Good morning. Thanks for joining us for the next session here, and very pleased to have with us, Karsten Voermann, Chief Financial Officer of GoodRx. Karsten, thanks for being here. Thanks so much, Charles. And to start off, I'm going to read a safe harbor statement, as you're all probably accustomed to so far. So I'd like to remind everyone that today's fireside chat will contain forward-looking statements. All statements that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding our plans, strategies, goals, and objectives, our market opportunity, and our anticipated financial performance. These statements are neither promises nor guarantees but involve known and unknown risks, uncertainties, and other important factors which may cause our actual results to differ materially from those projected in the forward-looking statements. For additional information concerning such factors, we refer you to the risk factor section of our 10-K for the year ended 12/31/2023, and we may also reference certain non-GAAP metrics which are reconciled to nearest GAAP metrics in our press releases on our investor relations site at investors.goodrx.com. Thank you, everyone, and thanks again, Charles. Really excited to be here. Great. Having the chance to meet folks in person again. You know, maybe just to quickly start, just give a very brief overview of what the company does, just in case folks aren't as familiar. Sure. So, as folks probably know, in the U.S. over the last few years, the cost burden borne by patients, employees, and consumers in the U.S. of the aggregate cost of healthcare has only gone up and gone up significantly. And GoodRx was founded to help solve that problem. So GoodRx's initial offering was one in which patients could receive prescriptions at substantial discounts to what they'd otherwise pay either through their insurance in terms of copays and deductibles, or on a cash pay basis. The way we did that was by aggregating up all of the discounts, that are available in the marketplace into one entity, which was our platforms, and present them to consumers who, over the years, have been saving more and more as we've gained scale and our negotiating leverage has increased, such that now consumers can save, relative to their next best prices, up to 80% off the prescriptions they purchase. That means cumulatively we've saved consumers over $75 billion since our founding. Last year alone, about $15 billion. 25 million consumers benefited from the offering in the last year as well. Quite a large number, indeed. But still, a small amount relative to the huge prescriptions TAM, because there's still 900 million prescriptions abandoned at pharmacies every year, which both lead to bad health outcomes and mean pharmacies aren't earning the revenue they could. That's what we help with. We also have a second area of focus, which is focused on branded drugs and reducing their cost for consumers and working with pharma manufacturers to ensure patients can get on medication. Because we have these 25 million consumers, as well as millions of healthcare providers who've had a patient on GoodRx, it means that we have an ability to also be a megaphone on the part of pharma manufacturers, branded drug discount programs, and copay and deductible assistance programs, too. Based on those things, we've created a business model that grows, has high, relatively speaking, EBITDA margins. We've got it towards 31% for this year, and great free cash flow conversion given the limited amount of continued investment we have to make. Great. Correct me if I'm wrong. I like to liken it when people ask. It's kind of like think of Expedia for drug prices, right, where, you know, you want to go you know, I'm flying from New York to Boston, and it's kind of like, what pharmacy do I live near? Yep. You know, and the flights are, you know, all the different prescription discount programs that are available, and you're just kind of aggregating and showing to me time and place, you know, and how much it is, right? Is that a... That's a great analogy. I've used an analogy too in the past, and I think it's a good one in our space. Yeah. Yeah. So, you know, and I think one of the interesting things here is that beforehand, right, you were outside of the healthcare system, right? So, like, once you kind of used the GoodRx platform, you're kind of outside of insurance, outside of your deductible. But I think the really interesting thing now is with ISP, you've partnered with, you know, some of your major PBM partners and are now getting integrated into the benefit. And, you know, and to me, I think this is where we could see some of the most upside, you know, from the partnership. Maybe just to help people understand what does ISP do and and sort of rationale how you got into into this partnership with some of them. Great question. Thank you, Charles. So, yeah, when GoodRx was founded, we were originally an exclusively direct-to-consumer model. So we went out and marketed, and through our marketing, we're able to acquire users who took advantage of our prescription discount offering. In that context, because the prescription discounts are so attractive, the direct-to-consumer model grew quite rapidly, and the investments we made in marketing paid back quite quickly. We've customarily paid back in well under eight months, and that's been consistent since before our IPO, even four or five years ago. So on that dimension, the direct-to-consumer model worked well for us, saved consumers an incredibly large amount of money as well. But what we realized was that there's an opportunity to aggregate demand, through employers and through PBMs, respectively. So what evolved was that folks in HR departments across America were hearing from their employees that even as the cost burden was shifting more and more to the employee side, employees weren't necessarily using the benefits their employers provided. Instead, if they had a prescription to fill, they were using GoodRx. And so that percolated up to HR departments who heard from employees, "Hey, why is why are my benefits costing more and more when I'm not even actually using them because I can get my prescriptions more cheaply on the GoodRx platform?" HR departments then talked to benefits brokers, benefits brokers talked to PBMs, and GoodRx, as an associated combined benefit with the PBM offering, became last year in our Express Scripts partnership, a manifestation of the way that we could aggregate demand and provider services at greater scale. So last year we had one PBM partner, Express Scripts. This year we added Caremark, MedImpact, and Navitus. The way this actually works is that for the first time ever, if you walk into a pharmacy and you have the benefit of GoodRx combined with your traditional PBM services from, say, Express Scripts, then you get either your funded price or if the GoodRx price is lower, which happens in many cases, then you benefit from the GoodRx price automatically. There's also a full backend data integration, so even if you end up benefiting from the GoodRx price, your accumulators, etc., will all benefit from the data associated with the prescription that you filled. From our perspective, great way to aggregate demand and bring many users on more quickly instead of one-on-one doing it in our direct-to-consumer model. From the employer's perspective, a free benefit that they can offer to employees that didn't exist, and free is great for folks in HR, and for PBMs a big differentiator that allows them to say, no matter what, your employees will get the best price if you buy services from us as a PBM to employers. Is that helpful contextually? Yeah, no, absolutely, right? I mean, I think the interesting thing, it now goes against your deductible. You know, the, your health plan has the data. Correct. Right, and then it sounds like it's. Full data integration, yeah. Exactly. You know, I think in terms of uptake, you guys made some comments where on the quarter, so far you're seeing volume sort of tracking 2x from last year. Obviously, last year was the Express, Fiscal year, yeah. First part, pilot year. You know, maybe talk about sort of how you see that ramp coming up because, you know, from our survey work, it would suggest that, you know, 60% of Caremark and Express employers, employers that have Caremark or Express, have opted into ISP for this year. You kind of run the numbers on how many employees that would be. That would suggest a fairly significant potential uptake. Obviously, you've talked about sort of the PBMs taking more time to ramp up. Maybe you kind of talk through that dynamic of and sort of how that's kind of blended into your guidance right now. Yeah, absolutely. So last year, with Express Scripts, that was effectively their pilot year where they tested the program, and we also had the opportunity to make sure that we liked the results we were seeing. So in that context, from their side, they wanted to make sure their employers and the employees within those employers had a great experience before rolling out the program fully this year. From our side, our goal was to understand the incrementality of the program, and what we discovered was that there's almost no overlap either on a top drug basis or on a person's basis with their direct-to-consumer offering, like low single-digit overlap, meaning incredibly low cannibalization, almost entirely incremental volume. So ESI was happy because it worked very smoothly. We were happy because it was very incremental. That led us to look to potentially work with incremental PBMs, in this case, Navitus, MedImpact, and Caremark. They began offering it in the fall or in the selling season, as you said, Charles, completely accurately to various employers. This period, though, at the start of 2024, is their first opportunity to work together with us, though. So unlike ESI that had a whole year of pilot, in a sense, this is their incipient equivalent period. So I think we have a couple dimensions that we anticipate we will see volume ramp during the year on. One dimension is formulary because we know from conversations with some of the PBMs that after they've seen this work quite well over the last couple months, their intention is to increase the amount of medications and, or more pointedly, the categories of medications that we will have the ability to offer GoodRx pricing on. So in the case of one PBM, right now it's primarily off-formulary, so 100% copay. And that's working very smoothly, so we anticipate they're going to start layering in the on-formulary where it'll be beat the copay as opposed to just off-formulary where it's 100% patient paid. In the context of another PBM, while they have offered it to a variety of employers, they've staged the access that those employers are having to the ISP program. So there too, in our conversations with them, we anticipate that those numbers will increase too. I think performance to date is landing pretty much exactly on top of our forecasts that our teams made that we also anticipated some amount of ramp in the year. Like you said, about 2x where it was last year right now, and we expect to continue to see that increase, through the year, Charles. Express Scripts volume, are they fully on-formulary or are they also staging at this point as well, since they already had the experience? Yeah, no, we believe, based on sort of conversion rates we're seeing and volumes we're seeing as well. We think Express Scripts is number one, super pleased to be continuing the program with us. And number two, we're really pleased with the volume that they're sending our way, so we're grateful for that. Okay. And maybe you think about what's implied in the guidance. You know, I think the comment that you guys had made was that, it's based on sort of the first few weeks of the data that you're seeing. Correct. Is what's then implied in the guidance, but the first few weeks is still that early stage ramp. Also correct, yes. Does the rest of the guidance assume there's an increasing ramp or it's kind of like, "Hey, this is what we're seeing, let's just kind of assume this"? Yeah. I think at present we're philosophically, first of all, focused on guiding what we have a high degree of confidence in as opposed to speculatively. So I think we're looking at the trends we've seen from the beginning of the year to now, and extrapolating those forward. So I think if we were to have incremental formulary loaded on sooner than we expect, for example, or incremental lives loaded on sooner than we expect, that would create upside. Right now I think we're taking a pretty modest view of when that might happen because, again, it's not wholly within our control. This is for us a little bit different than our direct-to-consumer business where we control literally every aspect of the experience and the marketing because we do have these PBM partners who have a view and a perspective. And so for that reason, we take a bit more of a modest view of it. And again, we're looking at the trajectory we see now and the slope of that and extrapolating it forward versus assuming some kind of nonlinearity is probably the right way of putting it. Right. You know, maybe talk about I think the key part will be the conversion rate on how often, you know, you beat the cash part, the full price pay versus how often you'll beat copay. That's correct. You know, sort of what you've seen so far, in terms of when you're against copay, you know, what have you seen in terms of your ability to beat that price? Sure. So we haven't put out quantitative information yet, but I think for everyone's modeling purposes, I can still try and be as helpful as possible. I think the biggest distinction between this ISP arena and our direct-to-consumer marketing is that in our direct-to-consumer business, consumers sort of mirror the reality of what we see in the U.S. So, the majority of them are either on some kind of insurance or on Medicare. And the majority of them have seen increasing copays that hover around sort of the $20 mark is probably a good way to describe it. I think the ISP population of users and their employers, as we've learned last year, looks different from the general population because the employers who are the ones who are most likely to pick up the ISP offering are the ones who already offer their richest benefit plans. What that translates into is that while in the general population, folks may have read in our white papers, we're able to beat the copay around half the time by around half. The proportion of time we beat in the ISP program, particularly associated with the early adopting employers, is much, much lower. We've talked about that being an order of magnitude plus lower because many of these employers do things like have programs where generics might be very low cost or have no copay whatsoever. And if the copay is zero, I can't beat zero. So, that's why we see a gradient in conversion rate. That said, we modeled it in that way because we expected that reality based on what we saw with ESI last year. I think that refers to your question earlier of things that can go right and kind of improve the outcomes. If employers get loaded on more quickly and the long tail of employers includes more with benefit plans that are, let's say, a little bit less rich, then that creates a potential to inflect up conversion rate as well. So it's not just formulary and lives. This dynamic also plays a role. So great question, Charles. Okay. And I guess the one thing there's one other comment you guys made is in terms of getting not only from the PBM side, but pharmacies. Yes. Right? Because if you're a pharmacy, on the surface you would say, well, I'd rather get the funded benefit cost because I, you know, there's a $20 copay plus whatever I've negotiated. But if it converts to the GoodRx, I'm probably going to get less. Right? Because it's a more competitive price. Because it's based whatever the discount card I've agreed to for whatever PBM that sits behind it, right? Is this where direct contracting comes into play? Like how, you know, is it also possible, let's say I'm at a Walgreens, you know, I'm trying to beat the $20 copay, but the price on the other side might actually be Walgreens direct contracted price versus, in which case I'm actually getting better benefits out of it. I think, there's a lot in the question, so I'll parse it and address it. I think first of all, the results for a pharmacy, when they receive an ISP versus a funded benefit price, it really depends on what they've negotiated with the PBMs on admin fees associated with both of those. So the admin fee may be higher on the $20 copay so that it nets out to be even. It really depends pharmacy by pharmacy on that one. Yeah, but to your broader point. Because I think it was an assumption that the ISP price would be worse for pharmacy. The price will be lower. Yeah, but on ISP, but if the admin fee is also lower, which is a good segue to direct contracting, then the pharmacies has the potential to be neutral or better. Oh, I see. Because the admin fee can be quite high on funded benefit. So in that context, though, you brought up direct contracting, and for those in the audience, historically to stick with Charles's excellent Expedia analogy, GoodRx was a marketplace of other pharmacy discount prices. So we pulled in discount prices from MedImpact and from Express Scripts and from Optum and everywhere else and aggregated them in one place so consumers could easily find them and get the very lowest price, the equivalent of the lowest airfare. Subsequently, in the last year or so, we've grown to such a scale now where along with aggregating pricing from all of the different PBMs, we've shifted to a model that's now impacting an ever-increasing minority of our volume where we directly contract with pharmacies like Walgreens or CVS, which are great examples. We're in Boston, so in Boston and Rhode Island area, CVS is dominant. So I'll say, we'll use them as the example today. So we'll work directly with a CVS or a Walgreens to set both pricing and margin and our admin fee that we get for pushing the scripts to the pharmacy for driving the demand. So we spend $200 million a year on sales and marketing that aggregates a ton of demand, again, 25 million users and way more scripts than that every year. When that demand gets pushed to a pharmacy, the pharmacy is grateful and pays us an admin fee in exchange for it. When we direct contract, the benefit of that versus working with the PBMs is that we in the pharmacy can leverage our data to pick the exact point on an elasticity curve we want to price a given medication for given users. We can work together to establish exactly what portion of margin the pharmacy should have versus what portion of margin we collect in our admin fees. Of course, there are only two players sharing that pie, us and the pharmacy versus in our historical PBM model, there are three players because the PBM's in there too. Pharmacies have been very receptive to direct contracting. We've now signed up the majority of the biggest pharmacies we work with, like Walgreens and CVS in the example I just gave, as well as many more. And we expect the trend of direct contracting to continue to increase going forward because it allows us and them more opportunities to leverage, again, the data we have to achieve the outcomes a given pharmacy wants. Like a perfect example is some work we did in the fall. There was a pharmacy who wanted to push very aggressive pricing on cold and flu-related medications. And so we and they worked together to make sure the pricing on those was lower than at many of their peers so they could pull in as much demand as they could. Worked great for us. We saw a great volume increase and, we'd negotiated the right margins and admin fees on our part to benefit from that. Worked great for them because they got the foot traffic they were looking for. So that's an example of why direct contracting works so well. Yeah, and maybe just to help because I think, you know, there's some concerns out there that, you know, for example, like a CVS, as they push into a cost advantage program, right, where they're arguing for better, well, a unit cost plus kind of model, on their drugs, somehow that would have a negative impact because their discount cash pricing would then also start to reflect those prices and that would, somehow, obviate the need for GoodRx. Maybe kind of explain because the way I understand it from them, they're looking forward to being more competitive on GoodRx. Yeah, so I think there are probably a few pieces to this answer. I think, the first part of the answer, just to make it absolutely clear, is that's exactly how we work with our direct contracted pharmacies today, including CVS, meaning we define with them what their margin's going to be and what our margin's going to be, and definitionally that's a function of the cost structure. So this doesn't reflect a change. And when CVS in their CostVantage announcement said, "Hey, we're going to be doing this in the discount area first, then we'll do cash pay. We'll do it in the funded benefit area second," we hope that we're their poster child and anticipate that we're their poster child for that happening because, again, exactly how we work with them today. I think to the point of CVS's objectives, I think there are two challenges around reducing pricing in a manner that, if I'm inferring from your question, right, converges the delta between what a consumer might just walk into a CVS store and pay versus what they pay using GoodRx. The two barriers that exist are, number one, the usual and customary cost barrier, meaning that if the pharmacy offers a cash price, that becomes the ceiling that they get reimbursed by Medicare, insurers, etc. Given that GoodRx pricing tends to be substantially below reimbursement rates, that would mean forgoing a huge amount of revenue because that whole delta between GoodRx price and the insurance reimbursement rate would be lit on fire. That sounds unattractive. I think the more general point, though, is even if we think back and I'm going to phrase it this way because CVS is a great partner and I don't want to put words into their mouths, but if we go back even to their investor day a few months ago, I think one thing you didn't specifically hear was, "We want to push pricing down." One thing you did specifically hear is, "We want to optimize our margins." So it's unclear what the motivation on the consumer pricing side is relative to the margin maximization side. Put it this way, we're not worried about this at all. We have a great partnership with them as with some of the other very large pharmacies. The pricing we have continues to be much, much more compelling than anything the pharmacy itself offers, again, because of these U&C and other risks. Yeah. And then maybe, just switching over to the other segment of business, Manufacturer Solutions. Yeah, right. This was, it's an emerging business for you guys. It is still a big opportunity, obviously, that part of the market, you know, not just for you, but overall has had some softness as pharma's kind of pulled back on some discretionary spending. You're targeting 11% to 16% growth. I think that's what the normalized growth was. Is that trying to think of it, right? Yeah, I think, I think that's off the we'd guided towards, about $15 million of $10 to $15 million of our incremental year-over-year growth coming from Manufacturer Solutions and the balance, of the growth, so call it $25 to $35, coming from our our, marketplace offering, so subscriptions, prescription transactions, and other revenue. That $10-$15, if you think about it on a sort of normalized recurring year-over-year basis, effectively is off of base revenue that's sort of in the high $80s. So when you think about it, and this is unfortunately a little bit complex, we had an offering last year that we restructured and decided we're no longer going to offer within Manufacturer Solutions. So we reported $85 million in revenue for 2023 for the line. Right, so it'd be like something percent. Yeah, net of a $10 million contract termination payment to a customer, which is contra revenue. Otherwise, it would have been 95. But we also restructured out that VitaCare offering, which brings you back down to the high 80s. So you're basically looking at, based on the guide, a number coming in at 95 plus 10-15 against a number that's a little bit over 85. And that gets you closer to a 20%+ growth rate, Charles. Sorry about all that math, folks. Hopefully I didn't confuse the heck out of it. Yeah, no, I think we have leverage here. So 20%+ growth is quite attractive here. You know, I think the big question has been we have seen softness in the pharma commercialization market. Sort of, what signs are you seeing? We have heard some more positive commentary from other companies that are in this space. Maybe kind of give us a sense of what you're seeing that gives you more comfort that pharma is going to kind of go back to expand some of this spend. Yeah, I think there are two points to make. I think that what you're hearing is consistent with what we're seeing from other folks in the marketplace, meaning 4Q and 1Q decision-making timelines generally by pharma looked a little different and looked a little longer. I think, though, number one, we see that ramping through rest of year. In fact, going to be leaving here for New York tomorrow and spending some time with a pharma manufacturer on exactly this topic, on how we can continue to help drive their volume. But I think the broader global comment is the TAM focused on pharma not detailing and not free samples, but marketing spend is quite large, depending on what data you look at, $15 billion-$20 billion. And our revenues at around $100 million are a tiny, tiny fraction of that. They're even a tiny fraction of the digital spend, which is the fastest growing part. So I think our view is right now it's on us to execute much more than it is on pharma manufacturers to spend more or spend less. I think your commentary and what you're hearing from others is exactly right, that there was a period of softness in sort of 4Q, 1Q, and we expect that to go away as we move forward through the year. But from where we stand, I think our view is still it's on us to execute, and that is the path to growth. The other thing, not to go too long in this question, is we can be fairly quantitative about this now. Like when I look back to sort of the 2020 era, this line of revenue was doing $17 millions for us. Last year it did nearly $100 million, so the growth has been quite rapid, which we're pleased with. So from that perspective, that rapid growth gives us confidence and, more importantly, gives us data that we can look back on. So we can look at bookings as of today relative to revenue expected year and compare that ratio to prior years. Same thing with contracted revenue, to contracts and so on too. So with each passing year, now that we have 4 years' worth of history instead of 3, we have 33% more data to be a little more precise in our ability to guide. Yep. And speaking of guidance, right, you gave formal 2024 guidance. So you're expecting revenues of at least $800 million, an Adjusted EBITDA of $250 million, I think both of which was better than people were expecting. Can you give us a quick sense of the various parts of the business contributing to that guidance, and where do you think we could see upside to the $250 million number? Sure. So So yeah, I think the right way to think about it is 800s our target. Relative to that 800, when we look, like we talked a little bit about Mansell having restructured the VitaCare offering out, we also ran a subscription program called Kroger Rx Savings Club for Kroger, which is going to sunset middle of this year. So relative to the 800, and relative to the $760 million in adjusted revenue we reported for 2023, we're seeing somewhere in the $15 million-$25 million range of revenue that's in 2023 that won't reoccur in 2024. So from a growth rate perspective, our view is that the growth rate looking forward is effectively the 800 divided by around 735, 740 versus divided by 760, to calculate. So I think that that's important because looking on a like-for-like recurring basis will help people model out the future, both for 2024 and beyond. I think more broadly than that, in terms of growth, we talked about $10 million to $15 million of growth in dollar terms coming from pharma manufacturer solutions. The balance coming from our marketplace side. On the marketplace side, the biggest drivers are the prescription transactions line, which includes ISP, among other things. Our subscriptions offering and our care offering are both a lot smaller. In the case of Care, one that we've deprioritized post-COVID to some extent. We expect those offerings to be relatively flatter. Okay. I know we're just a minute over, but just last quickly, capital deployment, at the end of the year with $672 million in cash. You know, maybe just give us a quick sense on, sort of capital deployment priorities. Could we see more share repurchase like we did last year? Yeah, so I think first of all, we absolutely do see the possibility of more share repurchases. Our board authorized a $450 million repurchase auth very recently, so larger than the historical $250 million auth. You've also seen us, and this is reflected in our filings, in essentially all of the previous few quarters, buying back as well with some acceleration through the year last year. So we fundamentally view the stock price and the multiples we're trading at as not aligned with what we believe the opportunity and the trajectory of the business to be. We'll continue to take advantage of that as opportunities arise for it, Charles. Okay. Perfect. So grateful for you hosting us today too. It's an amazing conference and great to see you and the team. Thank you, everyone.