Ladies and gentlemen, thank you for standing by, and welcome to the GoodRx Fourth Quarter and Full Year 2020 Earnings Call. As a reminder, today's conference 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 fourth quarter and full year 2020. 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 facts 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. These factors 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 annual report on Form 10-K for the year ended December 31 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'll turn the call over to Doug..

our mission to help Americans get the healthcare they need at a price they can afford and it has never been more relevant. With that I'll turn it over to Trevor to address key highlights from the quarter and trends in our business..

GoodRx Gold and the Kroger RX Savings Club powered by GoodRx. These paid subscription programs provide consumers to access even lower prices at participating pharmacies while generating greater lifetime value for us.

The growth in our subscribers was fueled by further optimizations around platform integration and user experience, which drove more effective consumer acquisition and conversion. The new benefits added to GoodRx Gold this year were another driving force behind the subscriber growth.

After adding prescription mail order benefits to Gold in the third quarter, we continued to expand the programs benefits in the fourth quarter to include exclusive discounts on online doctor visits through the GoodRx app.

During the year, we also closed a multi-year partnership extension with Kroger, the largest grocery chain in the U.S., which offers consumers access to lower prescription prices at Kroger Pharmacies.

We remain focused on creating more value for our monthly active consumers, subscribers and the millions of visitors, who use GoodRx and continue to collaborate with our pharmacy and PBM partners to find more opportunities to do so.

The growth in both our prescription transactions and subscriptions offering was achieved despite headwinds from COVID-19 in a weak cold and flu season.

As we look ahead, we believe we are very well positioned to capitalize on the rebound in doctor visits and new therapy starts once healthcare activity normalizes and consumer to resume typical healthcare purchases. During the fourth quarter, we continue to expand our telehealth services, both in depth and breadth, but remaining highly scalable.

HeyDoctor by GoodRx, which we are rebranding as GoodRx Care, now offers over 35 common primary care services available nationwide including eczema, headache and migraine, and hypertension. We introduced a new refill visit protocol covering over 1,000 medications, which addresses the needs of many of our consumers for short-term medication renewals.

As monthly consumer demand continued to increase, our median turnaround times remained consistent, demonstrating our ability to scale our custom Electronic Health Record technology and provider network.

We also introduced technology that can automatically navigate consumers to the most appropriate telemedicine options, including partners in our marketplace. Our telehealth offering, which includes GoodRx Care and our telehealth marketplace, covers over 150 conditions and adds a secondary entry point for consumer to access our platform.

Finally, our manufacturer solutions offering continues to grow at an incredible rate. During 2020, we grew revenue by approximately 4x. We had record bookings in the fourth quarter. We continued to increase the number of our manufacturer partners and our client renewal rate exceeded 90% from 2020 to 2021.

This offering continues to grow quickly, given the pool of high intent purchase ready consumers on our platform and our strong relationships with a wide network of providers. Manufacturers spend $30 billion annually on advertising to attract patients to their brands whether they go direct-to-consumer or through providers.

GoodRx offers a much more targeted and efficient way for them to do both. On the consumer front, 20% of the searches on our platform are for brand medications and many consumers already have a prescription in hand. We also have extensive reach and satisfaction with providers with 2 million prescribers in the U.S.

having a patient that has used GoodRx and an extremely high provider NPS of 86. We offer manufacturers both traditional advertising solutions as well as more customized innovative products, whether direct-to-consumer or through digital and in-office channels to reach healthcare professionals.

We are seeing demand for our full product suite to help consumers start in standard therapy and to inform healthcare professionals of new offerings.

Manufacturer solutions provides us with a high contribution since there is typically no incremental consumer acquisition costs given we already have over 18 million monthly visitors to our platform and have ample inventory. GoodRx is pioneering the transformation of healthcare.

We remain focused on increasing our reach, strengthening our relationship with consumers and continuing to build the trusted brand to guide individuals throughout their healthcare journey. Looking ahead, we see many opportunities to further disrupt the industry with new products to make healthcare more affordable and convenient for more Americans.

In 2021, we continue to be focused on increasing our reach and awareness. Since about 70% of consumers still are not aware that prescription drug prices vary between pharmacies.

In addition to investments in marketing, we are doubling down on our research and content efforts as we believe the right content and insights further empowers consumers, increases engagement, drives consumer acquisition and propels even foster growth in our manufacturer solutions offering.

We also recently launched new Spanish language options to facilitate the GoodRx experience for the Spanish speaking community. Increasing reach can also be achieved through the expansion of our offerings and new features.

In the year ahead, we will continue to work on exciting innovative products at the intersection of healthcare and technology, so we can help Americans to fill additional gaps when it comes to their healthcare needs. We also see exciting opportunities to better engage with consumers, who already used GoodRx through both up-selling and cross-selling.

We can up-sell by converting monthly active consumers to subscribers and cross-sell between our prescriptions and telehealth offerings as we continue to integrate GoodRx Care and provide more value to our consumers.

Over the last few months, we've already begun to reap the benefits a better integration of telehealth into our platform, including the increased attach rate of our telemedicine service to those using GoodRx to fill a prescription. For manufacturer solutions, we're continuing to add new partners and offer manufacturers more innovative solutions.

We're working on a significant multi-brand partnership with a leading manufacturer, which we hope to formally announce soon. On the product front, we're particularly excited about working with our partners to get consumers from a doctor visit to medication in hand in the smoothest fastest way possible.

We believe our 90% partnership renewal rate record bookings in the fourth quarter and the addition of very strong talent to our sales team position us for significant year-over-year growth in 2021.

Overall, we're very pleased with our fourth quarter and the full year results, the growth of our offerings and the continued progress we're making to deliver more value to consumers throughout their healthcare journey. With every transaction, the GoodRx network continues to strengthen.

Our leading platform and trusted brand allows us to reach more and more consumers. This increased volume drives improved pricing and consumer savings, strengthening engagement, and further improving already great user economics.

This allows us to continue to expand our platform and enhance our products further strengthening this hard to replicate virtuous cycle that we have and then creating an even deeper competitive mode.

We believe the years ahead presents an exciting opportunity to reach even more consumers through both our existing offerings and the launch of new services to further disrupt healthcare and improve affordability and access for all Americans. And with that, I'll turn it over to Karsten to discuss our financial results and guidance..

Thank you, Trevor. Good afternoon everyone and thank you for joining us today. Our fourth quarter results once again highlight the unique combination of scale, growth and profitability our business provides. Strong unit economics, the large market in which we operate and our ability to execute and generate strong operating cash flow.

Revenue for the quarter was $153.5 million growing 36% year-over-year driven by continued growth in our prescription offering as well as our newer offerings. Prescription transactions revenue grew 26% year-over-year to $131.3 million, driven by a 32% year-over-year increase in our monthly active consumers.

As a reminder, our 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 such as subscriptions, manufacturer solutions and telehealth.

When presented for the quarter, monthly active consumers represent the average of the calendar months in the quarter. Our MAC count reached a record 5.6 million in the quarter, which included mid-100s of 1000s of MACs from Scriptcycle. Scriptcycle was a small acquisition that closed in the latter part of the third quarter.

So the fourth quarter was the first quarter that MACs related to Scriptcycle have been included in the count. We expect Scriptcycle MACs to continue to grow at roughly the same rate as our GoodRx MACs.

Scriptcycle, whose revenue is included in prescription transactions revenue has significantly lower revenue and contribution per consumer than our organic MACs provide, however, Scriptcycle further increases our reach and its consumers represent a large incremental user group that has the potential to use other GoodRx offerings in future.

Excluding Scriptcycle, our consumer economics have remained largely consistent. Other revenue grew 153% year-over-year to $22.2 million with strong growth in all of our other offerings.

The growth of these newer offerings reflects the value they bring to consumers as well as our ability to create multiple entry points into our growing platform, which grows LTV over time. As Trevor mentioned, we finished the year with approximately 800,000 subscribers.

We're disclosing our subscriber count this quarter to provide a more holistic view of our growing consumer base and to present another way we monetize a portion of the millions of visitors on our platform. Our subscription offering which is rapidly becoming a scale business, is a natural extension of our successful prescription transactions offering.

It addresses the same consumer needs and generally offers even greater savings on prescription medications. Many times, consumers go through the same funnel when searching for prescription prices. And if they choose the lowest price, they will often become subscribers without ever having been a monthly active consumer.

This is mutually beneficial because we believe that we offer consumers more value through our subscription offerings, and they also generate higher LTV for us and provide better revenue predictability.

As we continue to scale our subscription offering, and it contributes more meaningfully to our financials, we could also see increased conversion from MACs to subscribers which also produces a higher LTV.

To summarize, looking at our total prescription-related offerings, we have 5.6 million MACs in our prescription transactions offering and 800,000 in our subscription offering. GoodRx has 18 million monthly visitors in January.

In addition to monetizing MACs and subscribers, we're able to further monetize a portion of these visitors with offerings such as manufacturer solutions, delivering more value to consumers and increasing the scale of our prescription related offerings.

Turning back to our 4Q performance, the growth of our prescription transactions and subscriptions offering in the quarter was partially offset by headwinds related to COVID-19. With the widespread surgeon cases and resulting lockdowns and restrictions, consumers continue to defer non-urgent physician visits.

This coupled with an unusually weak cold and flu season negatively impacted new therapy starts and prescription volume in the fourth quarter.

As Trevor mentioned, we believe we are well-positioned to capitalize on the rebound in doctor visits, prescription fills and new therapy starts once consumers resumed typical health care purchases and start clearing the substantial backlog that has built up over the last year.

Moving down the P&L, cost of revenue is $9.2 million or 6% of revenue compared to $4.6 million and 4.1% of revenue in 4Q 2019.

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

Product development and technology expenses were $23.7 million compared to $9.8 million in the comparable period last year. This increases 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 expense was 11.2% of revenue compared to 7.8% of revenue in 4Q 2019.

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.

All of which are intended to help more consumers in different stages of their healthcare journey, deliver more value to them and increase the lifetime value we generate. The sales and marketing expenses were $74.9 million compared to $54.3 million in 4Q 2019.

We increased advertising spend by $13.5 million year-over-year, and continued to build a strong team with a 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 modestly lower year-over-year making a 46.8% of revenue in 4Q 2020 compared to 47.7% last year. We continue to optimize our consumer acquisition spending in light of COVID-19 market conditions and are actively monitoring doctor visits and new therapy starts.

General and administrative expenses were $340.8 million compared to $4.5 million in the fourth quarter of 2019.

The majority of this increase $285.3 million, or approximately 85% was due to stock-based compensation expense and associated payroll tax expense related to the non-recurring Co-CEO awards made in connection with the IPO, as well as $41.7 million of non-recurring non-cash charge related to a charitable stock donation in support of GoodRx health, a philanthropic endeavor that I've described earlier in this call.

Excluding these two non-recurring and other items, adjusted G&A as a percent of revenue is 4.1% compared to 3.4% in 4Q 2019 with the incremental costs primarily associated with starting to operate as a public company at the end of September. In the fourth quarter, we incurred a net loss of $298.3 million.

Again, this is primarily due to stock based compensation expense and related payroll taxes of $297.8 million in the quarter, $285.3 million of which related to a non-recurring Co-CEO grants made at the time of the IPO and the non-recurring $41.7 million unrelated to the stock donation.

Adjusted net income was $32.2 million growing 40% compared to $23 million in 4Q 2019. Adjusted EBITDA grew 17% year-over-year to $49.1 million.

Adjusted EBITDA margin continued to be strong at 32%, reflecting our ability to deliver profitable growth due to compelling unit economics of our business and repeat activity on our platform, which remained at over 80%.

Our adjusted EBITDA margin decreased approximately 500 basis points year-over-due to continued investments in product development and technology. The growth of our telehealth business and investments in our general and administrative infrastructure, all of which I've discussed.

On a quarter-over-quarter basis, adjusted EBITDA margin decreased primarily due to an increase in advertising spend and a shift of some marketing investments from the third quarter into the fourth quarter, as discussed during our third quarter earnings call.

We continued to generate strong cash flow with net cash flow from operating activities of $14.9 million for the quarter.

Cash flow from operating activities was impacted by over $10 million in payroll tax expense related to the Co-CEO grant, as well as some prepaid expenses we had to make in relation to our operation as a public company and for some 2021 marketing expense.

On the capital investment front, our primary investments were related to the non-recurring one-time build of our new headquarters in Santa Monica, as well as additional investments in our platform and product.

Approximately $14 million have been spent to date under our new headquarters, net of tenant improvement reimbursement, approximately $2 million of which was spent in the fourth quarter, while we substantially completed the construction. There may continue to be some limited amount of CapEx hitting our cash flow statement in the first quarter of 2021.

We ended the year with $969 million of cash and cash equivalents. Before turning to guidance, I want to spend a moment on the Co-CEO awards. As a reminder, at the time of the IPO, we granted non-recurring equity awards of approximately 24.6 million shares to our Co CEOs for a total expense of $533 million over four years.

A portion of the awards were performance-based with vesting dependent on the price of our shares, and the other portion was time-based. The performance-based portion totals $320 million of expense; and the time-based portion total $213 million of expense.

As of the end of 2020, the performance-based portion of the award has been fully vested and expensed at $320 million, $88 million in the third quarter and $232 million in the fourth quarter.

For the time based portion, $53 million of the awards were expensed in 2020, $10 million in the third quarter and $43 million in the fourth quarter leaving $160 million remaining to be expensed in future period.

Approximately $91 million of the remaining $160 million will be expensed in 2021; $30 million, $24 million, $20 million and $17 million in the next four quarters respectively starting in the first quarter.

In addition to stock based compensation we also incurred employer tax expense of $10.4 million in the fourth quarter in connection with these awards. We expect another couple million dollars of employer taxes to be incurred in 2021 or approximately 1.5% of the $91 million.

And now turning to guidance; for the first quarter of 2021 we expect revenue of $158 million to $161 million, reflecting 20% year-over-year growth at the midpoint. We believe this growth will be driven primarily by a triple digit increase in other revenue as momentum in our manufacturer solutions, subscriptions and telehealth offerings continues.

We expect our prescription transactions revenue to contribute to the first quarter growth as well. Fourth quarter headwinds related to COVID-19 and a week cold and flu season have continued into the first quarter and are reflected in our guidance.

We estimate that the lack of flu will have a total negative impact of approximately $5 million on prescription transactions revenue this winter with the vast majority of this impact felt in the first quarter of 2021.

On a year-over-year comparative basis, it's worth noting that Q1 2020 with an extremely strong quarter for us relative to the COVID impacted Q1 2021. The first quarter of the year in a non-pandemic environment is typically seasonally strong, and that was the case last year.

Additionally, we saw some modest pull forward at the onset of the pandemic last March as consumers stockpiled their medications. We expect other revenue to continue to make up an increasing percentage of our revenue figure in the first quarter.

On the adjusted EBITDA front, we expect an adjusted EBITDA margin of approximately 30% as we continue to invest in our brand and platform. As stated in our third quarter's earnings call, we will not be providing specific guidance around our user count on a regular basis.

It's worth noting that as long as COVID-19 continues to impact consumer behavior around doctor visits and prescriptions, our MAC and subscriber growth may be impacted. However, we believe that this will be followed by tailwinds from the clearing of the substantial medical backlog which continues to build.

A recent IQVIA study found that, in 2020, there are almost 1 billion diagnosis visits that did not happen. When this backlog begins to clear and we see pent-up demand, we will be there to help our consumers reengage with the healthcare system.

Turning to the full year, we expect 2021 revenue of $735 million to $755 million, reflecting year-over-year growth of 35% at the midpoint.

This assumes the second quarter will still be impacted by COVID-19 and the healthcare activity will begin to pick-up in the third quarter as a substantial backlog of 1 billion visits will begin to clear significantly adding to visit therapy start and prescription volumes.

We expect our adjusted EBITDA margin to be in the range of 30% to 32% with 2021 laying the foundation for future growth of our platform and our brand as we continue to make the right investments to maximize value for our consumers, the company and our shareholders. We are building the leading consumer focused digital healthcare platform in the U.S.

and time to continue investing our strong cash flows in our platform, product, user experience, and our brand with the goal of creating the best consumer experience and improved health care affordability and access for all Americans. This is a scale platform with a rare combination of high growth and profitability.

We benefit from a strong brand, first mover advantage and a decade of experience in 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. And with that, I'll now turn to Trevor for closing thoughts..

Thanks Karsten. 2020 was another amazing year for GoodRx. We help more Americans than ever, access affordable healthcare when they needed it most and delivered strong profitable growth at a very fast pace. We grew revenue 42% over 2019, more than 2x since 2018 and more than 5x since 2016, only four years ago.

We also grew adjusted EBITDA 5 times in 2016, reflecting our focus on efficiency as we've grown, all while maintaining our extremely high MPS score with both consumers and providers, up 4.8 operating for GoodRx and a 4 Star operating for Hey Doctor.

Over the last few years, we've built on the success of our prescription transactions offering by introducing new offerings to bring more value to our consumers at each stage of their healthcare journey.

Between our subscription, telehealth and manufacturer solutions offerings, our services now span even more of the healthcare journey, but we are just beginning. Our teams are doing amazing work, and we are so excited for the continued rollout of new products and services for consumers and prescribers.

We have barely scratched the surface of the massive market opportunity as we continue to accelerate our transformation of healthcare for all Americans. With the strength of our brand, our increasing reach commitment to our mission and the value we continue to create for consumers.

We believe we are well positioned to win across the $4 trillion healthcare ecosystem in 2021 and beyond. Thank you for your continued interest in GoodRx. 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..

[Operator Instructions] Our first question comes from the line of Ricky Goldwasser of Morgan Stanley. Your question please..

Yes. Hi and good evening, and thanks for the update. First question is around the MAC growth, just wanted to make sure that I heard it correctly.

What was the impact from Scriptcycle on the sequential growth from 3Q to 4Q? And you've clearly done the acquisition earlier in the year, so was that already included in the guide?.

Thank you, Ricky very much for the question.

Yes, to step back just one second at a high level and look at sort of the macro and the overall growth, we delivered amazing performance in 2020 with sort of 42% year-over-year revenue growth to over $550 million, sort of this – incredible sort of 37% adjusted EBITDA margin, delivering $200 million of EBITDA.

We've hit a lot of new milestones including sort of that record sort of 5.6 million MAC, and we're really happy to now be talking about the numbers we've had on subscribers where we've doubled our subscribers, reaching 800,000 subscribers and sort of the 18 million visitors also.

So we're really excited about the growth and profitability that we demonstrated and continue to demonstrate. And so I'd like to turn it over to Karsten who can speak about specifics of the MAC on Scriptcycle..

Hey, Ricky. Yes, thanks for the question and thanks for turning it over Trevor as well. Ricky, with respect to MAC count, yes, we hit 5.6 million in the quarter.

And of that 5.6 million, mid hundreds of thousands of the total MACs, and we did not include those MACs in guidance previously, to your question, because the acquisition just closed at the end of the third quarter, and we needed some time to work through the calculations.

So they are wholly incremental, the mid hundreds of thousands, to our base of existing MACs.

And we're quite excited about them because they represent both deeper penetration into the market broadly and, secondly, because they represent users to whom we may be able to sell other GoodRx products and services going forward which is also an exciting reality.

I think the final thing that we like about them is that our channel of acquiring Scriptcycle MACs is a little different. While we've often had partnerships with the larger pharmacy chains, through Scriptcycle, we get much more access to smaller and regional pharmacy chains and can increase our penetration in that market.

Is that helpful, Ricky?.

Very helpful. Thank you. And then my next question, I mean, clearly, you're seeing a lot of momentum in manufacturing solutions. I think, Trevor, you mentioned a couple of times the backlog that you have and sort of the booking number.

Can you maybe give us more updates, any way for us to kind of like quantify the contribution we're going to see in 2021 and the visibility that a booking gives you?.

Yes. So we're really happy with the growth in manufacturer solutions. That offering continues to grow at a high rate. We grew 4x year-over-year as we continue to sort of help reduce the cost of brand prescriptions. In Q4, we continued building out the manufacturing solutions team.

We rolled out more of these integrated programs we've talked about with additional manufacturers. We launch new care portals. We just kind of driven that.

And so we anticipate with sort of the great sort of progress we've made on these products, on these teams and all the existing users coming to GoodRx to access these solutions that 2021 will also be a great year for the growth in this area.

So Karsten, do you want to speak any additional details on that?.

Yes. I think you largely covered it, Trevor.

But Ricky, in the past, we've talked about how excited we are about manufacturer solutions because we feel like we're in significant control of how fast it grows, meaning we already have the users, we already have the inventory and the app, and it's really a matter of incrementally selling through to the different pharmaceutical manufacturers and agencies.

And as Trevor said, the scaling of the team to levels that we haven't previously had has allowed us to really accelerate the business. We continue to increase the number of our manufacturer partners. And our client renewal rate from the existing partners exceeded 90%.

So when you combine those two things together, along with our record bookings in the fourth quarter, we believe that 2021 is a year that we're extremely well positioned for.

We also think that as manufacturers continue to evolve in their historical ways of interacting, both with HCPs and with consumers changes post COVID, that we're well situated to serve the new reality of how pharma manufacturers interact with those important constituencies. That said, we're still only a tiny bit penetrated into the TAM.

When you think about it overall, this is a $30 billion TAM by our estimation, and we're just barely scratching the surface of it. So we're really excited about this line of business..

Thank you. Our next question comes from Doug Anmuth of J.P. Morgan. Please go ahead..

Thanks for taking the questions. First, you talked about the backlog of undiagnosed conditions and neglected preventative care and, certainly 2021 providing a massive opportunity to help consumers.

Not looking for a product release or anything here, but just curious if you can give us a sense of what kind of new services you may think about just as you think about the product road map going forward? And then, secondly, I was hoping you could talk a little bit more about the marketing strategy just kind of coming out of COVID and how that impacts your ability, in how you're thinking about leaning in more on marketing as we kind of go through the quarters of 2021? Thank you..

Thank you, Doug. Really appreciate the question. And I'm going to hand it over to Doug to answer that..

Hey, Doug. It's Doug. So yes, thank you for asking. The overall theme of our product road map is we want to help more people in more parts of their healthcare journey. As we've already talked about, manufacturer services is wide open for us.

We already have engaged consumers who are literally in the purchase process, and we are excited to continue to deliver innovative and cool solutions that, honestly I think just are superior to what you can see otherwise in the market. And we just see tremendous potential there.

In addition, we are spending a lot of time and effort working on getting to know our consumers better, right, with accounts and subscriptions, as you already heard about, our record growth of subscribers, but – so that we can actually anticipate what a consumer would need and be there for them before they may even know that they need it.

So we're really, really excited about all these initiatives that will get us to know our consumers better. We've talked a little bit about telehealth. We've had tremendous growth in telehealth over the course of the year, especially in services like offering refills when people are out of medications, for example.

And we're going to continue to invest a ton into just finding affordable and convenient care anywhere where a consumer has a gap. And God knows, in 2021, all these consumers have this pent-up demand, and they're open to new ways.

And we're just very, very fired up to participate as consumers emerge from this pandemic and introduce them to new ways, better ways to get their healthcare. I'll hand it back at this point to Trevor to maybe handle the marketing question..

Sure. Yes, so for marketing, we have continued to invest in marketing to build sort of our brand and build awareness.

As we've talked about, even at the scale we're operating at and the growth rates we're operating at, 70% of consumers don't even know that prescription prices can vary significantly across pharmacies, much less sort of the tools that we are providing and continue to provide to help them navigate the sort of complex healthcare system.

So we're going to continue driving awareness at the top of the funnel through various channels. The main way we get consumers is still sort of unpaved, word of mouth, just the 90 NPS score that we have with consumers, because we offer a good product, drives increased uses. But we're going to double down on the work we're doing around insights.

We can talk about more with healthcare professionals, as we've been doing. And we've really started testing out some new channels, things like out-of-home audio where we've really never advertised in the past. So we see a lot of opportunities across a lot of areas to continue expanding marketing, building brand.

And we're starting to leverage our consumers and their stories. The stories we hear from our consumers are very powerful. And we want to share and amplify those stories where appropriate. So we started doing a lot of great work on that front led by our new Chief Brand Officer, Simon Cassels, who's previously CMO and did amazing work there.

And so we are excited about all this continued opportunity on marketing and making people aware of what we're doing..

Great. That's helpful. Thank you both..

Thank you..

Thank you. Thank you. Our next question comes from the line of Ross Sandler of Barclays. Please go ahead..

Guys, apologies if this is already asked, just been hopping around a little bit. But a follow-up on that marketing efficiency. So it seems like industry-wide CPMs and digital are going to come down in fairly short order on the back of IDFA and some of these more restrictions around targeting.

So do you think that could drive better efficiency from your marketing and potentially help accelerate your user growth or no? And then just high level, with consumers engaging with pharmacies at a higher cadence with the vaccine campaign, any thoughts on how you might combine that with marketing to accelerate some of the MAC growth? Thanks a lot..

Thank you, Ross for the question. On the marketing side and marketing efficiency, we've been sort of proud of being able to deliver this extremely good performance marketing throughout the sort of history of our business, along with the brand and increasing brand awareness.

As I mentioned, we've been testing a lot of new channels and finding new areas that are excellent and work. We've really been in a situation where there's a lot more opportunity on this type of marketing. And so it's really us digging in, doing more of this, driving it.

So if I – really, if that drives CPMs decreasing and we can use that that's only helpful, but certainly not something we are assuming needs to happen in any way for delivering the results per se.

On the second, in terms of more engagement in the pharmacies, yes, we think the – that there's a lot of benefits from this increased distribution of vaccine, specifically of – as the transition in this vaccine distribution from some of these more at-risk populations to sort of a broader population base, I think we're seeing more and more of that distribution going through pharmacies which increases pharmacy foot traffic which is generally beneficial to us.

There's a lot of more opportunities to work with the pharmacies on that and just get more general usage of our solutions from it. We'll talk potentially more about what we've been doing around sort of vaccine alerts and some of the partnerships there, large number of – 1.2 million people signing up for that program.

So, all of this is helpful for driving additional demand as we go through the year and continuing sort of even more of the sort of great performance, we had in 2020..

Really appreciate the question.

Thank you. Our next question comes from Justin Post of Bank of America. Your line is open..

Great. A couple of questions. First, you're one of the few companies guiding for the year.

And just what about your business, the stickiness of your user gives you confidence and prior years have you been able to hit your numbers? And then the second question on the acceleration in the second half, when you look at the users, as far as frequency, or spend what was down this year, that gives you confidence that that'll come back as we get to the reopening and the second half? Thank you..

Yes, so first I'm going to actually hand it over to Karsten..

Sure. I'll take the first part of your question, Justin, and great to speak with you again as well. When we think about our business, we have a few things about it that are really attractive to us and make it somewhat more predictable. The first of course is, the reality that over 90% of our transactions are repeats. So that helps us significantly.

I think the second one is that in relation to some of the marketing questions that Trevor already answered, the returns on our marketing are also returns that we now know how to expect and anticipate quite well.

I think the other important considerations are that we've looked closely at the patterns of what's happened over the last couple quarters and what we expect to happen over the rest of the year.

Over the last couple of quarters, I think, the combination of a weaker flu season this year is less exposed to regular flu and heavier COVID had a pretty significant impact.

But as you'd expect, we believe that the regular flu season which frankly dragged down Q4 and Q1 revenues, mostly Q1 by nearly $5 million or approximately $5 million, that's a passing thing.

We also believe that with the onset of more and more rapid vaccinations on the COVID side, as well as exiting winter, that post Q2, so in the second half of the year, that massive backlog of undiagnosed conditions, IQVIA estimates about a billion diagnoses didn't happen last year, which is close to 30% of them by their staff that that will begin to unroll.

And as that happens, we see that as just a really big tail end for the latter part of this year for us..

Is that helpful, Dustin?.

Yes, that is helpful. And maybe one, follow-up..

Sure..

Other revenue was above our forecast and a lot of interesting things going on. I'm sure we're all going to try to model it.

Any help in full year or for the quarter breaking down the other revenue in the categories?.

Sure. I think we're not breaking it into categories really, but what I can tell you is that we continue to see the other revenue growth rate continuing to grow faster than the core prescription transactions revenue. That revenue is growing quite rapidly too, but it's just the other revenue is even faster.

Like we talked about before, in particular, our manufacturer solutions business is performing very, very well. We're excited about that one. And when you really look at the combined growth last year, which was 153% year-over-year in 4Q, we believe that going forward into 2021, we're well positioned to produce high growth numbers as well.

So I think across the whole other revenue set of businesses we're feeling extremely positive indeed..

Great. Thank you..

Sure..

Next question comes from Nick Jones, of Citi, your question please..

Great, two.

One, can you talk about, I guess, the traction of the mail order, as COVID restrictions remain tight? And then the second question is we get to the second half of the year, are you seeing anything in some of the states that have already reopened, like Texas has no masks and all businesses are open? I think there's some other southern states who have followed to give you confidence that once things do re-open you'll kind of see this resurgence in therapy starts.

Thanks..

Great. I really appreciate the question. Yes, let me talk first about mail. We have been building some mail order capabilities to deliver more value to our consumers. We're looking for that option. We added mail orders, to both Gold and our Telehealth offerings in 2020, as we continue to meet consumers where they are in their healthcare journey.

But what I'd add here is mail continues to be this really small percentage of the prescriptions market. We believe we're well positioned to capitalize if there were a chance. But like mails remained at this similar penetration where on a number of fills basis, it's a mid-single digit percent of the market.

And even though there has been like a lot of effort over many years from a lot of different players even with COVID, people are talking about increases, but these are small increases relative to the actual market. And so, it's really just a very stable number. I think there's a lot of reasons why that's hard.

So even though COVID has been sort of an important option for some consumers during COVID penetration more broadly, really did not change significantly.

So, we're pleased with the adoption of mail on our platform, but it doesn't directly make a significant contribution to business customers today, but it's another way to deliver value for consumers and it drives the growth for our subscription offering, gives another way to cross our telehealth consumers, increase the lifetime value.

And most importantly, we're just super focused on providing more value to consumers across a broader part of the healthcare journey, really providing the best possible solutions. And so for the second question, I think, let me hand that to Karsten, to speak to that 2H sort of reopening and functions..

Yes, I appreciate the question. When we think about 2H in particular, I think, we think about the reopening in two ways. And I'm not sure the existing trajectory of in some of the states that you mentioned are going to be wholly dispositive. The two ways we think about are number one, access to resources and cash.

So things like the recently passed by the stimulus plan is very helpful in that respect. And then the second way we think about it as people's desire and willingness to go out and engage heavily with the healthcare community again, to receive the diagnosis many of which are right in that big backlog, I mentioned in response to a previous question.

So those affects won't fully manifest until the Biden stimulus dollars get into people's hands, and until the COVID is officially under control, either through vaccines or just through again, we've seen the warmer months be better.

Until those two factors happen, which we see happening in the tail end of Q2 and into Q3 we would expect that the resurgence will come at or after that point. So again, we don't think the existing patterns across the states fully incorporate the effects that we'll see later on in the year..

Great. Thank you both..

Sure. Thank you very much. .

Thank you. Our next question comes from Jailendra Singh of Credit Suisse. Your line is open..

Thank you. I was wondering if you can expand on your response on mail order question and spend some time on any of the early observations you have come across on the impact on competitive landscape and opportunities from your point of view, from the launch of Amazon Pharmacy and prime medics discount card.

Anything that you can share from your recent conversation with BBM, or pharmacy partners, since that launch from Amazon?.

Yes, that's a great question. As we spoke to, we had a record year, including record Mac numbers and the subscriber numbers that we’re excited to show. To your Amazon prime medics, we've seen no impact. They continue to push in mail. That's been their efforts since they bought PillPack in 2018 and that's continued.

We haven't seen anything outside of what they've been doing, not aware of anything, materially impacts of marketing, our marketing strategy, rates performance during the quarter, nothing that's showing any change to any of our user behavior performance indicating any impact on the business at this time.

And I think as we spoke about, we really – we work with our pharmacy, the PBMs to develop and roll out more programs to help consumers. And so we've been working on additional programs with partners to continue delivering even more value to consumers. So you can see that in some of – some of the additional pricing programs et cetera.

We're rolling out – and we've been doing with partners and you'll see more of these as you look throughout the year..

Okay. And my follow-up on the – I just wanted to get your thoughts on pharmacy transactions revenue per MAC trends. It seems all the declining metric in Q4 was all driven by Scriptcycle. I was wondering if you can help us how should we think about the trend in that metric on a pro forma basis in 2021.

And also if you can talk about your expectations for that metric in longer term..

Yes, great. I will have Karsten speak to that metric..

Sure. And great to speaking with you again Jailendra too. I appreciate the opportunity. When we look at revenue per MAC, it's best to look at it in terms of its components. The prescription transactions revenue per MAC decreased – in Scriptcycle. As mentioned in the script, it has significantly lower contribution per user than organic MACs provide.

GoodRx's consumer economics on the broader organic MAC side have been completely consistent with where they have been in the past. The other component to consider in revenue per MAC more broadly is other revenue per MAC. And that number continued to grow about 20% Q-over-Q and 90% – so quite rapidly indeed.

So to your question of how to think about Scriptcycle in relation to organic MACs, we believe the growth rates across both organic MACs and Scriptcycle should be roughly similar.

So that means when we look at the prescription transaction revenue per MAC – on the prescriptions transaction revenue side, we expect that will stay largely consistent as well.

I think when you look at total revenue per MAC, as we said before, we're so excited about the other revenue lines that we'll see that total revenue per MAC increase, hopefully that's helpful..

Yes, thank you..

Thank you. Our next question comes from Sean Dodge of RBC Capital Markets. Your question please..

Thanks.

On HeyDoctor or I guess GoodRx Care now, can you give us a sense of how that trended over the quarter maybe relative to the third quarter? And I guess what I'm curious about is how do you expect an eventual reopening to impact that business like if People feel a little bit more comfortable going back and seeing their doctors in-person again, is that potentially a bit of a headwind this year? Or does the uniqueness of HeyDoctor is being a little bit more purpose built, a little bit more script focused, maybe interrelated from that?.

Yes. Thank you for the question. I appreciate it. We've seen a lot of positive momentum with HeyDoctor. We are rebranding it, as I mentioned earlier, as GoodRx Care. And so, we've seen this demand across that marketplace. And we've seen the consumer demand and the visits in GoodRx – at HeyDoctor and GoodRx Care continue to increase sequentially.

So in 2020, we increased the number of conditions. We treated over 150 conditions across all 50 states, mail order options. We increased the cross-sell numbers from telehealth subscription offerings, added these discounted telehealth services for Gold. We're making a lot of product improvements to keep making that user experience better.

We have heard – when we look around some things about how telehealth volumes will shift, there may be people during sort of – during the pandemic who have gone to telehealth for something that should be treating in-person. For us where we have so much – we continue to grow here quickly. We have such a unique offering.

We don't anticipate that that affects our momentum in any way. We think there is truly sort of a permanent shift though. That's come post-pandemic that will sort of – that does make telehealth particularly attractive for certain portions of healthcare.

And we think we can uniquely provide more services to our users that help us facilitate some of these [indiscernible] healthcare for them and broaden sort of where we're accessing and providing services to them along their healthcare journey. So we're really excited about this and expect the momentum to continue at a great pace..

Okay, great. Thank you..

Thank you so much..

Thank you. Our next question comes from Charles Rhyee of Cowen. Your line is open..

Yes. Thanks for taking the question. I wanted to ask again about sort of expectations in the second half. And it sounds like what you're saying is that COVID – the impact of COVID as well as the soft cold and flu season, but it sounds like more if anything COVID itself is having an impact in keeping people from seeing their doctors.

And now the expectation is as vaccinations become more common and spread out and people hopefully go – will go back to normal that this we're going to unlock this big wave of pent-up deferred care. And I think that makes all sense.

As we look at the guidance particularly on revenue, how much of that though do you embed into your assumptions here? Obviously, no one knows yet to the extent that all of this deferred care will be realized.

Just curious – and recognizing that it's hard to say now, but what have you built into your assumptions here? Are you just kind of assuming if baseline was 100% or going to be 105% of our baseline, or do you think there is going to – or are you already assuming some big step up as we get into the third and fourth quarters? Thanks..

Great. Yes, I appreciate the question. One thing I'll just mention at a high level is so much – our business has a huge amount of recurring revenue, a large portion of our users are using GoodRx on a similar basis, which is one element of predictability.

And then we also have additional predictability relative to how our business forums that's given us great insight into how this performance, but I'll let Karsten speak to this more specifically..

Sure. And great to talk to again, Charles. I think as we think about it, there've been two factors in late 4Q and even more so in 1Q, and those are one COVID and two the weaker flu season, because the weaker flu seasons also a bit of a drag. We think it costs us approximately $5 million or so in revenue.

When we look at the rest of your forecast, we compare basically where we are to where we should be or where we'd expect to be, and look at that gap closing over time, particularly as we get out of the first half of the year and into the second half of the year. So that's really how we think about it primarily, Charles..

Okay. So in other words, it's not – it's sort of like where you expect to be where you would have been not necessarily saying that it's where we would have been plus some pent-up demand.

Is that the fair way to think of it?.

I think the fair way to think of it is more of a pent-up demand releases, clearly the better it is. But yes, I think conceptually it sounds like you could be aligned with where we are..

Okay. That's helpful. Thank you all. Thank you..

Thank you. Our next question comes from Lloyd Walmsley of Deutsche Bank. Your question please..

Thanks. Yes, I wanted to just ask about the Scriptcycle MACs. You mentioned they monetize at a big discount to where you monetize your core GoodRx MACs.

Is there an opportunity to get that up, it was part of the acquisition; we can plug our system in and get that up? And I guess, do you think you can fully close the gap? What needs to happen to get there? Where are you on that path? Would be the first question.

And then the second question would just be on the Gold subscription, as you've integrated mail order and telehealth to the bundle, have you seen engagement chain or retention change? Like, any further color you can give us on how enhancing the bundle has changed I guess the LTV, CAC-type dynamics?.

Great. I really appreciate the question. On Scriptcycle, that's an acquisition that we closed in August 2020. So, it's a relatively small company.

But what I think we spoke to then, area we're particularly excited about there is they primarily have partnered with these regional retail pharmacy chains whereas GoodRx has worked a bit more with the larger areas. So the main thing there is this additional expansion opportunity with these regional and smaller pharma chains.

And that, we think, is quite complementary. But the main opportunity there, we think, is the opportunity to grow reach, grow scale and to do a lot of cross-selling and upselling. So that's sort of how we see that's evolving.

And then for Gold, what I would say there is these new benefits that we've been adding, the main impact we see from them is that the driving force find the strong subscriber growth, 102% year-over-year subscriber growth.

And as we've been adding these additional benefits like prescription mail order, benefits to Gold in the third quarter, and in the fourth quarter we've added these exclusive discounts on online doctor visits that we are able to sort of get better attach between all of our services.

And all of this lets us convert users into Gold more effectively and continue adding to the benefits they're receiving. So our goal there is to really deliver this broad convenience and affordability to consumers at different stages of their healthcare journey and have this really tight relationship with our consumers.

As we have this tighter relationship, we think it enables us to generate this higher lifetime value which we've already seen and spoken in the past about this, meaningfully higher LTV from Gold users, drive better – even better revenue predictability and sort of just continue expanding on cross-sell, upsell, especially as we take these services as we've spoken to you about but also these new and additional services and areas we're working on as we expand and as we help them across their broader set of needs.

So I appreciate the question..

Thank you..

Thank you. Our next question comes from Lee Horowitz of Evercore ISI. Your line is open..

Great. Thanks. And sorry to maybe run back over a couple of things here. But maybe sticking with transaction revenue per MAC. The declines we had in the quarter and what we believe be implied for 2021.

Just so I'm fully clear, is Scriptcycle really the only driver of this, both in the quarter and as we look out to 2021? Is there anything else that we should be aware of in terms of kind of potential fundamental headwinds to transaction revenue per MAC? And then any chance we can get maybe a little bit of a finer point on what's implied in terms of the Scriptcycle contribution for revenue in 2021.

Thanks again for the question..

Thank you very much, Lee.

Karsten?.

Hi, Lee, great to talk to you again. Lee, in terms of PTR, prescription transaction revenue, per MAC, it would have been effectively consistent with prior quarters, but for Scriptcycle. So I think – question, yes, Scriptcycle is really the only contributor to shifts in PTR per MAC. So no real changes there.

In terms of contribution more broadly, we haven't broken out the Scriptcycle specifics at this point for a variety of reasons including some related to the confidentiality of our Scriptcycle deals. But we're pretty excited about the business, and we believe it will grow equally quickly as our base business will.

So from a modeling perspective or from a blended PTR per MAC perspective, I think knowing that both are growing at the same time should help make sure that that modeling process can take place pretty accurately..

Great. Helpful. Thank you..

No problem, Lee..

Thank you very much..

Thank you. Our next question comes from John Ransom of Raymond James. Your line is open..

Hi. When we talk to long-term investors on GoodRx, one of the questions we get is, is this really sustainable for some of your retail partners. And you've heard a couple of them kind of publicly float the idea of creating their own subscription program where they could get around these most favored nation clauses with PBM contracts.

So I mean do you see – like, two years from now, are you still going to have the same retail network? And what is the barrier, let's say, Walgreens who just created its own program and do it through their loyalty program or CVS? And how do you sort of keep this retail network in the fold, just given the pressures on that channel? And then the other thing is, like, the small PBM channel is also under a lot of pressure from the big three who can do everything better and cheaper.

So just kind of speak, if you would, strategically to the sustainability of the model because you're kind of between two players in the channel that are not exactly prospering, growing and gaining share? Thanks..

Sure. Yes. John, I appreciate the question. Yes, so maybe I'll start first – I'll cover both parts of this. With retailers, we've been doing this for a decade. We believe we are able to continue driving value for the retailers, for the PBMs, for every member, every part of the sort of ecosystem in which we work.

Every sort of transaction, we do grow the amount of value we're really able to provide. So the things like retailer programs, specifically, these have existed since we started. Walgreens has offered certain program since – since we started the business and for everyone else. We don't anticipate that this dynamic is changing.

And I think you can see programs that we're running that are really exciting that drive incremental value, like, the Kroger Rx Savings program powered by GoodRx that we offer that does some things in a different way and lets us sort of have even tighter connection to users and really drives value for those retailers in some unique ways.

So we're really excited there about those programs. On the PBM side, we work with all of these PBMs. And we work with extremely with all the PBMs. We work with – from the largest to smaller. We continue to add PBM relationships. And as these PBM relationships grow, we're able to deliver them more reach. These relationships only get better for both sides.

So it's – we think each of these factors just makes it so the business is stronger, relationships are stronger and the value we're able to deliver to consumers is even better..

Thank you..

Thank you very much..

Thank you. Next question comes from Stephanie Davis of SVB Leerink. Your line is open..

Hi, guys. Thank you for taking my question. Congrats on the strong comps in the quarter. So following up on Charles' question, this one is probably best for Trevor and Karsten. So you guys mentioned a highly recurring user base.

Acknowledging that flu headwinds affect both 4Q and 1Q and COVID affects both 4Q and 1Q, is there anything beyond conservatism in the low single-digit sequential growth from 4Q to 1Q, considering it's normally more in the high singles to low doubles?.

Got it. Stephanie, yes, thank you for the question. I think, Karsten, I'll hand this one to you..

Yes. No, Stephanie, we're decently far through the quarter right now given that it's March 11. And as we sort of look at the quarter's evolution, the impact of the flu on the top-line has been about $5 million combined in the last part of the fourth quarter and through the first quarter.

And while the transactions are highly recurring, the one challenge that COVID does present is that there are folks who don't actually get their new diagnoses.

So it doesn't necessarily hit the recurrence of existing transactions, but we're eager to have COVID unwind so all those new diagnoses come – get made and end up coming over to GoodRx as folks get the medications required to address whatever the diagnosis is.

So that's where we see ongoing lift, particularly later in the year relative to 1Q and even 2Q.

Is that helpful?.

No, that's helpful. That's helpful. Maybe following up on that one for Trevor, you did talk about the improving attach rate between HeyDoctor and the prescription business.

Is it still primarily a one-way street of HeyDoctor scripts to the prescription platform usage? Or have you solved for a way to close the loop for these existing users that don't have a script in hand yet, but could benefit from that?.

Yes. No, this is definitely a two way street. What we're really excited about is both of those things.

So when we look at the telehealth offering, this is, on one side, a secondary acquisition channel where we can sort of get people in who need a prescription and get them using our – all of our solutions, get them using our prescription transactions solutions, subscriptions, manufacturers and we're able to do that, and then also in the other direction.

And so one example of the other direction which is working great, is this additional benefit of these exclusive sort of discounted visits for Gold members. And so we're taking subscription users and driving them into these additional services.

So we're definitely seeing sort of increased attach on both sides and sort of great benefits on both parts of it. And this is really an area we think we'll continue to make lots of progress on cross selling, up selling between all of our areas. And so I really appreciate the question.

As we end, I just want to sort of highlight that we are really happy with this amazing sort of performance.

We believe, in 2020, with this 42% year-over-year revenue growth, with the great quarter, the great year and, most importantly, the value we've been able to provide to consumers, and we are only scratching the surface of the sort of massive $800 billion near-term market opportunity.

And there's so much room to go further into the sort of even larger $4 trillion healthcare market. So we're super excited for the quarters here to come this year and the performance and the new product and services that we'll see. So we really appreciate everyone's time..

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect..