenue per fill, so in a way, when you loop the mix shift from higher margin at the counter scripts, the fact that the price points have gone up and the cost plus models, I think by definition, are a little bit higher and contributing to the revenue per fill numbers and metrics. So, those are the big factors, I mean, and in terms of cost controls that you asked about, so we took action, obviously, and part of that was an enforcement reduction in our workforce, but others was just reallocating certain technology and related resources around strategic initiatives and refining those to the current strategic initiative set, so it's just a more focused approach, and you're seeing it come through. I think we're on a run of maybe two years straight of increasing the margin percentage on a -over-year comparative basis, which we continue to do and will continue to focus on. We wanna be good stewards of shareholder money and make sure that we're operating the business as efficiently as possible.

Yeah, I would just add, part of what Chris and I committed to early on this year when we first engaged with all of you is that we would take a hard look at not only the combination of strategic initiatives we were focused on, but our colleagues and the number of people focused on pulling those initiatives through, and that those that really didn't align to these core initiatives that we've continued to speak of in these earnings calls, that we would either redeploy in support of or eliminate roles that really weren't in service to the broader strategic mission. We have done that in combination with this broader executive leadership team, and it will just be part of our ongoing discipline as a leadership team.

That's helpful, and as a follow-up, are you seeing any shifts in consumer behavior or prescription fill rates that could impact platform usage in the remainder of the year? Thanks a lot.

I'm sorry, can you ask that question one more time?

Yeah, so are you seeing any shifts in consumer behavior or prescription fill rates that could impact platform usage in the remainder of the year?

Nothing comes to mind. I'm kinda looking around and thinking, around the room here to think through any.

I would just reiterate what I said, which is, I think the fact that consumer prices are up has likely pushed more into the benefit in the short term, and we're seeing that. I think you're seeing that as a part of the explanation for our max coming down, our max counts coming down. From my perspective, I think there's a lot of tailwinds that are brewing that are gonna push it back the other way next year, as I talked about, but really, there's really no other consumer-specific behavior other than, I think, the dynamics around the prices that people are paying at the counter.

Thank you. Please stand by for our next question.

Our next question comes from the line of Jalindya Singh with Trua Securities. Your line is open.

Thank you, Ann. Thanks for taking my questions. I want to double-click more into the volume reduction at OneISP, and I apologize if you already covered this, but what's the due to changes in PBM behavior, customer behavior, or any structural changes? Just trying to better understand what gives you the confidence that this would not spread into your other ISP partnerships, any proactive actions you can take on your part to manage these potential headwinds in the future?

Yeah, look, I think we've been pretty candid about what ISP is and what it isn't. So, in some sense, I would say the notion that the GooderX price may not always win, even when it's more competitive, has been known, candidly, as part of this problem, but it's still a compelling product that you want to get in front of commercial lives. So, for that reason, you've seen us continue to lean into additional partnerships, and while I appreciate the question on, so how should we think about scaling it going forward, I think about it really in two ways. One, it's about adding more commercial lives to make sure that we can continue to grow the reach of this product. We've done that, and we're continuing to do that, while also noting in tandem the pullback of our win rate with one particular partner. However, part two, as I think about this, is the additive brands that I noted in the transcript to kick off the call. And so, we do see an ability for this product to continue to grow, but if I add one third element, it would be this, which is, look, there's always going to be an element of favor to the PBM, and so for that reason, for this product to truly realize its full potential, it has to be implied through the employer and or client at some point. They've got to mandate that the cash price always win, and so for that reason, you've heard us talk about engaging more on the employer side, potentially with broker coalition, and we are building out a group to do exactly that. So that really is more the bolstering answer to your question, which is how do we ensure that this product truly realizes its full potential? That's how we're going to do it, and that really is more of a 2026 solve as we get this true strategy in market.

That makes sense, and then my follow-up, actually I'm following up on Stan's question around the recent launch of ED subscription plan and plans to expand into other categories such as weight loss and hair loss. How are you thinking about competition in those categories when some DTC incumbents in the space have been making big push? Is the strategy more about leveraging existing platform assets like traffic and band? Do you have to invest meaningfully to start having impact in those markets?

It's a great question. Let me start by saying you're not wrong in noting that, effectively tapping into the consumers who are already searching for these drugs on our site represents again a two to three times opportunity that those competitors, I'm presuming we're talking about the same ones currently enjoy. So we're certainly starting from a better point, I would say to springboard off of these types of launches. However, your observation is also correct that competitors do spend a meaningful amount on marketing on these same programs. You've seen us be a bit more tempered there. It is part of our consideration as we think about these future categories, I think you'll see us get more creative. But again, we do have the benefit of taking advantage of consumers who are already in front of us. So naturally our ability to attract a consumer, I think comes with a slightly lower cost of acquisition to do so, but you will see us lean into marketing around future programs as well.

Great, thanks a lot.

Please stand by for our next question. Our next question comes from the line of Steven Valiquette with Mizzouho Securities, your line is open.

Oh, thanks, yeah, good morning Wendy and Chris, thanks for taking the question. So, I think I had about five questions on Friday, I think you answered all of them in the answer to Charles' question earlier. But just to follow up a little bit on that topic, you mentioned you do have some recapture assumptions built into your outlook, just curious if you're able to maybe give at least some high level color on what that assumption is, or maybe it's, I don't know, 20, 25% or something like that, just for a rule of thumb, just to help us think about that. And then kind of tied into that, you also mentioned last quarter, again, that you were under-indexed to Rite Aid. Just in hindsight, doesn't matter as much now, but just remind us why you think that is, but also is there anything about that mechanically that might make it more challenging for you to recapture the scripts you do have with Rite Aid? Maybe they were just more tied in with other cash-based services or something like that, just trying to understand that angle as well, thanks.

Yeah, let me take those in sort of reverse order. I don't think there's anything unique about the Rite Aid customers that make it either harder or easier to recapture, I think it's just, these are consumers that were out looking for affordable solutions to access medications. So I don't think there's anything about that, I think as we go out and we think about future brand initiatives and the ability to contact these individuals and bring them back to the platform, I think they'll naturally come back to the platform. They may not be even aware they're no longer using their GoDev coupon depending on where they've landed or whether they've been switched or however that works. So our job is to bring them back and make sure they've got the most affordable price to do that. In terms of our assumptions built in, I think we haven't given a number, but Steve, I think you're directionally correct in terms of how you're thinking about our assumptions based on some historic, it's not an exact science. We don't exactly know, because we don't have the primary file, we have ways to sort of trace them and connect the dots back, but it's not an exact science. So your assumptions are sort of generally correct.

I would also add that we do, for those that we have contactable information for, we have directly marketed, communicated to them and given them an option as to where they could take that next fill, if you will. Additionally, for those that we don't have contactability for, we do have through our digital platform, very clear messaging around, hey, is your pharmacy closed? Let us help you. So we are leaning in in every way possible to recapture the lost consumer.

Okay, all right, that's helpful, thank you.

Thank you. Ladies and gentlemen, due to the interest of time, our final question will come from the line of Daniel Grosslight with Citi. Your line is open.

Hi guys, thanks for taking the question. There's obviously been a lot of disruption in national retail chains and store closings and the Rite Aid bankruptcy, which has been well covered on this call, but I'm curious where you're seeing volume flow through to with those store closings. And in particular, are you seeing more volume going towards independence? And in conjunction with that, you launched Community Link last quarter. I'm curious if you can provide an update on the updates you're seeing within Independence and Community Link, thank you.

Yeah, no, appreciate it. And one, and thank you for the acknowledgement of Community Link. Look, I will say for Rite Aid specifically, I think it's too early to know whether or not Independence has been an outsized recipient of that volume. From our partnerships with larger chains, I will say thus far, some of the grocer retailers have been, at least from traffic that they've shared with us, have certainly done well with some of this movement. Of course, CVS bought a number of those files too, but the timing, knowing that again, June, July was really the bolus of those store closures, particularly if someone would stay on a 90 day fill, the short answer is it's a little too soon to know where we think those are going to go. To the other point of your question, however, on specifically Community Link, look, we just think it's the right answer. I'm really pleased to be able to support this program, just knowing that those pharmacies often are an island in the rural environments in which they exist, sometimes the only entry and access point to care. What we do know with those that have contracted directly with us thus far, that their profitability is up meaningfully, we're incredibly proud of that. You're going to see us lean in from a marketing perspective much more heavily, both marketing and communications to continue to grow the number of those pharmacies that work with us directly, which of course also affords them the option to participate in ISP, inclusive of all the brand discounts that we've pointed to through our Pharma ManSol business, which again is incredibly meaningful, not only to our larger retail change, but more pointedly to those smaller community pharmacies that are for the most part underwater on all of these brands.

Got it, thank you.

You're welcome. Thank you. Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.