Operator: Thank you. Our next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is now open.
Craig Hettenbach: Yes, thank you. Scott, just circling back to pharma manufacturing solutions, I know you’ve been meeting with pharma companies as well. Any particular feedback that you’re hearing, in terms of as your strategy evolved there, and you look to target growth in this market, what’s resonating versus, what are some things you’re working on to drive that growth?
Scott Wagner: Yes, thanks for the question. I think what’s resonating is number one, the unique role GoodRx has in the ecosystem again, which is 25 million people who are a high intended audience around prescriptions. I mean, in other categories, you might call this Google, right? Outside of healthcare, there’s low funnel marketplace areas that marketers, and those industries absolutely recognize, love, appreciate. Healthcare is a little different, where this position that we have as a vehicle, to reach people, who are really thinking about, a specific drug, or their condition, and not just people, but doctors, is a unique and valuable one. And so, we’re at this place, where a couple of companies, and brands who are working with us, are leaning into all the unique ways that, they can work with GoodRx to, again, propagate their brand messaging.
Whether it’s to reach an audience, or to end up having some unique performance deals around a cash price that are working, which is great. I think the broader context around it is, we’re still in a spot, where when we look at the top 50 brands that, we’ve gone through and said, we have a lot of traffic, here relative to the brand itself, there’s unique things we can do for them, like its sweet spot value. We’re working with a very small number of those 50. And so, the effort really throughout this year is, just getting ourselves in front of the decision makers, and then getting campaigns loaded up. If I could literally wave a magic wand, and get in front of access people and brand managers at each of these companies, maybe not all 50 would sign up, but we think there’s a value prop for these that would happen kind of right away.
Well, that’s the work for our teams and for us to go do, which is to get ourselves in front of them, present a value proposition, and hopefully have them start to work with.
Operator: Thank you. Our next question comes from the line of Scott Schoenhaus with KeyBanc. Your line is now open.
Scott Schoenhaus: Hi, team. Thanks for taking my question. Most of my questions have been asked. But Scott, I wanted to follow-up on your comments around the ISP. You said you’re generating incremental year-over-year revenue in line with expectations, and those will ramp throughout the year. But then you also talked about sort of, seasonality in this business longer term, you’ll have more in the first half, due to the deductible. How should we be thinking about the back half of this year, as these new clients ramp, given that probably some of them have already reached their deductibles by that time, the employees? Can you just like walk us through, the moving parts of all that? And then my second question is, you talked about the revenue per transaction, on the direct retailing side. Can you comment on the ISP side, how that’s affecting that part of the business? Thanks.
Karsten Voermann: Actually, I might jump in first, Scott, and great to speak with you again. This is Karsten. I think there are two parts to the question. One is around seasonality of ISP. And on that dimension, we have two factors that, to some degree, are offsetting. On the one hand, you’re quite right, for lives that comes on at the beginning of the year, you’d expect ISP to be more valuable to them earlier in the year for the reasons you cited. I think the other effect, though, is that we also anticipate that, not only will we be picking up some incremental lives during the year, but we’ll be picking up incremental types, of transactions during the year as well that, we might not have from a given PBM, at the start of the year.
So while in a steady state, you would see primarily the former effect, meaning the seasonality of people hit deductibles. I think in this year that will be attenuated by in-year expansion of the people/lives, medications, et cetera, that we pick up. With respect to economics, the economics look very similar. The only real delta for the primary real delta might be a better way of putting it is, how we acquire users, meaning in our direct-to-consumer business, we pay the tax upfront. And then they pay back over time, still consistent with what we’ve always said in the past, sort of in the sub eight-month time frame. In the ISP context, it’s a little different, because there we’re paying as we go, in terms of marketing fees to the PBMs, who aggregate the demand on our behalf.
But that’s all sort of, below the revenue line for the most part. In terms of revenue per transaction or revenue per users, I don’t think we see – I don’t think, we see substantial differences there at all, Scott.
Operator: Our next question comes from the line of Stan Berenshteyn with Wells Fargo. Your line is now open.
Stan Berenshteyn: Hi. Thanks for taking my questions. On direct contracting, are any of your direct contracting agreements exclusive? And do any of the directly contracted pharmacies advertise GoodRx savings to consumers at the point of sale?
Scott Wagner: Yes, thanks. No, they’re not exclusive, but I think the way to frame that is, again, GoodRx working with retailers, and then how do retailers broadly, each of the retailers think about discount cards. And I think the – if you zone out a second, we GoodRx, if you’re in the world, if you think about cash discount card, or any benefit that lives off an insurance plan. We’re obviously far and away, the leading company in that space. We’re the only one that drives fundamental demand, relative to our marketing efforts, and has what I’d call a pure relationship at retail, where we’re above the board with every interaction we have, with our retail partners, without anything going to individual pharmacists. And so this category, I would say, has GoodRx and then a whole long tail of kind of small, little card companies.
And if you think about us, when we talk about direct contracting and work with retail, what this really is, is the category working with each retailer in an effective way. I hope from a standpoint, over a couple of years that that’s going to result in us, continuing to gain share just in a natural way, because we can do things with a retailer, to build their business that legitimately, these other companies just can’t do.
Operator: Our next question comes from the line of Kevin Caliendo with UBS. Your line is now open.
Dylan Finley: Thank you. This is Dylan Finley on for Kevin Caliendo. Thanks for the questions. So on ISP, in year two, three, four as Caremark and the others offer the program, to more and more plans and that in turn gets pushed out to more lives. I guess what is, the reason that there’s not going to be any overlap with the existing GoodRx customer lines that, you already have today? I guess it’s possible that there wasn’t much overlap in the pilot pool that you saw last year at Express Scripts. But I guess, what’s your conviction that as it continues to grow, there isn’t much overlap with your existing base? Thanks.
Karsten Voermann: Sure. This is Karsten. Yes, I think the best evidence we have is not just from last year with ESI, but even what we’re seeing this year, we’ve continued to evaluate this. Again, we worked with ESI last year, to really assess the benefit of the program for GoodRx, as well as for our counterparties before increasing its magnitude this year. And we did that in large part, because it’s non-cannibalistic like low single-digit overlap on top medications, or consumers. And we continue to evaluate, obviously, now that we’ve added MedImpact, Navitus and Caremark. And in that context, nothing has changed. We’re still seeing that incredibly low single-digit overlap on top 10 drugs, on consumers, et cetera. So what we’re really finding here is that this is a SAM expanding opportunity for us.
Meaning there are a bunch of folks, who might never have used GoodRx for a bunch of medications that, they might not have used GoodRx for in the past, who are doing it when it is automated and part of their benefit, and that’s exactly what we hope to see happen, and it is happening.
Operator: Thank you. Our next question comes from the line of George Hill with Deutsche Bank. Your line is now open.
George Hill: Hi, guys. Thanks for kind of squeezing me in here. Scott, I had a question about what I think about is like tail risk. And I’m following like the J&J lawsuit around the ERISA rules and the Consolidated Appropriations Act. When we probably get to a point in the future where PBMs, have to do a better job of matching drug rebates, with purchase prices at the point of sale. And I’d just be interested in how you think, or expect into that process and if there’s a way for you guys, to either facilitate that process, or whether, or not that serves as a risk? Thank you.
Scott Wagner: Yes, thanks. That’s a rich question. I hope – this is – I’ll answer in a hopeful way, which is there should be a future where that, in some ways, reflects the foundation of how we fit in the ecosystem, which, again, is you have this dynamic of healthcare plans, which rebates, plan design, benefit, right, that’s a complex system that entails plans, PBMs and the drug manufacturers and the economics flowing through all of them. But appropriately, there’s this mix of what do companies pay for, as part of paying for insurance coverage, and then what do we push on to people to ourselves. And that’s going to be a balance, and that’s going to be continuing to be a balance. And I think as planned design continues to evolve, there’s going to be different kinds of plans, for different segments, different companies, all within the same place.
And I think what you’re seeing with ISP is our – the industry partners, and GoodRx try to address, this need that’s outside of your plan, but still allowing for affordability, to create people to get access, to their medications. And there should be, should be, continuing ways for us, to work with that corporate funded plan universe, to create benefit for companies, who are paying for insurance plans and most importantly, they’re people. Like it is, again, with the 1 billion scripts plus that don’t get filled for affordability, and people’s uncertainty about, is this covered, or not and what’s it going to look like. That calls for a need for an independent marketplace that’s, covered across the retail universe that, creates transparency relative, to their insurance and relative to other pricing options.
And that’s kind of the value prop that, we have and what we’re trying to fulfil.
Operator: Thank you. Our next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is now open.
Eric Sheridan: Thanks so much for taking the questions, before we ran out of time. Maybe two just following up on topics we’ve talked, about so far this morning. In the subscription business, can you help maybe give a little more granularity, on some of the headwinds and tailwinds in the subscription business, as 2024 proceeds? And how some of it might be more pronounced, on either the subscriber side versus the revenue side, as we think about sort of bringing your forecast back to our models that would be number one. And on the Manufacturer Solutions side, understood some of the key points made so far on the call, but can you almost better understand, some of the execution going forward? Is that just broader adoption of manufacturer solutions, and continue to execute against the opportunity? Or there’s still building blocks, you feel like you’re putting in place, to drive sort of, sustained revenue momentum around that business? Thanks.
Karsten Voermann: Sure. It’s great to speak to you again, Eric, Karsten here. I’ll take the first part and Scott may hop in on the second part. On the first part relating to subscriptions, yes the reality is that our Kroger Savings Club users, are a lot less economically interesting for us than, our gold users. Even if you just look at the pricing for the two groups, our gold users are paying just shy of $10 a month, the Kroger Savings Club individual users are paying $36 a year, which is split with Kroger. So if you compare that, they’re about one-sixth as valuable, right? So as Kroger Savings Club rolls off, we will see subscription – subscriber counts decrease, but the revenue impact is much, much more diminished. Just to put it in perspective as well, the revenue impact of Kroger Savings Club along with the vitaCare restructuring that we did together, those things were around $15 million worth of impact.
So you can get a sense for the fact that there’s not an awful lot of revenue there. Our own gold users are growing, which we talked about in our prepared remarks, and we’re quite pleased with that, because it does reflect the value proposition that we offer to them, and their interest in it, which is something we’re very pleased with. With respect to Pharma Manufacturer Solutions, do you want to hop in, Scott?
Scott Wagner: Yes, sure. I like that question. Thanks, Eric. I’d say, first, we have line of sight to our value prop and particularly the kinds of brands where we have high value. So at its fundamentals for everybody here at hi, there’s some places we really do work. Now then to your question of where are we in matching yourself to all those opportunities, from an execution capability standpoint. There’s still a bunch of things that we’re building, particularly around the flexibility, and the GoodRx experience, to have a marketer show up in different points, and match it with data that, for anybody who’s been in performance marketing before, it’s things like data and have platform, and all these things that honestly, walking in on a scale of 1 to 10.
We were like a two. And I’d say now we’re to five. And that’s not difficult intellectual work, you just have to do it. And so I – we absolutely have work to do, to continue to make a highly flexible data metric ecosystem that we can, at scale, run hundreds of different brands in an intelligent way that, you think about as a best-in-class marketing platform. But we’ll get there, like that’s just pick and shovel work. And then I think from an awareness standpoint on, again, the same 1 through 10 scale. We’re probably like a three. And I take comfort from that, because our single biggest opportunity is just getting in front of the decision-makers within each company that sit either in brands, and access teams or agencies and we just have to keep doing that work.
But we have a good team in place now that, has done these kinds of things before, and are in the market having these conversations. Hopefully, that helps.
Operator: Thank you. I’d now like to turn the call back over to Scott Wagner for closing remarks.
Scott Wagner: Yes. Thanks. Thanks, everybody, for joining. I appreciate the questions, and thanks for joining us today, too. I think maybe to wrap a little bit. I hope what people are seeing and hearing is progress – seeing the visible progress against things that we started talking about in April and May that, we said we were going to do. Around bringing not just balance to the network. But partnerships to retail, thinking about ways to take this benefit and build it out over time, which is the integrated savings. And we were talking about those things last year. And – they don’t – they needed time to bake into our financial results, and I’m encouraged by the fact that now you’re seeing the visible signs of progress that’s a return to growth not just on the top line, but obviously, nice incremental scaling profitably, to the bottom line.
So it’s great to see those two things reflected. And now going forward, through 2024, what we’re doing with our own teams and what you’ll get to see alongside of us is the work to continue to scale each of those efforts. And we’ll share that progress with everybody, as we go throughout the year. Thanks for joining.
Operator: This concludes today’s conference call. Thank you for your participation. You may now disconnect.
