GoodRx (GDRX) Citi's 2024 Global Healthcare Conference summary

Retail environment and industry dynamics

• Store closures, especially Rite Aid's, caused a $5 million headwind in the second half, with concentrated closures in Ohio and Michigan having the most impact.

• Pharmacies have gained leverage in negotiations with PBMs due to unsustainable reimbursement rates, leading to a broader range of expected top-line growth (single-digit %) for next year.

• Most renegotiations are expected to culminate by year-end, with new rates manifesting in January and February.

• The current volatility is seen as a one-time reset, not a recurring theme, as pharmacy leverage is situational.

• CVS store closures had minimal impact due to geographic thinning, while Rite Aid's concentrated closures created more friction for users.

Direct contracting and business strategy

• Direct contracting with pharmacies increases their revenue and margin, with about 30% of volume now through such agreements and eight of the top 10 pharmacies signed up.

• The hybrid strategy allows flexibility, letting retailers dictate preferences between direct contracts and PBM partnerships.

• Direct contracts provide more control and merchandising opportunities, benefiting both parties and allowing for tailored pricing.

• No PBM has stopped working with the company; relationships have evolved, with some PBMs now distributing GoodRx through integrated programs.

• Direct contracting volume may accelerate or decelerate depending on PBM-pharmacy negotiations, but the approach remains adaptable.

Integrated Savings Program (ISP) and growth levers

• ISP has grown to 5% of marketplace revenue and is expected to maintain healthy double-digit growth, with new deals signed for ISP wrap targeting off-formulary medications.

• The most impactful growth lever is adding more plans and plan sponsors, with direct outreach to employers being a new focus.

• Marketing costs for ISP are similar to D2C, with PBMs handling most go-to-market efforts.

• Pushback from employers is mainly due to caution with new products, but comfort grows after successful implementation.

• MedImpact, SilverScript, SmithRx, and Navitus are signed up for ISP wrap, with ongoing discussions to add more PBMs.