GoodRx Holdings, Inc. (GDRX) Earnings Call Transcript & Summary

Great. Thank you so much for joining us. My name is Heath Terry. I cover the Internet sector for Goldman Sachs. Really excited to have with us today Doug Hirsch, Co-CEO for GoodRx; and Karsten Voermann, Chief Financial Officer. Doug, Karsten, thank you so much for being with us.

Happy to be here.

Grateful to be here.

So Doug, for investors that may not be as familiar with GoodRx or maybe that know you best as users of your app or from your advertising, how should they think about what is that you and the rest of the team at the company are trying to build?

I feel like, to some extent, we're the anti-health health company in the sense that we represent the average American consumer that's simply trying to navigate this puzzling, confusing, complex and too expensive health care system. I started at GoodRx about almost 11 years ago. And really, it was started by my own personal experience, where I went to a pharmacy and with insurance, and the pharmacist said it'd be $500. And I -- maybe it's because of my natural stinginess, I took it back. And I took it to a next -- another pharmacy on the street where they said $250. I took it to a third pharmacy that they said $400 per box and chased me in the parking lot very nicely and said, "Hey, let's do better than $400. I want you to get your meds." And it just, for me, it was like a lightning bolt of like, wow, health care is such a mess in this country, right? I mean consumers don't consume it because it's just too expensive, and that was the genesis of GoodRx, and it remains our driving force today. We saved Americans $25 billion on prescriptions now. I think we've improved adherence and outcomes for not just consumers but also for everyone else in the ecosystem. We've partnered very closely with pharmacists, with manufacturers, with PBMs, with every -- physicians especially, really to just try to bring everyone together to make sense of this nonsensical environment we have here. We take over $200 billion pricing points every day at all -- pretty much every pharmacy in America, bring them all together and try to make it seem like just like when you're buying a car or buying a TV, we try to make health care just accessible. And now we've moved far past prescriptions. We're roughly tackling things like telehealth. Again, we're working with brand manufacturers to bring down the cost of brand drugs. We're really just going to go where every American needs help because it's a $4 trillion industry, and it remains a mess, and we won't rest until we fix it.

Yes. So what's the profile of a typical GoodRx customer? Where do they live? What does their insurance coverage look like, their income level? How often are they filling prescriptions through GoodRx?

Yes. I'd like to break the myth real fast on this one because I think a lot of people assume that it's for low-income Americans who, I don't know, don't have insurance or something like that, and it's not. Actually the people that use GoodRx, GoodRx is everyone. I mean I don't think it's a surprise that everyone at this point has experienced some malfunction of our health care system, where either something has been way more expensive than they thought or they haven't been able to get it or their insurance said no. About -- and 74% of the people that come to GoodRx have commercial insurance, so those people, just like many of the people probably listening on this call and they have some sort of government benefit like Medicare or Medicaid. Again, we have $200 billion pricing points every day. We're taking in everything from co-pays to savings programs to patient assistance programs, and we're really bringing it all together so that regardless of whatever your insurance status is, we're going to find you an answer. One great example, by the way, a New York Times reporter called me up and said, "I don't believe in all this stuff." She's like, "This can't work for regular Americans." And so we actually compared our prices to her New York Times co-pays, and we beat them 40% of the time, and that was assuming she'd even satisfied her deductible. And our prices have gone down since then. So I guess my emphasis here is just that everyone needs help, and we're going to help everyone. And not only that, but when we help people, people love us. So we have an NPS of over of -- 90. We have 80% repeat activity. Really, we're just ultimately about helping people, whatever capacity, get the health care they need at a price they can afford.

Yes. So you've developed a lot beyond your core drug pricing offering. You've developed subscription programs. You've got a growing manufacturer solutions business. You've mentioned your telehealth service already. We can dig into each of those, I think, in the time that we have. But what's the overall strategy that you would say binds that altogether?

I should probably take that one, Heath. this is Karsten, folks. Yes. Health care in the U.S. is incredibly complicated, and it's incredibly massive. It's a $4 billion market, right, protect disruption. And we're building the leading, consumer-facing, digital health care platform in the U.S. As we think about that and as we think about our different offerings, we want to help consumers at various stages in their health care journey and make health care affordable and convenient for all them. As you think about our different offerings, your -- and to your question of binding offerings together, the different offerings provide multiple entry points for consumers to our platform and multiple opportunities for us to monetize a single cost of acquisition as well. In addition, the offerings really complement each other as well. We started with the prescriptions offering which is the area that has the most frequent interactions between a consumer in America and the broader medical marketplace. Prescriptions are way more frequent than doctor visits, certainly way more frequent than surgeries, so it really creates the opportunity to create a bond with consumers and create a level of trust with consumers through frequent interactions. The prescriptions market is also really big. It's over $500 billion of TAM. We've only today, in 2019, captured about $2.5 billion of that in our GMV, so there's ton of room to grow there. And 70% of consumers still aren't aware that prescription prices can vary between pharmacies or that they can use tools like GoodRx to save. So we feel like there's just a ton of runway. We monetize the prescriptions business via take rate on GMV, and we got paid by PBMs who benefit from the incremental volume we push their way. Once we have all these consumers, we have over 15 million visitors come into our platforms a month. That gives us the opportunity then to offer those same consumers additional services. So for example we've been able to expand into subscriptions from prescriptions offering consumers even greater savings and creating recurring revenue streams for us. We can monetize those through the subscription fees as well as through the incremental volume of prescriptions that our subscribers run through us than that our prescriptions offering users as well, which is exciting. And beyond those offerings, when we look at things like telehealth, as an example, when we have these consumers coming to our platforms, a decent number of them, roughly 20%, don't have a prescription when they come to the site. So we can help those folks out through telehealth. If they come into the prescription side or if they come in through the telehealth side and then receive a diagnosis and need a prescription, we can help fill that. The other thing that we can do very successfully is through our manufacturer solutions offering allow consumers to benefit from affordability of solutions on the branded drug side. Branded drugs are very expensive. Very few people pay cash for them. Some of them can be in the thousands of dollars per month, but branded drug manufacturers are eager to help consumers begin their prescriptions, many of which are often chronic, benefiting the drug manufacturers. And because there's an altruistic motivation as well to make sure consumers get the care they need. And we provide the perfect vehicle for the consumers to be able to gain knowledge on how to save money on these very expensive branded drugs. Because we have relationships with the manufacturers on one hand, we announced 30-manufacturer deals in our third quarter earnings release. And on the other hand, we already have this 15-million-plus visitors coming to our platforms, 20% of whom are searching for branded drugs and looking for ways to save money, often with the prescription in hand, so the perfect targeted audience. And manufacturers, therefore, are willing to pay us, and we can monetize these high-intent, purchase-ready consumers for them. Finally, I'd say that, not to run too long on the question, on the telehealth marketplace side, just to hit monetization on that, we're able to monetize the telehealth business on a per-visit basis, which works very well despite the fact that we have a competitive price point. And our marketplace operates on a take rate very similar to what we do in our core prescriptions offering. So the way all these bind together is that consumers can come in through multiple entry points and then leverage all of the different offerings. And we, in turn, can, again, invest 1 CAC. And after investing that CAC can monetize through all the offerings consumers directly might pay for as well as things like the massive $30 billion manufacturer solutions TAM where the consumers aren't paying and only benefiting and where the manufacturers are paying us. Hopefully, that's helpful, Heath.

That's extremely helpful, Karsten. Thank you for that. You touched on your relationships with the PBMs, and I think that's a really important one. How important are PBMs to the long-term story of GoodRx? And when you think about your relationships with the PBMs as you renew these contracts, what are the goals that really matter to you?

Sure. Yes. We have incredibly strong relationships with our PBM partners. We have well over a dozen now. None of them have ever terminated their relationships with us. They like working with us. And I think just to set context before diving into specifics, from a PBM perspective, GoodRx is a great partner, too. And the reason is because PBMs are effectively fixed cost players. You can either think of them in their role as folks who negotiate drug prices. And in that context where they have incremental or fewer users doesn't really change the cost structure. And you can also think of them kind of like a data or a payments network, which, again, is a pretty fixed cost reality. And so PBMs benefit from getting incremental volume, and that's exactly what GoodRx delivers. So we're able to take our huge base of visitors to our platform, convert those into monthly active consumers are full to actually transact on a prescription, our prescriptions offering. And in that context, when they do that, we route that prescription to one of our PBMs, who's then able to monetize it. We, in return, in return for driving the consumers to the PBMs are able to capture a portion of the margin the PBM would otherwise make. And again, because PBMs are largely fixed cost and the volume we're driving to them is largely incremental, that means that we can grab, in many cases, a significant portion of that margin in the form of our take rate and in the form of savings that we pass on to our consumers. And each year, in fact, we focus on driving those savings rates for consumers even higher. We're very careful to make sure to manage the relationships with PBMs so that they're receiving more dollar contribution year-over-year as we grow. But receiving more dollar contribution doesn't necessarily limit us from being able to push margins down a little and increase the savings rate. As Doug alluded to, back when the New York Times wrote the article, you referenced their savings rate was around 59% versus what the consumers would otherwise pay for in cash. Now we're well over 70%. So as we think about the long-term relationships with the PBMs, our view is that it's a truly symbiotic one for us and them. They're benefiting from the incremental volume, but we benefit from some of the services they provide around price negotiation, around providing the infrastructure to share the data that's necessary for our consumers to save and also because, at the end of the day, the PBM -- the PBMs themselves are -- who has the relationships and who allows GoodRx to be available to consumers at so many different pharmacies. Going forward, given the scale we have now, the need to take a path like we originally did that was PBM-centric is probably a lot lower. But given the value they continue to provide to us and we expect to continue to provide in the future, continuing the relationships from our perspective is something that we plan to do.

That's really helpful, Karsten. Doug, when you think about the competitive landscape and the prescription savings market at this point, between Amazon launching its own card and you rolling out your own mail order service, what does that landscape look like?

Sure. I mean it's amazing that I think -- still think of us as a start-up, and I've never been hungry or more motivated, especially in light of the pandemic and what's going on. But the reality is that we are America's leading resource for health care savings. We've been doing this for a long time. We were the first to market. We've established a beachhead and a brand that we're really, really proud of. There's been many folks that have popped up over the course of the last decade while we've been doing this, really well-funded folks, whether they be PBMs or health plans, whoever. And I think they've really struggled to get any more traction. And I think we have a unique ability to speak to consumers in a way that they understand and to translate the same dynamics that drive behaviors in other industries and bring them to consumers in just an honest, straightforward way that attracts not just consumers but also physicians and the rest of the health care system. And the other great thing is, as we do this, we learn so much. Like we are so good at this point at determining prices, getting a wide swath of all the potential discounts available to consumers, again on both prescriptions as also telehealth and medical services. And I'm just -- I have such confidence in our ability to continue to execute, continue to drive lower prices to consumers and continue to just engage consumers. And so it's -- I feel at this point, our competitive moat is as strong as ever. There's been a lot, a lot of talk about Amazon. And I guess, to some extent, it saddens me only because pharmacy is so confusing that I think in the 24-hour news cycle that we have right now and the headlines, people just see the word Amazon and just make assumptions that I don't think are actually accurate. Amazon has been trying to get into pharmacy for, I think, 20 years now. If you go back to drugstore.com back in 2000 where they had owned the majority of that, and they thought, oh, we'll just spin this off like we do for books and TVs, and that obviously did not end necessarily successfully. They then bought PillPack back in 2018. And then this most recent announcement was really mostly around modifications to the way that they expose their order pharmacy on Amazon. We think it's great. We are partners with PillPack and Amazon. You can use GoodRx discounts on Amazon when you purchase with PillPack. And we think they're great guys, but I want to remind everyone that they are one vendor and we are a marketplace. And so to consumers, it's like a David-Goliath or a X versus Y, it's really not the right metaphor for us. We are always going to drive to the lowest price. And if we can drive a consumer to mail order when it makes sense, we'd be happy to do it, whether we do it ourselves or whether we do it through Amazon. The challenge with mail order is even in the pandemic, I mean, could there have been more of a perfect storm of events that would drive mail order, mail order still only represents about 5% of prescriptions in this country. And it's a variety of reasons that we could talk about forever. But in short, a lot of consumers actually like to go to the pharmacy. They use it as a mini doctor visit. They pick up other things while they're there. And so displacing America's pharmacies with mail order, it's -- Amazon is going to keep trying, but it's a tall order. It's really, really difficult. And even Amazon's mail order service only because it has the complicated insurance contracts to deal with, has a lot of restrictions to it. A great example, you can't actually get a 90-day fill through Amazon. You can only get 30-day fills. And a lot of consumers actually like 90-day fills, and they won't be able to do that through Amazon. So it's not an X versus Y. I don't -- I actually really like Amazon. I think that we are proud to have them as a partner, and we're proud to work with PillPack. We're proud that GoodRx discounts work there, but they are going to continue to try to improve the outcome from the mail order pharmacy, and we also are going to try to improve the mail order outcomes and get more people to move to mail. But again, we're a marketplace, and people trust us to guide them to the right solution, and they may be one of those solutions. The other part of confusion that people got wrapped up in was this PrimeRx discount card that allows you to theoretically use an Amazon discount at a retail pharmacy. Without getting into the incredible complexity of pharmacy economics, I don't think either Amazon or Walmart or CVS actually intended a consumer to use an Amazon discount at a Walmart, their archenemy, to get a discount lower than Walmart's price. That doesn't seem to me like something that was either in either party's actual plans. In order for Amazon to put prices on their website, they have to use a third-party service that determines those prices. Those prices have to also be valid at other pharmacies. I think this was funded to something much bigger than it is. Again, I don't work for Amazon, so I don't really know what their plans are. But I can tell you that seems like from my outside point of view and probably everybody else, they would like to deliver prescriptions by mail, just like they do everything else, and the retail side was not really something in their plans. It's just sort of a strange outgrowth of the weird world of pharmacy where you don't have control of your own prices. So I'm really, really excited about where we're going. I'm really excited about the new services that we have. Again, I love the fact that we are America's trusted resource because we offer literally thousands of ways for a consumer to purchase both their prescriptions and the rest of their health care, and so I'm confident that we will continue to succeed.

No. That certainly makes sense. When you look at what you're trying to build in telehealth, you've got 2 different offerings. You've got your marketplace. You've got HeyDoctor, the branded side of the view. For people that aren't as familiar with your strategy, can you maybe lay that out a little bit on how those 2 pieces and/or operate with the rest of the business?

Sure. I'll take a stab. And Karsten, feel free to jump in if I miss anything.

Sure.

We -- again, I spend my days thinking about affordability and convenience. And I think we've done a really good job on affordability of prescriptions. I think we're still working on convenience, like we just talked about it in the Amazon case. So are they, so as everybody else trying to figure out how to make sure your drug should show up at your house or how to make sure that when you get to the pharmacy, it's ready or that the price is right, et cetera, et cetera. We had the foresight because this is what we do. We understand American consumers. We represent the American consumer to say, "Hey, telehealth, this is kind of interesting." But it's not interesting for everybody. I think people, briefly in the beginning of COVID, it was like telehealth's going to take over the world. You'll never see a doctor in person again. That is not correct. That is not what Americans want. But there are lots of great examples where telehealth works really great. Looking to refill a med? Fantastic. Looking to get a dermatological assessments? You can do that online. Looking to get a birth control refill? You could do that online. Like there's basic things where I think telehealth is perfect, and we saw that. And so we acquired a company called HeyDoctor back in 2019, and we have continued to roll out more and more services. I think we have almost 150 services between HeyDoctor in our marketplace now that a consumer can see a doctor for an incredibly reasonable price, lower than you might expect and often in line with a co-pay. And then if a prescription is warranted, you can either get it sent to your house by mail or we'll send it to your local pharmacy with a GoodRx coupon, and you can get it for a great price. So I'm just really, really proud of the HeyDoctor experience. But those of you who haven't tried telehealth for something simple, like the -- I call it the nuts and balls of health care. They're just like I have to accomplish something. I'm not leading. I just literally want to get this thing to manage my issue or to just take care of something that we can be there to fill that in. We also launched this marketplace which encompasses a whole bunch of different services because we're not the only answer, right? Like we want to encompass the best of telehealth. There's so many interesting, exciting new companies that are out there, and we're partnered with many of them to provide discounted rates and just awareness to a consumer that you might not know that you could accomplish this by telehealth, so really, really proud of that. And I expect to see a lot of continued investment there as we really want to make sure that we're, again, addressing -- I think of it just as really the medical side of care. On the manufacturer solutions side, look, I'll be honest. GoodRx mostly plays today in the generic drug side of the business, which, just to be clear, is about 90% of the prescriptions Americans fill. For brand, for a long time, I think our experience was substandard. You go and you'd search for a drug, it would say that's $900, and you feel like, well, that's not a -- who wants a $9 coupon? That's not really a very valuable thing. But meanwhile, both -- we approach the manufacturers. The manufacturers came to us, too, and they said, "Look, we want to offer a fair price, but this crazy system where it doesn't necessarily allow us to do so. And so we've put a concerted effort, and Karsten touched on this a little bit, to working directly with manufacturers to say, "What can we do to bring down this cost?" And we've made a ton of headway. As Karsten mentioned, I think we closed over 30 new relationships in Q3, and we're just really, really proud of taking -- remember where we are. We're at the point of purchase. Where when that consumer sees that $900 price, what can we do by working directly with the manufacturer to drive that cost down to a place that's -- manufacturers still very happy to offer that price? Consumers can now afford to take it so they don't walk away. And so we're really having a tremendous level of success at building services for brand drugs. So they're not only consumers, but also physicians because oftentimes the consumers even don't know the name of the drug. They just know they have this fancy drug that deals with their issue. So we're working with providers, manufacturers and consumers to really dive into this $30 billion TAM and see what we can do to really be that point of purchase because brands are always -- I mean putting an ad on a golf game is probably not the best place for a manufacturer to educate people about their drug. But when they're actually purchasing the drug, that's the time to talk to them about care.

Yes. I just wanted to dig into the manufacturer solutions business a little bit more. But just while we're on telehealth, where do you see the long-term monetization there? I know we're still really early, and I'm sure you've learned a lot just in the last year, especially during this pandemic. But given what you've learned so far, where do you see that business going long term from a monetization perspective?

I'll take a stab. And Karsten, you're welcome to jump in. The great thing about telehealth is we think that you can provide a fair price doctor visit at a very efficient way, right? Like many of our telehealth visits are asynchronous, right? A consumer comes in. They don't even have to talk to an actual doctor or nurse practitioner. There's also many times we don't actually need a doctor. I mean, again, if I'm looking to refill my birth control, I'm looking to refill my blood pressure meds and all my numbers are good, why am I engaging with a, call it, $300- to $500-an-hour-person as opposed to maybe a $100- to $200-an-hour person, right? And so we really believe that there's efficiencies to be gained and in the long term so much more in terms of like monitoring your condition over time and being able to give live feedback and things. And so I just -- I think that for, again, the nuts and bolts of health care, you shouldn't -- that we can actually really disrupt that cost dynamic and be able to charge, I would argue, a price that is both fair for the consumer and at the same point is profitable for both us and for the provider who's providing the care. And so -- but again, I want to emphasize, I don't think it's for everything. I don't think it's for open-heart surgery. I think it's for, again, the nuts and bolts of fair, and there's other categories I think are perfect for telehealth. For example, mental health, that one that I'm really, really excited about personally, where I think you can both drive down cost and provide more accessibility for consumers. I don't know, Karsten, if you have anything else you want to add to there.

I think that was pretty complete, Doug.

Okay.

So maybe then, Karsten, to dig into the manufacturer solution, you referenced the 30 new partnership -- partners that you've got. But to start it at a higher level, what exactly is it that you're doing for the manufacturers? How big could that opportunity be? And when you look at the -- those partnerships, what is it that differentiates what GoodRx is doing in the manufacturer solutions space?

Sure. That's -- I'd love to talk about that. The manufacturer solutions business is actually one of my favorites. People joke about that because as the CFO, it's easy to love because it's sort of fastest-growing business, highest-margin business and just a huge TAM as well. Manufacturers spend about $30 billion annually on advertising, and the advertising is designed to attract consumers to their brands and make sure that consumers have avenues through which to afford them. And that latter part is really the part that's most congruent with our mission, which is to increase the affordability of these often very expensive branded drugs. So the way we think about it is that if we can provide our users with co-pay assistance programs or deductible-assistance programs and the like, they benefit because they get better access to medication than they'd otherwise have. And they're more likely to have better health outcomes. On the manufacturers side, manufacturers don't have great avenues to put these different kinds of offerings in front of consumers. You see a lot of ads for branded drugs on news programs, on CNN and other outlets as well, but they're amazingly untargeted at that point. They're really just broadcasting to everybody. And that's really where GoodRx comes in because against this $30 billion TAM, GoodRx provides manufacturers with both an opportunity to reach consumers and health care providers because we have high usage in both groups, and we have a great brand. Our NPS is 90 with consumers and 86 with health care providers, so they listen to us and they like us. So branded drug manufacturers want to be associated with that. We also have a huge purchase-ready pool of consumers who have prescriptions in hand. We mentioned earlier, we have over 15 million visitors to our platforms every month. Of those 15 million visitors, 20% or so are doing searches for branded drugs. So branded drug manufacturers want to be on the recipient end of that search because it gives them the perfect opportunity to engage with those consumers and be able to offer insights and help for that specific consumer in their specific condition and as they're trying to benefit from manufacturer's medication as well. So we couldn't be better situated in sort of the consumer's health care journey to be able to help both the consumer and the manufacturers. And because of that, we've offered a variety of different solutions that allow manufacturers to get in front of and build those relationships with consumers, things like our patient navigator that's more condition focused or things like more traditional advertising solutions associated with a search for a given branded manufacturer's medication. And with respect to the 30 incremental or the 30 relationships we announced, broadly speaking, in the 3Q earnings call, I think what's really important about that is that it represents the fact that we've now built relationships with pretty much almost all of the big drug manufacturers out there and getting that first relationship, that first MSA can be tougher, just time-consuming. But once you've got them, expanding across more different medications in their portfolio becomes easier. And that's one of the reasons this is such a high-margin business. It's like when -- if you've already got all the visitors and you don't need them because they're already coming to your platforms, if you already have the inventory for the advertising, the real cost that exists is pretty small. It's just sales costs. And by establishing MSAs with so many big drug manufacturers now, the incremental sales cost to get another medication into the system and into our manufacturer solutions program is very, very low. So we've had 4x year-over-year growth we've talked about in the past in this business, and we've still barely scraped the surface of this $30 billion TAM. We feel like it's ours to win a heck of a lot more share because there isn't anyone who's better positioned, both to help consumers and to help manufacturers here. And that's why we are so focused on this business. And why I, particularly like I said at the beginning, as the CFO love it, high growth, high margin, lots of TAM left and a lot of runway ahead of us.

Karsten, you mentioned the TAM. How do you see the TAM? How do you define the TAM? How big is it, especially when you think across the different businesses that you've got?

Sure. So when we think of the TAM across all of the businesses, well, all health care is huge. It's, by various estimates, $4 trillion or larger. I think when we look at our businesses, it's a question of where we are versus where we're going, in large part. I think in terms of where we are today, if we go through our different businesses, the prescriptions TAM, generally, is measured at well over $500 billion, of which our GMV or the amount transacted via GoodRx is about $2.5 million, so again huge runway ahead of us in the prescriptions TAM. The subscriptions TAM is, in a sense, similar to the prescriptions TAM. So I won't go into that one in a lot more detail. We talked about manufacturer solutions and the $30 billion there. And on the telehealth side, while telehealth is sort of the media TAM, and there are various measures of that, $250 billion plus, that's not really the aggregate TAM that we perceive as being relevant to us. I think we perceive ourselves as being relevant not just to telehealth, even though that's where we're starting today, but we want to be with consumers on every aspect of their health care journey, as Doug has said earlier in the conversation as well. So ultimately, as the leading brand in consumer health care today and as we continue to grow the platform, we see more and more of that aggregate $4 trillion becoming relevant to us as time elapses. So we're extremely excited to go penetrate deeper into all of the existing TAMS, but more importantly, to open up further avenues to help consumers which, in turn, open up further avenues for us to monetize as well, which is incredibly exciting for us.

Yes, yes. Doug, just last quarter, you had nearly 5 million customers on the platform, monthly active customers. How do you think about customer acquisition, where your priorities are, particularly as we hopefully start to appreciate something that looks like back to normal? What advertising channels work for you best in terms of getting people onto the platform and getting them to stay on the platform?

Yes. I'll take a first stab, and Karsten is actually probably best qualified in this and answer this one.

Sure.

Look, the thing I'm most proud about is the reputation of the brand we have and the word-of-mouth that we have, especially with America's health care system, right? Physicians tell their customers about GoodRx all the time. They tell their patients, and what -- who do you trust more than the person in the white coat who's guiding you? I think a decade at end and with both the combination of the advertising and the relationships that we have and the presence that we have in the marketplace, that, that is a major driver for us to continue. And of course, with COVID in 2020, 2021, where everyone is going to be engaging with a health care system, honestly, in a life or death sort of scenario, we think that there's never been higher engagement and a better opportunity for us to talk to consumers about their health care. Because once this pandemic starts to subside, we still have the -- I would call it the pandemic or the disaster of the American health care system. Karsten, you want to talk specifically about some of our acquisition channels?

Sure. Yes. So again, for us, as we see it, the biggest challenge we have is there are so many consumers who don't even know on our prescriptions offering, for example, that prices vary between pharmacies or they can use tools like GoodRx. And I think folks also don't realize broadly that, again, given the reality of our business and the fact that we help people regardless of insured status and that we help people regardless of geography or any other sort of typical characteristic, we're relevant effectively to all Americans means that when we go out and think about user acquisition, our model is to focus on managing carefully our CAC to LTV in the form of our payback, which has consistently stayed in a similar range, despite the fact that we've rapidly increased our -- both our scale and our marketing spend. And in that vein, as Doug said, our biggest single source of growth is unpaid. That is health care providers, other GoodRx users, et cetera, driving demand from new users to us, which is exciting. And the NPS with health care providers helps. Pharmacists recommend us. Other users, like I said, recommend us. All of these referrals are incredibly valuable to us and are a benefit of having a deep relationships over a long period of time with all these different constituencies. The other thing we do a lot of is invest in content. So we've both made acquisitions around this historically as well as invested further organically, and that's really important because investing in content is very helpful from an unpaid traffic perspective. Search engines recognize good content, and GoodRx's content is some of the best being cited regularly, including by governmental and regulatory entities. Once we get through those sort of principal unpaid channels, the other area where we focus is some of the more traditional marketing activity. You've probably seen Doug on TV. So we definitely do that as well as streaming, and we also do out of home and audio as well on a more recent basis. So we leverage each of these different areas. I think what's exciting to us and really helps underscore the amount of TAM we still have left ahead of us is that, even though we keep on making bigger and bigger investments year after year in marketing, both on the content side, so more on the unpaid organic side as well as on the paid side, we haven't really seen dramatic changes in our paybacks. And we believe that really represents the fact that there are so many folks still out there and that 70% of the population doesn't recognize the benefit they could be receiving that we've got a long way to go to just bring those folks onboard.

Yes. Yes. That's really helpful Karsten. Doug, one question that we've gotten from the audience that I wanted to run by you. Why -- and I'll just read it verbatim. Why is it that there are and likely will continue to be such varying prices between different pharmacies served by different PBMs? And why is that likely -- why is this phenomenon likely to continue?

Yes. And it's always fun to have this conversation because you have to kind of say it like 10 times for someone to fully understand that market forces don't apply, right? I mean we all live in a same world where if I buy a product for $5 and I have it my store, I sell it for $10 and I made some profit and pay my rent, like we understand those dynamics. But that's just not how health care works. It's never worked that way. Why is a BAND-AID $5,000, right? The nature of health care is because we have this ridiculously complicated, what is it now, 70-, 80-year-old system in this country, that basically inhibits all market dynamics. So at the highest level, and we only have a few minutes left, and we can do a whole course on pharmacy and healthcare economics. But at the highest level, it's not that anyone's out to necessarily gouge anybody. It's that if I'm a pharmacy, I have a relationship with a PBM, or for that matter, if I'm a hospital, whenever I have a relationship with insurance company, right, that entitles those entities to a significant discount for their insured members, right? And in the old days, this never mattered. In the old days, I would have a $10 co-pay. No matter where I went, life was good. But then as health care became more expensive and benefits were paying for less and insurance plans got more expensive and things like high-deductible health plans, which now I think some huge number like 40% Americans have or a limited formulary or a step the -- I can give you 1,000 reasons why insurance is basically paying for less. And all of a sudden, you, the consumer, are seeing the inner workings of this really ugly machine you were never supposed to see. And all of a sudden, you're seeing that $5,000 BAND-AID because you were never supposed to see it. You were supposed to have insurance that is supposed to go down, where you're seeing that $300 drug that actually probably costs the pharmacy $2. And so prices vary per item. They vary both between pharmacies, as in pharmacy A and pharmacy B might have different prices, but they also vary within a pharmacy because if every single person listening to me right now walks in the pharmacy and presents their insurance, they may get a different price. You satisfy deductible. I haven't. It's not in his formulary. They pulled a different NDC, which is the actual drug off the shelf. You know that a bottle that has 100 pills in it is a different price than the bottle that has 10 pills it. And if I write it for a 90-day fill, it's a different price than a 30-day fill. This is the magic of GoodRx. This is the $200 billion price points every day, which we boil down into something that a regular consumer says, "what's it going to be?" It's going to be $6 when I show up because we're going to take all the information throughout all the other noise and just give you one simple price. And there's so much more behind it. But until this -- until we enter a world of sanity, you're going to continue to have this crazy regularity, both between pharmacies and again in the way you choose to purchase within a pharmacy or again at any health care provider.

Yes. So on that world of sanity point, maybe this is where we can wrap up. You're going in -- we're going into a different administration from a regulatory standpoint in 2021. How do you see the potential for health care regulation changing impacting GoodRx's business?

Sure. Well, before we even talk about the new administration, we should talk about the world as is, right, which is -- I mean, again, I want to remind everyone, no surprise there, I was actually in a pharmacy just before I came here and their first shipment of vaccines came in. Every American is going to have to interact with the health care system, whether you're healthy or not, over the course of the next year. And this is a tremendous opportunity for us to reeducate Americans, right? And just say, "Hey, there's a better way." You don't necessarily go in and just show your insurance. You don't necessarily just take the old way of doing things. And so I'm super fired up to use this moment to show those 70% that Karsten talked about that they need to be smarter and more engaged health care consumers, and we're going to be there for them. In terms of the new administration, I mean, we -- obviously, they're not in place yet, and we monitor it closely. In fact, we often provide information research to legislatures, both state and federal, because everyone loves to complain about the cost of drugs, but nobody actually knows what people are paying out of pocket. We're the experts in out of pocket. And I'm so tired of seeing these $1 million drug articles that -- but that's a price that no one actually sees, but people are still paying way, way, way too much. And so we're going to be there to educate. We're always going to be on the side of transparency, and there's some really interesting movement in terms of like, again, opening up these information. Like today, I can tell you what your co-pay is, and I want to be able to reflect that back to you. Anyway, so we're going to stay in touch with the administrations. We don't see anything that's materially changing the sort of antiquated way that our country runs, but we'll be there to address whatever issues come up as they go. But we're fired up for this next year because we think we have an opportunity to really fix the system.

That's great. Well, really looking forward to that. Doug, Karsten, thank you so much for taking the time to join us. Look forward to staying in touch and seeing more of that progress soon.

Absolute pleasure to be here. Thank you, Heath.

Thank you.

Thank you. Bye-bye.

Bye.