GoodRx Holdings, Inc. Q4 FY2024 Earnings Call

Ladies and gentlemen, thank you for standing by, and welcome to the GoodRx Fourth Quarter and Full Year 2024 Earnings Call. As a reminder, today's call is being recorded. I would now like to introduce your host for today's call, Aubrey Reynolds, Director of Investor Relations. Ms. Reynolds, you may begin.

Thank you, Operator. Good morning, everyone, and welcome to GoodRx's earnings conference call for the fourth quarter and full year 2024. Joining me today are Wendy Barnes, our Chief Executive Officer; and Chris McGinnis, 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's 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 point-of-sale cash programs 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 include the factors discussed in the Risk Factor section of our Annual Report on Form 10-K for the year-ended December 31, 2024, and our other financial filings with the Securities and Exchange Commission could cause actual results, performance or achievements 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 disclaim any obligation to update these statements even if subsequent events cause our views to change. In addition, we will be referencing certain non-GAAP metrics in today's remarks. We have reconciled each non-GAAP metric to the nearest GAAP metric in the company's earnings press release, which can be found in 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 Wendy.

Thank you, Aubrey, and thanks to everyone joining us today. I would first like to share my excitement about joining GoodRx at such a pivotal time for both the company and the healthcare system as a whole. I've spent the last 30 years in the pharmacy and medical benefit industry, most recently at RxBenefits, Express Scripts, and Rite Aid, working across almost every aspect of the drug supply chain. So I understand where there can be friction and opportunity. I have also spent the last 30 years building strong relationships with colleagues, clients, and other business partners who represent a network of key leaders across healthcare. Leveraging my background and deep relationships with these leaders, my goal is to help GoodRx accelerate its ability to solve the very pain points that consumers currently face in getting medication. It is a privilege to take on this role. I'm excited and optimistic about the opportunities we have to help make access to healthcare convenient and more affordable to millions of Americans. On today's call, I would like to highlight my focus for the first two months as CEO, progress we've seen in the business and my initial thoughts on where we have the greatest opportunities. Then Chris, our newly appointed CFO, will take you through the Q4 financials, which are substantially in line with our expectations and guidance. My priorities over these first two months have centered around two principal actions. First, understanding our business capabilities, opportunities, and people; and second, committing substantial time to personally meet with our partners across the pharmacy ecosystem to understand how we can best leverage our capabilities to drive innovation and success. Regarding the first point, after conducting comprehensive reviews with our internal leaders, I'm deeply impressed by the level of expertise and strategic thinking throughout the company. Regarding the second point, my principal action has been meeting with industry leaders and business partners across pharmacy benefit managers, retail pharmacies, pharma manufacturers, and healthcare professionals. During these meetings, I focused on identifying ways to enhance the prescription experience for consumers and healthcare professionals, recognizing that each constituent has distinct needs. With pharmacies, it is enhancing and aligning more economic value and meaningful technological innovation. With pharma manufacturers, it is building on our momentum through optimized patient access solutions for all brand medications that target both our consumer and healthcare professional audiences. For our consumers, we are making it easier to save both within and outside the insurance benefit. And for our healthcare professionals, it is investing in tools to improve their workflows, reinforcing GoodRx as a seamless and essential part of the caregiving experience. The value proposition is clear. GoodRx makes it easy for people to save time and money when filling medications, complementing insurance by filling in the inevitable and growing coverage gaps and friction points of plan design. Consumers and partners trust us to deliver affordability, clarity, and simplicity. That is why nearly 30 million consumers and over 1 million healthcare professionals used GoodRx in 2024. Our reach proves that medication cost and access are a universal challenge regardless of income or insurance coverage. I've seen this firsthand. My father-in-law, a retired research scientist and college professor, had great insurance and his medications were seldom more than a $15 co-pay. When he was forced to change insurance providers, medications that were once $15 are now multiples higher, with one nearing $400, thanks to our strong brand awareness. His providers referred him to GoodRx, which he now uses for multiple prescriptions, saving over 90% for the most costly one. My in-laws' experience highlights a broader truth. GoodRx is an indispensable complement to anyone's insurance. The system needs a better model, one that benefits consumers, healthcare professionals, and the most challenged parts of the ecosystem. This is where GoodRx comes in. We reduce friction, improve access, and make saving on medications simple. In a world where potential regulatory changes center on transparency and lower prices, we believe we will be operating in a favorable environment to make it easier to benefit from and access more affordable options. The opportunities ahead are substantial, and I'm excited to lead GoodRx as we grow and expand our impact. Now let's dive into our prescription marketplace and manufacturer solutions offerings. Our solutions in the prescription marketplace have never been more needed, which is reflected in the company's scale and growing market share. In 2024, almost 30 million consumers used GoodRx. That's almost 5 million more than 2023, saving nearly $17 billion on their medication. Our share of the prescription discount segment grew 3% year-over-year in the fourth quarter, reinforcing our position as the leading platform for medication savings. GoodRx partners closely with pharmacies to help solve challenges they face around lower reimbursement, rising store costs, and technological innovation, and we're driving real results. We estimate that our partner pharmacy's profitability in our book of business was up over 20% per script in January 2025 compared to the same period in 2024. And this is not coming at the expense of GoodRx's aligned economics, but through a combination of cost-plus reimbursement, pricing partnerships, and brand drug solutions. As an example, deep engagement with one major retailer on pricing has driven over $20 million of estimated incremental annual margin for them while also contributing incremental GoodRx prescription transaction revenue. Our value proposition to retail is frankly stronger than I originally thought from the outside looking in. In terms of opportunity, GoodRx has technological capabilities that I believe can significantly enhance and streamline the pharmacy experience, reducing pharmacy labor costs, improving workflows, and delivering an engaging digital consumer experience. Now, pivoting to our integrated savings program, or ISP, which provides consumers with a seamlessly integrated complement to their health insurance. ISP primarily works on cover generics today, but we are working to expand that to non-covered brands through our ISP wrap program. Given 28% of new brand prescriptions are never filled, ISP wrap helps bridge coverage gaps, creating a win-win for consumers, healthcare professionals, pharmacy benefit managers, and pharma manufacturers. I have a deep understanding of PBM economics and in turn of the clients and consumers we mutually serve. Sophisticated clients are already demanding an integrated, funded, and cash benefit experience, where consumers, pharmacists, and prescribers are no longer left to solve those gaps on their own. We believe integrating GoodRx is the answer and I am taking this message to the top of every payer, broker, and coalition with whom I already have a relationship. Now pivoting to our manufacturer solutions offering, GoodRx is more than just a place to advertise brand medication. We are becoming the starting point for brand medication access. The brand drug ecosystem is full of inefficiencies, rising gross-to-net costs for pharma manufacturers, lower reimbursements for pharmacies, reduced coverage for consumers, and many medications are administratively burdensome for healthcare professionals to confidently prescribe. We have grown the number of brands we work with from 150 in 2023 to over 200 in 2024 and plan on continuing this growth in the coming months and years. We help pharma manufacturers serve more patients and grow their revenue through three main avenues: integrated access solutions, brand point of sale discount programs, and our e-commerce solution. Let's hit each of these. First, our integrated access solutions service pharma manufacturers' co-pay and patient support programs directly on GoodRx's brand drug price page, which has 5x to 10x the traffic of a typical brand affordability website. This allows high volumes of qualified consumers to download a co-pay card or enroll in patient support programs. Second, our brand point of sale discount programs generate clear and affordable cash prices for brand medications. We ended the year with 78 signed brands, nearly 3x the number we began with in 2024. Growing our brand point of sale discount program footprint is a key priority and we have clear opportunities across the spectrum, including new brands, mature brands, and even those who've lost exclusivity. We are enthusiastic about the progress of these critical solutions and see their potential to be a major growth driver. Third, on our last earnings call, we talked about our e-commerce infrastructure that we launched with Opill, the first over-the-counter birth control pill, marking our entry into an incremental addressable market. Our e-commerce capability was built to allow pharmaceutical brands to seamlessly integrate their direct-to-patient flows into the GoodRx platform. Whether it is a virtual healthcare professional visit, prescription fulfillment, and home delivery or scheduling vaccinations at the pharmacy of their choice, there's much more we can do here. Overall, we believe this shift from media-based partnerships to an integrated platform partnership with top pharma manufacturers allows us to secure better terms across a broader set of solutions. One clear example from Pfizer is its launch of a GoodRx point of sale cash price for its entire portfolio of menopause hormone therapies on our platform last October. We saw not only a significant increase in prescriptions filled, but also a large number of new-to-brand prescriptions in Q4, reversing a two-year decline in one of their drug's market share. Turning towards the keys of GoodRx, there are four key opportunities I see that align with our broader strategy to enhance medication access, deepen partnerships, and drive sustainable long-term growth. These are areas where we have an opportunity to win and where winning will help create value across the entire value chain. First, on brand medications, we want to ensure that every brand affordability and access program is available on the GoodRx platform. Right now, we've partnered with over 200 brands, but we are just scratching the surface. Having now met with several pharma manufacturers where we've shared validated results, we believe that we provide an extremely strong value proposition to brand teams. Second, we want to help pharmacies improve profitability and drive innovation in the prescription experience. There's a lot of friction at the pharmacy counter and we can help modernize the prescription experience and remove strain on consumers, healthcare professionals, and pharmacists. Pharmacies clearly see GoodRx as an ally serving our shared consumers. Third, we want to build out the prescriber's office as a go-to-market channel. Physicians and other prescribers play a key role in keeping their patients on therapy and GoodRx is uniquely positioned to help remove the friction they face. We have several teams throughout the company doing exceptional work in this area already and I believe we need to be doing more, and I'm focused on integrating these efforts under one executive leader. Fourth, we are determining how best to expand GoodRx into the pharmacy benefit ecosystem. Our integrated savings program is already driving meaningful savings for consumers and plan sponsors and we believe there is an opportunity to expand its reach and impact. By broadening drug scope and membership, we can deliver deeper savings across generics, brands, and specialty drugs. In addition, I'm intrigued by other opportunities around employer programs, direct delivery, and real-time benefit checks that we'll begin to explore. I look forward to updating you on the progress we make on all of these priorities over the next several quarters. Before turning the call over, I'd like to say a few words about our new CFO, Chris McGinnis. I'm excited to welcome him to the team. Chris has over 30 years of experience in the healthcare industry across operational, strategic, legal, and corporate development functions. He most recently served as the CEO of CitizensRx and has held a number of leadership and advisory roles for healthcare companies. I had the privilege of working alongside Chris during his tenure at Express Scripts and know he is uniquely equipped to help guide GoodRx through its next phase of growth. With that, I'll turn it over to Chris to discuss our financial results and outlook.

Thank you, Wendy. Before I review our financial results and 2025 guidance, I would like to take a moment to talk to you about why joining GoodRx was the right decision for me. Being in the pharmacy space for a long time, I understand the pain points that consumers face in getting access to their medications. So I joined GoodRx for what it is, a solution that is complementary to insurance, enabling consumers to fill prescriptions easily at an affordable price. Perhaps more so, I joined GoodRx for what it can be. Pharmacy is the first line of defense for managing healthcare, and far too many prescriptions go unfilled for reasons that can and should be addressed. I believe GoodRx is poised to leverage its core capabilities, deepen its relationships across the pharmacy ecosystem, and drive towards a broader solution set to benefit all participants: consumers, healthcare professionals, pharma manufacturers, pharmacy benefit managers, and retailers. That's where GoodRx can step in to reduce friction, enhance access, educate, drive adherence, and seamlessly transact, all while simplifying the process of saving money on medications. I also joined this company because I had the privilege of working with Wendy previously and I believe she is the right leader to continue to execute on the next phase of our company and I could not be more excited to be a part of the GoodRx leadership team. Now, turning to financial results for the fourth quarter and full year 2024. For the fourth quarter, revenue came in at $198.6 million and adjusted EBITDA was $67.1 million. This resulted in full-year 2024 revenue of $792.3 million, which was up 6% year-over-year on a GAAP basis. Full-year adjusted EBITDA was $260.2 million, which constitutes 20% growth over 2023. On balance, our 2024 financial performance was substantially in line with the company's latest guidance. Drilling down on full-year revenue, prescription transaction revenue grew 5% year-over-year to $577.5 million, primarily due to a 7% increase in monthly active consumers. Subscription revenue declined 8% to $86.5 million, which was expected largely due to the sunset of a retailer specific prescription savings program in July of 2024. That program contributed approximately $8 million more in 2023 than it did in 2024. Pharma manufacturer solutions revenue increased to $107.2 million, up 26% year-over-year. With respect to other financial data, net income was $16.4 million compared to a net loss of $8.9 million in 2023, while adjusted net income was $131.6 million, up from $114.6 million in 2023. As I stated a moment ago, adjusted EBITDA increased 20% year-over-year while adjusted EBITDA margin was up 420 basis points year-over-year to 32.8%, marking another year of margin expansion on an annual basis. The significant year-over-year improvement was primarily driven by pull-through from top-line revenue growth and run rate savings from the restructuring of our VitaCare Pharma manufacturing solutions offering in the prior year. Adjusted EBITDA margin grew sequentially every quarter of 2024 from 31.7% in Q1 to 33.8% in Q4. We continue to have a strong balance sheet, generating net cash from operating activities of $183.9 million in 2024, compared to $138.3 million in 2023. Ending cash on hand for 2024 was $448.3 million with $500 million of outstanding debt. Our $100 million revolver had $91.7 million of unused capacity at the end of 2024, resulting in total liquidity of approximately $540 million. Turning to our outlook for 2025. Wendy and I are committed to providing the market with clear expectations about the financial outlook of GoodRx. Given our limited time here, we are taking a disciplined approach to guidance, ensuring we provide visibility where we have conviction while allowing ample room within our ranges to adapt as we gain greater clarity. For full-year 2025, we expect revenue to be in the range of $810 million to $840 million, which represents growth of approximately 4% at the midpoint of the range. We expect adjusted EBITDA to be in the range of $270 million to $286 million, representing growth of approximately 7% at the midpoint of the range. With that context, for the first quarter of 2025, we expect revenue to be in the range of $201 million to $205 million, which represents 3% year-over-year growth at the midpoint. Furthermore, we expect adjusted EBITDA margin to be relatively consistent with 2024 at approximately 33% in Q1. Our Q1 growth outlook is directionally aligned with our full-year expectations and reflects the same underlying trends driving our annual guidance. As Wendy highlighted, GoodRx has a lot of runway. There are several avenues to pursue profitable growth while helping to solve pain points for consumers, enhancing medication access, and deepening our partnerships. I believe the company made solid progress in 2024, exemplified by 20% growth in adjusted EBITDA and significant operating cash flows. I'm excited about GoodRx and I look forward to future discussions. With that, I'll turn the call over to the operator for questions.

Thank you. Our first question is from Lisa Gill with J.P. Morgan. Your line is open. Please go ahead.

Thanks very much. Good morning. Welcome back, Chris. It's nice to work with you and Wendy again. I really just wanted to start with a couple of things. Wendy, you talked a lot about different initiatives with both manufacturers, retailers, and continuing to focus on the consumer, etc. Can you maybe just talk about how many of those new initiatives are included in the guidance? And specifically when we think about ISP and you talked about ISP wrap, can you talk about what the experience has been there and also what the expectation is and guidance for 2025?

Sure. Thanks, Lisa. Good to hear from you. And I too am equally excited to have Chris on the team here. So let me start with kind of the former part of your question, which is the broader set of opportunities and how we're thinking about those as they pertain to guidance. Look, I would say that the general growth that Chris outlined both in Q1 as well as the full year does account for some expansion in the manufacturer programs and the overall marketplace there specifically as it pertains to brand expansion, which you've heard us talk about a fair bit. So that certainly is accounted for. Although having said that, I do think that there's considerable additional opportunity there over time, which we referenced a bit to carry through into future years well beyond this year. As it pertains to pharmacies in particular, I think the area that I am most excited about is our ability to enhance margin for retailers, which we know has been a considerable pressure point. And we are just wildly proud of the fact that we're showing year-over-year for the retailers that we're partnered with on specific programs, that their profitability is about 20% improved year-over-year. Being an ally to pharmacies is certainly not perhaps where we started the legacy of the company. And I will say that transition and evolution is just critical to our ongoing growth. And so the retailer partnership also is a key aspect of the growth that we've talked about both in the quarterly outlook as well as the full year outlook. As it pertains to healthcare professionals in general, Lisa, you heard me mention that a bit at the top of the call. I would say we have a lot more runway there to flesh out candidly, while we know that that top decile of healthcare professionals has continued to drive a good 50% of our volume. We have a lot more that I think we can do over the coming months and years as it pertains to healthcare professionals. But at present we're guiding to what we actually know. So those are the numbers that you heard us underscore thus far. To the second half of your question regarding ISP, I think we continue to see solid traction there. What we know is that our PBM partners value the idea that generics wrapped into their offering make a ton of sense when there's a cash price that, in fact, is more competitive. I think the most interesting runway, of course, is wrapping non-covered brands candidly; that is an area that I believe, particularly given the fiduciary pressure that employers are under, to be able to say that they, in fact, are providing a comprehensive benefit without putting the onus on their own employees to go searching for a better price. That to me is the biggest untapped opportunity. We're actively engaged with a number of PBM partners to facilitate that integration with brand wrap. And I would close by also saying we're also in active conversation to add another ISP program. We know that we have other partners we can work with there. We've had one notable gap specifically, and I think we're making good progress towards having a more comprehensive ISP partnership list.

Thank you. One moment, as we move on to our next question. And our next question is going to come from the line of John Ransom with RJF. Your line is open. Please go ahead.

Hey, good morning. Just thinking about your pharma manufacturing solutions, can we agree that pharma man sol is a terrible name? You don't have to use that anymore.

Yes. I agree with you on that and say we're actually working on it with the marketing team. Yes, high five.

Thank you. At the Analyst Day, the algo was this was a 20% to 30% growth market. Do you still stand by that?

Yes. What we demonstrated from 2023 to 2024 is a 26% increase in pharma manufacturer solutions. I am still very confident in achieving another 20% growth this year, with additional upside potential as well. We understand that the sales cycle for these brand deals takes longer, but currently, we have grown to 78, particularly around brand point of sale and cash buy downs, and more broadly, we have 200 brands on the platform, which represents about 3x growth in 2024. This presents a significant untapped opportunity for us. The most exciting aspect of these partnerships is the results we have validated and communicated to the early manufacturers who invested in us. We can demonstrate that we generate about 5x to 10x more traffic to their brand pages compared to their brand.com pages. When we showcase these results, manufacturers are often encouraged to explore a broader portfolio of drugs. Pfizer is a prime example of this, and we are starting to observe similar trends with other partners. To simplify, we are proving our return on investment in this area, and we will continue to invest in the team focused on engaging with manufacturers to elevate our performance. Thank you for the question.

Thank you. One moment, as we move to the next question. Our next question comes from the line of Charles Rhyee with TD Cowen. Your line is open. Please go ahead.

Thank you for taking my question, Chris. Wendy, I would like to know more about ISP. A year or two ago, the focus was on partnerships with ESI and Caremark, along with a few other PBMs. Last year, we learned that while these partnerships were established, the implementation for employer customers wasn't fully realized, even though it seemed to involve an opt-out model for employers, partly due to formulary limitations and not all drugs being included. Can you provide an update on the status of these rollouts? It seems you are now discussing ISP wrap and manufacturer solutions more frequently, so I’m trying to understand the current role of ISP in the traditional context and how those programs with the major PBM partners are progressing. Thank you.

Sure, I'm happy to address that question. There’s no doubt that our initial concept and collaborations with Express Scripts and Caremark have taught us a lot in the early stages. You’re right in that we had high expectations for what the integrated solution could achieve. Over time, we’ve realized that including non-covered brands adds significant value for the PBMs and the clients we serve together. This expansion of the types of drugs in our offering has been a natural progression. I also see this as a long-term opportunity that may involve a different approach. Additionally, we are actively continuing to connect and collaborate with Express Scripts and Caremark, making this agreement dynamic to ensure value for both sides. We're also broadening our partnerships with ISP, which I've mentioned before. I remain optimistic about the potential of this initiative. When considering the number of drugs that are not covered for typical employers and their beneficiaries, we’re looking at over 600 NDCs for each of the major three PBMs. Therefore, there will always be a need for a solution that complements traditional insurance offerings. PBMs recognize this necessity and are under pressure to provide answers since they want to retain satisfied clients. The tone of our ongoing discussions with PBM partners is very positive, focusing on identifying specific drugs and suitable economics for both parties, and we’re making substantial progress on that front. In summary, I have a lot of confidence in these programs, though they are complex. Ultimately, we are still learning and developing the platform.

Thank you. One moment, for our next question. Our next question is going to come from the line of Michael Cherny with Leerink Partners. Your line is open. Please go ahead.

Good morning, and thanks for taking the question. Maybe Wendy, to build on that a little bit, obviously a management team has been changed over but on the last earnings call, the preliminary guidance was talking about the changing economics that pharmacies are trying to drive with PBMs broadly. I like how you use the term. I think it was a friend of pharmacy going forward. But what do you see in terms of the current landscape right now and GoodRx's ability to continue to position itself well against the push and pull of potentially changing reimbursement dynamics?

Sure. Let me address your question. There are various ways to interpret that. First, the dynamic between pharmacies and PBMs involves ongoing negotiations where pharmacies try to maintain their margins while PBMs aim to maximize margins for their clients. Regardless of how these negotiations unfold, we have a multi-PBM strategy. We collaborate with multiple PBMs and essentially all major chain and grocery pharmacies in the U.S., maintaining either direct or hybrid relationships with many of the top pharmacies, specifically 8 out of 10. As a result, we have the capacity to support these pharmacies. We have observed that through our brand cash buy downs and some technological partnerships, their profitability significantly increases in collaboration with us. We are able to focus on specific drugs that are performing exceptionally well for both them and for consumers who benefit from competitive prices at the point of sale. Additionally, there are over 1 billion prescriptions that remain unfilled each year. Our direct engagement, whether through ISP on non-covered drugs or directly with pharmacies, helps them serve consumers more effectively with GoodRx solutions, saving them significant time at the counter. In summary, we believe we are effectively addressing the needs of pharmacies and filling the gaps that insurance and PBMs cannot address due to their reliance on managed care tools, which seem likely to persist. GoodRx complements these tools effectively.

Michael, I would add to that that to your point about being the sort of friend of the pharmacy and we want to have a long-term relationship that has an aligned economic model. And so I think what you'll see as we have the ability to solve some of their pain points around, scripts that have either gone unfilled or where they've had particularly low or underwater margins, I think our retail partners can make more money and we think our revenue per script actually goes up. So even in an environment where we may have mild headwinds on our active consumers because of some of the things going on at retail that they manage through their strategic initiatives around rationalizing footprint and whatnot, I think what you'll see is that our margin per script will go up. Some of the low-margin or underwater margin scripts for them may fall out of the system, but we'll actually continue to grow top-line revenue because of the mix.

Thank you. One moment, for our next question. Our next question is going to come from the line of Jailendra Singh with Truist. Your line is open. Please go ahead.

Good morning, Wendy and Chris. My name is Jenny from Truist Securities on for Jailendra Singh. I'm just curious on just a little bit more color on your capital allocation priorities. You talked about investing in more profitable growth to navigate near-term challenges in your press release. So as you think about your marketing strategy this year, any particular areas of focus you would highlight? There's the Meta ad policy changes in healthcare and how do you think about contra revenues approach to customer acquisitions?

Let's start with the financial side and I'll take the marketing side.

Yes, I want to ensure I'm addressing your question regarding our capital allocation priorities. First and foremost, we generate significant free cash flow. Over the past two years, we've achieved about $0.12 of free cash flow for every dollar of revenue. We do invest back into our business, and as we look towards 2025, we plan to refocus our investments to support our strategic initiatives. We will allocate cash towards these key initiatives and remain open to other strategic opportunities for deploying that capital. However, given our current stock price, we intend to return excess cash to shareholders through share repurchases, with $290 million authorized at the Board level, so we will likely pursue that option as well.

Thank you. And one moment, as we move on to our next question. Our next question is going to come from the line of Scott Schoenhaus with KeyBanc. Your line is open. Please go ahead.

Hi, team. Thanks for taking my question. Wendy, your comments seem to be really optimistic about the partnership with retailers and talking about the savings that you provide them. And I'm just wondering, can you remind us the breakdown of direct contracting, hybrid, and then traditional PBM contracting that you guys had last year, where it is today, where do you think it can be by the end of the year? And what's really the ideal mix between the three buckets? Thank you.

Yes. Hi, thanks for the question. Let me start with where we are now. So 8 out of 10 of our top pharmacies are either direct or hybrid. And what I would say is of the remaining two that are through our PBM networks, that is their choice. We effectively work with the pharmacies in whatever manner they prefer. That's really the long and short of it. So we'll always have conversations with them pertaining to, hey, do you have an interest in hybrid? Here's how it works. If you have interest, same with direct. But to the extent that they are comfortable accessing our pricing through their PBM contract and that network relationship, we're happy to support it in that way. Candidly, I don't know that I could tell you 12 months ago, what the breakdown of those numbers were, having not been here. If that's something important to you, we certainly can follow-up with that. But I candidly don't know the answer to that question. What I do know is that where we are today in all of the conversations I've had with our top retailers personally at this point, they seem pretty pleased with the contractual mechanism with which we're working with them today.

Yes. Hey Scott, I would only add. I mean in terms of the right mix, it's somewhat irrelevant to us. I mean, the fact that we have multi-channel, we can move scripts around to optimize where the patient saves the most money, where they can get access to their drugs. We want, again, to line to pharmacies and be their best partner. And I think that will overall drive our economics. But we have the ability to move it around to make sure that we're optimizing the model.

Thank you. One moment, as we move on to the next question. Our next question comes from the line of Stan Berenshteyn with Wells Fargo Securities. Your line is open. Please go ahead.

Hi, good morning. Thanks for taking my questions. Two quick ones for me. Well, maybe the question is clear. The answer might be longer. But the first is on the Kroger channel returning. Can you just give us an update on the uptake you're seeing here and how does that compare to your internal expectations? And then also you launched GoodRx expect. I'm just curious what opportunity you're seeing in this adjacency. And I know it's a bit early here, but any consumer adoption at this point. Thanks.

Yes. I would say it's a little too early to comment specifically more broadly, what I can tell you is the relationship has been a fantastic place. I personally met with their head of pharmacy. There is a lot of shared opportunity that we're both excited about and engaged on. I will say without sharing specific numbers, I'm seeing volume through Kroger improve nicely. So I feel like we're in a good spot with more runway in front of us. And just to make sure I'm clear, the second part of your question was it pets?

Yes, correct. Just the extent that you're seeing any traction there.

Yes, I would say that too is also quite early. We continue to see the overall opportunity being a very nice one just given the total addressable market that is pets, which won't really come as a surprise, I think, to this group. There are a lot of competitors in the pet space. But what we do know is that it makes sense for our target audience, many of whom we know have pets. And so for that reason, we continue to be bullish on it. But it's really too early at this point for us to comment on anything meaningful as to what is driving in the plan.

What we like about the strategy too though is that it is a demographic of typically younger people who all pet meds are uncovered and as those pets that demographic aren't heavy. They don't have a lot of prescriptions at this point in their life. But as they age, the long-term value that they bring, as GoodRx having a brand name and a place to come get uncovered meds, I think pays dividends over the long-term.

Thank you. And one moment for our next question. Our next question comes from the line of Steven Valiquette with Mizuho Securities. Your line is open. Please go ahead.

Thanks. I guess, just regarding the new administration and RFK historical negatively biased views on pharmaceutical marketing to consumers. Probably some mixed implications for GoodRx and your digital pharma manufacturer solutions if any policies were to move to the front burner. So obviously it's too early to really give any specific details but just curious to get your high-level thoughts on this topic as I'm sure you've had some internal discussions. Thanks.

Yes, thank you. I was just joking this morning about not having checked on healthcare policy changes in the last 12 hours while preparing for this call, and I was wondering what I might have missed since things are progressing so rapidly. Generally, based on my current understanding, the primary focus concerning pharma and advertising is largely direct-to-consumer, which we're not involved with through TV or radio. However, looking ahead, this could potentially become a tailwind for us if those marketing dollars were redirected to our platform, where we typically see a 5x to 10x increase compared to their usual brand platforms. Beyond that, it would be pure speculation. Nevertheless, we know pharma is interested in using those funds to engage both healthcare professionals and consumers, and we see ourselves as a strong partner to help them reach both audiences. So, we would capitalize on any opportunities if pharma had a channel unavailable to them.

Thank you. And one moment, as we move on to the next question. Our next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is open. Please go ahead.

Hi, this is Jay Jin on for Craig. Thanks for taking my question. Previously, I know the goal posts are fairly wide for prescription transactions due to the rate of negotiations and headwinds in retail pharmacy. And I know there are some mentions of near-term challenges in the release. Can you expand on what kind of headwinds are reflected in there? Are you still expecting any more pharmacy store closure impact lingering into 2025? Thank you.

Yes, thanks for the question. Certainly, we accounted for store closures in our 2024 plan, which you've heard us talk about historically. As it pertains to Rite Aid specifically this year, I mean, what we have in the plan are things that we know. We know at this point, it's just really too soon to understand what may or may not happen with Rite Aid. What we do know is that anytime there are store closures, those scripts ultimately land somewhere. And while there may be some short-term turbulence around that jump ball with those scripts, those same patients who are seeking a cash script 9x out of 10 are going to end up at another store where we're already working in partnership with and where we expect to reengage that same consumer. So again, broadly speaking, it's just a little too early for us to really understand what may or may not happen with Rite Aid.

But I would say in terms of our overall guidance, we obviously we're not going to drill into the prescription transactions revenue specifically, but we have accounted for some headwind on our monthly active consumers, which I think is sort of the fallout, as I mentioned earlier, from some of the rightsizing that the retailers are going through. And so I think we will see a headwind on our active consumers. But I still would expect, based on the revenue mix that our prescription transaction revenue line grows overall into 2025. So I think the revenue per script will be up. And I think there's probably headwinds on the consumers and that's baked in, I think in terms of the range of guidance that we have.

Thank you. One moment, as we move on to the next question. Our next question comes from the line of George Hill with Deutsche Bank. Your line is open. Please go ahead.

Yes, good morning, guys, and thanks for taking the questions. Two very quick ones for me, I guess, Wendy, number one is kind of following on the theme of being a friend of the pharmacy. Are there any plans to increase engagement or penetration in the independence channel? And number two, I guess, could you comment on what is explicitly contemplated in the guide for 2025 as it relates to volume increases from renewing engagement with Kroger? Thank you.

Thanks for the question. Gosh, let me start with independence in general per your question, we are open to really working with any pharmacy inclusive of independence, provided that lands upon a price point that makes sense for the consumer that is in fact competitive. I would also say perhaps a little less discussed within the company and certainly in this forum is that we actively work with a number of independents through our script cycle offering in a much more focused manner, and we intend to continue to expand that through our script cycle partnership. So short answer is always open to it. And I would also say, and have extended a conversation opening with the head of NCPA with whom I've had a longstanding relationship. So we'll continue that dialogue is really my short answer as it pertains to independents. Can you kindly repeat the second half of your question again?

It's about specific Kroger volumes. So George, hey, good to talk to you again, George.

Yes, that was it.

We don't have specific large volumes for Kroger to share at this time, and we won't be breaking it out by retailer. However, we do anticipate an increase in volume as our direct relationship with them develops. Currently, around 35% of our volume is coming through direct relationships. There’s flexibility in our approach, as we can shift back to the multi-channel PBM route if that proves to be more effective. While we're expecting some challenges with overall prescription transactions revenue, I believe that the mix will ultimately drive our overall revenue higher.

Thank you. One moment, for our next question. Our next question comes from the line of Allen Lutz with Bank of America. Your line is open. Please go ahead.

Good morning, and thanks for taking the questions. I wanted to follow up on Michael's question around some of the changes going on in the end market in 2025. One of your pharmacy partners introduced a cost plus model that's going out in 2025. Another one of your PBM partners is passing along rebate savings at the pharmacy counter. Is there anything that's different that you're seeing through two months in 2025 whether it's the type of insurance coverage where you may be supplementing a different drug mix? Has anything changed as you kind of turn the calendar year from 2024 into 2025 as it relates to your win rate mix or really just anything that you're seeing in the end market? Thanks.

I would like to provide an update after three weeks. Although I haven't delved deeply into the data, I estimate that we have around two-thirds of our volume, approximately 70%, operating on a cost-plus basis already. Currently, the impact of this seems negligible. As retailers implement their strategies, whether through renegotiations with PBMs or store rationalization, it's crucial for them to establish a healthy retail environment. They need to enhance their margins at the point of sale. We aim to be a supportive long-term partner in this process. The health of the retail environment and the cost-plus model can potentially create better economics for all involved, which I believe will contribute to an increase in our revenue mix. While I can't provide specific details on what's changed, I don't see this as a challenge for our cost-plus model.

Thank you. One moment for our next question. Our last question will come from the line of someone with Citi. Your line is open. Please go ahead.

Hey, this is someone on for Daniel Grosslight. My question is about GLP. It seems like the supply constraints for GLP-1 are starting to ease. Are you currently collaborating with GLP-1 manufacturers, and how do you anticipate this situation will develop over the next year? Thanks.

Sure, appreciate the question. Let me start with just a couple of macro items to comment on through our health research economic group, we just kind of wrapped up a retrospective on 2024 into 2025. Interestingly, despite increased utilization, coverage by payers actually hasn't changed. In many instances, it's gotten worse because they tried to cover it and then they couldn't afford it and so they stopped covering it after it hammered their overall cost either as an employer or health plan. So juxtapose that to the expanded number of indications for GLP-1s, and we've seen just through our own site traffic of approximately 2 million consumers looking for pricing at the end of Q4 and now in total 9 million in 2024. What we are already doing with GLP-1s is we're partnered with these same manufacturers to support their manufacturer co-pay coupon program. So I mentioned previously around that 5x to 10x list when someone comes through our front door as opposed to the manufacturer's front door, we're doing that in partnership with pharma today. Having said that, there remains an opportunity to get a truly competitive cash price at the point of sale. We are in active dialogue to obtain that. We don't have one today and I think the market is keenly aware of probably why that is so given where manufacturers are today. I think the opening is now bigger than ever with these negotiations continuing given that supply should be stable and the government, of course, supports the notion that supply is in fact stable and they're cutting off the compounder's ability to continue to push these molecules. Therefore, the demand for the branded solution is only going to increase, not decrease. And we believe at this point it's a matter of when, not if, we're able to have something concrete in a point-of-sale brand cash buy down, and we are aggressively working to get it.

Yes, the one thing that I would add is obviously with relationships with Lilly and Novo. I mean, actually, I would say this is a microcosm of our business model. What Wendy has really brought to the table is an elevated discussion inside of really across all of the pharmacy ecosystem, whether it's retailers, whether it's the PBMs, whether it's manufacturers. The discussion has really been elevated, I think relative to where it's been in the past. That's what excites me the most is these conversations across all everything we've talked about today, I think is becoming more of a top-down discussion which I think positions us very well for the long-term.

Thank you. And I would now like to hand the conference back to Ms. Wendy Barnes for closing remarks.

Thank you so much. Thanks to everyone for being with us today and for all of the thoughtful questions. We look forward to follow-up calls with many of you. I'd like to just close today quickly with three themes regarding the value of GoodRx. One, we are truly saving Americans time and money when filling their medications. Two, we are truly removing friction in the ecosystem and are a valuable partner to pharmacies, PBMs, healthcare professionals, and manufacturers. And lastly, we're a complement to insurance. We see ourselves as necessary and integral to the insurance that all of us use each and every day to fill in those gaps that insurance simply doesn't cover. Let me close this out by saying how incredibly excited I am about the long-term growth potential of GoodRx and I'm really looking forward to updating all of you on our progress during future calls. Thanks for joining us today.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.