GoodRx Holdings, Inc. (NASDAQ:GDRX) Q4 2022 Earnings Call Transcript

GoodRx Holdings, Inc. (NASDAQ:GDRX) Q4 2022 Earnings Call Transcript February 28, 2023

Company Representatives: Doug Hirsch – Co-Founders, Co-Chief Executive Officer Trevor Bezdek – Co-Founders, Co-Chief Executive Officer Karsten Voermann – Chief Financial Officer Aubrey Reynolds – Senior Investor Relations Manager

Operator: Good day! And welcome to the GoodRx, Fourth Quarter and Full Year 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. . Please be advised that today’s conference call is being recorded. I will now like to hand the conference over to your speaker, Ms. Aubrey Reynolds, Senior Investor Relations Manager. Please go ahead.

Aubrey Reynolds: Thank you, operator. Good afternoon, everyone and welcome to GoodRx’s earnings conference call for the fourth quarter and full year 2022. 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, the impact of the grocer issue on our business, the impact of legal or regulatory matters and the expected impact of the macroeconomic environment 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, 2022, and 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 earnings press release, 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 it over to Doug.

Doug Hirsch: Thank you, Aubrey. Good afternoon, everyone and thank you for joining us today. GoodRx operates with a clear mission, to make healthcare affordable and convenient for all Americans. I am proud of report that in 2022, we made great progress delivering on that mission. We’ve saved consumers over $55 billion since our founding. In 2022 alone we saved more than $10 million consumers over $200 on the cost of their medications. For many, those savings are life changing and the medication adherence we support can be lifesaving. Before discussing our recent performance, I want to highlight a few of the accomplishments that have made these incredible savings possible and are helping to lay the foundation for future growth.

First, we leverage technology acquired through RxNXT to launch a new collaboration with Express Scripts. Today allegeable Express Scripts members are automatically able to receive GoodRx discount prices as part of their pharmacy benefits. It’s built right into their card with no action required on the consumers’ part. Through Express Scripts, we’re excited to work with Cigna, which has made this program available to all participating Cigna Health Plans, encompassing over 10 million lives. With positive early results, Express Scripts continues to educate and enroll planned sponsors across the balance of their commercial book of business. This program opens up a huge new segment of the prescription savings TAM for us and we’re seeing great early results.

Over the coming months, we plan to continue rolling the offering out to other health plans as a way to expand our reach in serviceable, addressable market. Based on an August 2020 survey we commissioned, we estimate that 70% of consumers do not know that the price of a prescription can vary widely across pharmacies. With this product, consumers can now benefit from GoodRx without having to consciously price shop. The collaboration is seamless for payers, benefit plans and most importantly, eligible Express Scripts members who are now getting access to GoodRx prices for eligible generic medication when that price is lower than their benefit price. We’ve also made important progress with our provider partners as we continue to expand the health care provider value proposition and make GoodRx a destination for providers.

We’ve now enrolled almost 400,000 new prescribers into provider mode. One way we did this was by delivering new offerings, in part enabled by past acquisitions such as flipMD. This brings even more value to these providers, who are choosing to use GoodRx as a way to improve patient outcomes. Lastly, we’ve expanded our core retail network. We recently added Sams Club and their 560 retail pharmacy locations to our network of pharmacies that accept GoodRx discount, another proof point in our strengthening retail network. And we look forward to extending GoodRx’s value to Sams Club shoppers. While there is much to be proud of in advancing our mission, 2022 was not the year we anticipated in terms of financial performance. The grocer issue that began in the first half of the year impacted us significantly, and we haven’t yet recouped the volume loss resulting from that event.

But our resourceful team used this event as an opportunity to take actions to make the business more resilient, and we exited the year with results that were better than our expectations following the grocer issue. Since the second quarter of 2022, we expanded adjusted EBITDA and consistently drove high cash conversion in line with our priorities. We have more work to do, but I am pleased with how our team responded to the unexpected challenges and the progress we are making. Trevor will provide more details on our actions in a moment. We believe our consumer facing offerings remain incredibly relevant in light of the current macroeconomic environment. When economic uncertainty increases, American families take a close look at their expenses, and we expect even more consumers to turn to GoodRx for help with their healthcare needs.

A reminder catalyzed by the grocer issue last year was how critical it is for us as a company to engage even more deeply with our partners to ensure mutual success, and the degree to which our relationships deliver value to our entire ecosystem. As we articulated in our third quarter earnings call, we are taking a hybrid approach to our pharmacy and retailer constituents, where we have complemented our PBM networks contracts with formalized retail relationships to ensure ecosystems stability. As a result of prioritizing increasing engagement, we now have direct contracts with many of our top pharmacy partners. Our pharma manufacturer solutions’ offering continues to benefit from the shift to digital ad spending, and we expect that to remain the case for the foreseeable future.

At the end of the fourth quarter, over 7 million consumers use GoodRx across our prescription and subscription offerings. Our net promoter score is 90 among both healthcare providers and consumers, and speaks to the value we continue to provide and the preference for our platform over other options in the marketplace. And we continue to deepen our relationships with consumers through our engagement efforts. These engagement efforts resulted in the doubling of the proportion of prescription transactions by fully registered members between the start of the third quarter and the end of the fourth quarter. I want to briefly touch on our strategy and in particular, four key areas of investment we believe will position us for long term profitable growth.

Number one, create a more direct consumer relationship to increase touch points and access. Number two, built on our strong foundation to increase savings across the entire prescription basket, including by leveraging our deep HTP relationships. Number three, grow our leading position as the B2B partner of choice across retailers, PBMs and pharma manufacturers, driving foot traffic for retailers, volume for PBMs and awareness, access and adherence for pharma, all of which we anticipate will increase our relevance even further. And number four, leveraged data and marketing to reach more consumers and providers and drive higher revenue from our users be they visitors, max, subscribers or health care providers. This brings me to another point.

While we separately disclose max and subscription counts, we view our users as a rate along a spectrum of opportunity for us. Subscribers have the deepest relationships with us, engaged consumers have growing relationships, and max, who have not yet fully registered as well as visitors, create opportunities for strong future relationships. Regardless of the consumer type, we are expanding our relevance to them. I am looking forward to continuing to deliver on our mission and make further progress on our strategic priorities in 2023. I will now turn the call over to Trevor to provide more details on the quarter and on our strategic priorities.

Trevor Bezdek: Thank you, Doug, and good afternoon everyone. Before getting into our fourth quarter results, I’m going to update you further on actions we’ve taken to strengthen our retail, PBM and pharma manufacturer relationships. As Doug said, the last quarters were disappointing relative to our original aspirations, primarily due to the unanticipated headwind presented from the grocer issue. However, from crisis comes opportunity, and we applied our learning from the first half of last year to make our business and specifically our prescription transactions offering, even more durable going forward. The steps we have taken span our entire ecosystem of retailer and PBMs and all our staff, structures, systems and shared values.

No stone was left unturned. Our hybrid strategy Doug mentioned has now been implemented across our key retailers, greatly enhancing the stability and strength of our retail and PBM relationships. Moreover, we are happy to announce the recent addition of Sams Club our core prescription transactions network, showcasing our retail strength. Consumers can now present a GoodRx discount at over 560 Sams Club locations across the US and access our low prices on medications, regardless of whether or not there are Sams Club member. With our retail network continuing to strengthen and expand, our hybrid strategy has helped to offset the churn we have seen at the grocer. I am proud of the resilience our employees and partners demonstrated throughout the year.

Additionally, our engagement efforts are bearing fruit. We have doubled the proportion of prescription transactions by fully registered members between the start of the third quarter and the end of the fourth quarter, and progress is continuing. We expect higher registrations will drive more frequent and customized engagement with consumers, which we believe will increase the LTV of these relationships. Beyond the engagement efforts, we are continuing to deepen our relationships with consumers by offering timely, relevant and actionable services and content. These include our medicine cabinet functionality that we believe helps drive adherence for consumers, prescription transaction revenue for us, volume for PBMs and foot traffic for retailers.

We believe that we continue to offer the most competitive prices on medications in the industry, feeding our key competitors on the top 30 prescribed medications in America, 87% of the time at top pharmacies by our analysis. We believe our competitive position has never been stronger, and when we take a new entrant into our space seriously, the stickiness of our relationships with over 80% of our transactions being repeat is a direct function of our value proposition. Our take rates has remained stable since the grocer issue, which demonstrates the value that PBMs derived from us by leveraging millions of consumers across the GoodRx network. Volume across pharmacies increased approximately 5% quarter-over-quarter and approximately 12.5% year-over-year, excluding the impacts from the grocer issue.

We believe that growth is much faster than the broader prescriptions market, which we estimate excluding COVID vaccine was up approximately 3% in the fourth quarter year-over-year. In addition, the impact to our prescription transaction volume from registration efforts to support engagement in Q4 ’22 represented a smaller headwind than we expected. Within our subscriptions platform, we successfully launched initiatives to help ensure Gold members consistently receive even better pricing relative to our core prescription transaction offerings than in the past. On the marketing side, we launched product and CRM initiatives to drive growth and reduce churn, including incorporating gold pricing on to core price savings. As one of our strategic initiatives, product innovation and delivering on product initiatives, the result in near term growth will remain a key focus and is critical for sustaining our competitive advantage.

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We believe we will see Gold user growth in the quarters to come, and we lapped last year’s subscription fee increases. Across prescription transactions and prescriptions offerings, our platform serves millions, over 7 million at the end of the quarter. This represents an increase of over 1 million consumers since we became a public company. Pharma manufacturing solutions revenue declined in the quarter against a difficult year-over-year comparison, and pockets of advertising sped moderation across manufactures. We increased our engagement with pharma customers and rolled out a number of solutions to help manufacturers reach more patients and providers. We enabled several exciting medication assets products for high profile pharma customers.

For example, our Dexcom G6 and G7 work, including rebates, saving $200 for consumers. We believe we’re becoming even more critical to the largest global manufacturers. Through our investments in new solutions, we are solving critical pain points for manufacturers and catalyzing further growth in the $30 billion pharma manufacturers’ solutions TAM. Despite some slowing in manufacturer decision making starting in the fourth quarter, we anticipate strong secular tailwinds and growth over the long term as pharma sales and marketing spend increasingly shifts to digital in the quarters and years ahead. We believe our runway is very long. I’m particularly excited about GoodRx provider mode. In the fourth quarter we saw strong provider growth with almost 400,000 providers engaging with us through our provider mode technology, and in turn we are building capabilities, connect those increasingly engaged providers to brand partners in new and beneficial ways.

I could not be more enthusiastic about what our team has achieved. There are significant synergies between provider mode and our pharma manufacturers’ solutions platform, and we look forward to sharing more on these initiatives and our growing momentum into 2023. Turning to our fourth quarter highlights. Total revenue of $184.1 million was down 14% year-over-year, but above the top end of our fourth quarter guidance for revenue of $175 million to $180 million. Adjusted EBITDA of approximately $50 million represented a margin of approximately 27% was also ahead of our adjusted EBITDA guidance. Efficiency gains were driven by actions to improve marketing efficiencies and productivity. Sales and marketing came in at 46% of revenue in the quarter, consistent with our third quarter and our cash flow provided by operating activities was $31.9 million, compared to $33.7 million in the third quarter.

During 2022 we adjusted to the new macro reality with the goal of advancing our mission and maximizing shareholder value. We prioritize investments that we expect will drive adjusted EBITDA growth in the near term, as well as profitability and cash conversion. We remain focused on initiatives and innovations that we believe will pay back sooner with higher certainty. Along with our focus on increasing our marketing efficiency, we are very early in realizing the benefits of acquisitions made over the last three years, which includes RxNXT exciting technology that underlies our Express Scripts integrated savings collaboration, and our Scriptcycle acquisition, which contributes to our success in our hybrid PBM and retail contracting strategy, as well as vitaCare critical, branded drugs, access and assurance capabilities that support our pharma manufacturer solutions offering.

We have taken specific actions to drive focus and efficiency, including divesting our GoodRx Care backend technology to wheel, while maintaining the consumer facing GoodRx Care website and mobile app. This is an example of our ability to positively impact our expense structure and asset light model, while simultaneously focusing on our end user experience. Our focused strategic and tactical prioritization has positioned us to build on the adjusted EBITDA margin improvement we’ve achieved relative to the second quarter of 2022 in the future. We are confident we have strengthened our business model, the stabilization and expansion of our retail network and the increasing value we add to our PBM and pharma manufacturers and customers, have laid the foundation for returning to year-over-year revenue growth as we move closer to lapping the grocer headwinds in the fourth quarter of 2023.

We remain committed to executing on our mission to make healthcare more affordable and accessible to Americans and to returning to our historical levels of adjusted EBITDA margin and revenue growth, driving value for our shareholders. With that, I’ll turn it over to Karsten to discuss our financial results and guidance.

Karsten Voermann: Thank you, Trevor. Total revenue for the quarter decreased 14% year-over-year to $184.1 million, which exceeded our quarterly guidance of $175 million to $180 million. Prescription transactions revenue growth was down 19% year-over-year to $129.4 million, but was also ahead of our expectations by approximately $4 million. The estimated grocer issue impact to our revenue in the quarter was approximately $40 million to $50 million when compared to the fourth quarter of 2021 while the volume friction from engagement efforts was again less than we expected. Max declined 8% year-over-year to $5.9 million, while PTR per MAC decreased approximately 11% year-over-year and 3% quarter-over-quarter. The shift in volume to other retailers from the grocer contributed to the Y-o-Y, PTR per MAC decrease, the average volume of scripts for MAC at the grocer was higher than the average volume of scripts per MAC across all pharmacies prior to grocer issue arising, likely due to the historical low consumer pricing at the grocer.

Flu activity and the increase in growth across the prescriptions market had a slight positive volume impact; however we did see some offsetting impact from adverse weather in the latter part of December. In line with our expectations, pharma manufacturing solutions revenue declined 23% year-over-year in the fourth quarter to $24.9 million, driven partly by our increased focus on prioritizing recurring service arrangements relative to the prior year from timing and from a moderation and spending across pharma companies, resulting in part from some deal approval periods being extended by our customers. Revenue is up 2% quarter-over-quarter and full year revenue growth was up 36%, despite the challenging fourth quarter comp last year. We remain very optimistic about this business long term, and our ability to drive growth in this extremely large and fast growing $30 billion market.

Turning to subscriptions, subscriptions revenue again was very strong, growing 42% year-over-year to $24.6 million, approximately $2 million ahead of our latest expectations as the Gold membership fee increase implemented in the first half of 2022, more than offset the churn related decline and paid members. We ended the quarter with over 1 million plans, down 15% year-over-year and approximately 1.5 million total members, with both plans and members lower as a result of the continued churn throughout the fourth quarter from the pricing increase. Kroger Savings declined sequentially as expected, given its reduced priority. Other revenue increased 8% year-over-year to $5.2 million, slightly ahead of our expectation. Cost of revenue is $17.4 million or 9% of revenue versus $13.9 million or 7% of revenue in Q4 ’21.

An increase in personnel related to consumer support and the vitaCare acquisition primarily drove the year-over-year increase. Product development and technology expenses were $36.8 million or 20% of revenue compared to $35.1 million or 16% of revenue in the fourth quarter of 2021, driven by increases in third party costs associated with cloud computing and hosting arrangements and in stock based compensation expense, partially offset by lower allocated overhead as a result of lower headcount as well as higher capitalization of qualified costs related to software development. Adjusted product development, technology expense was relatively flat at $26.3 million compared to $25.5 million in the fourth quarter of 2021. Sales and marketing expenses were $84.1 million or 46% of revenue versus $106.5 million or 50% of revenue in the fourth quarter of 2021 and declined approximately 2% quarter-over-quarter.

As Trevor and Doug discussed, we are proactive in managing marketing expenses in response to the current environment, our efficiency goals and our adjusted EBITDA and cash conversion focus. We will continue to look for ways to further leverage our marketing spend, while still building the GoodRx brand. Excluding stock based compensation expense and other items, adjusted sales and marketing expense was down 22% year-over year and was 43% of revenue compared to 47% of revenue in the year ago quarter. Despite lower marketing spend, we’ve modestly increased our MAC count quarter-over-quarter. General and administrative expenses were $28.6 million or 16% of revenue, versus $35.4 million or 17% of revenue in the fourth quarter of 2021. The decrease was primarily driven by stock based compensation, principally related to non-recurring co-CEOs’ award made in connection with the IPO.

Excluding stock based compensation expense and other items, adjusted G&A expenses as percentage of revenue is 7% compared to 5% percent in the fourth quarter of 2021. The decline in sales resulting from the grocer issue is the primary contributor to the increase in adjusted general and administrative expense as a percentage of revenues. Net loss was $2 million compared to a net loss of $39.9 million in the fourth quarter of 2021 and was impacted by the grocer issue and our investment in vitaCare, partially offset by our ability to proactively manage marketing spend. Adjusted net income was $27.4 million compared to $40.5 million in the fourth quarter of 2021. Adjusted EBITDA decrease 20% year-over year to approximately $50 million, which was ahead of expectations.

The decline in our PTR related to the grocer issue was the biggest driver with an estimated impact of approximately $40 million to $50 million for the fourth quarter and approximately $110 million to $120 million for the year, which we believe has an almost straight flow through to adjusted EBITDA. We expect vitaCare will continue to be a drag in adjusted EBITDA margins as we work to scale and integrate the business. Adjusted EBITDA margin of approximately 27% was down 230 basis points year-over-year due to the flow through impact of the revenue from the grocer falling. We are pleased with our resiliency and our profitability since the issue and we are committed to driving efficiencies and targeted growth investments. We generated net cash, provided from operating activities of $31.9 million compared to $49.8 million in the fourth quarter of 2021.

Cash conversion will remain a key focus along with growing our adjusted EBITDA going forward as we progress through 2023. Our capital allocation priorities are unchanged. These priorities play a critical role in our organizational realignment and how we are thinking about growing adjusted EBITDA and cash flow going forward. We expect to continue to focus on high return projects and investments and deploy capital in ways that create the most value for shareholders most quickly. Currently, our priorities are investing for organic growth, maintaining a strong balance sheet, buying back shares, and possibly strategic M&As that aligns with her longer term priorities. Our balance sheet remains strong, and we ended the quarter with $757.2 million in cash on the balance sheet, and $667.1 million of outstanding debt.

I’d now like to spend a moment talking about our guidance. For the first quarter we expect prescription transactions revenue of approximately $134 million to $135 million, which assumes impacts from the grocer issue of approximately $35 million to $45 million and ongoing engagement effort had been consistent with the fourth quarter of ’22. Recall, as we have discussed previously, we expect to continue seeing a year-over-year impact from the grocer issue until 4Q 2023, when we’ll lap the volume impact. Our expectation for PTR per MAC is to show a modest decrease quarter-over-quarter until that time. We expect subscription revenue of approximately $23 million to $24 million, slightly down quarter-over-quarter from the decreasing levels of price increase churn as we are nearing the anniversary of fee increases implemented last year.

We may see additional churn, although we’d expected to be increasingly modest in future quarters. We expect pharma manufacturers’ solutions revenue to increase modestly in the first quarter following the same fourth quarter to first quarter pattern as a year ago, and also due to the continuing effects of longer deal approval cycles discussed on our last earnings call and the resulting delays in our ability to deliver and recognize revenue. As a reminder, this offering comprises of relatively large, often multimillion dollar deals that can create quarterly volatility depending on agreement and delivery time. From our pharma manufacturers solutions, we expect Q1 revenue of approximately $20 million down 15% year-over-year and 20% quarter-over-quarter.

However, we have a number of engagements we’re working on with some of the largest manufacturers, which we anticipate will drive sequential growth in future quarters. The favorable macro tailwinds driving more digital or outreach to HCPs and their staff and a focus by pharma manufacturers and continue to move more spend to digital, generally make me highly optimistic about our ability to grow this offering sequentially in coming quarters and over the coming years. Finally, we expect other revenue to be approximately $4 million in the first quarter, which is slightly below the fourth quarter. In aggregate, the total outlook for revenue is $181 million to $183 million in the first quarter. We anticipate making additional targeted investments that quickly scale some of our new retail expansions, as well as our efforts to drive user engagement.

We are also integrating and working to better leverage vitaCare, which will be a key growth driver in our pharma business in the coming years. As we said in our last earnings call, the new pioneer period can mean opportune time to invest in marketing, so while we didn’t invest substantially in the fourth quarter, we’re maintaining the flexibility to do so. For that reason, expect our adjusted EBITDA margin to fall in the mid-20% range for the first quarter. For the full year, we expect total revenue across our entire business of approximately $780 million to $790 million, and adjusted EBITDA margins in the mid-20 range. As I mentioned with respects for the first quarter, maintaining the flexibility to make strategic and tactical investments throughout the year remains a priority.

On the capital deployment side, I’d also like to call out for everyone that the equity relating to our co-CEO grants made around the time of our IPO will be delivered to our co-CEOs in the fourth quarter. We expect to withhold part of the equity to cover the recipient’s taxes and to use cash to pay the taxing authorities. The exact amount depends on the stock price, but anticipated figure in the range of $40 million to $75 million of cash will be required to fund the tax obligation. Finally, also on the cash and capital deployment side, I’d like to note that approximately $148 million over original $250 million share repurchase authorization remains. Our strategy is clear, to deploy capital only to where we see potential for higher returns and profitable growth and where investments are strategic and support proven offerings.

We look forward to leveraging our brand and technology to continue strengthening our platform for the long term and returning to our historical profitability growth profile. With that, I’ll turn over to Trevor for closing remarks.

Trevor Bezdek: Thanks, Karsten. As we look forward to the rest of the year, our leadership team is laser focused on executing on our realigned priorities. We are working hard to drive efficient, durable growth, deliver on our mission, and create value for shareholders. We believe we have a stronger, more stable and more resilient business today than ever before. We see attractive avenues to pursue profitable growth in our core markets, where we maintain strong market share and are well positioned to capitalize on those opportunities. We have stabilized our retail network and are now expanding the network or reaching more consumers and our value proposition to our partners has never been greater. We look forward to updating you on our progress in the quarters to come.

As always, I want to thank our employees and team members at GoodRx for their hard work and focus in moving our mission forward, and we look forward to the opportunities ahead. Thank you again for joining us today. I’ll now turn it over to the operator for Q&A.

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Q&A Session

Operator: Thank you. . And today’s first question will come from the line of Mark Mahaney with Evercore ISI. Your line is open.

Mark Mahaney: Thanks. Two questions, please. First on the grocer impact, you quantified it for Q1 and also qualitatively talked about it impacting throughout the year. Can you help us think through what that impact should be like through the balance of the year? Will there be kind of a sequential step down? Looks like there will be from Q4 of last year to Q1 of this year. And then secondly, could you just talk about stock based comp and what that’s going to look like this year? Has that also stepped down from whatever $160 million in ’21 to $120 million in ’22? Should we €“ as you move through the founders grants, does it step down at the similar pace, at an accelerated pace. How do you think about managing that expense item? Thank you.

Karsten Voermann : Sure, thanks for the question Mark. This is Karsten Voermann speaking. Mark, I’ll take those in reverse order. First of all, in the stock comp piece, we expect stock com of approximately $27 million in the first quarter and approximately $110 million for 2023 in aggregate at this point. Of those amounts, approximately $7 million and $21 million relates to our co-CEO grants made around the time of our IPO. And to your second question on the grocer issue and its impact, as we get further and further from the grocer issue, it becomes a little more challenging to estimate the impact with absolute precision of course. So we triangulate using a couple of analytical approaches to try and estimate how big it is. I think the reality is, first of all it will fully lap the grocer issue in the third quarter, but because we also increased our engagement in the middle of the third quarter, it’s really only the fourth quarter of 2023 that will be the absolutely cleanest comp to show the impact of growth, absent both unusual grocer and unusual engagement effort changes.

That said, as we said right where the grocer issue happened, we see it as a step down versus a change in growth rate. So a step down, meaning in total volume of users, and that’s why you are seeing the amounts of the impact of the grocer issue be relatively consistent over time versus seeing them having dropped overtime as you might otherwise have expected. So hopefully that’s helpful, if not I’m happy to dig in deeper.

Mark Mahaney: No, that’s great. Thank you, Karsten.

Operator: Thank you. One moment for our next question. And that will come from the line of Sandy Draper with Guggenheim. Your line is open.

Mitchell Kellett: Hi! Thank you. This is actually Mitchell on for Sandy. We wanted to ask about the Cigna partnership and just any more details exactly about how it came about and how it works. And we wanted to see how the economics are, and if they are similar to regular transactions. So any kind of more color on the Cigna would be really helpful. Thanks.