Ladies and gentlemen, thank you for joining us, and welcome to the GoodRx First Quarter 2022 Earnings Call. Please note that 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 first quarter of 2022. Joining me today are Doug Hirsch and Trevor Bezdek, our Co-Founders and Co-Chief Executive Officers; and Karsten Voermann, 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 facts should be considered forward-looking statements, including statements regarding management's plans, strategies, goals and objectives, our market opportunity, our anticipated financial performance and the expected impact of COVID-19 on our business. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors. These factors may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Factors discussed in the Risk Factors section of our quarterly report on Form 10-Q for the quarter ended March 31, 2022 and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on this call. Any such forward-looking statements represent management's estimates as of the date of this call, and we disclaim any obligation to update these statements, even if subsequent events cause our views to change. In addition, we may also reference certain non-GAAP metrics, which are reconciled to the nearest GAAP metric in the company's shareholder letter, which can be found on the overview page of our Investor Relations website at investors.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 it over to Doug.

Good afternoon and thank you all for joining us today. When Trevor and I started GoodRx, our mission was clear. We knew we had to help Americans get the health care they need at a price they can afford. To build a strong and sustainable business from the ground up, we knew that both the product and the team would be key to our success. Fast forward to over a decade later, GoodRx has become a trusted brand that is led by both consumers and health care professionals. GoodRx was also recently named to TIME's list of the 100 Most Influential companies of 2022. This recognition is a testament to the amazing work and extraordinary impact of our team. It's exciting to think about how far we have come. GoodRx' unique, proprietary and extensible platform has now saved consumers a cumulative $40 billion. Our curious, passionate and highly motivated team is now, with the addition of vitaCare, almost 1,000 strong and we have a highly profitable business, growing 27% year-over-year. We believe the opportunity ahead is significant, and we're just getting started. That is why I'm thrilled to announce that we're continuing to bolster our leadership team with a number of new hires we've made in the past few months. Raj Beri will be joining GoodRx as Chief Operating Officer later this month; and we've recently welcomed Mark Hull, our Chief Product Officer; Vina Leite, our Chief People Officer; and Scott Paul, our SVP of Healthcare and Consumer Innovation. These innovative forward-thinking leaders believe in our vision and share our passion to improve the state of health care in America. We believe their respective expertise and exceptional experience will be invaluable as we continue to grow and scale our business. As Chief Operating Officer, Raj will lead continued growth and expansion at GoodRx, while helping increase value across the prescriptions business. He brings more than 20 years of operational leadership experience at fast-paced innovative companies, including Uber, where he most recently served as Vice President of Global Grocery and New Verticals. As Chief Product Officer, Mark leads product strategy and management at GoodRx and is focused on building industry-leading solutions for consumers, providers and pharmacies. With over 25 years of experience in product management at companies including Meta and LinkedIn, he has built world-changing products that have had an incredible impact on billions of people. As Chief People Officer, Vina leads our HR strategy and operations. She is a transformational HR leader who brings her extensive experience at global fast-growing technology companies, including The Trade Desk and her passion for employee development and engagement to GoodRx. As SVP of Healthcare and Consumer Innovation, Scott works closely with senior leadership on all areas of health care innovation across the ecosystem of consumers, retailers, PBMs, providers and drug manufacturers, leveraging his substantial health care experience and knowledge. Scott previously founded Apex Affinity, where he created and ran many of the large pharmacy discount programs in the market and most recently served as EVP at MedImpact, where he focused primarily on consumer savings. We are very excited to be adding these exceptional leaders to the team and look forward to accelerating GoodRx accomplishments together. With that, I'll turn it over to Trevor to address key highlights from the quarter and trends in our business.

Thank you, Doug. Coming into 2022, we set four strategic priorities for the year: increasing consumer awareness and reach; strengthening our healthcare provider relationships; deepening our relationship with consumers; and finally, building or acquiring new platform capabilities that create the foundation for additional services and value we can offer consumers, HCPs and pharma manufacturers. As our first quarter results show, we've already begun delivering on these priorities as we continue to evolve our solutions to benefit our users and create LTV-enhancing opportunities. Revenue and adjusted EBITDA were both ahead of our expectations in the first quarter, primarily due to the incredible growth of our pharma manufacturer solutions offering, which was further supported by the continued strength of our prescription-related offerings, both prescription transactions and subscriptions. First quarter performance of our prescription-related offerings was largely in line with the expectations we provided in February. Prescription transactions revenue increased 16% year-over-year, with an average of over 6.4 million monthly active consumers, and subscription revenue grew 59% year-over-year, with over 1.2 million subscription plans. I wanted to spend a moment discussing an unexpected headwind that impacted us in the first quarter and is impacting our current and expected performance. Recently, we recognized that a grocery chain sustained actions that impacted acceptance of discounts from most PBMs for a subset of drugs. This impacted the acceptance of many PBM discounts at the grocery stores, which affected many parties, including GoodRx. As many of the discounts found on GoodRx are provided by PBMs, this issue directly impacted our consumers. Since this started happening late in the first quarter and initially affected a subset of drugs in a subset of their stores, we experienced an immaterial impact on Q1 prescription transactions revenue that we estimate was roughly $1 million to $2 million based on our subsequent quantification. In April, this dynamic intensified, impacting more drugs and more of the grocery stores and pharmacies, leading to significant lost volumes and an expected greater impact on our Q2 and full year prescription transactions revenue. We are still doing significant discount volume with this grocer, but it is currently substantially decreased from typical levels. It's unfortunate that this issue impacts our consumers and financial performance, since PBMs, not GoodRx, negotiate economics with pharmacies. We are not aware of similar PBM partner issues at this time and believe that the scale of the situation is unique. This is unique because in the past, the pharmacy has negotiated and changed pricing with one or two PBMs at a time. In this case, this grocer has negotiated with almost all PBMs at the same time. This effectively meant that all discount pricing became unavailable to consumers at the same time. The swift action we took in response to this issue, including removing discount prices from our platform for this grocer while PBMs work with this grocer on resolution, protected our new user growth from being impacted. New user counts remain very consistent and pharmacies, other than this one grocer, showed strong aggregate new user growth momentum. Many of this grocer's competitors saw new user growth rates up over 20% to 30%, offsetting the new user decrease at this grocer. This issue impacts us, though, because returning users sometimes go directly to the pharmacy without first checking GoodRx. While we expect to reach these users, it will take time and we may not reach them all. As such, we expect a decrease in returning users at that grocer. We expect this issue to have a material impact on our Q2 and full year prescription transactions revenue. To note, we have not seen any impact to our subscription revenue and so expect a limited impact of that revenue, if any, and do not expect any effect on revenue related to our pharma manufacturer solutions, both of which continue to make up a larger share of our total revenue. Karsten will provide more detail shortly when he speaks to guidance. While this grocer represents less than 5% of the pharmacies in the GoodRx network, it made up almost one-quarter of our prescription transaction revenue in the first quarter. Its over-indexing relative to market share is because we had particularly attractive PBM negotiated pricing. As mentioned earlier, our new users are now going to other stores, and new user volumes remain consistent even without showing discounts for this grocer. GoodRx is the marketplace for drug pricing at retail. We do not offset the price of what consumers pay. Instead, we source competitive prices from our broad set of PBM relationships. Prices change over time, but even because this grocer is negotiating with almost all PBMs at the same time, that has caused this impact. While new users are moving to other retailers, we believe the PBMs with this grocer have been working to resolve their issues in a timely manner. It is important to note that while this unusual event is expected to impact prescription transaction revenue, we do not believe this impacts the growth rate of this business in future years or the total market size. We also believe that rising costs in the U.S. put additional strain on consumers and the need for savings programs is only going to grow. For any case where prices change, we have excellent abilities to move new users, and our success there is evident in our new user counts remaining constant. And where we want to continue to improve is ensuring our ability to move existing users through our product and marketing very quickly to the retailer who invested in. Overall, we believe we have strong relationships across the PBM and retail universe. We offer significant benefits to retailers. When a GoodRx user goes to the pharmacy, they often purchase other items. According to our internal survey data, GoodRx users buy incremental items more than 75% of the time, and they spend on average over $40 in that part of their basket. In addition, over half of the people we surveyed are willing to switch pharmacies as a result of using GoodRx in order to take advantage of GoodRx discounts. And when they have a good experience using GoodRx pharmacy, 85% say that makes them want to return more often. Finally, many prescriptions, by some estimates about one-third, are not picked up due to costs often after the pharmacist has fulfilled them. We believe GoodRx savings mean that more prescriptions are actually picked up, generating revenue for and reducing the wasted effort at pharmacies. The strength of our retailer relationships is manifested in the work we do together. We've worked with some of the largest retail pharmacies in the U.S. on advertisement and other strategic initiatives over the last few months. Most recently, we worked with Walgreens to leverage their broad brand recognition amongst consumers and show advertising in one of their stores. In addition, Rite Aid joined our Gold offering in the second half of last year. We're in active discussions with most retailers in a variety of new initiatives and additional ways to drive business. Turning to subscription. As we discussed in our fourth quarter earnings call, we are strategically repositioning Gold, our subscription program as we tighten our focus on the people we believe we can help the most, members with chronic conditions. In addition to offering Gold members even better pricing on their prescriptions than our prescription transactions offering, we've added more value to the program over the past year with new benefits, including mail order and discounted telehealth visits. To support the repositioning of Gold and to more clearly differentiate it from our prescription transactions offering, we increased prices for new gold subscribers in January. In March, we also began increasing prices to a subset of existing subscribers. This is the first price change to Gold since we introduced the program five years ago. Since new subscriber acquisition and existing subscriber retention are both performing at or better than our expectations, we are rolling out the remaining price increases for existing Gold subscribers. We expect this to be completed by the end of the second quarter. The incredible momentum in our pharma manufacturer solutions offering continued during the quarter with 150% year-over-year growth. To help provide more visibility into this exciting offering, we've disclosed pharma manufacturer solutions revenue separately for the first time this quarter. The value and uniqueness of our solution set, more specifically, our unique ability to reach both consumers and providers, is recognized by pharma manufacturers. As evidenced by this rapid growth, we are rapidly penetrating the $30 billion pharma manufacturer solutions TAM, and we believe we will continue our rapid growth as more and more pharma manufacturer spend shifts to digital and as pharma manufacturers continue to recognize high returns on our marketing investments as they leverage our incredible healthcare provider and consumer constituencies, both of which rate us at a 90 NPS. Even with the rapid growth of this offering, our revenue is not penetrated anywhere close to 1% of the $30 billion pharma manufacturer solutions TAM, and our relationships with 19 of the top 20 pharma manufacturers position us well for future growth. We expect growth to be driven by more partnerships with more pharma manufacturers, more penetration of their brands, and increasing the number of solutions each brand deploys with us. We are also adding more solutions to our consumer and provider offering and continuing to sell into the HCP opportunity with GoodRx for Providers. GoodRx for Providers create a more customized experience and equip providers with the tools they need to support their patients through their healthcare journey, with over 750,000 prescribers using GoodRx since June 2021 and more than 150,000 HCPs who have opted into the GoodRx for Providers mode so far. To further expand our provider offering, we recently announced the acquisitions of vitaCare and flipMD. In April, we closed the acquisition of vitaCare, a pharmacy services platform that expands GoodRx’s offerings to pharma manufacturers while helping to improve patient access and adherence to affordable brand drugs. Of the over 500 million brand prescriptions that are written per year, only 50% are filled. vitaCare helps patients understand their coverage, identify available saving opportunities, and facilitates provider communications with payers. It benefits the HCP community by reducing administrative burden and helps improve the likelihood that patients get on their prescribed therapy. The platform also offers prescription fulfillment options and manages ongoing patient adherence. vitaCare will enable GoodRx to help more patients receive their prescriptions in an efficient, affordable and transparent manner and stay on their prescribed therapies as long as medically appropriate. This acquisition gives us unique capabilities to facilitate the brand medication prescription process from start to finish, expanding our capabilities beyond our digital platform from the physician's office all the way through the patient's pharmacy journey. We look forward to growing our reach across consumers and providers, along with our established relationships with pharma manufacturers to help more patients access the brand drugs they need. The acquisition is expected to further strengthen our rapidly growing pharma manufacturer solutions offering. We believe our strong relationships with pharma manufacturers, HCP awareness and loyalty, and consumer traffic will drive more growth and adoption of the vitaCare platform, delivering even more ROI to pharma manufacturers. During the quarter, we also acquired flipMD, a marketplace connecting practicing providers with organizations seeking on-demand medical expertise, representing another provider-specific solution we can now offer. flipMD has exciting capabilities that we expect will expand our engagement with healthcare providers and the services available through our pharma manufacturer solutions offering, continuing to differentiate it and expand the offerings to lead. We believe there is an enormous opportunity for us to meet providers' unique needs with innovative solutions while helping them achieve better patient outcomes. With our incredible opt-in rate to our GoodRx providers platform, we believe we are on the path to becoming one of the largest provider platforms in the U.S. With the combination of GoodRx providers and our consumer offerings, we have the opportunity to deliver a truly unparalleled digital health care platform with a unique ability for us and for our partners, especially pharma manufacturers, to educate and serve providers and patients in a coordinated fashion. We continue to broaden and deepen our competitive moat, which is rooted in the trust we have 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 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 began the year strong, outperforming our first quarter revenue expectations at attractive margins while growing our user base, including providers. We continue to see tremendous opportunity ahead to revolutionize health care for Americans in this massive $4 trillion market as we expand our platform and range of services over time. With that, I'll turn it over to Karsten to discuss our financial results and guidance.

Thank you, Trevor. Revenue for the first quarter grew 27% year-over-year to $203.3 million, exceeding the guidance we provided in February. Prescription transactions revenue grew 16% year-over-year to $155.5 million, driven by a 12% year-over-year increase in our monthly active consumers, which exceeded $6.4 million. This includes the $1 million to $2 million impact related to the grocery issue Trevor spoke to. I'll discuss the expected future impact in more detail in the guidance section. At this point, most of the COVID effect on our business relates to the cumulative two-year impact of smaller new therapy cohorts, which is a much longer period than we expected and affects both new and returning users. We can't make up for these smaller cohorts instantly. Even if the market were fully recovered, acute and seasonal trends like cold and flu were fully on pace, and the availability and effectiveness of the amazing referral engine we've built through physicians and pharmacists had fully rebounded. From a market standpoint, March was stronger than February for both total and new prescriptions, which is a typical seasonal dynamic we see every year. This dynamic was magnified by a weaker than usual January and February due to the January, February COVID spike and some bad weather in February. Flu remained under historical levels. All of these factors were already baked into our guidance. So with the exception of the grocer issue we discussed in great detail today, which had an immaterial impact on Q1, performance on the prescription front was in line with our expectations. As for Q2, it's difficult to evaluate where we stand since our data had quite a bit of noise with this grocer disruption. But based on what we see, macro conditions remain largely consistent with March from a new prescription and new therapy starts standpoint. More broadly, if you look at IQVIA's data for new therapy starts or as they refer to it new-to-brand prescriptions, or NBRx, we're getting close to the pre-pandemic baseline, but we are not quite there yet primarily because of acute scripts. Turning to subscriptions, subscription revenue continued to grow rapidly, up 59% year-over-year to $19.1 million. We ended the quarter with over 1.2 million subscription plans and 1.6 million members benefiting from our subscription offerings since our family subscriptions generally serve multiple consumers. We do not believe the grocery issue impacted our subscription revenue in the first quarter though it may be impacted in the future. As Trevor mentioned, we started increasing subscription fees to a subset of our existing subscriber base at the end of March after testing higher fees with new subscribers in January. The early results across new and existing subscribers are encouraging and are at or even outperforming our expectations in some cases, which shows that even with higher pricing, the value we deliver to subscribers is compelling, extending from better savings on prescription medication and discounted access to care services to free home delivery. Pharma Manufacturer Solutions revenue grew 150% year-over-year to $23.5 million as we continue to work with more pharma manufacturers and offer more solutions and deliver superior ROI to those with which we work. Other revenue grew 5% year-over-year to $5.2 million, driven by the growth in GoodRx care. Moving down the P&L, cost of revenue was $12.3 million or 6% of revenue compared to $10.4 million and 6.5% of revenue in Q1 2021. Product development and technology expenses were $35 million compared to $26.2 million in the comparable period last year. This increase was primarily due to continued investments in the team and product. Excluding stock-based compensation expense and related tax and other items associated with acquisitions, adjusted product development and technology expense was 13% of revenue compared to 10.6% of revenue in Q1 2021. Sales and marketing expenses were $93 million compared to $79.7 million in Q1 2021. We increased advertising and promotional spend by $6.2 million year-over-year and continue to invest in our incredible team with the goal of increasing our consumer and pharma manufacturer base and building the GoodRx brand. Adjusted sales and marketing expense as a percent of revenue decreased year-over-year, making up 42.8% of our revenue in Q1 2022 compared to 46.3% last year as we improved some of our marketing efficiency metrics towards the end of the quarter. General and administrative expenses were $31.9 million compared to $43.8 million in Q1 2021. The decrease was due primarily to stock-based compensation expense relating to the non-recurring co-CEO awards made in connection with our IPO, which was approximately $16.1 million higher in the comparable period last year. Excluding these and other adjustments, adjusted G&A as a percent of revenue was 6.3% compared to 4.9% in Q1 2021. Net income was $12.3 million compared to net income of $1.7 million in the first quarter of last year. Net income was impacted by stock-based compensation expense of $30.1 million, $13.9 million of which related to a non-recurring co-CEO award made at the time of the IPO. The year-over-year increase was driven primarily by business growth as well as a $16.4 million decrease in stock-based compensation expense primarily related to the non-recurring co-CEO award made in connection with our IPO. This was partially offset by an increase to our provision for income taxes, which was a $1.7 million expense in the first quarter of 2022 compared to a $12.6 million benefit in the comparable period last year. As to the co-CEO award made in connection with the IPO, we have expensed $477.8 million of the total $533.3 million awarded through the end of the first quarter and have $55.5 million remaining to expense over the next 10 quarters. The expense schedule for the rest of 2022 includes approximately $11.9 million in Q2, $10.2 million in Q3, and $8.5 million in Q4. Moving on, adjusted net income grew 30% year-over-year to $41.3 million. Adjusted EBITDA grew 27% year-over-year to a record $64.7 million. Adjusted EBITDA margin continued to be strong and was above our expectations from February at 31.8%, reflecting our ability to deliver profitable growth due to compelling unit economics of our business. We continue to generate strong cash flow with net cash from operating activities of $30.1 million for the quarter. In Q1, we repurchased $83.8 million of Class A common stock or approximately 5.6 million shares. At the end of Q1, we had $166.2 million remaining from our $250 million share repurchase authorization approved by our Board during the quarter. Moving on to guidance. At this time, we believe it is unlikely we will be able to achieve the full year 2022 guidance we provided in the fourth quarter earnings call due to the grocery issue we discussed. We will not be providing full year expectations at this time as the full year impact of the grocery issue is difficult to estimate because there are several variables, including, among others, eventual consumer pricing and returning usage levels that have to be determined. We expect Q2 2022 revenue to come in at about $190 million. This assumes the grocery issue, which we believe could have an estimated revenue impact of roughly $30 million, will be ongoing without amelioration through Q2. At this time, we do not have sufficient data to forecast the trajectory of any amelioration because GoodRx usage there has not stabilized sufficiently to be forecastable. There is potential for revenue upside in the quarter from pharma manufacturer solutions, depending on when certain larger pipeline deals close and we deliver on them. The guidance includes vitaCare, which is expected to contribute approximately $1 million of revenue in the second quarter. For the quarter, factoring in no amelioration of the grocery issue, we expect prescription transactions revenue to decline approximately 8% to 12% year-over-year, subscription revenue to grow 60% to 70% year-over-year, pharma manufacturing solutions to approximately double year-over-year with additional upside as I just discussed, and other revenues to grow 10% to 15%. We expect adjusted EBITDA to be impacted roughly dollar for dollar by the revenue shortfall as we have historically been an extremely high-margin company and since we do not plan to significantly alter our level of sales and marketing. This is primarily because the issue generally did not impact our ability to acquire new users and because we are focused on communicating with impacted users so that they are aware of attractive prices available at other retailers convenient to them, ensuring they can continue to use GoodRx and save on their prescription medication. In addition, our vitaCare acquisition has historically had net losses and negative adjusted EBITDA, which we expect will continue. As Trevor mentioned, we acquired vitaCare in April for $150 million in cash with an additional $7 million of contingent consideration payable upon vitaCare’s financial performance through 2023. We also established a management incentive plan under which certain continuing employees would be eligible to receive up to $10 million of additional compensation upon achievement of certain performance milestones. The acquisition of this pharma services platform expands our offerings to pharma manufacturers while helping to improve patient access and adherence to affordable brand drugs. vitaCare is expected to contribute more than $8 million of revenue in 2022. As we look ahead to our multiyear outlook, we continue to be confident in our ability to return to revenue growth rates in the mid-20% range in the next few years, albeit potentially off a smaller base than we expected due to the current grocery PBM dispute we've discussed. We expect Pharma Manufacturer Solutions to continue to grow rapidly and become a larger contributor to our revenue. Another driver of this longer-term revenue growth is our belief that as we replenish some of the smaller cohorts from the COVID period with larger wins as we become further removed from COVID over time. Our penetration into the huge prescription TAM remains low, and we continue to increase our share of the market consistently, giving us confidence in the business. GoodRx is committed to building the leading consumer-focused digital health care platform in the U.S., and we 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 health care affordability and access for all Americans. We're equally committed to driving shareholder value by leveraging our cash and driving our margin growth over the long term. And with that, I'll now turn the call back over to Trevor before we open it up for Q&A.

Thank you, Karsten. In summary, we delivered a strong first quarter that exceeded expectations in many ways and we're making good on our strategic priorities for the year. In Q1, we reached a cumulative $40 billion in consumer savings, grew our highly profitable business and expanded our leadership team to support accelerating innovation. We remain committed to delivering affordable prices so all Americans can access the care they need. We're happy to say that we received positive updates from the grocer and from PBMs over the last few days indicating progress towards resolution. We are hopeful they will resolve their outstanding issues in a timely way. Looking ahead, we see many opportunities to bring value to more consumers and support more Americans. While we've made amazing progress, we have barely scratched the surface of the opportunity to transform health care in the U.S.

Thank you. The first question is from Justin Post with Bank of America. Your question.

Great. Thanks for taking my question. Obviously, this is a new issue. Any insights on why the grocer might have made the change and why you believe others won't follow? And then maybe part B, any issues with PBM volumes where maybe lower volumes would change any of your relationships with PBMs? Thank you.

Thank you very much for the question. Recently, we noticed that a grocery chain took actions that affected the acceptance of discounts from most of the PBMs for a subset of drugs. This change impacted how many PBM discounts were accepted at grocery stores, which in turn affected multiple parties, including GoodRx. We are still building significant discount volume with the grocer, but it has decreased considerably from the typical levels. It’s common for there to be negotiations between PBMs and pharmacies over prescription pricing, usually resulting in changes over time, but the impact on our consumers and financial performance is quite unusual. We aren't aware of any similar issues between PBMs and pharmacies, and believe this situation is unique. We discussed the uniqueness of this issue and the actions we are taking to help consumers maintain access to discount pricing. Therefore, we removed discount prices from our platform for this grocer while the PBMs negotiate a resolution with them. This has helped maintain our new user growth. New user counts remain fairly consistent, while pharmacies other than this particular grocer have shown strong user growth after this change. Many competitors of the grocer experienced new user growth rates of over 20% to 30%. However, there is a significant impact, as returning users may go directly to the pharmacy without first checking GoodRx. While we hope to reach these users, it will take time and we might not reach all of them. Consequently, we anticipate a decrease in our returning users at the grocer. While new users are shifting to other retailers, we believe that PBMs and this grocer are working to resolve their issues. We are actively participating in discussions to ensure that consumers continue to save, and it seems there has been some positive progress. Regarding PBMs, we do not expect any specific issues related to them or our volumes. Our relationships with PBMs remain incredibly strong, but I'll let Doug address the additional aspects of your question.

Thank you, Trevor. As Trevor mentioned, PBMs and pharmacies maintain complex relationships. While they ultimately need to partner to sustain their businesses, complex contract negotiations can impact consumers at the pharmacy counter. You may remember the dispute between a well-known PBM and a large retail pharmacy in 2011. In that instance, the two sides came to terms because ultimately, it's really just in everybody's best interest. We do not expect similar issues to materialize at pharmacies with significant volume. These pharmacies value our significant reach with millions of monthly users and continually express interest in deepening their relationship with us. Just some examples, we are working with Walgreens to leverage their broad brand recognition amongst consumers, and we just shot an advertisement in one of their stores. We recently worked with CVS on an integration that allows GoodRx users to book many clinic appointments right on the GoodRx platform. Rite Aid joined our Gold network in the second half of last year. And we're in active discussions with most retailers on a variety of new initiatives and additional ways to drive business. It's important to reiterate that our new user accounts are stable and other pharmacies are seeing significant increases as GoodRx consumers move through different pharmacy. One of the best ways that we can protect ourselves from future disruptions between PBMs and pharmacies is to continue to strengthen our relationship with the millions of consumers and HCPs who come to GoodRx, and that's exactly what we're doing. With the addition of Raj Beri, who led a large part of Uber's consumer experience, and Mark Hull, who held senior positions at Meta and LinkedIn, we continue to build trust and guide users to the right pharmacy for them. Events like these ultimately are fuel for innovation, and we are rising to the challenge.

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

Hey, I know you guys are going to get a million questions on this, but am I just to understand this dispute as this grocer just blew up all of their contracts all at once, and this eventually, I guess, would have to get resolved? And assuming it does get resolved, what's the scenario under which things don't go back to normal and things do go back to normal? And then my second part, which is kind of a follow-on is, you guys are ratcheting up your spending and hiring a bunch of people and continuing your great marketing as if the revenue picture was unchanged. So is this implying that you think this is a short-term issue, or do you think this could be a permanent issue but you're just going to run lower margins and profits for the time being? Thanks.

Sure. Yes, thanks for the questions. We are looking at this issue. Maybe I'll talk first about resolution and then just talk about the current status, and then I'll let Karsten speak about the broader picture. We've heard the grocers and PBMs continue to have constructive advanced conversations. We're a marketplace. So while we don't set prices and are not a party to the agreement, we've been trying to be helpful to ensure consumers can save as many pharmacies as possible, and we've received positive updates from the grocer and PBMs over the last few days that indicate substantial progress towards resolution. In the meantime, and because we continue to put consumers first, we're offering competitive prices in other pharmacies. So as mentioned, new users are moving to different pharmacies. The new user counts on GoodRx remained very stable, and competing retailers to this grocer are seeing a number of them with 20% to 30% increases in new users. So we are communicating with existing users and providers through our product and marketing to ensure they are aware of the situation, continue to save on their medication. But we believe there's true positive progress there and anticipate this will be resolved soon. But I'll let Karsten speak to other spending and such.

Hey, John, it's Karsten. I wanted to address a couple of points. First off, your core assumption regarding the relationships with multiple PBMs is quite unusual, as Trevor mentioned earlier. This characterization of the situation is fairly accurate. In terms of impact, the revenue effects we discussed earlier reflect how we expect things might develop. Currently, new user growth should remain mostly unchanged. After taking action, we've found that we can effectively direct new users to other pharmacies. In fact, many of the competitors of this grocer have experienced new user growth rates of over 20% to 30%, which compensates for any decline in new users at this grocer. This ties back to your marketing observation; persistent new user acquisition suggests that ongoing marketing efforts remain sensible. The key issue is that we have strong repeat activity, which is beneficial. However, some repeat users do not check GoodRx before visiting a pharmacy. Therefore, we have communicated with these existing users to inform them about favorable pricing at other pharmacies, though it may take longer and be less effective to shift existing users compared to new ones. For this reason, until the issue is resolved, we expect a slowdown in returning user activity at this grocer. Since this grocer accounted for just under one-fourth of our prescription transaction revenue, it significantly impacts our projections for the year, which will rely on how and when the situation gets resolved. There has been some positive progress, but a complete resolution has not yet occurred. Consequently, we are estimating the impact under the assumption that the issue won’t be resolved before the end of the quarter, which means we could lose up to 75% of the revenue related to this grocer, roughly $30 million. It's essential to note that this situation is very rare, involving the disruption of several PBM relationships simultaneously. Furthermore, while we anticipate a near-term impact on prescription transaction revenue, we do not believe this will affect the long-term growth rate of the business or the overall market size. We’re still seeing strong momentum in our subscriptions and pharmaceutical manufacturer solutions as well, indicating strength in the business overall. Hopefully, this provides some clarity.

Thank you. Your next question comes from Mark Mahaney with Evercore. Your question, please.

Okay. I'm going to stick with the topic, please. Why would businesses possibly be impacted by this in the future?

Mark, we’re listening to you.

Sorry, Mark, this is Karsten. Could you repeat, please? It broke up a little bit. We couldn't understand the question.

I'm sorry. Could you explain why this would impact subscription business growth? And then if this situation isn't resolved, will that impact Q3 and Q4 by the same amount, $30 million?

Let me answer the first part regarding subscription, and then I'll let Karsten speak to Q3 and Q4. We have limited impact on our subscriber base because this revenue is based on subscription fee; we expect a limited impact to subscription revenue, if any. Gold subscribers have options that are good or better than other retailers, and we continue to serve them, delivering savings to them. Gold performed better than expected for Q1, and we expect the strong performance of the subscription business to continue. Karsten, do you want to speak to...

Certainly. Mark, I think you may be assuming a direct and linear impact when you mentioned the possibility of $60 million in the second half of the year. We're not providing full-year guidance intentionally because, as Trevor mentioned in our prepared comments, when issues arise, there is a strong motivation for all parties involved to resolve them quickly. While this might suggest a linear impact, it isn't entirely the case. Additionally, the issue developed over time, not suddenly, which means its effect during the quarter is also not completely linear. For instance, at the beginning of the quarter, the impact was less pronounced. Right now, it’s difficult to estimate the full-year impact as it will largely depend on when the issue is resolved. While we are making positive progress, there isn't a complete resolution today. This uncertainty is why we're providing a Q2 guidance to help with modeling. There could be further progress, and as Trevor noted, issues like this typically don't persist indefinitely.

Thank you. The next question comes from George Hill with Deutsche Bank. Please go ahead.

Yes, good morning, everyone. I’d like to discuss PBM relationships. Can you elaborate on whether all PBMs are involved with the grocer? Additionally, could you clarify the types of discounts we are referring to? Are these standard PBM discounts or are they related to DIR fees? I'm trying to understand the root of the frustration between the grocer and the PBMs. Also, can you specify which category of drugs is under discussion? Any details you can provide on these three aspects would be appreciated.

Sure. And you win for my favorite phrasing question. Yeah, while we do not know all the facts based on what you're saying, the grocer's recent actions related to the contracts with certain PBMs relate to pharmacy economics. You mentioned DIR fees. There aren't really any DIR fees related to our business; so it's not related to that, but just other parts of the economics. This is limiting acceptance of many programs at the grocer pharmacy. This involves, to your point, essentially all PBMs. So this is across the vast majority of PBMs. And that alone makes it incredibly unique. In the past, we have seen a pharmacy negotiate changing pricing with one or two PBMs at this time. In this case, this grocer has negotiated with almost all PBMs at the same time, and that has effectively meant that discount pricing became unavailable to consumers at the same time. As Doug mentioned, an issue of this magnitude is very infrequent. It happened in the PBM pharmacy issue that Doug raised around 2011. In that instance, historically, PBMs and pharmacies came to terms on how to work together. The indications we have are that our priorities are making active progress here.

So then, I just want to make sure I understand it right. So this grocery chain basically just opted out of every PBM network. And I know you guys are exposed to DIR fees. I used it as an example of like, could it be an unintended consequence where these guys are opting out because of a problem with X. And they opt out because of a problem with X and the impact is also a problem with Y, which is you guys. I'm trying to understand the dynamic and whether you guys are part of the problem or collateral damage?

This situation primarily stems from our role as a marketplace. Pharmacy Benefit Managers and pharmacies have their own contracts, and we display pricing based on those PBM relationships. Your assessment is accurate. While the PBMs have temporarily disrupted the non-funded segments of their businesses, we are seeing progress being made.

Thank you. Your next question comes from Sean Dodge with RBC Capital Markets. Your question, please.

Yeah. Thanks. Doug, so you mentioned communicating with customers impacted by this instance the discounts available elsewhere. So just to be clear, these are individuals that have had scripts filled in those grocery stores before. So they have a GoodRx on file, so they aren't checking the website ahead of time. But how much identifying data do you have on those individuals? How good is that identifying data? And I guess how are you engaging them? Is this just simply sending on a postcard or are you using other means and methods?

Thank you very much for the question. We are effectively able to reach most users who have filled prescriptions at this grocer through various methods. Our aim is to ensure that across all our operations, people are aware of the best ways to access affordable prescriptions and care. We prioritize the consumer experience and are committed to helping individuals adhere to their prescribed treatments. We leverage a range of approaches, including our product, app, and marketing efforts. We have a significant marketing reach and the capability to run direct mail campaigns effectively. Recently, I heard a story about a high-volume urologist in Los Angeles who had been directing many patients to this grocer using GoodRx. However, they have learned anecdotally that some patients have encountered issues with acceptance, leading them to redirect those patients to a competing retailer. Thanks to our strong relationships with consumers and healthcare providers, along with our effective marketing and targeting capabilities, we are well positioned here. Additionally, on the new user front, we are seeing stability in new user accounts, while some competing retailers are experiencing notable increases in new users. Thank you again for your question.

Thank you. Your next question comes from Sandy Draper with Guggenheim. Your question, please.

Thank you very much. I apologize, but I need to remain on this topic. When I consider the mechanics of modeling prescription transaction revenue, I see that you have the monthly active customers and the monthly contribution per consumer. I'm trying to understand if, essentially, we will lose those active consumers because they're shopping at this grocer, or will it affect the pricing in terms of the actual price per action? Additionally, if this issue were magically resolved at the beginning of the third quarter, would you recover all that revenue, or would it be more gradual? I'm trying to grasp the mechanics of the model and whether, if resolved, the revenue would return as quickly as it is currently declining. Thank you.

Sure, thanks, Sandy. I'll take over. This is Karsten. First, I want to clarify that this issue is related to the number of MACs, not the revenue per MAC. While we've been very successful in attracting new users, as Trevor mentioned, our existing users are part of the challenge. The significant growth at competing grocers is due to the number of MACs, not the revenue dynamics. Looking ahead, if this issue is resolved at a certain point, we might not see everything return to normal immediately. The main concern is with certain users who don't check GoodRx before going to the pharmacy and simply show up. If they don't check GoodRx and we're not directing them elsewhere, that could affect MAC counts during this transitional period. However, we've been successful in moving new users. We're working diligently to guide our existing users to options where they can save more money with our healthcare provider partners.

Your next question comes from Charles Rhyee with Cowen. Please, go ahead.

Yes. Thanks for taking my question. Maybe I'll shift away for a little bit here. I think earlier you talked about Rite Aid joining the Gold program. Maybe you can talk a little bit about the impact we should think about for subscriptions in the back half of the year, recognizing you're not providing guidance in the back half. But also you talked about CVS and Walgreens, when we think about users being able to book appointments through the app to a CVS clinic, can you talk about how the economics work there because it's not really taking a take rate from a transaction? Maybe you can talk a little bit more about that. Thanks.

Let me start by discussing subscriptions, and then we can move on to the other topic. We are really excited about the growth of GoodRx Gold over the past couple of years and the opportunities that lie ahead. We believe we can provide substantial value to consumers through the subscription plan, which enhances our relationships, improves communication, and allows us to cross-sell more effectively, leading to higher user satisfaction and lifetime value. One major initiative related to Gold that we mentioned is the recent change in pricing, and early results from both new and existing subscribers are promising, with performance meeting or slightly exceeding our volume expectations despite the higher pricing. This is why our subscription revenue growth in the first quarter exceeded our expectations, showing a 59% year-over-year increase compared to the 45% to 55% range we projected last quarter. We are witnessing solid performance, which reflects the value we provide to subscribers. It's quite compelling, and we continue to enhance that service. Regarding the rest of the year, our expectations for growth have not changed significantly, and we have observed limited impact in this area. Therefore, we do not anticipate any substantial effects on subscriber revenue. I will now pass it over to Doug to address the second part of your question.

Thank you for the opportunity to speak. I wanted to highlight our collaboration with CVS and MinuteClinic, which exemplifies my enthusiasm for our ongoing efforts to expand our platform to support consumers throughout their health care journey. We may not always appreciate the extensive range of products we offer. For instance, we assist consumers in the research and prevention stages with Healthy Nation, and in the diagnosis phase with GoodRx care. Additionally, we support them during treatment by providing both generics and brand medications through prescription transactions, subscriptions, and pharmaceutical manufacturer solutions. Our aim is to address consumers' health care needs by offering them a variety of options. The integration with CVS MinuteClinic enhances our ability to help consumers schedule and receive care, complementing the virtual services we provide through GoodRx care. We are genuinely excited about these partnerships and look forward to strengthening our relationship with CVS to help more consumers navigate their health care effectively.

Thank you. Your next question comes from Ricky Goldwasser with Morgan Stanley. Please go ahead.

Hello, good evening. I have two questions. First, for clarification, I understand that GoodRx members’ discounts are not accepted at that grocer. Does this mean that no PBM cards are accepted there and that only cash payments are allowed? I want to make sure I understand that correctly. Second, you mentioned earlier that this grocer represents a quarter of your transactions. Can you confirm that? If so, are there any other pharmacies, PBMs, or customer groups that make up more than 10% of your transactions?

Thanks. Let me answer the first part. The situation is evolving, and I can't speculate about exactly what's happening at the pharmacy counter. What we do know is the grocer is taking actions that impacted acceptance of discounts from most PBMs for a subset of drugs. So this action is impacting acceptance and affects many parties, not just GoodRx. So, I'll let Karsten answer the other part of your question.

Sure. I think the best way to answer it is that compared to other retailers, we don't see significant variations related to the retailer in question. The growth we are discussing specifically aligns with how other retail channels interact with GoodRx, similar to the broader market. Concerning PBMs, our concentration has decreased over the past year. Two years ago, we were dependent on three PBMs that made up nearly half of our volume. That has changed considerably, and now just a couple of PBMs account for slightly more than 20% of our volume, indicating a significant reduction in concentration. As reflected in our quarterly report, only two of them exceed 10% of volume, with the largest at 13%. Hopefully, that's helpful, Ricky.

Thank you. Your next question comes from Glen Santangelo with Jefferies. Please go ahead.

Yeah. Maybe if I could just follow up on Ricky's question. I mean, in your K, those two PBMs that represent 13% to 11% of your revenue, that's $96 million and $82 million. It just seems crazy to think that those couple PBMs could account for 25% of your transaction volume with one grocery store. I mean that's like CVS and Walgreens market share numbers. So it just seems odd that they kicked all those PBMs out at the same time. So I think that's one of the things we're all struggling with. But my two questions are really around the profitability. Let's assume this ultimately does get settled. Presumably, the PBM may ultimately have to accept some lower profitability. And then I guess the question is going to be, does that roll downhill to GoodRx. So whatever the profit margins were on this relationship, which seemingly is a quarter of your volumes. I mean are you going to have to accept lower profitability going forward? And then my last question is does this grocer, do they have their own discount card program in place right now? Thank you.

Sure. Let me answer the economics part. When we compare GoodRx to other marketplaces, we believe our take rate is comparable or less than other industries. And the economics we have with the PBMs are generally not pharmacy-specific, and our economics at this pharmacy are not materially better than in other pharmacies. So for this grocer, we can't speculate on the negotiations between the PBMs and the grocer, but at this point, we do not anticipate changes to our economics. Karsten, is there anything else you'd like to add there?

Yeah. I think there is a question around PBM concentration versus pharmacy concentration. Again, on the PBM side, the PBMs, and we have had a very symbiotic relationship for years there, ultimately our customers and the entities whose prices we promote to consumers. So from that perspective, I think we've talked in the past about GoodRx never having had a PBM terminate on it, and us having been successful in acquiring incremental PBMs, and those PBMs being one of the factors and the economics they give us being one of the factors that over time increased our take rate to some degree. So from those perspectives, we think those relationships are extraordinarily strong. I'm not sure if you had a follow-up or if I wholly addressed the question; so if I didn't, please do let us know, Glen.

Your next question comes from Stephanie Davis with SVB. Please go ahead.

Hi, guys. Thank you for taking my question. I'm sorry, I'm going to be one more on the PBM bandwagon. But I understand you're not giving firm numbers, but could you walk us directionally through the path out of this grocery PBM conflict? Is this merely a question of waiting for the grocer and the PBM to resolve the issue, in which case they'll have a step function back up and all that could be on the GoodRx coupons, or is this more a matter of growing your prop of business at other pharmacies and moving these existing customers from the grocer to these other pharmacies so we'll see more of a slow build-out of this? And as making a quick follow-up, is there any color you can share on how this grocer got to be such a large compensation of volume?

Sure. I think the answer is both. We talked about the natural migration that occurs in both naturally and via any actions from our marketing and product that moves users. So regardless of anything else, users do move. We've seen that on the new user side where our new user accounts are constant. People are just filling in different places. Existing users just take more gradual impact. But as we've spoken about, we also believe that existing users can move as a step. It's just there's a 30-day and 90-day cadence on prescription sales. We're really focused right now on the product side on building even stronger product capabilities to move people in an even more timely way in months, for example, and making sure that, that happens faster. So that's one side of it, the first side you said. The second side of it is that, yes, we believe that the PBMs and pharmacies are working towards resolution. As I mentioned, we've heard updates in the last couple of days that sound like substantial progress is being made. And so that provides a resolution just in place separately. To your second question of over-indexing, it's true that we over-indexed in this grocer; they had very attractive consumer pricing. And as the marketplace puts consumers first, we've been presenting these attractive prices, which, as I mentioned, led to a relatively high volume concentration compared to market share for this party. And as a marketplace, we source and show competitive pricing from our broad set of PBM relationships. As prices change, we do expect to see consumers change their behavior and move between pharmacies, which is something we can already see occurring.

Thank you. And your next question comes from Doug Anmuth with JPMorgan. Please go ahead.

Thank you for your question. There's clearly a lot of conversation surrounding the resolution of the grocer issue. I'm curious about your confidence that this situation is primarily about negotiations and pricing, which may indicate a strategic shift by the grocer. Additionally, just to clarify, even though you have limited competition in this area, it seems that this would affect all discount cards and programs. Is that correct?

Yes. So again, our understanding is that this acceptance issue has affected most PBMs, thereby affecting a number of parties, including us. We've spoken that it's pretty common for prices to change. So in the course of us running this business for the last decade, we've seen meaningful price changes at retailers, and there's a pattern, I'd say, where retail grade prices change over time. There's this negotiation where they lower prices to get consumers, and then they raise prices again and get more stable with respect to consumers. The nature of this dispute, however, where we have loss of multiple PBMs at once is unusual. This is similar to the relatively known dispute between a larger PBM and a large retail pharmacy back in 2011. Historically, PBMs and pharmacies come to terms because access for consumers is good, and letting people fill is important. For us, we want to ensure that consumers are able to afford healthcare conveniently, so we want to give them the best options. Even if new users will move rapidly to different places, we want to make the most convenient options for consumers that are possible. And we just care that consumers are getting the best options here.

Thank you. Your next question comes from Steven Valiquette with Barclays. Please go ahead.

Great. Thanks. Good afternoon, everybody. So you're not disclosing which grocery chain, which I guess is kind of understandable. But I guess I'm just curious, can you disclose whether or not it's a publicly traded grocery chain versus private? And since GoodRx is intertwined a bit more with Kroger than most other grocery chains, can you confirm that it's not Kroger at this point? Given the materiality of the situation, I'm sure we're all going to figure it out fairly soon, but just any breadcrumbs you want to throw our way to help figure this might be helpful?

Yeah. I think at this time, we just want to say it's a large grocer. Thank you.

Thank you. Your next question comes from Jonathan Yong with Credit Suisse.

Hey, thanks for taking my question. You quantified the revenue impact at $30 million. But I guess, is this the maximal impact that we should expect moving forward, or is there a possibility there could be more? And then just going to your comment about how the grocer has really good pricing, I guess, how do you prevent yourself from being over-indexed to this one grocer in the future given your commentary that they do have really good pricing?

Thanks for the question and great to speak with you. As we mentioned earlier, the new user count has been back to normal and is largely unaffected after removing the discounts from this grocer while the PBMs and the grocer work out their issues and come to resolution. So that drove new user counts to be much higher in other places, which has been key to our estimation of what the impacts look like, which means the impacts are largely tied to recurring usage at the grocer, so returning users more than anything else. And as we think about that, when we quantify what the potential impact could be, we assume that we do not see us benefiting from the resolutions that the PBM and the grocer might come to during this quarter. And that's why we extrapolate forward and measure it as the $30 million estimate that we disclosed earlier on. So we think if resolution were to happen in the quarter and if the pricing at the grocer in question were attractive, then that potentially creates some upside in our prescription transactions line relative to the $30 million estimate we put out. So from those perspectives, I think that's probably helpful to your question. With regard to over-indexing generally, I think the issue is, as Trevor said, one where, as a marketplace, as an entity that wants to provide the best prices to consumers, if someone has very good prices, that is a logical place to drive them to. I think going forward, we continue to also have more and more tools to even once consumers begin working with a given retailer, being able to move them to other retailers. So the other strength we have is the opportunity over time to be able to govern where they land. You see us doing that with new users, which is why these are the retailers not what the question, are seeing 20%, 30% plus increases in volume, and that's one of the tools we can use to make sure that we continue to be able to allocate volume to places where consumers will be best served.

Yes. I will add that we have outlined our strategic priorities, which include increasing consumer awareness, strengthening healthcare professional relationships, enhancing our connections with consumers, and building new platform capabilities. We are making significant progress in deepening our relationships with consumers, particularly in helping them become aware of where to fill prescriptions. This is reflected in the stability of user accounts, but we are intensifying our focus on product development to ensure effective communication and timely information about the best options available to consumers throughout the month. This is a key area of focus for us. We are excited about new executives, including Mark Hall in product development, who will help us further strengthen our consumer relationships. We believe there are many opportunities to quickly add capabilities in this area.

Thank you. And the last question will be from Stan Berenshteyn with Wells Fargo Securities. Please go ahead.

Great. Thanks for asking. Clearly, the grocer has had a significant impact on GoodRx. From another perspective, I believe GoodRx is generating considerable foot traffic for the grocer. Given your comment about driving foot traffic elsewhere, those other retailers and pharmacies will benefit from that additional traffic. My question is whether there's a chance to monetize the foot traffic to different retail locations beyond just the take rate. For example, perhaps they could pay GoodRx to provide a flat coupon applicable to any drug they offer, which would help increase their sales volume. Could that be a possibility?

Thank you for the question. I'll address this in two parts. We have been exploring specific OTC offerings and previously discussed our new initiatives around insurance, which plays a critical role in the consumer journey in healthcare, helping people access insurance plans. Doug mentioned the scheduling of appointments at CVS MinuteClinic, and there are various ways we can enhance opportunities in these areas. We're also improving our cross-selling of different services. In Q1, we experienced substantial growth, particularly in subscriptions, which are rising rapidly. Our Pharma Manufacturer Solutions business is our fastest-growing segment, with revenue up 150% year-over-year, reflecting strong momentum and effectiveness in serving our clients. Our GoodRx for providers initiative is on track to become one of the largest provider platforms in the U.S., with an impressive opt-in rate exceeding 90% among healthcare providers. Over 150,000 HCPs have opted into the platform as of April, and we've seen over 500,000 prescribers join in the last 90 days. While we face some immediate challenges with a particular grocer, GoodRx continues to attract millions of users each month seeking help with their healthcare needs. This situation, as your question suggests, opens many future monetization opportunities beyond our rapidly growing Pharma Manufacturer Solutions and subscription businesses. Additionally, as one of the largest HCP platforms with a 90 NPS among consumers and providers, we see unique monetization possibilities across different segments and parts of the ecosystem. Thank you again for the question.

Thank you. And with that, ladies and gentlemen, we close our Q&A session and conference for today. Thank you for participating, and you may now disconnect.