GoodRx Holdings Inc Q2 2024 Earnings Call Transcript

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

Question: Charles Rhyee - TD Cowen - Analyst : Yeah. Thanks for taking the question. Scott, just wanted to ask, obviously, there's a lot of vectors for growth here and it's fair to say you're making good progress across all of these. One thing that you did talk about at Investor Day was the HCP channel. And if I recall correctly, you had mentioned that sort of roughly 50% of your MACs are coming from the top 10 percentile of HCPs. And this was a potential channel where you can put more resources in, we could help drive further macro. Just wondering where we are in that and sort of the progress you're making and how we might see that translate more into macro.

Question: Charles Rhyee - TD Cowen - Analyst : Great. And if I could follow-up, maybe, Karsten, obviously, a lot of great momentum here, particularly on the gross margin side. A lot of the teams, particularly as you move into direct contracting, can you remind us sort of is direct contracting a better margin profile for GoodRx? And then maybe you talked about the number of retailers that you have under direct contracting. Maybe if you can help us kind of size that in terms of PTR, like how much of PTR is under direct contracting versus the traditional PBM model? Thanks.

Question: Lisa Gill - J.P. Morgan Securities LLC - Analyst : Thanks very much, and good morning. I just want to follow-up with your comments around the store closures for Rite Aid. So when we think about the store closures, is this because this is a direct contract and so therefore, you're going to lose that volume, you try to recapture it in some other way? Because I would think that if it was just a traditional GoodRx user, if they go to the CVS down the street, it would be the same relationship. So one, can you help me to understand that? And then secondly, I just wanted to follow-up on your comments on Humira biosimilar. If you could just give us an idea of what you've seen on the uptake on that side would be great. Thank you.

Question: Lisa Gill - J.P. Morgan Securities LLC - Analyst : That's helpful. Thank you.

Question: Lisa Gill - J.P. Morgan Securities LLC - Analyst : And anything you can give us around like a number on the uptake or anything around that, Scott?

Question: Lisa Gill - J.P. Morgan Securities LLC - Analyst : Super early, okay.

Question: John Ransom - Raymond James & Associate, Inc. - Analyst : Hey, good morning. When you look at your '24 exit rate, how should we be thinking about that for the three lines of business jumping into 2025? In particular, I'm interested in the manufacturer solutions. Thanks.

Question: John Ransom - Raymond James & Associate, Inc. - Analyst : Great. And just my follow-up, if we think about Rite Aid specifically the $5 million bad guy, does that kind of come with the usual sort of gross margin attach rate, so we should think about that being almost like-for-like EBITDA hit. And so your EBITDA guide is jumping over a $4 million-plus Rite Aid bad guy or is there something I'm missing there?

Question: Stephanie Davis - Barclays Capital Inc. - Analyst : Hey, guys. Thank you for taking my question. I was hoping to ask a little bit more about the biosimilar construct, since it looks a bit more embedded than the prior construct in your website. So how should we think about your forward-looking feel as you get some of these deals with manufacturers? And could it eventually become fully embedded versus the current transfer to the brand website, albeit with a few more clicks?

Question: Stephanie Davis - Barclays Capital Inc. - Analyst : And Scott, what's the biggest headwind or friction point in getting you guys to have more of that embedded construct? Is it just trying to get the deals faster to market? Or is there some sort of ownership that the brands would want to have that maybe prevents you from having this feel a bit more GoodRx native?

Question: Stephanie Davis - Barclays Capital Inc. - Analyst : No, continue.

Question: Jailendra Singh - Truist Securities - Analyst : Hi, this is Jailendra Singh from Truist Securities. Thanks for taking my questions. So as we are in the heart of the employer selling season, I was curious if you can share any feedback you've got from your PBM partners on the interest level in ISP from potentially new employers in addition to any feedback from your existing employer claims what's currently on platform and their willingness to expand the program across the population or across more drugs on formularies. And on the same topic, has there been any change to your $35 million of ISP related contribution expected this year?

Question: Jailendra Singh - Truist Securities - Analyst : That's great and its exciting. A quick follow-up on especially related to GLP-1 with these weight loss drug coming off the shortest list now and given your consumer demand and your relationship with pharma companies like Novo, how do you think about your positioning there? Are you expecting REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 12:00PM, GDRX.OQ - Q2 2024 GoodRx Holdings Inc Earnings Call some tangible actions from these manufacturers to push their branded product more aggressively into marketing given all the noise around compounding? And how do you see your PMS business positioning in that environment?

Question: Scott Schoenhaus - KeyBanc Capital Markets Inc. - Analyst : Hi, team. Thanks for taking my question. I believe you mentioned in the prepared remarks that ISP volumes were healthy and maybe running a little bit ahead of expectations. What's driving this? Is this more a function of better cohort of employers that have less robust insurance coverage? Or is it continued volumes into the rest of the year when you thought maybe it would be more seasonal from a deductible standpoint in 1Q? Thanks.

Question: Stan Berenshteyn - Wells Fargo Securities, LLC - Analyst : Hi, thanks for taking my questions. Appreciate all the color. I'd like to maybe dig into the mechanics of the Rite Aid impact. So if I'm thinking about it correctly, if you have a GoodRx card on file and the store is closed, is the implication that the Rx BIN number doesn't get routed to a different location, and so essentially you need the consumer to re-engage with a different pharmacy using the GoodRx discount card. Is that correct? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. AUGUST 08, 2024 / 12:00PM, GDRX.OQ - Q2 2024 GoodRx Holdings Inc Earnings Call

Question: Kevin Caliendo - UBS Securities LLC - Analyst : Thanks for taking my question. I understand that the changes that we've seen in NADAC pricing on Medicaid side don't directly affect you in your business necessarily. Although if you want to clarify that in any way, that'd be helpful. I'm just wondering, you were talking about how you were involved in negotiations between PBMs and pharmacies around cash pay reimbursement. And I'm wondering if PBMs in any way are using what's happening with NADAC to affect any of their other pricing in the marketplace. I don't know if any of it's tied to NADAC pricing or not and how they negotiate it. Just interested to know if it's having any other wider effect on how PBMs are behaving.

Question: Allen Lutz - BofA Global Research - Analyst : Good morning. Thanks for taking the questions. I want to start with something Scott said around the ISP wrap. If the drug isn't on your PBMs formulary, can you talk about what the win rate would be relative to the PBM's rate? I would assume that it's close to 100% when it's all formulary. So can you provide any kind of context on how much higher the win rate would be there? And then, as a quick follow-up, I appreciate all the commentary on Rite Aid and the specifics around their business. If there were Walgreens store closures, would you need the same type of dynamic you're seeing with the Rite Aid business where you would need to see the consumers re-engage if their script goes to a different pharmacy? Thanks.

Question: Daniel Grosslight - Citi Investment Research - Analyst : Hi, guys. Thanks for taking the question. I wanted to go back to employer receptivity to ISP. We've seen now the second lawsuit filed against the self-insured employer for mismanaging their drug benefit. And one of the lawsuits out there actually took screenshots from GoodRx to show how much lower you guys are versus the funded benefit. So I'm curious if you're hearing increased chatter in the market about adopting ISP directly from employers, given you would think that, that might shield them from some of these lawsuits that have popped up about, mismanaging the drug benefit.

Question: Jack Wallace - Guggenheim Securities LLC - Analyst : Hey, thanks for squeezing me in. Just so we can kind of get a better context for the retail pharmacy closure issue. Thanks for quantifying the impact of the Rite Aid stores for this year. Can you remind us how much of your maybe distribution is through a kind of standalone retail pharmacies versus say a co-located or owned outright by a grocery chain? And then just thinking about the general shrinkage of the retail pharmacy footprint over the last couple of years and what appears to be a consistent trend going forward, how much if any impact from store closures is baked into your guidance that you laid out at the analyst day, the multiyear guide? Thank you.

Question: George Hill - Deutsche Bank Securities Inc. - Analyst : Good morning, guys. Most of my questions have actually been answered as it relates to the Big Box pharmacies. I guess my follow-up would just be, can you comment on your initiatives to partner or help out independents and kind of non-large retail, non-Big Box channels to accept more GoodRx or use more GoodRx given that they're likely to be shared gainers, given the retrenchment by large chains? Thank you.