But those are all things that are panning out. They’re increasing the company’s profitability. So even though they took a small step back in subscribers. Similar to what we did in 2022, when we refined our base in the Telehealth business to lop off a lot of those trial offers that, were not as profitable. They are now earning more per user, and their economics and their margins have gotten substantially better while still being able to grow the top line of their business. They are going to return to subscriber growth again in 2024. Now that they’re back to the right base, and they have better economics. And you’re going to see their margins expand even beyond where they are today.
Ilya Zubkov: Thank you, Marc. I appreciate this. And congrats again with the strong quarter.
Marc Benathen: Thank you
Operator: Our next question comes from the line of Yi Chen with H.C. Wainwright. Please proceed with your question.
Yi Chen: Thank you for taking my question. My first question is, could you comment, on what percentage of market share do you currently have with over 22,000 patients for GLP-1 program, where that’s going?
Marc Benathen: I mean, it’s impossible, but it’s like a pinball at this point, everybody else pretty much a pinball — we’re in the first inning of the weight management market. I mean, look, at the end of the day, both analysts think by 2030, this is a $100 billion plus market. More and more people are coming around to that. And – consider the fact that we ended the year with 22,000 patients, 129 a month with discounting, say you’re like 90, 95 a month. And we’ve already in the first quarter, between the end of last year and today’s call, March 11, so is at about 70 days, 71 days. We’re already up to 35,000. So, we added another 13,000. There’s massive runway here. Nobody has a big share. Obviously, at the pharma side, there’s two dominant players, but from the provider side, nobody has a big share, massive runway.
We’re in a situation we’re in substantially more demand than there is supply on our side. If we had an infinite number of providers, and could service people all day long, we could sign up even more than, what we’re doing today. That’s showing no signs of slowing down.
Yi Chen: Would you be able to comment on the age groups of these patients, who recently set up for the weight management program? Are they – are the majority of them, towards the younger age group, or older age group? And do you think these patients receiving GLP-1 drugs will stay on it for a very long period of time?
Justin Schreiber: Yes. This is Justin. Look, the average age right now is in the mid-40s for these patients. As we’ve shared in our remarks, retention rates so far have been very, very strong. It’s very difficult to say our goal, is to help patients hit their goal weight, with one of these therapies in a comprehensive way. And hopefully, they can change their diet and lifestyle in the process, and they’re not on one of these medications, for the rest of their life. I think that they’re likely going, to be some patients that, are on these therapies for the rest of their life, and need to be and it makes – and their health outcomes are going to be better, because of that. But as far as predicting, I think as far as predicting that right now, it’s impossible.
Yi Chen: Got it. Well, thank you and congratulations for the strong performance.
Justin Schreiber: Thank you.
Marc Benathen: Thank you.
Operator: Our next question comes from the line of David Larsen with BTIG. Please proceed with your question.
David Larsen: Hi. Just one quick follow-up. Can we get an update on customer acquisition costs, companies like Teladoc and other entities in the mental health space, have talked about increased pricing pressure there. Just any thoughts there would be great?
Marc Benathen: Yes. I mean, look, there’s been some increased pricing pressure, but we’ve been able to counteract it. I mean, look, in the Rex business, we’ve seen this quarter, slightly higher increases in CACs, but we were also getting much longer and bigger LTVs in the past year than we had in the prior year. So, we’ve been able to more than offset that, and actually are holding ourselves to a higher return on ad spend than what we used to get a year ago in that business. And the weight management business, we’re actually – as we’ve scaled to more volume, and I’m not saying this is going to always hold this way, but – we actually have seen CAC slightly decline. We’re actually seeing some of the best return on ad spend investments, within the last 30 days that, we’ve had in the history of the weight management program.
That will fluctuate a little. We’re obviously, I mean, those things do fluctuate a little. But in general, we’ve consistently even if we’ve scaled to the highest volumes per day that we’ve seen have seen really strong economics. So yes, I mean, look, CPMs and pricing out there, ebbs and flows. It certainly had some increases in the first quarter, but we’ve been able to manage through that, and counteract a lot of it.
David Larsen: So if it’s $99 a month, and somebody signs up in a day basically – and it’s $300 for three months and they sign up, what’s your return like on day one? Is it CAC $300 so?
Marc Benathen: Yes. Look, the real numbers are – we’re getting, on average, a little over $300 for an average order value, and we’re earning more than one times our money day one.
David Larsen: Okay. Great. And then last quarter, you mentioned an agreement with IQVIA for a sales and marketing effort. Can you just provide a little more color there? What exactly was that?
Justin Schreiber: Sure. David, this is Justin. So we signed a collaboration, there was a marketing joint venture type agreement with IQVIA. We’ve explored several different medium to large pharma opportunities, with IQVIA since signing that agreement. To-date, like nothing has turned into a commercial opportunity for us, but – we’re optimistic. IQVIA is a great company, and we really like the team there, and we’re optimistic that some – that, that will be a fruitful relationship down the road.
David Larsen: Okay. And I think what that means is they’re working with pharma manufacturers are trying to identify products that, you could help them bring to market. Is that right?
Justin Schreiber: Yes, exactly. I mean, I think, yes. So IQVIA provides, a lot of different commercial solutions directly, to pharma companies. And one of the things that’s interesting for them, or that they were interested in was, finding a partner that could enable them to offer – or enable their clients in the pharma world direct care platform to deliver direct care to their patients. So, I think that – look, I think the whole opportunity in pharma has just been – has taken a lot more time to materialize, than people thought, including me. I mean I think if you listen to prior calls, I was much more bullish, and excited on the whole direct-to-patient Telehealth opportunity as it relates to pharma companies over the past several years.
I think for a number of reasons, it’s been – the adoption rates have been very slow. I think a large part of that is pharma doesn’t – pharma has to be very careful about having anything to do with delivering healthcare. There are a lot of compliance issues. And so, I just – I think they’re very difficult business models to sync – to sync with each other.
David Larsen: Okay. Thanks very much. Congrats on a good quarter.
Operator: Thank you. We have reached the end of our question-and-answer session. And I’d like to turn the floor back over to Mr. Justin Schreiber for closing remarks.
Justin Schreiber: Thanks, Camila. We appreciate everyone dialing into our earnings call today and look forward to next quarter, and giving you a very positive update next quarter. Thank you very much. Have a good evening.
Operator: This concludes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation.
