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

Good morning to everybody who is here at the presentation and for any investors that are listening online. I'm George Hill. I'm the healthcare technology analyst and services analyst at Deutsche Bank. I'm very happy to have with me here this morning, Karsten Voermann, who is the CFO of GoodRx. Karsten, thank you for joining us.

Thrilled to be here, George. Thank you so much for having us and having GoodRx. And as usual, I think I need to start out with the safe harbor statement. We have a safe harbor provision. That we'll make forward-looking statements during this presentation, and we'll refer you to our SEC filings for risk factors that could impact our future performance. And with that, back to you.

Back to me. I like it. And Karsten, we caught up before this. You know I'm going to try to keep this very casual and very conversational. For those who might be uninitiated, maybe just give us a couple of quick minutes a minute or 2 on the background of GoodRx, what you guys do and kind of how you guys fit into the health care and technology ecosystem.

Sure. So we're very excited at GoodRx to help millions of Americans each month, save money on their prescriptions and related health care services. Our mission is to provide convenient and affordable access to health care for all Americans. And that's exactly what we do. So we have a broad panoply of services from prescription discounts where consumers generally save around 80% off what they'd otherwise pay for prescriptions. That's used by both the insured population and the uninsured population. Even insured folks save over 50% of their co-pays over half the time, which is why they make up about 74% of our user base. And along with prescription savings, we also offer discounted telehealth services and a variety of other services that are useful to consumers, including access to branded drug manufacturer discount programs.

That's super helpful. And I think that's a good jumping off point, where the company recently reported Q4 results with solid numbers. That we would note that COVID took a layer of the torrid growth that the company had been putting up prior to that. Maybe could you revisit the year-end and Q4 for GoodRx and talk about the company's outlook for 2022 at a high level?

Sure. Thanks for the question, George. Yes. So I think when we look at 4Q, it's best to sort of start off from where we were about a year ago today when we're doing our 4Q related calls -- 4Q '20 related calls and presentations. At that time, we predicted we do about $750 million in revenue for 2021. And we predicated that on COVID largely being gone by the middle of the year. We said at the beginning of the second half of the year. We also, at that time, anticipated the huge undiagnosed condition backlog. IQVIA talks about 1.3 billion undiagnosed conditions roughly. We've anticipated that backlog would also start to erode, resulting in more visits by patients to their physicians and ultimately more scripts. As we all know, we didn't really see that, especially with Omicron hitting in the fourth quarter. We still managed to get to about $745 million, instead of the $750 million we guided to for 2020, but we didn't quite make it there with COVID. And I think this year, as we look forward into 2022, what we decided would be better than speculating on when COVID might end and when the undiagnosed condition backlog might go away, we've decided not to speculate on those things and look at the world as we see it now, George. And look at -- given it the good world staying exactly as it is now what the future would look like. And so by taking away the speculation and the guessing around when COVID might be fully gone, if it becomes endemic or not, whether the undiagnosed condition backlog erodes or not. By taking all that out, we felt like it would be more useful to constituents to really understand what was in the guide and what wasn't. And it's interesting, one of our investors sent me an article from STAT, which is a health-related publication this morning, talking about how COVID volatility over the last year significantly impact health care providers. And we see the same thing, too, because health care providers are our biggest single source of new users. A lot of companies in the Internet space broadly spend a lot to acquire consumers. We spend a lot less because health care providers refer GoodRx very, very significantly. About 88% of them are aware of GoodRx, but 80% refer patients to GoodRx. And when they do, that's obviously a great and paid source of new users for us.

No. That's really helpful. And I know that you guys have highlighted, and I know it was discussed on the last earnings call that despite the targeting of $750 million in revenue, let's just say, COVID cost you more than $100 million from expected revenue. I know I'm kind of digressing off the question just a little bit. But maybe -- so the guidance was inherently conservative, it would seem. And the headwind from COVID cost you, I think the number $70 million to $140 million or $70 million to $150 million. Maybe could you talk a little bit about the assumptions behind $70 million to $140 million? And like maybe put that in the perspective, both of that's almost 10%-ish of the company's revenue. And do you think about it the same way from like a prescriptions perspective and maybe the assumptions that underlie the $70 million to $140 million and maybe the implications for '22 as well?

Absolutely, yes. So I think on the first part, the reason we performed the analysis was in part to help us understand and be better about predicting what the future might look like. So that was the initial goal. So since the beginning of COVID, so since March of 2020, again, we saw the low end of our range, about $70 million, at the high end of the range, about $140 million worth of revenue, not come in the way we would have otherwise anticipated in a non-COVID situation. And the majority of that falls into the 2021 period. So if the majority falls in, you're quite right that it forms about 10% of revenue or so. And the assumptions that underlay it are twofold. So we performed the analysis along a variety of prongs that fall into 2 broad categories. The first category is we looked at our performance through the pre-COVID period, so January and February of 2020, March is already sort of anomalous because prescriptions got pulled in from April into March last year as folks might recollect. So we looked at December, January, February of 2020 and then extrapolated from that what normal growth would look like for the existing users in the cohorts we had, both the chronic users and the acute users modeled separately because both sets of users actually do a lot of repeat transactions with GoodRx. And then layer it on what we traditionally expect from a seasonality perspective in terms of new users. So prong 1 was predicated on taking historical realities of how users and cohorts perform and extrapolating forward the early pre-COVID period, so December, January, February 2020 results, extrapolating forward using those assumptions. Then the second prong we used was looking at our historical rate of penetration into the market and rate of market growth because the overall market slowed down quite a bit, too. And by triangulating across both of those is how we came up with the range that I've been describing. And the reason we did it again was to be able to predict forward better because what we generally saw happened during COVID is that our cohort shrank a little because, again, the health care providers weren't referring as many patients because they weren't seeing as many patients. And then secondly, the time it took a given patient to pick up their potentially second or third script could also take longer. So once we're already a GoodRx user, they may not get another prescription as quickly as they historically had. And those are the principal drivers, George.

No, that's great. And I think you even kind of -- you went into my next question. As we joked before the presentation started to like to keep it simple.

It's a conversation, right?

Yes. I think of users times scripts, times price as the construction of the revenue build for the company. And you talked a lot about how the users did not -- I think we're not going to the doctor's office, which yielded fewer scripts and the price, the pricing environment is kind of something that's out of your control.

Yes, generally, we've -- on the pricing side, we've generally seen our revenue per user, revenue per -- we call them monthly active consumers. We've seen revenue per MAC accrued up a little bit quarter-over-quarter. So I think that's generally been a good thing and that's mostly just a function of the fact that our agreements with our back plane of PBMs are such that they often have tiering in the agreement. So as our volumes increase, which they do every year -- as the volumes increase, the pricing gets better for us and our users. So our savings rate for users went from around 59% in 2017-2018 to about 80% that we talking about earlier today. Our take rate, meaning a portion of GMV we keep went from around 13-ish percent to around 60-ish percent in the same period. So both grew by roughly the same proportion and both grew because our volumes are increasing. That allows us to extract better deals for everybody in our ecosystem.

Yes. And definitely a lot to pull apart in that conversation. But as we think about the MACs and the users, I think one of the things from our conversations with investors that might have caught people by surprise is the implication from the guidance is the slowdown in the MAC growth as we look at '22 versus '21? I guess could you talk a little bit about how the company thinks about that versus how much of the MAC slowdown is kind of this COVID uncertainty that you think about versus how much of it is just as the business continues to grow and continues to scale, you can bump up against the wall of large numbers? And are you just -- nothing grows at 25% forever. That's just it's not really math works. I would love you to kind of disaggregate how you guys think about the MAC growth?

Sure. Yes. I think the -- there are a couple of things to talk about there. I think first quarter, in particular and then full year '22 and relative to prior years as well. So I think the best place to start, though, is talking about sort of cohort sizing and taking that a little bit away from the last question. So we mentioned that the cohorts were smaller during COVID because less folks were going to a doctor in any given month. So the new users we got in that month through referrals or even directly through our own advertising was reduced because both weren't getting the script. The challenge around that is that those cohorts say, a cohort from March of 2021, for example, is now of a fixed size. It can't get bigger anymore. So however many people we got in that period. Same thing for April, same thing all the way through December 2021. So by December '21, when you think about it, we had 20 previous months from March 2020 until December '21 of cohorts that were a little smaller than usual. And because of that and because we have such a high recurring transaction rate, over 80% of our transactions are repeats, because of that, as we go into 2022, those smaller cohorts catalyze less repeat transactions in '22. And again, from a guide perspective, because we aren't assuming in a change to the current environment, we're not anticipating that the undiagnosed condition backlog dumps more users in for '22 than we'd otherwise have. And so with that stripped out and the fact that we're also assuming we continue to have some endemic COVID, I'm not quite sure what letter comes after Omicron -- the Greek alphabet. It could be Theta, maybe.

Omega.

But anyway, we assume that, that may happen, too. So from those perspectives, we're not anticipating sort of a rapid increase in our cohort size that would mitigate the bolus of 20 months of smaller cohorts at this point. And that's why we wanted to make sure we wouldn't put ourselves in a position to speculate when that might change. Now over time, we know that it will change because every single report that you read says that people got less healthy during the COVID period. And the undiagnosed conditions are just now leveling out, but they haven't actually shrunk, which means, ultimately, there are another 1.3 billion-ish undiagnosed conditions and likely scripts waiting to come in, but we don't know when, and we didn't want to speculate on that. So there is potentially a little bit of upside if they come in this year, but it's also possible that consumer behavior has changed such that where folks used to go to their dermatologist once every year, now they go once every 2 years. We'll still get the scripts because ultimately, the prescriptions will be written. But there could be a lag period in there before people get back on a normal cadence. And just to finish off with respect to 1Q. The 1Q guide, in particular, when we looked at that as well, we contemplated all of the issues that I'm talking about. And of course, we're doing the guide during the period when Omicron was still having some effect. So setting the numbers in late January. So that's a consideration. And 1Q is also a little tricky because it's, like in most of retail, you see this as well to a shorter quarter. So you lose about 3% of revenue off that. And you also have to bake in a couple of winter storms that cost you 3%, 4% of revenue too. Last year it was Texas. This year, it was a little Texas and the Southeast. It happens every year.

No, that's very helpful. And it's interesting to hear you the very small things that are out of your control that easily impact numbers by 5%, 6%.

Yes.

When you roll it all together. You talked about the 80% recurring revenue portion of the business. Could you talk a little bit about what you guys see as new Rxs versus customers who use for refills. And I say that because 2 threads that you mentioned that I want to pull on is the 80% recurring, which to me, part of it is new versus refills. We're going to run down the PBM rabbit hole next time. I imagine a lot of people at the TMT conference don't think a lot about PBMs. So for their benefit, we'll talk new versus refills, and then we'll talk PBMs?

Excellent. So on new versus refills, new scripts are really important for us because that acts as a catalyst for the health care provider to be able to make the referral to GoodRx, number one. And even if a user doesn't get a referral from their health care provider, when they get that new script, even if they're on a number of existing scripts, the new one is the one where they go, wow, I'm on these other scripts, now I have to pay this too. How can they save money? And that's one of the reasons that new scripts are so important for us as a catalyst for new users. So when we look at predicting our performance or looking at the size of our opportunities, we focus much, much more on new Rxs than total Rxs. And specifically, even for our core prescription transactions business, we focus on new generic Rxs. And for our prescription transactions business, that's a business that's fairly high margin. And to use a word earlier on, growing at a torrid pace. It grew 4x Q-over-Q through the fourth quarter. That business helps consumers take advantage of pharma manufacturer discounts so co-pay and deductible assistance programs. And that business depends more on branded drugs. So new Rxs on the generic side, fuel our prescription transactions business, new Rxs on the branded side, fuel our manufacturer solutions business.

Yes. And we're definitely going to get into the -- you guys affectionately call the other segment in a little bit. But as it relates to PBMs, I'll ask you to explain it versus me for a TMT audience, the company's relationships with PBMs and how you aggregate what I would call PBM purchasing power on an any payer basis to drive benefit to your clients, to your customers?

That was actually a great summary, George, so perfect summary. But to take it -- to expand on that a little bit. So the best way to think about it is that effectively, GoodRx is like a marketplace. So we have relationships with well over a dozen pharmacy benefit managers or PBMs. And each of those PBMs negotiates prices with drug manufacturers and some PBMs negotiate certain lower prices on part of the basket, other ones will negotiate lower prices in other parts of the basket. Where other parts can mean different drugs, different geographies, different conditions served, et cetera. So each of the PBMs on any given pharmaceutical will have a different price. So what we've effectively created is a marketplace in which the PBMs try and offer the lowest price they can in order to get all the volume from our consumers. And given that we have on average 6.4 million monthly active consumers or MACs, plus another set of subscribers that amount to about 1.6 million Americans served through a subscription plans, that's 8 million to use a health care parlance term, lives effectively. And PBMs get very excited about that kind of volume. And they get excited for 2 reasons. The first reason is they directly make some margin off us. So not that much because, again, we've continued to increase our savings rate and our take rate. But equally importantly, by getting the extra volume, it gives them more leverage with the drug manufacturers to negotiate lower pricing for themselves. So by taking GoodRx's volume and leveraging it, it makes all of their other business more profitable than it would otherwise be. And that's why PBMs don't leave GoodRx and why we actually keep on adding more. We added another couple over the second half of last year, I think, was the timing on that. So these pharmacy benefit managers want to get into the ecosystem, want to benefit from the volume. But in order for us to let them in, they have to offer better pricing than any of our existing PBMs and at least some of their formulary that is on some of the medications and be able to offer better savings to our consumers and a better take rate to us. And PBMs continue to want to opt in because, again, they really want that volume, and they really want that volume because it benefits them in so many different ways. Is that helpful?

I'd say helpful. Always helpful for me to hear it again because as you know well, the drug supply chain and drug reimbursement is…

It's complex.

I'll call it Byzantine.

Byzantine is a good word. Yes.

We're going to have a good word day. And I feel like, to some degree, what GoodRx has done is you've kind of -- you've taken the cover off of a weird part of the drug reimbursement process, and this is going to be the question that leads into a competitive environment. And you've actually -- you've shown what big business and how lucrative the backward incentive structure of the drug supply chain can be. And talk to me about how do you -- and you've done it to benefit the consumer, which is the best part of this business. And -- but can you talk about how you keep the PBMs or we hear about companies like drugs -- like the drug switch, people don't even know what drug -- like pharmacy benefits switches are. They want to get into your business or try to disintermediate your business. Talk a little bit about the competitive environment?

Sure.

And how do you keep your partners from trying to get into your business and people who are kind of upstream and downstream from trying to entrench upon the area that you've carved out?

Sure. Yes. No, we've really benefited from the relationships we've established. And while they are -- while the industry as a whole is pretty Byzantine, to use your word, I think our goal has been transparency. And to use a word that the former CFO of Zillow uses, democratization. So we've democratized the ability for consumers to really understand what a prescription should cost. So consumers are sitting there going, I have a $20 co-pay from Anthem Blue Cross plan or whatever plan they're on, is this what it costs? And in general, for generics, it's definitely not, right? Like GoodRx pricing for 30-day generic scripts is well under $10 most of the time. And so that transparency is what allows consumers to save the money. But going into the competitive environment a little more, it's very challenging for others to do what we do. So there are 2 sort of classes of others. There are other entities like GoodRx. And on that dimension, of other entities like GoodRx, there are little companies like RxSaver, which we ended up buying and also some larger ones that folks may have heard of. But across the board, the reality is that no one's got even close to relative market share we do. Our next biggest competitor is roughly 15%, 20% as big as we are. And when we're talking about the PBMs earlier, I mentioned that our savings rate keeps getting better because we keep driving more volume. So that ends up making our savings rate bigger, which gets us more users, which makes our savings rate bigger. And so that makes it very hard for other competitors who are actually in the prescription discount space, trying to do something similar to GoodRx, is it very hard for them to offer compelling prices. I think the other reality is that one of our competitors referred to us as the Kleenex of discount pharmaceuticals, and that would make it -- because we're the Kleenex, effectively, the name people think of, that would make it very hard to disintermediate us from health care providers and pharmacists who again, drive many users our way, which is accurate. So between the marketing leverage we have and the pricing leverage we have, I think we're not worried about that all that much at all. And then the other dimension that you raised as well, some of the PBMs have talked about going into prescription discounts. And I think there the reality is that PBMs have been trying to do this for decades, plural. So they've offered sort of paper-based prescription discount cards going back to the '90s or early 2000s, and they've never really taken off and there are really 2 reasons for that. The first reason is, if you're a typical PBM customer, which has been an employer or a payer, so I think municipalities, health plans, employers and the like. And you find out that the rates you're paying the PBM are higher than the rates that PBMs are offering a single consumer, you'll be really irritated and you'll think you're paying too much. And therefore, you'll push on the PBM to lower your pricing for you as the employer plan sponsor, municipality, et cetera. And so the challenge PBMs have is one of channel conflict where if they tried to offer the same pricing that GoodRx offers, it potentially deflates or drains their profit pool across the massive majority of their business that has nothing to do with direct-to-consumer. Because those direct-to-consumer prices to compete with us would have to be so low that they're likely below the prices that plan sponsors are paying. And what GoodRx really provides them is a way to get extra volume, but with an abstraction layer so that no one really knows on any given script, which PBM is actually the one that's getting the benefit of the GoodRx volume. So on any given script, you can't tell. It's one of our back plan of PBMs, but not which one. And that protects the PBMs, too, because it allows them to price right at marginal cost without disrupting their existing relationships with their existing clients. And I think that's really important and why we've never really seen any significant encroachment there. And on the pharmacy side, we have deep relationships with all of the big pharmacies out there. So some examples of that are that. We ran ads in the fall that folks might have seen in collaboration with CVS. They're in CVS stores. Obviously, you don't do that unless CVS like you. We brought Rite Aid onto our Gold platform, our subscription platform. Walmart's running videos for their pharmacists and how to take GoodRx, how to accept GoodRx, which they pay for because they really value the GoodRx users coming into the Walmart stores and filling a basket with a whole bunch of other things. Entities like Costco and we work together on integrations to make the GoodRx flows easier for pharmacists there, too. So we feel like our relationship with all the big pharmacies, which is where all the volume flows through are really strong.

I'll ask one last competitive question.

Sure.

And I'll ask you to be brief because this is the obligatory Amazon question.

Got you.

And just I feel like you have to ask about Amazon.

You do.

Could you talk about what you see from Amazon competitively. They launched an online pharmacy. They launched a discount card partnership with ESI. Do you see any encroachment -- have you seen any impact at all from Amazon's entering the pharmacy space?

The very short answer is no. And to go slightly less brief George, on the brick-and-mortar side, we've looked at the IQVIA data closely, and I think Trevor, our CEO, was talking about this in one of our earlier earnings call, so it's out there in the public already. But IQVIA is looking at Amazon codes and recognize that the number of subscription -- number of prescriptions going through the brick-and-mortar ESI card are literally in the 100s per month. Not the 100s of 1,000s, the 100s, which sort of makes sense because we don't see Amazon trying to drive Prime users into Walmart to fill a script. So the purpose of that ESI card is really so that Amazon can offer discounts on the online side without usual and customary issues, which is a sort of a complex area that would take longer to explain. But suffice it to say that's the main point of the ESI relationship. So then if we look at mail and delivery, we haven't seen mail and delivery increase in aggregate. In fact, it's shrinking post COVID, and we haven't seen significant shifts in taking share across that either. So Amazon has made a lot of announcement, but their announcements have customarily been sort of like the ones I used to make when it's at Microsoft doing corp dev, they're related to new offerings, and they're related to things we plan to do. So far, we haven't seen a single announcement that actually showcases the achievement of any KPIs, volumes, revenues or anything else. And we think the reason they're not making those announcements is because they're not getting traction on any of those measures.

As they continue to learn, health care is hard.

Health care is hard.

Health care is hard. You're talking -- you mentioned the -- the Gold product.

Yes.

At GoodRx you guys got a Gold product. You guys recently took a price increase in the Gold product -- the subscription product. Could you talk about what you saw in the market that drove the price increase? And insofar as you've had time to evaluate the price increase, what type of impact you've seen on retention, churn, utilization?

Sure, yes. So first of all, the basis for the price increase was that we're looking at our subscription product strategically and realizing that consumers are saving hundreds of thousands of dollars a year and they're paying us $5.99 a month. And we thought that the ratio of the amounts of savings we're driving against our take on that business was somewhat out of balance. And I think that was also a factor because when we looked at our offering, we hadn't repriced it or changed price at all on it for the last 5 years, but we kept on adding more to it, mail and delivery, discounts and telehealth visits, a variety of incremental offerings to our base subscription business -- so at that point, we thought it's time to start thinking about a reprice. So we did some testing and realized that because of the amount of savings, this was an elastic product basically in microeconomic terms, meaning folks weren't going to not use it and forgo the huge savings they'd potentially had for a smaller price increase. And based on that, we first rolled forward the testing then applied the price increase to our new users, which is in effect right now. We haven't seen significant attenuation of new users from what we expected, absent the price increase. So we felt good about that. And so we're going to then layer it into our existing user base, too. We've already begun doing that. That will continue through the second quarter, maybe a little bit into the beginning of the third quarter as well. But that's all happening this year. And as you'll probably recollect in our guide, we talked about 45% to 55% growth in revenue of our subscriptions business. And we also are doing a price increase that is roughly a doubling of the subscription pricing. So the reason that math works is, number one, we're doing the price increase roughly midyear, so going to get about half the effect. And so that gets you to that sort of 45% to 55% off price, primarily versus off volume this year. So from a volume perspective, even though our testing showed that folks are generally pretty inelastic, when you translate the sample into the population, you don't know for sure that that's going to hold perfectly. So we elected to assume into our modeling that there will be some onetime churn and we'll probably have a somewhat V-shaped set of subscriber numbers this year where they start off pre-price increase at a certain level, then potentially drop down through the beginning of the second half and then climb back up to a higher number at the end of the year again. Whether we actually do see significant churn, I think the jury is a little bit out on. Again, the testing didn't show it, but we want to make sure, given that this is a consumer-facing offering and sometimes in consumer as opposed to B2B, there's more nonlinearity. So we want to make sure we at least contemplated that in our plans.

That's very helpful. And I'll say that makes a ton of sense. And when you -- I'll say, as a decent analyst, I can unpack the math quickly in my head, and I understand the assumptions behind that. I'll say, however, if we think the growth in the prescription transactions business has been torrid, let's talk about the other segment where growth has really been off the charts as I'm following the clock here. I guess a brief overview of what GoodRx hopes to accomplish in the other segment and talk about the it's called the other segment, it's -- I call the manufacturer services business. Talk about what you guys are doing in manufacturer services and how you see the opportunity to grow the business facing manufacturers?

Yes. I think that's the business, frankly, that I'm as a CFO most excited about, and I'm really excited about it for a couple of reasons. One is the growth rate that we talked about, 3x year-over-year for the whole year last year versus the prior year, 4x in the fourth quarter with some extra seasonal pharma manufacturer solution or pharma manufacturer broadly spend. And the reason we're so excited about it is not only the growth rate, but also the margin profile because this is for us a sold business, not a marketed business. So we already have millions of visitors coming to our platform, well in excess of our MAC subscriber number. And we already have over 500,000 health care providers who use GoodRx in a given 90-day period. So that approximately 500,000 health care providers are very, very valuable audience for pharma manufacturers as well. And it's, we believe, more health care providers than pretty much any other platform like us has in the U.S. today. I think when you look at other competitive platforms, they talk about smaller numbers than that, and they also don't have a 90 NPS with health care providers. So this business basically to take a step back, though, away from the stats on the growth rate and the margin on it. This business is exciting to us because it offers us another way to help consumers save. So in our prescription transactions business, as we talked about a little bit earlier, that's focused primarily on lower-priced branded drugs and generics. The ones where if you take the price down by about 80%, they become really affordable for consumers because they're paying $5, $10, $15 for a script. On the prescription transactions business, that's focused on drugs and medications where even if you take the price down by 80%, there are a lot of consumers who still won't be able to afford it. So you can think of a variety of different pharmaceuticals out there like some of the wins that support autoimmune conditions, Humira and Enbrel, they can cost thousands of dollars in lands. And even if you take it down by 80%, your average American can't write that check. So pharma manufacturers have created a variety of programs to help get people on medication on those higher-priced drugs. And the reason pharma manufacturers do that is because for, let's say, AbbVie who makes Humira in their context, this is a chronic medication that once someone gets on it, they'll likely be on for years and even decades. So the lifetime value to an AbbVie of getting someone on the medication is very, very high and the social good of helping someone with their autoimmune condition is also very, very important. The challenge manufacturers have is about 3%, 4%, definitely single-digit percentages of the folks who are eligible for deductible and co-pay assistance programs, the programs that help them get on medication, actually use them. And the reasons are twofold. One, health care providers are really busy. The AMA says they spend about 15 hours a week trying to get patients on medication. And two, consumers either don't know about the programs or don't know how to navigate them because they can be a little complicated like they involve things like step therapies, where you have to try a different lower-priced medication first. In the case of autoimmune, it might be methotrexate. And only after that doesn't work, you get the better biologic like Humira. So broad point here is it's hard for consumers to get on these medications, manufacturers really want them to. So where does GoodRx come in? Because GoodRx has so many users, we get more hits to any given drug name on GoodRx then that drug's owned website guests. And about 20% of the folks who come to GoodRx searching for medications or searching for branded drugs. So drug manufacturers know that. The health care providers know that, too. And so the drug manufacturers partner with GoodRx to help both patients and providers ensure that folks can get on the therapies they need. And that's where we work with 19 of the top 20 drug manufacturers to help educate and enable the access to the medications. And the way that stands through a variety of solutions, they're access solutions, things like co-pay assist and deductible assess their awareness solutions, education focused on health care providers. And there are adherent solutions. So things like pharma manufacturers who enable nurse chat through GoodRx. So as a patient and GoodRx user, if you're on a given prescription already, you've got another prescription that comes in. You can chat with a nurse at when the drug manufacturers to say, hey, is there going to be an adverse interaction or not. And things like that help people stay adherent and continue to help drug manufacturers because then they continue to achieve revenue from those patients. So the number of solutions we offer drug manufacturers has gone up significantly by about double their purchasing has gone up significantly also by about double. So that's an important growth vector for us, a number of solutions. Second important growth vectors, a number of manufacturers, third big growth vectors, number of medications that we serve at each manufacturer that's gone up significantly up to about 140 medications that we're helping promote now. And then the fourth dimension is that we've now focused more and more heavily on our health care provider universe. We've created a specific health care provider, mode and GoodRx for them. And we've now seen that about 90% of the health care providers who that mode gets exposed to opt into it. And we've seen the utilization for those health care providers have very, very positive inflections. So they use GoodRx during their prescribing windows. So most of the use is between 7:00 a.m. and 4:00 p.m., which is great for manufacturers. And the providers who use it don't just help our manufacturer solutions business. They also help our core business because they share coupons with consumers, so e-mail or text them to consumers, we're otherwise share with consumers at nearly twice the rate of our average health care provider users. So that's also really attractive since it drives both the manufacturer solutions business and also our core -- sorry, a little bit of a longer answer. Hopefully.

No, it was a great answer, and you preempted a couple of my questions, which is going to make me jump right to vitaCare. And the recent vitaCare acquisition, which should slot nicely into this segment. I guess maybe talk for a minute about what vitaCare does and what you guys saw as attractive about vitaCare adding it to the -- you guys call the other segment, I'm going to call the manufacturing segment.

There is little telehealths there too, but all the growth is manufacturing solutions here most of -- almost all the growth. Yes. So vitaCare is really exciting for us because they enable something that we haven't really been able to do to the degree we wanted to and that manufacturers were asking for, for a long time. So we talked a little bit about the challenges associated with a consumer or a health care provider trying to get on medication for branded drugs. And the consumer side is essentially a competence issue because it's very hard to negotiate with their insurer or to negotiate with the drug manufacturer. On the provider side, it's a time issue. Again, I cited that AMA report that said providers spend about 15 hours a week, not actually seeing patients, but just trying to get folks on medication. So manufacturers realized this is a huge hurdle. And so what they've been asking for is that someone comes in and basically offloads the work of the patient and provider in order to make sure folks can get on medication more easily. So a great way to talk about this is if we picture this, Karsten Voermann gets a script for Humira, say, to continue the example, and we're big fans of AbbVie. So Karsten gets a script for Humira. I may have, if I'm on an insurance program, a need to prove that a first tried methotrexate, and then I may have a significant deductible or co-pay on an expensive branded drug. And so all of a sudden, I'm stuck because I don't know how to navigate that. So what vitaCare does effectively is take all that work off my plate as a consumer and take the provider out of the need to have to go through all of this insurance for lack of a better word, overhead. So the provider prescribes the medication to me, send the script to vitaCare. vitaCare then works with me as the patient to gather my relevant information and then navigates the entire insurance and manufacture process to be able to coordinate between the 2, so I benefit from the deductible or co-pay assistance on the one hand and ultimately get the drug covered by insurance on the other hand. And the reason manufacturers want us to do this is because ultimately, it's a scale business. So the more of this you do for more manufacturers, the lower your cost structure will be in terms of providing these kinds of services. And therefore, it makes sense for it to be done in sort of a hub late model for those folks who are in sort of the pharma health care world. So we can support multiple manufacturers doing this at any given time. And this is exactly what vitaCare did. It both did this for its parent company, TherapeuticsMD and it also does this on behalf of other manufacturers, too. So what got us excited is that they've got proven systems, processes and practices around doing this both for their existing parent and other manufacturers. They're a known entity in the space, so other pharma manufacturers who we sell to already know vitaCare, and we'll be excited to leverage its services when we close that transaction. And we're excited because it deepens both our relationships with those providers, but it also deepens our relationship with a health care and dock side because we're helping them have less work, which is one of the reasons they're so loyal to us and one of the reasons we have a 90 NPS with them. So absolutely excited about this business. I think our manufacturers are too I heard from one of our sales folks that after we announced that transaction, the phone started ringing pretty much right away, which is a great thing -- it's very validated.

It's what you like to hear.

Better than the alternative.

It's like when I publish a good research note the phone starts to ring. It's a good thing. I'm looking at the clock, unfortunately. I think I have time for one last question. Product. Okay. What I'm going to hit is margins, even though I've got another page of questions here. You guys talked about on the Q4 call, the ability to get back to better than 40% or so normalized EBITDA margins.

Yes.

I guess talk about what's the most important thing in getting there? Is it growth? Is it mix? Is it cost controls? Like when you think about the gap from where you are now to north of 40%, what's the biggest swing factor?

I'm going to hit on 2 big things. Growth is clearly important because we're -- and significant parts of our business were largely fixed cost. So that alone takes care of a lot. But I think the more nuanced parts that folks may not realize as much ore mix is important, again, because our pharma manufacturer solutions, what's in the other bucket as we talked about, that's a sold business doesn't really have marketing costs associated with it. So it's extraordinarily high margin. So as that continues to grow at a faster rate than even our other business lines, that will, in itself, enhance our margin profile over time. The other dimensions are that the cost structure even in marketing and product and tech is somewhat fixed. It hasn't manifested itself as fully yet, mainly because we grew the labor for us about 70% year-over-year from '20 to '21. And of course, those folks were only there for part of the year in '21. They'll be there for a full year in '22. So it creates a real impression that labor costs are going up, even though head count from '21 to '22 is growing at a fraction of the rate -- but you see the manifestation of that much slower headcount growth going forward, now that we've got the product and technology teams built out to where we want them, you'll see the manifestation of that margin in the next year since again, in that '21 to '22 period, we're now picking up a full year cost and people are only a partial year before. So that will be a big factor as well, along with mix.

Okay. Well, we are beyond over on time. I thank you for being here. And Karsten, great to see you in person.

Great to see you in person, and we really appreciate the invite. Always fun to be out in the field again.

Thank you.

Take care folks.

Thank you.