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

Market environment and industry dynamics

• Store closures, especially Rite Aid's, created a $5M headwind in H2, with concentrated closures in Ohio and Michigan causing friction for users.

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

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

• The current year is seen as a one-time reset in admin fees, not a recurring trend, as pharmacy leverage is situational.

Direct contracting and business strategy

• Direct contracting with pharmacies now covers over 30% of volume and offers about double the margin for pharmacies compared to non-direct agreements.

• The hybrid strategy allows flexibility, letting retailers dictate preferences between direct and PBM-based models.

• Direct contracts provide more control and merchandising opportunities, benefiting both parties.

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

Financial impacts and growth levers

• Rite Aid closures will continue to have some impact into next year, factored into the single-digit growth outlook for 2025.

• Kroger direct contract volumes have not yet normalized to market share; expected to take a couple more quarters.

• Integrated Savings Program (ISP) reached 5% of marketplace revenue, with expected double-digit growth into next year, driven by new PBM deals and the ISP wrap product.

• Most impactful ISP growth levers are adding more plans and plan sponsors, with direct outreach to employers being a new focus.