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

I think we can get started. Thanks for joining the GoodRx fireside chat here at the Citi Global Healthcare Conference. My name is Daniel Grosslight. I'm the health tech and distribution analyst here at Citi. I'm very pleased to have with us today GoodRx' CFO, Karsten Voermann; and Chief Accounting Officer, Romin Nabiey. Thanks, guys, for joining us.

Thanks for inviting us. We're excited to be here at the conference and grateful too. And I'll lead off with the safe harbor statement, if that's okay, and then I'll turn right back to you afterwards. I'd like to remind everyone that today's fireside chat will contain forward-looking statements and all the statements we make that do not relate to matters of historical fact should be considered forward-looking statements and aren't promises or guarantees. Actual results may differ materially from those projected in any forward-looking statements. Please refer to our recent 10-K and 10-Q filed with the SEC for a description of factors that may affect our results. We may also reference certain non-GAAP metrics, which are reconciled to the nearest GAAP metric in our earnings press releases, which can be found on the overview page of our investor relations website at investors.goodrx.com. And back to you, Daniel.

Nice reading Okay. Let's kick off with a question just on the retail environment because I think that's been causing a lot of volatility, obviously with you guys, not just this year, but over the past couple of years. But I think this year, specifically, there's been 2 big challenges that you've called out. One, store closures, and that's across Rite Aid with their bankruptcy, but also others like Walgreens and CVS have had issues and are closing stores. And then the second big issue is it seems, at least from your commentary on last quarter's call, pharmacies are being more aggressive with their negotiations with PBMs and they might be having a little bit more success this year than past years in terms of pushing back on some of the admin fees. And it seems like the latter challenge is what's causing some of the volatility on the top line, namely, I think you mentioned that next year, we should think about top line growth in the single-digit range. So let's start there. What changed this year versus prior years that will potentially give pharmacies the upper hand in negotiating with PBMs?

Sure. First, Daniel, that characterization was spot on that the environment is a little different than it was in the past, both because of the store closures, which we'd already talked about and factored into our numbers. To a large extent, we talked about the Rite Aid closures, for example, costing about $5 million in the second half. And we talked about $2.4 million of that having hit in the third quarter. So trajectory is as we expected. I think what has become a more recent factor is exactly what you're articulating, which is that push-pull between pharmacies and PBMs. They renegotiate contracts regularly so that part is not a surprise at all. I think what has changed this year, though, is the challenging situation pharmacies find themselves in is such that it gives them more leverage than they've had in the past, meaning specifically that now that they're in a place where continuing to see reimbursement rates from the PBM side decrease isn't really sustainable anymore. And that's one of the reasons they're digging in harder. And as we talk about that single-digit percentage growth range for next year on the top line, that's obviously a decently wide range, 1% is a lot less than 9%. And the reason for the breadth of the range is we thought about what would happen if nothing changes and that PBMs effectively get everything they want versus if things do change and the pharmacies get most of what the pharmacies, we believe, are asking for. And again, we don't have perfect insight, which is one of the reasons we provided a broader range.

Yes, that makes complete sense. When do you think you will have more insight into how those negotiations have turned out?

Sure. I think it will be prior to our 4Q earnings call because as these renegotiations happen, we expect them as they usually do in prior years to culminate sometime around the year-end, and probably be effective as of the start of the new year in the majority of cases. And to the extent that, that happens, we'll start seeing the new rates manifest in January and in February.

Yes, yes. And you've also mentioned that you think this is kind of a onetime reset. And so we're not going to have these further degradation in admin fees likely. What gives you the confidence that this isn't a recurring theme with pharmacies and PBMs. So this is a reset year, and from here, we can grow.

Sure. I think the reality is that historically, the PBMs have generally gotten most of what they want in terms of the push and pull around the profit pool, more has been pulled towards the PBMs. And I think that historical trajectory would likely still be the norm, but for, again, the leverage pharmacies have because of their situation being a little dire right now. So in that context, the source of the leverage goes away, as soon as the pharmacies find themselves in a more sustainable position and the incentive for PBMs to fund even further beyond that does not seem very high.

Yes. Yes. And given that you're kind of arm's length from these negotiations, what can you do now to help your pharmacy partners, to help your PBM partners to offset some of these pressures?

Sure. I'll take that, Daniel. I think there's a number of mitigants, the biggest of which is our direct contracting approach that we embarked on a couple of years ago. What that does is it puts the agreement in place between ourselves and just the pharmacy. And with that, typically, we find that the pharmacies experience increases in revenue and margin associated with these agreements. And during our Investor Day back in May, we talked about on average them having about 2x the margin in these direct contracts versus non-direct agreements. So for that reason, we've seen significant growth, we've talked about in the past how we have about 30% of our volume flowing through these agreements, and we now have 8 of the top 10 pharmacies signed up. So I think that's probably the biggest mitigant that we have. And it's ultimately the right answer for the business because it puts control back in our hands and is obviously good for the pharmacies, too.

Are you agnostic as to if this -- if pharmacies contracted with you directly or go through your PBM partners? Or do you have a slight preference for one or the other?

Look, I think from an economic standpoint, Karsten just talked about, we haven't seen much PTR MAC degradation at all. So I think pretty much agnostic there. But it does give us more control. Ultimately, we're going to let it be a retail-driven demand versus a GoodRx-driven push though. So in other words, we're going to work with the pharmacies and the retailers to understand what their needs are, and they're going to dictate what their preferences are and our hybrid strategy is going to accommodate for that. So that's just what it's designed to do. And there are things that we can do to help drive that momentum, which is driving more value to them holistically, things like generic and brand reimbursements, helping them with merchandising opportunities and helping them expand their digital footprint. But ultimately, like I said, it's really going to be driven by what their needs are, and we're going to help meet their evolving priorities by being an adaptive and responsive partner.

Yes. Yes. And I know this is probably a difficult question to answer right now given there's so much unknown about how these negotiations between pharmacies and PBMs actually turn up. But how do you think direct contracting is going to change next year? Because I guess you could feasibly see if the PBMs are pushing back hard on the renegotiated admin fees, you see these direct contracting volume accelerate. Whereas if the pharmacies are more successful, you might see that moderate a bit. How are you thinking about direct contracting given the negotiations that are ongoing right now?

Yes. I think it goes back to we ultimately want to go where the retailers lead us there. So depending on how the market evolves and what industry conditions are, retailers are going to work with us and, again, dictate what their preferences are, and we will be able to accommodate for that. Thankfully, we have a strategy that has direct contracting, which we can work directly with the pharmacies, a hybrid model where we can have some direct and some through our multi-PBM backed [ lane ]. Or just reverting to the entire multi-PBM backed lane for the entirety of the volume through a pharmacy. So lots of flexibility in our approach and so we can adapt to whatever the pharmacies need.

Yes, yes. And I'd like to stick to kind of the direct contracting and the potential economic effect on you guys, you mentioned you're kind of agnostic that it doesn't really have that big of an impact on PTR per MAC. But it was, I think, a tailwind at the beginning of the year and then it flipped to a headwind in the third quarter a little bit. Can you just walk us through kind of the economics of a direct contract? When is it a tailwind? When is it a headwind? And how can you kind of manage some of that uncertainty?

Yes, I can take that one. So I think in general, we optimize around the direct contracting being pretty much similar to the revenue we make on a script -- per script basis or overall through our traditional PBM model. And in that context, that's one of the reasons we haven't seen a lot of PTR per MAC flex is because we've generally been able to do that. Like we talked about -- we're now up to over 30% of volumes through direct contracts. If you look at PTR per MAC over the last several quarters, there's been some ups and downs, but it's generally pretty consistent. So from that perspective, the reality is that the pharmacy is really benefiting from the fact that there is one fewer -- one less player in the mix, meaning it's just the pharmacy and U.S.. So revenue or value that would historically have been captured by the PBM, to your point, gets to be captured by the pharmacy in that context. And to your prior question around, depending on how these negotiations go, direct contracting could be accelerated or decelerated, I think that's partly true. But I think there's also from our and the pharmacies perspective, a control aspect of it, too, because in direct contracting context, there's an ability to merchandise that's incrementally better. Like around this time last year, we talked about Walgreens and us working together to specifically set pricing on seasonal illness medications, things like cold, flu, RSV, et cetera, because Walgreens had specific ideas around where they wanted that pricing to land. And with us, we can just work that out between the 2 of us and it's done. It's much more difficult for a pharmacy to establish and maintain a price point in a funded benefit PBM context, in particular than it is working directly it does.

Yes. So it sounds like pharmacies have, all else being equal, have a preference to direct contract with you. You guys have a preference to direct contract with pharmacies, all else being equal. I guess that kind of begs the question, and I think I asked this each time we have one of these discussions. But at some point, do you think that, that starts to kind of cause a little bit of abrasion on the PBM side that, hey, now we're competing with GoodRx who before was more of a partner.

Sure. I can probably jump in on that one, you might want to jump in too for color. But I think the reality is we haven't seen that, like our relationships with PBMs have evolved. But number one, we haven't had a PBM that stopped working with GoodRx. So that's not happening. Number two, the degree to which some of the largest PBMs are working with us has shifted to the point where they're now effectively distributing GoodRx on our behalf through things like our integrated savings program, where large PBMs allow their benefit plan members to either get the co-pay price or the lower of that and the GoodRx to the extent we're cheaper. So they're promoting GoodRx into their plan sponsors to sell that benefit. And that, in many ways, I think, indicates a stronger strategic alignment between them and us, given their channel than before, and it also creates new opportunities for them to earn revenue, obviously, to which they like.

And the other thing I'll add is there's really no incentive for them not to continue working with us. If they were ever to pull out of an agreement or decide to stop working with us, that volume is purely incremental to them. And it would just end up going to a competitor. So that's part of the reason why, as Karsten mentioned, we've never had a cancellation or termination. And in fact, they're working with us more deeply now.

Yes. Makes sense. Okay. Let's stick with the retail channel. And Karsten, you mentioned at the outset that $5 million headwind this year in the second half because of Rite Aid store closures. I guess I want to focus on how we should think about this not for necessarily this year, which has gone as you expected, but for next year. So obviously, $5 million is a second half issue. Should we just think about next year, annualizing that $5 million. So you have an additional $5 million headwind next year? Or are you recapturing some of that volume? How should we think about that for '25?

Sure. So I think in terms of the impacts, there are probably 2 comments, one more general one and one more specific to Rite Aid and the $5 million. I think the more general comment is that store closures aren't inherently problematic in a significant way. What makes them problematic is when there's concentrated store closures in a given geography. So the contrast here would be CVS has been closing a lot of stores this year. And throughout the year, we did a significant amount of analysis around the impact there. And because CVS is only thinning stores, the impact on us was de minimis, like really small. Rite Aid, however we called out, where we commented on that $5 million of impact in the second half of this year because of the concentration of store closures in Ohio and Michigan, where there wasn't another Rite Aid with GoodRx on file for a user to go to. So from that perspective, that creates friction until the user, a, finds the new pharmacy, and b, has GoodRx applied again. So you can imagine that there's some users out there who maybe picked up the GoodRx card at the doctor's office or had the doc recommended that they use GoodRx, they got on script at Rite Aid, the GoodRx cards on file at the Rite Aid store associated with that prescription, and then the Rite Aid store goes away. Well, they may not even have the GoodRx card anymore at that point, right, until they go to the doctor next and get a new one, for example, if they don't use the web or the app as a means of accessing these discounts. So that's why the concentrated store closures are a much different reality than a thinning like what Walgreens talked about doing when they talked about their store closures, which we saw as favorable. Because in a thinning context, the consumer just goes to another Walgreens and has a similar experience at the Walgreens a mile down the street. So Rite Aid is sort of unique in that case. Okay, now getting to impact, sorry for giving that preamble first to put it in context. As Rite Aid stores continue to close, the impact will continue for a few weeks and months after the closure of those stores in concentrated locations. So to the extent they're still closing stores right now, that will carry over to some degree into next year. And we contemplated that in the context of that single-digit growth rate we talked about as an early indication of what '25 might look like.

Yes. It might be too early to have data on this. But of those early store closures, Rite Aid store closures, any idea on where those patients are going and what your recapture rate has been for those patients?

Sure. So yes, we have a ton of analysis around that, which is what we use to both calculate the $5 million impact for the second half of this year and then communicate that to the investor community. And as you can surmise from the fact that in the most recent quarter, the impact was about $2.4 million. And that's about half of the second half of the year, that should hopefully give investors' confidence that we are able to perform analyses and estimate these amounts reasonably accurately. So we certainly haven't been surprised by sort of recapture rates and consumers continuing to use GoodRx yet.

Are you able to disclose anything around kind of the percent recapture or where these folks are going? Or is that proprietary?

We haven't disclosed anything on that yet, but it's a good note to incorporate into our forward-looking conversations.

Got it. Okay. Okay. I want to focus on Kroger as well because this has obviously been an issue for you guys for a while now. You signed a direct contract with Kroger recently. I think perhaps that has developed a little more slowly than you had anticipated or perhaps TheStreet had anticipated. And I think there's probably still a little bit of confusion at the Kroger level of, "Oh, can we actually accept GoodRx again." So maybe if we can just get an update on how that contract is progressing? And how long do you think it will take for Kroger to get to kind of equalize with its overall market share and the claims flowing through GoodRx?

Yes, we still think there is upside because it hasn't equalized out to its market share yet. Going back to our Investor Day, we said it would probably take a few quarters for that to happen. And I think that's the reality as well. We do, once we direct contract with a pharmacy, look at post direct contracting volumes and margins and often adjust consumer prices subsequently and optimize those to get the optimal point of elasticity is probably the right way of thinking about it, the margin maximizing point. So in a few cases, we launch the direct contract and then we'll work to optimize prices with the counterparty and make sure that the pricing drives the amount of volume that they and we expect. But that's not instant, and it's somewhat iterative, and that's the sort of thing we would be doing right now.

Fair to say a couple more quarters for it to normalize or equalize?

Yes. I think it's reasonable to think that we're not there yet, and it will be a couple more quarters or so.

Got it. Let's turn over to the integrated savings program, Karsten, you mentioned this so, with Romin, on kind of your deeper relationships with PBMs. That seems to have done as you expected and quite well. I think at the Investor Day, you noted I guess it would be around 5% of your marketplace revenue this year, and it would grow at a 60% to 90% CAGR through 2026, which is obviously a great growth rate. Any changes to those targets and how you're thinking about the program in '25 and '26.

Maybe you go on and take that one, Karsten?

Yes. So I think on ISP, number one, it has performed pretty much exactly in line with our expectations for this year. So we were not surprised by how it did, and we're grateful that it's expanded in the way it has. And as we said at our Investor Day, going from nothing to 5% of revenue is a pretty steep climb granted off a small base. I think looking into the future for ISP, what we have going forward is not only the existing ISP program, which operates on the basis of driving scripts to GoodRx' when GoodRx is cheaper than the co-pay on covered PBM or benefit plan formulary. We incrementally announce deals with several PBMs around ISP Wrap as we're calling it, because it wraps around the benefit to provide GoodRx pricing for off-formulary medications. So deals are signed. We'll be launching that as we look into the coming year. And so I think the challenge right now is absent trajectory, it's hard to predict exactly how Wrap's going to contribute. But given that we're dealing with medications that are inherently off the patient's formulary, our ability to provide a lower price is something we're highly confident in, in many instances. I think the wildcard is if they're off-formulary medications, even if the consumer can save a lot, is the price still too high. So do they still walk away, for example, if it's a brand drug that may cost tens or hundreds instead of single-digit dollars. So that's the wild card that we're evaluating. But within that context, we absolutely expect to see healthy double-digit ISP growth into next year as well, between the combination of the base ISP and this new ISP Wrap that we've signed deals with, with several PBMs.

Got it. Let's stick with the base ISP, but I do have some questions on the Wrap product as well. So I think you've said that there are 5 main levers to drive growth in ISP, adding PBMs, adding employers' plans, adding pharmacies, adding drugs covered and increasing the win rate. Can you kind of force rank those levers on kind of what do you have the most control of, what's most impactful for you and what you're focused on?

Sure. So I think the most impactful levers from our perspective at this point, given we have like the big PBMs, the majority of them in the program, it's all about more plans and plan sponsors coming on board. So I think as this has been in market longer, plan sponsors get more comfortable, PBM sales forces get more comfortable. We anticipate that we'll continue to see that. We're also -- this year was the first year we've done this, we're also now directly reaching out to employers/sponsors to also catalyze demand directly at that level to pull the demand through the PBM channel as well. And this year has been pretty nascent, but it's something that we plan to continue to focus on going forward.

As you do more of that direct outreach, do you think you'll have to spend to invest in more sales folks.

We love being a high gross margin and high EBITDA margin, too, and we also love variable cost, Romin and I. So from that perspective, it's more about educating brokers and leveraging those channels versus fielding some kind of huge sales force that knocks on every employer's door just to be super clear.

And just as a reminder, the go-to-market is on the PBM's end to communicate and drive that messaging to their plans to kind of do the uptake of this program. So it's really not on us, it's on them, but we definitely help them with the messaging and marketing as well.

Yes, yes. And full disclosure Citi has -- uses Caremark, who has the ISP program. And I have no idea if I'm using it because we don't know as consumers if -- what price I'm getting. But I guess it seems like a no-brainer to me on the employer side. Like when you do get push back, if you do get pushback on this program, where is it from? And as an employer, why wouldn't an employer want to adopt this?

Sure. I think the nature of the pushback generally, and this holds true at the employer level, and I also surmise at the PBM level to some degree, too, is that I think when a new PBM starts to offer ISP, like this year was the first year that Caremark was in, for example. I have a feeling that the folks who are interfacing with the PBM customers so Citi in your case. Some of those folks are maybe more cautious about how aggressively they sell until they've seen how well it works, seeing it work seamlessly for a year. And then they go, okay, this is something I can put my customers on without my customers being mad at me. Back in the days, when I used to work at Microsoft, every time we add a new product that sales force wouldn't touch it because they'd say, "Hey, I don't want to sell the 1.0 version because it might mess up my sales of Windows and Office, right?" And so it took a year or so before they really ramped up. And I think this could be a maybe not perfectly analogous situation, but correlated situation at least.

Got it. Got it. Okay. Now let's shift over to the Wrap product because I do think that is a very interesting extension of ISP. Can you remind me which PBMs are on the Wrap product, and for the ones that aren't currently, what's the kind of fear there?

Sure. So far, we've announced that MedImpact, [ Survey Smith ].

Navitas.

Navitas are signed up on that one. We've seen some of those PBMs be sort of more innovative in terms of things they're willing to try quickly in the past. So we're eager to have them all enrolled now. I think with respect to the others, we -- we are certainly continuing to work with them. And in that context, our hope and expectation is that those conversations prove fruitful, and then we'll add more of them in too because it's just such an incrementally logical extension of the base ISP.

Got it. And as both these products grow, ISP base, ISP Wrap, how do you think that changes your business model? Because presumably, if we do see more volume come through the ISP versus the, call it, the core products, you would have to spend less on direct-to-consumer marketing. So you become more efficient from a marketing perspective. So just talk to us about how your model may change as volume increases through the ISP.

Yes. So from a marketing standpoint, we're still paying a marketing fee to the PBM for ISP. So it's very similar at scale to our existing business. So in other words, on a per transaction basis, the amount that we pay to the PBM approximates the CAC in our D2C business. So in the D2C business, we pay an upfront acquisition costs, and that's amortized over the life of that customer. But -- whereas in the ISP side, we're just paying it on a per claim basis. So you shouldn't see any nonlinearity in marketing as a percentage of revenue as that business scales.

Got it. Okay. Okay. I do want to touch on Medicare because there has been some changes in Part D plan design. In 2024, there's a $3,500 out-of-pocket maximum cap on beneficiary spending, it's going to drop to $2,000 next year. Presumably, this may make GoodRx a little less impactful for Medicare beneficiaries. But can you just remind us, one, what percent of your users are Medicare beneficiaries, and have you seen any drop this year as that kind of benefit change is phased in? And what are your expectations for next year?

Sure. Just to hit the summary first, our expectations are that it's not very impactful. And the basis for that is a couple fold and essentially mathematical. So under 30% of our users are Medicare users, about 28% or so. And of the Medicare users, if you look at historically, how many of them would have exceeded the $2,000 like that information is available and it's generally around to sub-2%. So sort of 2% of 28% theoretically impacted. I think that's sort of the ceiling as a way to think about it, though, because you don't necessarily know if you're going to get impacted at the start of the year. So at the start of the year, if you think you're maybe not going to hit it, you're still incented to try and save money. And then if something happens to you acutely and you hit the limit, you may stop. But that's why you sort of define that as a ceiling because everyone who hits the limit doesn't know ad hoc, some of them only know post-hoc that they're going to get there. But that gives you the rough scope, which is pretty darn small.

Got it. And I presume no change that you -- no meaningful change in what you've seen this year out of Medicare. If we were to look at Medicare beneficiary utilization in 2023, 2022, it would be around that 28% to 30% or so.

Correct. Yes. Like I think we -- even if you went all the way back to our IPO-related disclosures. Medicare has always been in that roughly 30% range, plus or minus a few percent.

Got it. Okay. That's good to hear. Let's switch over to Pharma [ Mansal ], which has been a nice growth driver for you guys recently. I think this year, if you exclude the [ vitaCare ] business, you're going to grow kind of in the mid-20s percent next year. You said you expect that business to grow 20%, which is faster than the rate of the overall kind of market for pharma advertising budget. So can you kind of parse out that growth for us, how much of that growth is due to just overall market growing? How much of it is from you taking share? And from that bucket of taking share, where is that coming from? Who do you compete against? And who are you winning from?

Sure, I'll take that. Thanks for the question, Daniel. I think we're growing significantly faster than the market just as a top line point. A key driver of that are our access solutions. We've talked about our embedded co-pay cards and our point-of-sale discounts being highly measurable and driving high-value outcomes, things like incremental claims and increased medication adherence, and these are particularly compelling for pharma because they're highly -- there's strong attribution and there's high ROIs typically associated with them. And for that reason, they're very sticky programs. Once they start, they tend to stick and compounded value over time. Now in terms of growth dynamics overall, what we're seeing is that there is pretty great momentum in the digital brand and media side of the business, where we're noticing that we're taking share. We're also seeing that in trade and market access budgets, where typically, there aren't digital budgets allocated to those types of solutions that we have. We're noticing that there's new budget dollars being assigned there. And part of that is driven by the fact that our point-of-sale discounts are kind of a new way to go to market for pharma and thus represent new budget dollars, which we think is indicative of a lot of the innovation we're bringing to the market there. So I think overall, a combination of market growth, taking share in digital and new dollars from new budgets.

Yes. Yes, makes sense. And I want to stick on that point-of-sale discount point because that is a really innovative approach that you guys are taking. And I should mention before we get into that question, you guys recently put up on your website a whole hub dedicated to Pharma [ Mansal ]. So I encourage everyone listening in to visit your website in the Investor Relations site and look at that because there is some great data there. But now you do have 72 point-of-sale discounts whereas before we -- I think at the beginning of the year, what was it -- so it's been a very fast-growing area for you. Can you just describe what that is and why a pharma company would want to use that and how the price they get from going through you and a point-of-sale discount may differ from the net price that it receives if going through an insured benefit.

Yes, sure. Effectively, what these point-of-sale discounts are us working with pharma to create a cash price for the consumer that's lower than the list price. And the way that is affected is the manufacturer will fund that buy down, and we will, as an intermediary, pass it through to the consumer at the point of sale. We're specifically situated in a great way in that we have relationships with the pharmacies, relationships with pharma and the relationship with the consumer to do that. And so far, we've seen great uptake as we just talked about, 72 programs in place now. They're quite sticky once they're in place. They continue to compound, and it's great momentum, and we plan to continue kind of leaning into this area. We've also seen that it creates wins across various stakeholders. Consumers have better prices. They also get to sidestep oftentimes the friction that's associated with their funded benefit, things like step therapy and prior authorizations, they no longer have to deal with that. So they get a big win there. Pharma obviously gets incremental claims. There are 80 million rejected brand claims per year. So we're able to kind of lower that number and help them kind of get incremental claims on top of that. And in addition, pharmacies, and this is not quite often known is that they get much better reimbursements through us. Oftentimes, I think they'll have reimbursements in the 2% to 5% range, sometimes for high-demand drugs, even negative like for GLP-1s. So our reimbursements are more in the 5% to 10% range. So this is quite attractive for them as well. So overall, it creates a lot of wins across the environment, and that's part of the reason why we've seen such great uptake.

Got it. Got it. Helpful. Okay. Let's turn to GLP-1s because you mentioned that button issue. It does seem like constraints are -- supply constraints are easing a bit, that more competition is coming into the market. Pharmacies are still struggling and oftentimes are underwater on their GLP-1 products. So talk to us about what you're doing with the GLP-1 manufacturers, how can you help your partners with this product. And as we think ahead to 2025 and '26, as we see supply constraints ease, as we see more competition coming to the market, how is that going to change for you?

Sure. So these are obviously extremely high demand drugs, and they represent an enormous opportunity. We're currently deeply engaged in the space as it is. We get over 2 million unique searches for GLP-1s, we got last quarter 2 million unique searches on GLP-1s in our platform. And I think that represents the level of consumer intent that we have and the scale, the opportunity itself. Looking forward, we already work with the manufacturers to help them embed their co-pay cards and drive awareness to their brands. And there are significant potential opportunities on things like point-of-sale discounts that we just talked about to create a lower cash price for consumers to convert some of these high-intent folks into loyal users for brand pharma. But I think that's a significant opportunity. And as the FDA, as you just talked about, signals some of the shortages perhaps coming to an end or supply constraints easing, we anticipate that GLP-1 manufacturers may use that as an avenue to now unleash their marketing engines and their access engines. And I think we're a natural and strategic partner for them to work with in that regard to help kind of drive these users to become loyal brand users of their medications on a go-forward basis, help them get on these medications and stay on them.

And presumably as compounding comes to an end, your solutions become a little bit more impactful?

Yes, absolutely.

Okay. Okay. Last question here. I think we're just about out of time. But I do want to talk about your capital deployment priorities, given you are free cash flow -- you throw off a lot of free cash flow. And you don't have debt coming due until 2029. How are you balancing investing in the business organically, M&A, perhaps share repurchases given where the stock has traded recently?

Sure. Yes. No, quite accurate. Our EBITDA margins have been accreting up for the last several quarters up to the levels that you've seen in the -- in the lower 30s now. I think we grew -- we grew margin like 520 basis points Y-o-Y 3Q to 3Q last year. So EBITDA is growing and our EBITDA is actually supported by cash, like you said. So we had a great cash flow quarter again, too. So from those perspectives, we spent a lot of time thinking about this. M&A tends not to be a priority. We're focused on running our business as it is. So you may see us do smaller sort of tuck-in type things like a couple of years ago, we bought an entity called RxNXT, that became the technology foundation for ISP, for example, but that was like a teens of millions of dollars deal, if I remember correctly, and Romin's confirming that. So we do smaller deals, I think, could still be in our future, but that obviously leaves a lot of FCF since we don't have to invest that much into the business beyond the current levels of product development and tech expense. So to your question, when we see opportunities, we have taken advantage historically of buying back stock on the open market and also to a degree we can get it to an appropriate price and discount off some of our sponsors as well, the private equity sponsors who still own stakes in us. So we have a repurchase [ auth ] that's pretty healthy at well over $200 million. So we've got some room to run with that.

Yes. Yes. All right. We are officially out of time. Karsten Romin, thank you so much for joining us at our conference this morning. And thank you, everyone, for listening in.

Appreciate it. Thanks so much for having us.

It's been a pleasure. Thanks, Daniel.