Ladies and gentlemen, thank you for standing by and welcome to the GoodRx Third Quarter 2020 Earnings Call. As a reminder, today’s conference call is being recorded. I would now like to introduce your host for today’s call, Whitney Notaro, Vice President of Investor Relations. Ms. Notaro, you may begin..

Thank you, operator. Good morning, everyone. And welcome to GoodRx’s earnings conference call for the third quarter of 2020, our first call as a public company. Joining me today are Doug Hirsch and Trevor Bezdek, our Co-founders and Co-Chief Executive Officers; and Karsten Voermann, our Chief Financial Officer.

Before we begin, I’d like to remind everyone that this call will contain forward-looking statements.

All statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements, including statements regarding management’s plans, strategies, goals and objectives, our market opportunity, our anticipated financial performance; and the expected impact of COVID-19 on our business.

These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

Factors discussed in the Risk Factors section of our quarterly report on Form 10-Q for the quarter ended September 30, 2020; and our final IPO prospectus filed with the SEC on September 24, 2020 and our other filings with the Securities and Exchange Commission could cause actual results to differ materially from those indicated by the forward-looking statements made on this call.

Any such forward-looking statements represent management’s estimates as of the date of this call. And we disclaim any obligation to update these statements, even if subsequent events cause our views to change.

In addition, we may also reference certain non-GAAP metrics, which are reconciled to the nearest GAAP metric in the company’s shareholder letter, which can be found on the Overview page of our Investor Relations website at investors.goodrx.com. I’d also like to remind everyone that a replay of this call will become available there shortly as well.

With that, I’d like to turn the call over to Doug..

Thank you, Whitney. And thank you, everyone for joining us this morning. I hope you and your families are safe and well. We are pleased to report our first quarterly results as a public company. I want to thank our new shareholders for their confidence in our company and our covering analysts for performing such thoughtful and thorough research.

I’d also like to thank the amazing GoodRx team for all their hard work and especially throughout our recent IPO. As this is our first earnings call, I want to spend a few minutes emphasizing what drives us to build America’s best consumer healthcare platform.

I will then turn the call over to Trevor, who will address key highlights from the quarter and trends in our business. Then Karsten will discuss our financial results and guidance. GoodRx helps Americans get the healthcare they need at a price they can afford.

Trevor and I started GoodRx to provide affordable and accessible healthcare, information and guidance to demystify an incredibly complex industry. And perhaps most importantly, to simply help people who have nowhere else to turn. For too many, healthcare in the U.S. is expensive, complicated and confusing.

Every year, Americans pay more out of pocket costs and face new insurance hurdles and restrictions. Too many families are uninsured or underinsured, forcing them to make painful sacrifices just to stay healthy.

Lack of affordability in healthcare is a key reason why Americans don’t get the care they need, which causes massive negative impacts across our entire nation. We believe GoodRx can solve these problems. We can provide a better way for people to understand access and afford quality healthcare. This is what drives us every day.

We’re on the heels of a Presidential Election, where healthcare policy became the single most important issue facing our nation. Much of our economy remains on hold because of the COVID-19 pandemic, while our medical professionals work heroically to provide care.

The world is relying on our healthcare industry to provide accessible vaccines and treatments to protect lives and the global economy. I am proud to be joined by growing team of talented passionate colleagues, who are focused on providing assistance to Americans through this pandemic, unemployment, changes to insurance and federal and state laws.

We have come a long way in the decades since Trevor and I started GoodRx. I’m proud to report that we’ve reached a number of major milestones in the last few months. We reached $25 billion in cumulative consumer savings.

We extended HeyDoctor, our telehealth service to offer online medical professional visits for over 150 conditions in all 50 states at a price that is often less than a typical insurance copay. We introduced affordable home delivery for hundreds of prescriptions.

And we launched GoodRxHelps, our philanthropic initiative, to provide free medications at more than 20 clinics across America. There is still so much that needs to be done to fix America’s broken healthcare system. We believe that the pandemic has accelerated long needed changes to the way Americans find and receive healthcare.

Millions of Americans have embraced telemedicine and home delivery. Millions more are turning to the internet to learn about their care and the choices available to them. Across the healthcare ecosystem, long-hidden information is flowing more freely and patients are being empowered to own their healthcare journey.

Providers are learning that treatments and prescriptions don’t work if patients can’t afford them. The old model is broken, and Americans are ready to embrace a new, better way to stay healthy. We intend to run towards this opportunity.

We will continue to invest our strong cash flow in our platform, product, user experience, and brand, with the goal of creating the best consumer experience and major improvements to healthcare affordability and access for all Americans. We are building much more than a company.

We are building the leading consumer-focused digital healthcare platform in the United States. Our impact will ultimately be measured by the lives we positively impact and the care we provide. We have never been more motivated. And with that, I’ll turn it over to Trevor..

Thank you, Doug. Consistent with our historical performance, we continued to deliver strong profitable growth at a very fast pace. In the third quarter, we delivered record monthly active consumers in our prescription offering, record revenue and adjusted EBITDA, and strong growth in our subscriptions, manufacturer solutions and telehealth offerings.

Total revenue for the quarter grew 38% year-over-year to $140.5 million. Prescription transactions revenue grew 30% year-over-year to $124.4 million, driven by 29% year-over-year growth in our monthly active consumers.

Other revenue grew 170% year-over-year to $16.1 million, reflecting strong growth in our subscription, manufacturer solutions and telehealth offering. And we delivered adjusted EBITDA of $53.2 million, representing an adjusted EBITDA margin of 37.8% and year-over-year growth of 23%.

Consumer-facing markets are being rapidly transformed by technology, driving greater transparency and convenience and creating a clear connection between value and cost. The healthcare market is no exception. GoodRx is at the forefront, pioneering healthcare’s transformation.

Our approach has always been consumer first and we’ve created the trusted brand to guide individuals throughout their healthcare journey. We’re only just beginning our efforts to become the first stop on any healthcare journey.

Our expanding suite of offerings, deep brand building investment and differentiated content is accelerating consumers’ understanding of how we help. We will continue to increase our engagement with healthcare providers, particularly around affordability, adherence and access solutions.

We aim to accelerate this trajectory, launching new services and organizing existing products. As we continue to grow our business and expand into new categories. We’re focused on providing value to our consumers and are fortunate to have a platform that positively impacts both consumers and key stakeholders in the healthcare ecosystem.

We deliver value to consumers through our mobile first offerings that make access to healthcare simple and more affordable. We help people fill prescriptions that they may otherwise not have filled. We provide telehealth visits that allow access when care may have been avoided due to cost, long wait times or COVID concerns.

We drive greater medication adherence, faster treatment and better patient outcomes. All of which create a healthier, happier population. We deliver value to healthcare professionals by providing information and strategies for their patients’ financial burdens of prescriptions or treatments.

We improve patient outcomes by increasing medication adherence. We deliver value to Pharmacy Benefit Managers, pharmacies, and pharmaceutical manufacturers by helping them reach more consumers who seek their services and products. We operate in a massive industry with a combined total addressable market of over $800 billion.

The annual prescription market in the U.S. alone, including prescriptions left at the counter is estimated to exceed $500 billion. The telehealth opportunity is estimated at $250 billion. And our manufacturer solutions business has a potential annual addressable market of over $30 billion.

In the third quarter, our team continued to deliver value to our consumers and strengthen our relationships with stakeholders in the ecosystem, increasing our penetration in these large markets.

During the quarter, we helped to record 4.9 million monthly active consumers, save money on their prescriptions through our prescriptions offering; allowing consumers to save money on their medications by simply presenting GoodRx at one of the 70,000 pharmacies where GoodRx is accepted.

We continue to have strong relationships with our pharmacy and PBM partners and have recently launched initial PBM on our platform. We continue to focus on user experience to ensure we can provide consumers with prices, savings and information through a simple, easy to use and convenient digital interface.

Our proprietary platform now aggregates over 200 billion prescription prices from a variety of different healthcare sources every day. With GoodRx, consumers can efficiently and conveniently search for their medication, choose from a list of prices at various pharmacies near them and save money on their prescription medication.

Our relationships with consumers and pharmacies continued to strengthen and repeat activity exceeded 80%. The GoodRx network strengthens with every transaction. Our leading platform and trusted brand allows us to reach more consumers.

This increased volume drives improved pricing and consumer savings, strengthening engagement and expanding unit economics. This allows us to continue to expand on our platform and enhance our products, creating a hard to replicate virtuous cycle and a deep competitive moat.

Our prescription offering continues to deliver solid growth with strong revenue and consistent unit economics. Every time a consumer uses GoodRx to save money from the first prescription fill to subsequent refills, we earn fee from our partners, creating alignment between the value we deliver to consumers and the lifetime value they generate for us.

Our prescription offering has demonstrated resilience during this challenging time as the COVID-19 pandemic continues to impact the economy. We believe our prescription offering continues to be impacted by the pandemic. As many consumers continue to cancel or defer non-urgent physician visits.

However, we have seen a significant quarter-over-quarter increase in our prescriptions offering and a number of our monthly active consumers, as people have begun to resume typical healthcare purchases. The continued incredibly fast growth of our prescription offering demonstrates our value proposition and the large market in which we operate.

As we already mentioned, we’re working closely with our pharmacy partners on additional programs to drive value for both them and their consumers. One highlight is our flu vaccine program, where we’re working with retailers to drive additional flu vaccine participation, as well as consumer savings.

We’ve grown our program from two pharmacies in 2019 to eight pharmacy chains this year. It will likely be a big year for flu vaccination with the pharmacies, and we’re happy to help facilitate and look forward to expanding this program in the future. Our subscription offerings had a successful quarter as well.

We closed the multi-year extension of our relationship as the exclusive prescription savings program with Kroger, the largest grocery chain in the U.S. The Kroger Rx Savings Club powered by GoodRx offers access to lower prescription prices at Kroger pharmacies.

To-date, the program has provided hundreds of thousands of customers with exclusive access to discounts on commonly prescribed generic medications. We are very excited to continue this fruitful relationship with Kroger and plan to invest more in marketing and this product with this extension.

We continued to enhance the user experience of GoodRx Gold, up GoodRx program, where subscribers pay a monthly fee to access even lower prices at participating pharmacies. Gold offers over 1,000 prescription medications that are available for under $10 with savings of up to 90% off standard list prices.

We’ve been focused on better integrating this program into our platform and optimizing acquisition and conversion, which resulted in accelerating new subscriber momentum. As the pandemic has made it more challenging for Americans to visit retail pharmacies.

We launched prescription mail order services for Gold, enabling Americans to receive medications by mail and just stay. Today we offer more than 300 common medications by mail for less than $10, which improves access, saves patient’s money and offers needed convenience when leaving home is not an option.

We also added mail order services to HeyDoctor, our low cost online telehealth service. In addition, HeyDoctor expanded to provide care for Americans in all 50 states and grew the number of conditions we treat.

The combination of convenient online provider visits and our new mail order service gives Americans access to medical professionals and medication all through an integrated online experience at a time when they need it most. Finally, we increased our focus on providing assistance to reduce the cost of brand prescriptions for Americans.

We launched more than 30 integrated programs with manufacturers. As we continue to grow our manufacturer solutions offering, we also launched care portals for several brands. This new functionality provides additional ways to help patients find both savings and resources to help manage their conditions.

Overall, we are very pleased with our results for the third quarter, the growth of our offerings and the continued progress we’re making with our various products and services. We see exciting growth potential.

As we continue to attract new consumers through our existing offering and launch new services to improve healthcare affordability and access for all Americans.

As we extend our platform, we are helping more people at different stages of the consumer healthcare journey, delivering more value to our consumers and generating higher consumer lifetime value. And with that, I’ll turn it over to Karsten..

Thank you, Trevor. Good morning to everyone. And thank you for joining us today. Our third quarter results highlight the unique combination of scale, growth and profitability our business provides, strong unit economics for the large markets in which we operate and our ability to execute and generate strong cash flow.

Total revenue for the quarter was $140.5 million growing 38% year-over-year, driven by continued growth in our prescriptions offering as well as our newer offerings. Prescription transactions revenue grew 30% year-over-year to $124.4 million driven by a 29% year-over-year increase in our monthly active consumers.

As a reminder, monthly active consumers represent the number of unique consumers who use GoodRx to save on their prescription in a given month. And it does not include consumers of our other offerings. When presented for a quarter, monthly active consumers represent the average of the calendar months in the quarter.

Other revenue grew 170% year-over-year to $16.1 million with strong growth in all of our other offerings, subscriptions, manufacturer solutions and telehealth. This reflects our ability to deliver value to consumers at various points in their healthcare journey, as well as our ability to create multiple entry points into our growing platform.

Cost of revenue is $7.5 million or 5.4% of revenue compared to $3.4 million and 3.3% of revenue in 3Q 2019.

This increase was driven by provider costs related to our telehealth offerings, driven by an increase in the number of online provider visits and an increase in outsourced and in-house personnel related consumer support expense to support our growth. We continue to deliver strong gross margins at the mid-90s levels.

Product development and technology expenses were $15.8 million, compared to $7.8 million in the comparable period last year. This increase was primarily due to continued investment in the team and product as well as an increase in stock-based compensation, including awards made in connection with our IPO.

Excluding stock-based compensation and various items related to acquisitions, adjusted product development and technology expenses 8.9% of revenue compared to 7.1% of revenue in 3Q 2019.

As Doug said, we plan to continue to invest in our product and platform with the goal of creating the best consumer experience, continuing to scale our existing offerings and developing new offerings to help more consumers in different stages of their healthcare journey, delivering more value to them and increasing the lifetime value we generate.

Sales and marketing expenses were $65.1 million, compared to $45.0 million in 3Q 2019.

We increased advertising spend by $13.3 million year-over-year, and continue to build a strong team, including hiring our first Chief Brand Officer, all with the goal of increasing our consumer base and building the GoodRx brand, which we believe will yield positive returns for us long-term.

Adjusted sales and marketing expense as a percent of revenue was stable year-over-year, making up 43.3% of our revenue in 3Q 2020, compared to 43.9% last year.

After reducing advertising spend in certain channels in the second quarter of 2020 due to the impact of COVID-19 as many consumers avoided visiting healthcare professionals and pharmacies in person, we increased our advertising spend in the third quarter as more consumers resumed their interaction with the healthcare system.

We will continue to evaluate the impact of COVID-19 on our business and actively manage our consumer acquisition spending according to market conditions. General and administrative expenses were $108.5 million, compared to $4.1 million in the third quarter of 2019.

The majority of this increased $98.1 million was due to stock based compensation related to the Co-CEO awards made in connection with the IPO, which I’ll provide more detail on shortly in the context of guidance.

Excluding stock-based compensation and other items, adjusted G&A as a percent of revenue is 4.6%, compared to 3.2% in 3Q 2019 with the incremental cost, primarily related to our IPO and associated with starting to operate as a public company at the end of September. We incurred net loss of $50.0 million in the third quarter.

Again, this is due primarily to stock-based compensation of $106.8 million in the quarter, $98.1 million of which related to the Co-CEO grants made at the time of the IPO. Adjusted net income was $35.6 million, compared to $23.2 million in 3Q 2019. Adjusted EBITDA grew 23% year-over-year to $53.2 million.

Adjusted EBITDA margin continued to be strong at 37.8%, reflecting our ability to deliver profitable growth due to compelling unit economics of our business and repeat activity on our platform.

Our adjusted EBITDA margin decreased approximately 460 basis points year-over-year due to the growth of our telehealth business and continued investments in product development and technology, as well as in our general and administrative infrastructure, all of which I’ve discussed.

On a quarter-over-quarter basis, our adjusted EBITDA margin decreased 220 basis points, primarily due to an increase in advertising spend, which we pulled back in the second quarter due to COVID, as I previously mentioned. We continue to generate strong cash flow with net cash from operating activities of $32.7 million for the quarter.

On the capital investment front, our main investments related to the non-recurring one-time build of our new headquarters in Santa Monica was approximately $13 million spent today, net of tenant improvement, reimbursements, and additional investments in our platform and product.

We expect to substantially complete construction of our new headquarters by the end of this year. We ended the quarter with $1.1 billion of cash and cash equivalents after netting, approximately $1 billion from our IPO and private placement in September. I’ll now turn to guidance.

As we begin our journey as a public company, we want to ensure that we provide clarity and transparency to our shareholders while maintaining our long-term focus, as well as our ability to make the right investments, to maximize value for our consumers, the company, and our shareholders.

To balance these priorities, we will be providing guidance on total revenue and adjusted EBITDA margin. We are committed to being transparent about both our performance, as well as our investments in the years to come. So, shareholders are informed and understand our operating decisions.

For the fourth quarter, we expect revenue of approximately $148 million reflecting 31% year-over-year growth. This would translate to full-year total revenue of approximately $545 million representing a year-over-year growth of 40%.

While we won’t be providing guidance for monthly active consumers regularly, we did want to provide our short-term expectations on this call since our business is still impacted by COVID-19 and because this is such an important driver of our prescription offering.

For that reason, we expect our quarter-over-quarter growth of monthly active consumers to be approximately between 4% and 5% for the fourth quarter.

Remember that consumers of our other non-prescription transactions offerings, like for example, our high growth subscriptions offering, which delivers two times the contribution do not contribute to our monthly active consumer figure.

Final note on revenue, we won’t be providing guidance for each revenue line item, but just for total revenue, we expect the other revenue line to continue to gradually make up a higher percentage of our revenue. Looking at stock-based compensation.

We expect stock-based compensation related to the co-CEO grants we made in connection with the IPO to be approximately a $275 million in the fourth quarter, compared to $98 million in the third quarter. this will bring total expense recognized for this grant to $373 million out of the total expense of $533 million.

The performance-based portion of this grant will be fully recognized by the end of the year as the price target criteria for besting have been met. The remaining $160 million is time-based and will be recognized over the following 15 quarters on a great investing basis with the expense moderately frontloaded.

We plan to provide quarterly update related to the grant until they’re fully expensed or becoming material. Turning to adjusted EBITDA margin, we expect it to be between 30% and 31% for the fourth quarter translating to a full-year adjusted EBITDA margin of approximately 36.5%.

We plan to make significant marketing investments in the fourth quarter to continue to grow our brand. This coupled with a shift in the timing of certain marketing investments from the third quarter as a primary driver of the lower adjusted EBITDA margin in the fourth quarter, compared to our year-to-date margin.

As Doug said, we are building the leading, consumer-focused, digital healthcare platform in the country and plan to invest our strong cash flows and our platform, product, user experience, and our brand with the goal of creating the best consumer experience and improve healthcare affordability and access for all Americans.

This is a scale platform with a rare combination of high growth and profitability. We’ve benefited from a strong brand, first mover advantage and a decade of experience and relationships that benefit all key stakeholders in our ecosystem and we believe we’ve only just begun to scratch the surface of a massive market opportunity.

We’re pleased with our third quarter results and we’re excited about our future. Thank you for joining us on our mission to help Americans get the healthcare they need at a price they can afford. We look forward to sharing our progress in the quarters to come. And with that, I’ll now turn the call over to the operator for questions..

Thank you. [Operator Instructions] Our first question comes from Ricky Goldwasser with Morgan Stanley. Please go ahead..

Hi, good morning. And congratulations on your first quarter as a public company. When we look at the performance and clearly, monthly active consumers is now above pre-pandemic levels and you’re seeing momentum and subscriptions growth up is picking up.

But to your point, as we think about the metric, subscribers are not included in the member and in your ability to negotiate and scale.

So, can you maybe, help quantify for us the subscription growth? What would be the gross monthly active consumer metrics look like if we normalize for the ads in the subscription side?.

Good morning, Ricky. thank you very much for the question. Let me have Karsten speak to this question..

Hey, Ricky. great to speak with you again.

Ricky, we’re very excited about our subscriptions plans, because they’re a natural extension for our successful prescriptions offerings and they allow us to deliver more savings and value to our consumers while increasing the LTV as evidenced by their 2x year one contribution and it allowed us to create really tight relationships with the consumers throughout their healthcare journey.

We’re not disclosing specific subscriber counts are mixed by planned meaning Gold versus Kroger an ongoing basis, but I can’t show that growth plans and need to show high positive growth and great momentum. We’ve integrated the gold experience onto our platform and added additional features like mail order as well.

A mail order is added during the third quarter specifically. We also agreed to a multi-year renewal with Kroger, which means we’ll make more marketing and product investments going forward. We’re really excited about those offerings, the subscription side ramps. but again, aren’t disclosing specific, specific numbers on them..

Understood.

So, when we think about the new mail order offering, and we think about the opportunity, within your user base, is there maybe some data on both the set of users for chronic medication that over time could convert to mail solutions?.

Sure. And thank you again, for that question also.

Karsten, is there – do you want to answer that in regards to the mailers specifically?.

I think, well, I think the more general question first of all is chronic versus acute..

Yes..

And I think in general, like the industry we skew towards chronic as you’d expect. With respect to the intersection of chronic and mail-order more broadly, I think that as evidenced by some of the analytic reports that have even come up over the last few days, mail-order continues to not be the dominant mode for users to get subscriptions.

And I think Trevor will likely want to address mail order in a little more detail..

Yes. What I would say on mail is in the U.S., mail-order penetration is pretty low. The COVID, I think, is more of an accelerated – you would imagine it would be more of an accelerated for that than almost anything else. And yet, you look at this year, it hasn’t changed mail penetration much.

for us, at GoodRx and what we’re trying to provide to consumers, we just want to meet consumers where they are.

We want to provide consumers the – what they’re looking for and so we want to work with our partners like the retail pharmacies and mail – and those retail pharmacies by mail and other partners, so that where consumers want to use mail and where it’s the appropriate solution they’re able to get it..

Thank you. Our next question will come from Heath Terry with Goldman Sachs. Please go ahead..

Great. Thank you. I was wondering if you could give us a little bit of a sense around the progress with, HeyDoctor, as well as the marketplace itself, realized things are still very early stage.

but if you could, maybe just aggregate for us a little bit, the growth that you’re seeing in the two parts of your television medicine platform that would be – that would be really helpful.

And then as we look at this quarter and beyond, especially as we see cases rising, how much of a – how much of a factor do you continue to see sort of delayed medical visits or delayed procedures being taken, having on overall prescription and particularly, the generic prescriptions that are such a big part of your business, having an impact on that in this most recent quarter, as well as the quarter that we’re in now..

Thank you very much for the question. I’ll be glad to answer sort of about the – about the marketplace and then about COVID impact. When we look at telehealth, this is continuing to be a great area of growth. We’re seeing positive momentum with HeyDoctor on month-over-month basis, on a quarter-over-quarter basis; we’ve really done a lot of expansion.

We increased the number of conditions treated to 25 and we’ve expanded the offering to all 50 States. And then as we mentioned, we’ve added mail-order options and we’ve also increased the cross-sell numbers from telehealth to our prescription offerings.

When we look at telehealth, we are – we see it both as an additional way for us to acquire customers into the broad set of services we offer, as well as being sort of a part of this additional expansion of our mission to provide, affordable, convenient healthcare across all of healthcare.

We continue to make product investments and how to make just like a great user experience for consumers.

We won’t enable Americans to have access, to affordable doctor visits, to get prescribed medication and to have that all be complete integrated experience and it allows us really to be with the consumer at sort of a broad set of points in their healthcare journey.

to the marketplace, we launched the marketplace in late March for providers and we added labs in April. This was something that had been on our product roadmap, but then because of COVID, we accelerated the development of it, wanted to make sure consumers had options when it came to getting the care they need.

in the third quarter, we continued to add additional partners and grow our marketplace. Although this is still, in an early stage, this is the – our part of our broad effort to access and get a take rate on a broader set of healthcare like we do around the prescriptions area.

So, this market still gives the consumer as much broader provider choice and conditions and covered by HeyDoctor. And it addresses areas, not addressed by, HeyDoctor.

So, we plan to keep adding services, adding providers to our marketplace and introducing some new ways to monetize those, that large consumer base like sponsored listings on the partnerships. So, also again, like telehealth, just another entry point into the broader set of our offerings.

So, I’d like to also speak about the impact of COVID, a bit more generally like we said. What we have seen is consumers have – COVID certainly caused me to risk to not visit doctors and pharmacies as much as normal.

The pharmacy space, I believe is impacted less than almost any other industry and our 80% and so I’d say that factor as well as our 80% plus repeat activity rate has made us continue growing at a really good, really good rate, even during COVID. And COVID has accelerated a number of trends sort of that we had predicted.

And sort of fit into this roadmap, we’ve had around sort of where the – where the industry and where sort of consumers getting healthcares going. But what I would say is as the impact of COVID hopefully decreases at some point in the future, there is upside there.

but we are not making sort of real assumptions – any real assumptions here that happens any anytime soon. We’re assuming sort of status quo, but hopefully for the country that it’s better than that..

Great. Thank you very much. Thank you..

Thank you. Our next question will come from Doug Anmuth with JPMorgan. Please go ahead..

Great. Thanks for taking the questions. You’re two years into your Kroger partnership and you talked about recently extending the contract for multiple years.

Can you just talk about the potential to work with other large retail pharmacies on a subscription basis, and then just on sales and marketing, it ramped pretty aggressively in 2019 and then in early 2020, and then kind of slowing some with COVID, just curious how you’re thinking about that going forward, I know it’s early obviously to talk about next year, but assuming that we’re in a somewhat better place, just how you’re thinking about that? Thanks..

Great. Thank you, Doug, very much for the question. For your first question, what I would – we really, enjoyed working with Kroger that I believe has been a very successful program for both us and them and we are excited for it to continue growing, excited for our continued and extended partnership there.

We want to work with all of our – all the retail pharmacies, on different programs to help them. So, one that I would want to highlight is our flu vaccine program. So, in the flu vaccine program, this is where we are going, working with pharmacies to help expand availability and help consumers get good access to good pricing on flu vaccination.

That’s a program we’ve expanded from two pharmacies in 2019 to eight pharmacies this year. And just to meet this, increased demand for flu vaccines in the current environment.

And what I say is that’s an example of where we want to find the right programs for each of our partners to help drive what’s important to them and highlights what’s really special and good about each of these partners to consumers. So, we want to meet work to find the right programs for each partner.

On the sales and marketing spend and how we forecast that in this maybe, in this year and in the future years, what I would say there is – well, I’d personally maybe highlight where we are currently on sales marketing, which is – this has been a sort of complex year for marketing spend, like the media environment has changed significantly in the period and I want to sort of compliment our marketing team that we’ve been able to spend into this period and do with great performance even in an environment, where it’s – where a lot of things are changing.

So, as we look though at Q4, we plan to make significant marketing investments in the fourth quarter and beyond to continue to grow our brand and we also anticipate there’s some seasonal customer acquisition opportunities that often occur at start-up plan years. So, we will continue spending, continue making, investing in marketing Q4 and beyond.

And I’d say, just maybe, lastly, we really plan to continue to build our brand, increase awareness, enhance our offerings.

We have been able to drive this really strong long-term profitable growth and we are very focused on driving that long-term growth, increasing our penetration, and they sort of multi-hundred billion markets, prescription telehealth, manufacturer solutions. We’re scratching the surface of the opportunity.

So, we’re definitely leaning into all these opportunities – and sorry, last week, on that marketing spend. the other thing I guess I’d highlight is we even in that challenge environment even increased spend, we’ve been able to keep marketing, sort of our acquisition costs below an eight month payback, even at increasing spend levels.

So, thank you for the question..

Thank you..

Thank you. Our next question will come from Ross Sandler with Barclays. Please go ahead..

Hey, guys. congrats on the first quarter out of the gate. I guess the question on the total addressable market.

And so we heard a lot of questions around this since the IPO process kicked off and just wanted to kind of hear your guys’ take on TAM; at the high end, you’ve got 5 billion U.S., generic scripts flowing through retail pharma – pharmacies; at the low end, you’ve got $300 million or so cash pay annual scripts. So, that’s a pretty wide range.

How do you guys think about the TAM for your core scripts business? Thanks..

Yes. Thank you. Thank you, Ross for the question. Appreciate it. When we look at our users, most of our users have insurance. So, 75% plus of our user base today has some normal insurance and a significant portion of those are on Medicare, which is often the best insurance someone’s going to get.

So generally, what I’d say is that, we don’t actually think cash pay is sort of a relative – a relevant segment that when we look, broadly, these are – and this is all Americans that we’re serving. I think when we’ve even looked at the market just since we began, I think, we’re looking back – health plans have only become more complex.

We only now have more three tier plan, four tier plan. And the reality is you have quantity limits, narrow network, utilization management, like prior authorizations, all of which makes access to prescriptions, challenging for people.

And so within prescriptions, there is a large opportunity and we – that $5 billion – 5 billion scripts is much more than the set of services we can offer. I mean, you look at some of the – some of this also of where we’re helping, and it’s really the broad set of prescriptions, where we can help.

In addition, we are very focused on the broader healthcare market. How do we help Americans get access to convenient and affordable healthcare broadly, which is really the need that Americans have. And so yes, I hope that answers the question..

Thank you. Our next question will come from Justin Post with Bank of America. Please go ahead..

Great. Thank you. Just wanted to ask, as we get coming off of the election and people are kind of learning the company, what were the healthcare policies are you focused on federal level? And do you – would you foresee any changes under a Biden administration we should be thinking about? Thank you..

Thank you, Justin.

Doug, could you speak to this?.

Sure. I’d be happy to – one of the nice things is about our GoodRx history have had and we’ve been here for about a decade.

And I can recall, back in 2010, when we first got started, it was prior to the ACA Obamacare and at the time, there was a lot of feedback that there would be significant changes that would make healthcare so much more easy for Americans to access. And obviously, our company has existed long through Obamacare.

And to be honest, what we’ve seen consistently over the course of the last decade is despite whatever administration or whatever sort of executive order is floating around at the moment, the reality is, is that the burden on Americans just continues to increase, right.

There has been so many policies and so many attempts, and yet, I feel like it’s often lost in the shuffle is just – there are just so many gaps in healthcare policies and what’s – and what has been done to-date and we’re very focused on ultimately just helping the consumer and really driving solutions for them.

And we – anyone, any politicians, who engage with us is fantastic and helps consumers, but we’re going to be there no matter what to fill in those gaps and make sure the consumers get the care they need at a price they can afford..

And I’ll just add that with a new administration, we don’t anticipate any legislative concerns for the business. We’re really fundamentally aligned with the political objectives of driving affordability and access to healthcare for Americans and so we don’t foresee any issue..

All right.

Maybe, one follow-up, because vaccine is so important next year, but how would you expect people being outdoors more and just normalization of activity in stores and pharmacies, how would that affect your business next year? How would you think about that?.

Yes. The – when we look at this, I mean, this is sort of the – what I spoke to previously on the consumer – on the impact of COVID, the – there is an impact to consumers, current – both earlier this year, as well as now on going to their physicians, getting prescriptions.

At the very beginning of COVID, we saw people really not going to their physicians now, people are going to physicians, but they’re not going to physicians for sort of non-urgent care. And that does have an impact. Obviously, we’re still growing at a very fast rate, even through that. That said, it is good.

There is upside if that amount of going out, if people going outdoors that cleanup any of these things have positive effects. This is all better for just the economy in general, our business.

But we’ve kind of modeled in some, I can speak to this, but there is a – Karsten, maybe do you want to speak to the current thoughts or words there?.

Yes. I appreciate the question. So, as we contemplate it from a modeling perspective, more broadly, we model in a gradual recovery. We’ve seen some of that happened already, from 2Q into 3Q, and benefited from that.

So, if there is a significant lockdown that could impact us, but we also haven’t at present assumed that the V-shape incredibly steep recovery is likely if that’s helpful..

Great. Thank you..

Thank you. Our next question will come from Nick Jones with Citigroup. Please go ahead..

Great. Thanks for taking the questions.

Can you touch on the manufacturer solutions? You mentioned 30 plus new partnerships, can you talk about, I guess, how they view to get our ex-channel, as an advertising channel, and then maybe, talk about the rate of consumers searching for branded drugs that are maybe, looking for generics and just don’t know it, or actually looking to try to get a discount on the branded drug? Thank you..

Thank you very much, Nick, for the question. We continue to increase our focus on providing assistance to reduce the cost of brand prescriptions for Americans. We want to serve consumers as they try to save across all of healthcare, which includes prescriptions, which includes all of the different types of prescriptions that a consumer can get.

In Q3, we really continued to build out that team focused on that area And as we spoke to you, and it is mentioned, we rolled out more than 30 integrated programs with approximately 20 manufacturers, and we’ve also launched these new – several of these new care portals for some additional – a new piece of functionality, which has driven this sort of really strong year-over-year revenue growth.

Along with helping consumers, this is also one of our sort of highest margin offerings. These are really high intent consumers are already searching for brand drugs in our platform. About 20% of our $15 million plus monthly visitors are looking for savings on brand drugs.

And that’s really, not changed as sort of a portion of the user base, looking for brands first, generic. It really has just scaled relative to that overall growth and we’re able to help consumers save on these brand medications and to what you’re asking on that, on how they perceive it.

We’re delivering a lot of value to these pharmaceutical manufacturers by helping them reach these of purchase ready consumers at the right time and this – what’s also good about, I think this line of business is there’s no incremental cost of acquisition to us. These are searches on our platform that are already there.

These are users, who are just trying to use GoodRx to help them find affordable, convenient healthcare, and these are – now, we’re able to sort of just make that user experience better for them and also enable the growth of this area. We do have a lot of additional inventory, I guess, I’d call it less across our platform to sell.

So, a lot of – huge room for expansion here, and while we’re not breaking out this – the other revenue interest components, the year-over-year growth was in line when we provided originally and we expect this area to keep being a great area moving forward..

Great. Thank you..

Thank you very much..

Thank you. Our next question will come from Jailendra Singh with Credit Suisse. Please go ahead..

Thanks and good morning, everyone. Congrats on your first quarter as a public company. My first question, regarding the sequential increase of around 477,000 monthly active consumers, you saw in the quarter compared with decline in second quarter, around 455,000.

Can you talk about like how many of these monthly active consumers you gained sequentially in third quarter or part of that cohort, which you’ve lost in 2Q versus how many are completely new users, any color around that?.

Thank you. Thank you very much for the question.

Karsten, would you like to speak to this?.

Sure. And thanks for the question to Jailendra, great to talk to you again. We’re happy with the increase in max or monthly active consumers, which hit an all-time high of $4.9 million in 3Q 2020, and with the overall growth of our offering.

Max increased in the third quarter as activity in the prescription market, primarily improved, and as consumers started to go back to their doctors, and on a year-over-year basis, Max grew significantly up about 29%. And of course, that’s a comparison to a non-COVID quarter.

I think your question is more specifically related to Q-over-Q growth, whereas macros grow 11%.

We generally haven’t gotten specifically into retention/attrition, but as you can imagine, given the reopening of the economy, we believe that a significant number of our users with the reopening are new users, but we’re confident as well that a certain number of them may have been folks, who delayed or otherwise elected not to see either their healthcare providers or, go to pharmacies during the height of the COVID period in 2Q? Trust that’s helpful.

And yes, I appreciate the question..

Yes.

And then a quick follow-up, I know you guys just announced this partnership with Know Your Meds; can you talk about how that integration will work? How many consumers that integration provides you with and what is reflected in your guidance with respect to that partnership with Know Your Meds?.

Sure. This is just one of many partnerships we have in the ecosystem. We have a goal of reaching more consumers at a time – at just any time, where they’re sort of accessing different healthcare solutions to help them save on prescriptions, medications.

So, we really just look at, across opportunity as we really look where can we increase our reach through scaling existing marketing channels, creating new marketing channels, partnering with affiliates and the ecosystem.

And so we are broadly looking around it at opportunities of that nature and hope each of them provide some incremental value and almost more importantly, provide just a really good consumer experience for people, where they’re able to really access the information they need when they need it across the healthcare journey..

All right. Thanks..

Thank you, Jailendra..

Thank you. Our next question will come from Mark Mahaney with RBC. Please go ahead..

Thanks. I want to ask about manufacturer solutions.

You talked about launching 30 plus new partnerships, any more color on those, how many total partnerships do you have now? Is there something in the process, it’s allowed you to launch these new partnerships more quickly than you – than they were in the past? Is there a reason to think that these new partnerships could be more material than the ones you’ve – than the ones you’ve had to-date? Thanks a lot..

Thank you very much for the question. We see general growth in this area. We’re in a situation, where on the manufacturer solutions, where we’re not just getting the benefit of the growth of our overall platform.

There’s a huge amount of growth here, just because this is an area, where we have a huge number of users, 20% of our 15 million plus sort of monthly visitors are coming to look for savings on these brand drugs and we’ve not really monetized this much in the past. I mean, we’ve only monetized like a really small portion.

So, we’re really also just, sort of getting – now monetizing across those existing set of people. So, we’ve been adding these – a large reason for that is just us building a strong team there. We’ve really built an experienced team. We’ve grown that team.

We have been rolling out additional premium customized solutions, but mostly, this is just about focus. We hired Bansi Nagji from Karsten, who was their Chief Business Development, Chief Strategy Officer. We’ve invested in more technology here. They have premium solutions like patient navigator.

So, I would – we anticipate this, continuing to grow quickly in the future, just like it has in this past year past quarter..

Okay. Thank you..

Thank you very much..

Thank you. Our next question will come from Eric Sheridan with UBS. Please go ahead..

Thanks for taking the question. Maybe, if I could just zoom out for a minute.

obviously, we’re seeing a little bit of margin pressure over the shorter-term as you deploy some of the investments you’ve talked about in the past to position the business, the long-term, could you just refresh investors on what you see as some of the key investments you have to make over the next couple of quarters against your broader long-term goals and how people should think about the trade-off between growth and margin volatility in the coming quarters.

Thanks so much, guys..

Thank you very much, Eric. yes, let me have Karsten speak to this question..

Sure, always good to talk to you. We plan to make significant marketing investments in the fourth quarter and also beyond of course, to continue to grow our brand, in an anticipation of the seasonal consumer acquisition opportunities that occur at the start of plan years.

When we think of that in terms of increased investment, the marketing is just one component though, we’re also making increased investments in product and technology supported by our detailed product roadmap at the same time.

And those are really the key drivers of lower adjusted EBITDA margin for the fourth quarter, compared to our 2020 year-to-date margin or to our 3Q 2020 margin specifically. I think you also need to keep in mind that the fourth quarter will be our first full quarter operating as a public company.

And then of course, new costs associated with that, like an increase in D&O, auditor fees, various other things that have an impact on margin. We expect to continue making these product and marketing investments and of course, having public company expenses going forward into next year or two.

With respect to all of that, the reason we’re doing it of course, is we have a huge TAM. I think the question came up earlier related to TAM, and we talked about the fact that we feel like we’re continuing to be massively underpenetrated in it with a lot of room for expansion.

So, in terms of your growth versus spend trade-off, we believe that we’re going to continue to make efforts to penetrate more deeply into that TAM and as a relative market share leader, it’s in our interest to make sure that we can grab as much of it as we can..

And what I want to add there is – sorry, I’ll just add, we’re just scratching the surface, like we are super-focused on the – capturing this larger opportunity of being the digital health platform for all of healthcare and we are going to deliver on this product vision that we have to provide that.

We’re really focused on these on building great product and building brand..

Thank you..

Thank you. Our next question will come from Charles Rhyee with Cowen. Please go ahead..

yes. Hey, thanks for taking the question guys and congrats on your first quarter here.

One, I’ll ask about the monthly active consumers, and if there’s any kind of color you can kind of give about, you mentioned earlier that you’re a golden Kroger members, are double the contribution to your revenues than the typical prescriptions customers, but even within that group, is there a cohort, like what sort of the average number of scripts someone’s filling, either in a month or in a quarter, and does that skew to – is there a subset are kind of heavy users versus people who kind of occasionally use it?.

Thank you. Thank you very much for the question. Let me actually pass this to Karsten, so you can speak to it, certainly..

Sure and thanks, Charles. So, I think there are a couple of things, like any business, we have different users with different rates of utilization.

but again, going back to the concept we discussed earlier, as with most of businesses in the space that we benefit from a reality of having number one, a significant number of chronic medications that our users are buying a majority, in fact; number two, and over 80% repeat transaction rate.

So, those things are critical and are what allows us to drive the unit economics we’ve discussed earlier, like the, for example, eight-month payback on marketing spend. with respect to subscriptions specifically, we look to subscriptions to be a way of continuing to push incremental value for users.

So, the subscriptions offering, while it has a monthly fee associated offers, even lower drug prices. And despite that, we’ve still, as you mentioned, been able to generate 2X LTV in the first year off a subscription business.

So hopefully, that’s relatively helpful in terms of giving you perspective on how our user base and its usage applies in our case..

Yes.

That was helpful and you said there’s a – obviously, the month payback on marketing spend, I guess when you think about marketing, then are you like targeting within the active consumers that’s been directly to get people, who are more likely users to use more or you’re really kind of focused on trying to track always, obviously, you want to always try new users, but is there a sort of a division within how you kind of look at marketing?.

Yes. I’d say we do – we have a pretty sophisticated, I believe marketing operation. There is certain types of marketing that are really general in nature, so if we’re running television for example, that’s generally going to get us sort of the wide set of all these sort of healthcare users and prescription users.

Whereas on the digital, we may be able to focus as you said on people and on particular products that are even more chronic nature. So we do spend more or less on digital campaigns relative to the type of prescription user, we think they are. But we try to just optimize that as best we can.

But a lot of the marketing we do is more general in nature and isn’t sort of too targeted in that fashion..

Great. Thank you..

Thank you very much..

Thank you. Our next question will come from Lloyd Walmsley with Deutsche Bank. Please go ahead..

Thanks. I’ve got a couple.

First, can you talk about any changes you’re seeing in the competitive environment? Any competitor stepping up advertising or any impact from the new pharmacy discount cards that you’re seeing? And then secondly, can you just talk about some of the other potential areas of healthcare you see yourself potentially adding product around for price transparency over like the next five year period, leveraging the existing user base? Anything you can share there would be grateful.

Thank you..

Thank you very much Lloyd. On the competitive side, we’ve really spent a decade building this brand that’s trusted consumer, first we have 90 NPS for – we have this platform that’s scalable central as deep network relationships, integration. Everything we’ve done has just built a deeper competitive moat for us.

And what we’ve seen is – we have not seen sort of any competitors that have really impacted our business in anyway, sort of historically or currently.

There are cases where we’re seeing sort of some increased advertising, but we don’t – from people in the state, but I feel like that’s what we’ve sort of seen from the last decade, people putting some types of solutions, but us really being able to capture the vast majority of games in this space just due to the scale, the data, pricing power, the products.

And a lot of this also lets us – that we’ve now build these better and new products. We’re able to build new products that make the consumer experience better and offer more and more tools to consumers to go and navigate their healthcare and navigate affordability, as well as lets us make more money from each of those users.

So this really does create this virtuous cycle that has made us sort of the far leader in helping consumers, save money on their healthcare. And that’s what we continue to see in looking forward.

The – relative to healthcare in general, as I mentioned the Telehealth Marketplace has been – and this marketplace that’s now expanded into labs and other areas, it is sort of the beginning of where we have expanded in these areas. What – we see a large stack across healthcare or services where there consumers are struggling to afford them.

And so we aim to provide a health across the broad set of these. So we’ll be rolling out more and more products to address these needs sort of in a much sooner timeframe than the five years, and then the five year period..

All right. Thank you guys..

Thank you very much..

Thank you. Our next question will come from Lee Horowitz with Evercore ISI..

Great. Thanks for the question. Maybe one more on mail order, given a number of announcements from both partners and competitors recently.

Ultimately, how important do you think that short e-commerce like delivery windows are seeing greater adoption of mail order delivery and do you believe that these sort of delivery windows can potentially be done profitably?.

Thank you very much Lee for the question. Yes, as I sort of spoke to on mail order, mail order still is really a small portion of prescriptions. And I think you really can’t think of something that would accelerate adoption more than COVID, causing people to often not want to go places or not be able to go places.

And yes, if you look at the end of the year and it looks like that male adoption as a percentage of your subscriptions, that’s not really changed much. I think the faster delivery is a factor, but I actually would say, I don’t think it’s the critical factor.

I think it’s one factor out of many, then make it so that in a lot of situations that it’s just not the preferred solution for consumers. I think there are others issues such as, just general onboarding, general sort of experience of getting the prescriptions, there was a – it was for yesterday, so just trying low consumer interest in general.

And so, I think it’s a variety of factors that will be required to make that work. For us, we want to meet consumers where they are.

Where consumers have, one mail, we want them to go and get mail, whether that’s from a retail pharmacy providing that as mail or other partners, we want to meet consumers where they are, provide them the services they want and our business works well in all these different environments..

Great. Thanks. And one follow-up with like third question. Circling back on the vaccine of it, can you expand a bit on how you’re thinking about modeling the COVID recovery? You talked about not a feed like recovery, but specifically with the vaccine now generally expected in the second quarter of next year.

Can you comment at all on whether this vaccine timeline was consistent with your prior view, or if your expectations around the pace of recovery and the proliferation of the vaccine have changed at all, given the news earlier this week? Any color there would be helpful. Thanks so much..

Surely. I think, first of all, with respect to fourth quarter, it doesn’t really change anything obviously. And in the longer-term, I think we’d expect a gradual recovery, where the economy would be fully open into next year, regardless.

So I think the vaccine more than anything else reaffirms that reality will manifest itself versus being a significant shift to our expectations, our expectations generally. So again, I think for 4Q, I think the vaccine doesn’t impact and I think our views on guidance continued to be entirely likely discussed.

And I think in general, looking forward into the coming year, we’re excited to see the economy potentially reopening further, but we also modeled in a reopening generally speaking. So I don’t expect it to have a dramatic impact, beyond what we’re thinking about..

That said we certainly have not assumed that – there is a couple of factors when we look at the impacts of COVID. One is sort of access to healthcare in general, which has been pretty good, that there is been access to pharmacies sort of broadly throughout this period.

Second is access to healthcare providers, which was really constrained and now is also quite good. The thing that’s part of – we’ve sort of assumed and have kind of continued to assume, it takes a while just like people are just feeling comfortable going to get healthcare.

So the people go in and get those non-urgent things, people having their annual physical and finding out they have low blood pressure, high blood pressure and going to get the medication for it. So those sorts of a lot of new starts related to that. Those just take – we just think that takes a while for that to come back.

Theoretic – hopefully it is possible that something – that a vaccine or the effect of the vaccine caused that to really happen sooner than we imagined. And that sort of activity in general goes back in a sort of more meaningful way sort of – to normal in next year. But even the vaccine news is amazing.

But we certainly haven’t sort of – we certainly feel like we don’t know enough of when that happens, what happens, when things are distributed to make any real assumptions there. The one other thing I’d say is just about vaccines in general.

I think this is a great opportunity for pharmacies, as I spoke to about the flu vaccine program, where we’ve gone from two partners, last year to eight partners this year.

We really want to help the pharmacies drive additional volume into that, we want to help the public health side of this to help people get these vaccinations, we’ll help consumers to get these to help their quality of life.

And there is probably a similar opportunity at some point here around the COVID vaccines, where hopefully depending on the type of vaccine the pharmacies will be really important distribution partner for those.

And then we want to make sure consumers are able to get those, get access to them and get people into pharmacies to get them to help people through that period. And hopefully, recovery does happen faster than any of us have expected historically..

Thank you. Our next question comes from Aaron Kessler with Raymond James. Please go ahead..

Great. Thank you guys. Maybe just quickly on kind of converting your customers. Our survey work has shown pretty high brand awareness for GoodRx. How are you thinking of converting more of these customers that have obviously have heard different sorry – GoodRx, but maybe not customers yet.

And then maybe thoughts on working with employers to promote GoodRx, especially as they move more towards high deductible plans as well. Thank you..

Yes. So in terms of converting customers and brand, we think we – I have – we think we have a lots more to do on brand awareness.

We think we have actually extremely high brand awareness among healthcare professionals, that among pharmacists, it’s almost sort of everyone among sort of physicians, two out of three, more than two-thirds of physicians sort of know GoodRx, most of those recommend it to their patients.

I mean, it’s a really good brand awareness among the healthcare professionals. But we think there is actually a huge amount of additional room to gain around brand awareness among consumers.

When we think of what our competition is, that earlier question, the real competition we have is people most not knowing that there is this opportunity in general to get – to save on prescriptions, to save on healthcare and to be shoppers.

So most consumers just don’t know that there are tools to help them navigate our complex healthcare system and we really believe we can help them 70% of consumers don’t know the prescription prices can vary. And everyone just thinks everything – kind of thinks of the same. So this is a great opportunity there.

So we’re obviously focused on converting customers on increasing use of the customers, but we still think, there is so much additional awareness we can gain across the user base. In terms of employers, our – we’re not focused on employers, I think we are focused on consumers.

So when we look at the market something we think we are uniquely good at is speaking to consumers about their healthcare experience, providing tools to consumers for their healthcare experience, and really reaching there – there are plenty of companies that are good at working with employers.

But we think we’re really uniquely good at working with consumers in healthcare, and that is our focus. And then in terms of HDHPs, when we look at our users, our users have all forms of insurance, 75% plus of our users do have insurance, more than a third of those have Medicare.

So this is not – it’s not just an HDHP user, again – across all the commercial insurance, we see good usage. So we really want to deliver value to users across their healthcare journey. We really want to continue to invest in our product build great new products, add more entry points, add more services, there is just a really big opportunity.

So we’re super excited about sort of the progress we’ve made in Q3 and just all the work we’re doing now to increase awareness – increase – extend the platform and just increase penetration broadly across sort of the broad set of consumers and offer them – make everyone healthcare experience better..

Got it. Thank you..

Thank you very much..

Thank you. And today’s final question will come from Stephanie Davis with SVB. Please go ahead..

Hey, congratulations on a strong first public quarter at the gate guys..

Thank you very much..

Could you comment on CMS’s transparency and coverage rule? And how would you think about the puts and takes those increased price transparency? Not just on the market, but maybe on your competitive dynamics in specific..

Sure. And thank you Stephanie very much for the question. We are really in favor of anything that increase the transparency. When we see as to the – what regulators, what public, what lawmaker, what people want to – people want transparency and they want lower out-of-pocket costs for consumers.

And so we think we are entirely – those are the things we want, those are the things that I think the country wants. And we think we are really aligned with that. In regards to specifically sort of the new rules around transparency, which there are a variety of – this is something we definitely want and think it’s good.

We think it opens up new opportunities in some other portions of healthcare. And we think it’s only good for us and our business, our ability to deliver these solutions for consumers. And I think that fits into just our overall goals as a business.

Our overall goals are to deliver affordable healthcare for all consumers to help them navigate this to be this leading digital platform for all of healthcare. And it’s just a huge opportunity and we are at the early points of it.

So we’re excited that larger trends are also pushing in the same direction of more pricing, more transparency being available. And so we’re excited to capture these new opportunities, as well as, just continuing to strong profitable growth, we’ve been able to deliver in the businesses that we’re in..

Thank you very much. Now I have a quick follow-up for Karsten, just to give him some air time too. On the 4Q guidance holding all else equal, it implies a pretty healthy sequential step down in that.

Is there anything to call out that drove up that in 3Q or is it just some uncertainty around the pandemic, driving Mac working back metric?.

Sure. Thanks for the question, Stephanie, and thanks for giving me an opportunity here to talk. We continue to see the impact of COVID-19 on our prescriptions offering realistically, primarily through the impact of doctor visits and access that Trevor talked about a little bit.

Monthly active consumers in the third quarter increased about 11% Q-o-Q, as activity in the prescription market improved. When we think about that the third quarter is a bit of a rebound quarter though, because 2Q is just such a tough one for COVID.

And because of that, I think we got the benefit of a bit more rebound in that quarter than the gradual improvement that we’re forecasting going forward.

So as we look forward, we still see nice growth, 4% to 5% Mac growth going forward, which translates to about 20% Y-o-Y, even as we see the economy open up in a more gradual fashion and not sort of instantaneously. Of course, it also seems things on the COVID front stay fairly constant.

I think the other reality is that total revenue growth, we expect to have growth significantly faster, in part, because of the rapid growth of our other revenue lines, and frankly, in part, because the recurring nature of prescriptions, the fact that we continue to benefit from most of the growth in this space, given where the largest relative market share player.

And the general reality of all of our offerings intersecting in a way that’s helpful, meaning that Telehealth has an entry point for prescriptions and vice versa. All of those things are helping us to drive even faster revenue growth than Mac growth.

I think the other thing too, which I should probably remind folks of generally is that Macs are the users of our prescriptions offering.

So things like subscribers, et cetera, those counts do not form a part of the core Mac count, which is part of the reason AC revenue per Mac growing, and it’s also part of the reason, as a subscriptions offering continues to expand quite quickly – we have modeled out our Mac count for the fourth quarter like we have.

Hope that’s helpful, Stephanie, and thanks again for the great question,.

Ladies and gentlemen, thank you for participating in today’s question-and-answer session, as well as today’s conference call. This concludes today’s program. You may now all disconnect and have a wonderful day..