GoodRx Holdings Inc at UBS Global Healthcare Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Kevin Caliendo - UBS Equities - Analyst : Let's jump right in. The call -- your last earnings call was interesting in the context that you gave a much wider range of expectations around prescription trans -- the prescriptions transaction business for '25 than I think a lot of people expected. It's been relatively consistent, predictable business, give or take one or two points. And your guidance and please remind us specifically what it was but had a very much larger range based on a potential various outcomes that you were seeing in terms of PBM pharmacy behavior. Why don't you first talk about the guidance just to frame it and then we'll dive into it more.

Question: Kevin Caliendo - UBS Equities - Analyst : No, it's a great framework and I really want to dive into this because what you're stating is somewhat unique. We haven't really seen an environment in the last however many years we can go back forever where the PBMs did not cut reimbursement. We had Walgreens in our offices and Tim Wentworth was talking about that he was excited because the reimbursement cuts weren't as great, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 7:00PM, GDRX.OQ - GoodRx Holdings Inc at UBS Global Healthcare Conference They had $1 billion, $700 million, $500 million. Now it was somewhere less than that. We don't know exactly but he was excited by the idea that he saw the light at the end of the tunnel. And are you suggesting that you're actually seeing a scenario where PBMs aren't getting as much rate cut or they actually -- you're hearing because I know (multiple speakers) the negotiation, but they're actually going to be paying more like because of mix or some other reason.

Question: Kevin Caliendo - UBS Equities - Analyst : I definitely want to get into that and understand it. I guess my point is, are you actually hearing from PBMs who are coming to you and saying we might have to affect the take rate to you because we're getting hit? Like, is that what you're actually hearing or you just worried that that might be knowing how PBM -- PBM is always managed to a profit margin. We know that, I mean, they've been doing it forever, they're really good at it. And instead of going this way, they might have to go tangentially towards you a little bit or somewhere else.

Question: Kevin Caliendo - UBS Equities - Analyst : We as investors and analysts who are looking at your company and looking at the industry, should we be following what's happening with CVS and Walgreens or should we be following what's happening more with the independence and trying to get anecdotal checks when it comes to thinking about your business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 7:00PM, GDRX.OQ - GoodRx Holdings Inc at UBS Global Healthcare Conference Like who are you potentially more at (inaudible) I don't say risk because I don't think that's the right answer but the right word but you understand what I'm saying?

Question: Kevin Caliendo - UBS Equities - Analyst : Okay? No, that's helpful. I was just trying to--

Question: Kevin Caliendo - UBS Equities - Analyst : Frame it a little bit in terms of the context for this. You mentioned on the call, you had reached a point where 30% of your Rx volumes are now running through direct contracting. Let's get into this. For those listening on the call who are new to the story or need a refresher, can you speak to how this way of contracting differs from your traditional role as a funnel for the PBMs and how this type of contracting can appeal specifically to pharmacies -- where you are.

Question: Kevin Caliendo - UBS Equities - Analyst : How do we as consumers see that? And I ask, and this is just a unique thing that's happened to me in the last couple of weeks. I picked up three prescriptions, two for my wife and one for myself. And two of them, I had zero. I literally -- they did not ask me to pay. And I've never had that happen before. The other one was $4.87 or something. It's more traditional price. And I'm like why am I not paying for this? And they, the pharmacist behind, it was a tech didn't really have an answer. I don't know why that happened. I was glad to have to not pay, but it just seems interesting, like what is going on that it used to be $10 and then it was $5 and then it was $4.87 or a $1.38 or like the numbers became random as you can see that they were behind the counter discounting or couponing or doing or using GoodRx themselves. And now I got zero.

Question: Kevin Caliendo - UBS Equities - Analyst : Now, for you guys, as we think about your business in the direct contracting, where can it go? I mean, 30% now is great. Is this -- are we talking about eventually this becomes the majority? And I guess the second question is you said it's better margin. What happens if the revenue -- this is a separate question. Why don't we just talk first about the -- where can it go in terms of the percentage?

Question: Kevin Caliendo - UBS Equities - Analyst : Got it. Okay, helpful. When we think about the delta between low-single digit, high-single digit, this gets back to margin a little bit. But what is that like how much leverage is that or is it just simply the margin is the margin on each of those? And it wouldn't necessarily affect, it doesn't really matter if you grow 1% of that business or 9% over fixed cost. I'm just wondering, okay, lower margin, lower earnings, but is there also any incremental margin shifts

Question: Kevin Caliendo - UBS Equities - Analyst : Okay, I want to get back to the direct contracting because I don't know, I fully understand how it works and how the contracts work with the pharmacies? Is it for all drugs? Is it certain categories of drugs? Do you provide them a list of this is a particular category or manufacturer or something? How does that work? And can the pharmacy use it? Are they mandated to use it at all times? Or can they just use it when it's their best price? You understand what I'm saying? How does it work?

Question: Kevin Caliendo - UBS Equities - Analyst : I got it. So you create this program, the pharmacy benefits. I'm assuming it helps them too, right? They benefit -- every pharmacy right now is struggling on margins, struggling on cash flow.

Question: Kevin Caliendo - UBS Equities - Analyst : So it helps them on the predictability of their own reimbursement and their own costs.

Question: Kevin Caliendo - UBS Equities - Analyst : So there's -- they have a huge amount of incentive to do this. The PBM always had incentive to work with you guys because in essence, it was free money for a lot of them, right? Where they were going to get capture scripts where they might not have because (multiple speakers) you were basically marketing (multiple speakers) you're marketing their price for them. Does it come to a point where you can -- if you're worried about the PBM take rate and say, hey, well, listen we're going to continue to work with the pharmacies, like if you want to be more competitive or you want to capture more share, can you do that? Can you get in the middle like that? And play one against the other to certain? I mean, I just thinking a lot here.

Question: Kevin Caliendo - UBS Equities - Analyst : We just want -- I mean, I'm just trying to think out loud there. Why would a pharmacy work with you guys as opposed to try to run promotions or be more aggressive themselves? Is it the predictability aspect of it?

Question: Kevin Caliendo - UBS Equities - Analyst : It makes total sense. Let's shift gears a little bit. I want to talk about ISP. I don't know that every -- all the investors, if they haven't been following the story for the last year or six months, even nine months might not be fully aware of what ISP. Maybe spend a couple of minutes or a minute or so talking about this program, how it came to be, how we should think about it in '25, '26 going forward. Do you have any visibility yet on how many planned lives? If you want to break the news to us here, I'll be happy to share that in the context of Reg FD, what can you talk about with that business and that opportunity?

Question: Kevin Caliendo - UBS Equities - Analyst : Is there anything you can do to influence whether or not a plan signs up for ISP? Like is the entire process up to the discretion of the PBM and the plan alone? Or do you -- I mean, ideally, do you want to push somebody in one direction or the other? Do you -- are you marketing (multiple speakers) --

Question: Kevin Caliendo - UBS Equities - Analyst : We've gone 25 minutes and haven't talk about [mansol] manufacturing solutions, which you got it for 20% growth and that -- I apologize. But the debate currently is on the other side of the business. But let's talk a little bit about that. What's driving 20% growth? I know it's not -- I know that the baseline is not as large, but it's still 20% growth. Where's the demand? Who's -- where is it coming from? What products and solutions are resonating more? And as this business grows faster, what does it do ultimately to the margins within the segment and the margins within the company?

Question: Kevin Caliendo - UBS Equities - Analyst : What categories is this affecting or being is -- are being impacted the most? When I say that, is there a particular -- is it GLP-1s? Is it I mean --

Question: Kevin Caliendo - UBS Equities - Analyst : We're out of time, but just one really quick one. The margins on mansol as these programs, the 72 programs. Do they become margin accretive to the industry to the overall enterprise? To the margin -- can the margins of that business continue to grow? I just -- because it's growing and it's growing in different ways now. I'm just not sure how to think about it longer term. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 12, 2024 / 7:00PM, GDRX.OQ - GoodRx Holdings Inc at UBS Global Healthcare Conference

Question: Kevin Caliendo - UBS Equities - Analyst : Fair enough.

Question: Kevin Caliendo - UBS Equities - Analyst : Thank you (multiple speakers) for coming. I appreciate it. Thanks, everybody, for joining and have a good day.