As digital prescription platform GoodRx moves to steady the ship in choppy waters by appointing former GoDaddy CEO Scott Wagner as interim CEO in April, its co-founders concede that the company needs to refocus its priorities to move to the next stage of growth.
During a first quarter 2023 earnings call Wednesday (May 10), GoodRx Co-founder and now Chief Mission Officer Doug Hirsch told analysts and investors, “It’s no secret this past year has been rough. Our results are disappointing to us as well as our stakeholders, and we believe the time is right to have someone lead the company who has extensive experience running and growing public companies.”
Wagner got right to the point with his first at-bat on a GoodRx earnings call, saying, “GoodRx has experienced some uneven performance over the past 12 months, and no one likes that. We need to get to a place where we can provide clear ranges of growth and profitability to our investors, deliver against those ranges consistently barring any external and exogenous events, then lay out longer-term plans and milestones over a three-plus year period of time.”
Ending the tiptoeing around a well-publicized 2022 dustup — cryptically called “the grocer issue” for the past year — and from which GoodRx is still recovering, CFO Karsten Voermann said: “Subscriptions revenue grew 26% year over year to $24.1 million as a gold membership fee increase implemented in the first half of 2022 more than offset the negative impact from Kroger Savings Club and related reduced marketing of the program and price increase related to Gold user churn. We ended the quarter at 1.0 million plans, down 16% year over year.”
That Kroger is the mystery grocer is GoodRx’s worst-kept secret, yet despite that falling out, the Kroger Rx Savings Club webpage was still labeled “Powered By GoodRx” as of May 10.
Though it wasn’t mentioned on the call, supplemental materials note that “First quarter other revenue decreased 14% year-over-year to $4.5 million, driven by a decrease in the number of telehealth visits on the GoodRx platform.” The drop in telehealth visits isn’t unique to GoodRx as more providers and insurers have been limiting the use of telehealth.
Voermann said prescription transactions revenue (PTR) growth “was down 13% year over year to $134.9 million, but up quarter over quarter by 4%,” while monthly active customers (MACs) “declined 5% year over year to 6.1 million but increased 3% quarter over quarter.”
He added that PTR volume “excluding the previously discussed grocer issue has continued to grow consistently, is up 3% sequentially and 16% year over year for Q123. The year-over-year declines were largely driven by the grocer issue.”
On the upside, Voermann pointed to progress in point-of-sale discounts, saying “POS discounts allow GoodRx to take control of the amounts consumers pay in a rapid, targeted manner that is similar to couponing by consumer packaged goods companies. This enhances our ability to fulfill our mission of medication affordability. We can deploy this tool against specific medications and to drive specific behaviors, including, for example, our engagement efforts.”
In terms of future focus, Wagner noted that scaling GoodRx’s pharma manufacturing solutions business shows promise. “There is a lot of goodness here,” he said. “We’ve got a very unique capability in branded pharma that can benefit both patients and manufacturers alike. While our offerings in this area are nascent, we believe early proof points have been extremely positive with pharma customers being really strong value given our high-intent audience that spans both patients and healthcare professionals.”
However, Co-founder and Chairman Trevor Bezdek said in his remarks that “our pharma manufacturer solutions offering has faced continued macroeconomic headwinds with the spending delays and reductions we discussed in our fourth-quarter earnings call in February, which have contributed to uneven execution to date.”
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