GoodRx Holdings Inc
For the period ended Sep 30, 2024. Filed Nov 7, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 7, 2024
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001809519-24-000164
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-07.
0001809519-24-000196
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 371 previous paragraphs and 380 current paragraphs.
201 unchanged; 97 reworded; 74 added; 58 removed; 15 previous and 8 current paragraphs rearranged.
Tables are not compared: 6 previous and 6 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (74)
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director of the Company.
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•Revenue increased 8% to$195.3 million from$180.0 million;
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•Adjusted Revenue increased 3% to$195.3 million from$190.0 million;
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loss margin of$38.5 million and 21.4%, respectively; and
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million and 28.1%, respectively.
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•Adjusted Revenue increased 5% to$593.7 million from$563.6 million;
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•Net income andnet income margin were$9.7 million and 1.6%, respectively, compared to$17.0 million and
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3.1%, respectively; and
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•Adjusted EBITDA and Adjusted EBITDA Margin were$193.2 million and 32.5%, respectively, compared to
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$160.2 million and 28.4%, respectively.
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below.
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the changing retail pharmacy landscape, we have seen and continue to expect heightened renegotiations between
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Consumer demand for our prescription transactions offering is subject to seasonality. We typically experience stronger
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consumer demand during the first and fourth quarters of each year. For our integrated savings programs, we may
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experience stronger traffic during the first half of each year since more claims are likely to be routed through GoodRx while
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plan members are in the deductible phase of their health plans. For further information regarding seasonality, refer to Part II,
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K.
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EBITDA Margin:
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costs, contract termination costs, and losses from the disposal of certain capitalized software.
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expected to occur in the fourth quarter of 2024.
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compared to 930 thousand as of September 30, 2023. Kroger Savings contributed $2.1 million of subscription revenue in the
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subscription revenue.
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million client contract termination payment, which was recognized as areduction of revenue in the prior year quarter, related
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to the restructuring of our pharma manufacturer solutions offering in the second half of 2023. The year-over-year change
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customers. The prior year quarter included $2.5 million of revenue contribution from vitaCare Prescription Services, Inc.,
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("vitaCare"), a solution we de-prioritized in connection with our restructuring of pharma manufacturer solutions as described
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above, compared to nil in the third quarter of 2024. We expect pharma manufacturer solutions tocontinue to grow as a
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Cost of revenue decreased $7.0 million, or 38%, year-over-year, primarily driven by a $6.4 million decrease in
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$7.6 million loss recognized last year on the disposal of certain capitalized software that were not yet ready for their intended
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use principally as a result of the restructuring of our pharma manufacturer solutions offering in the second half of 2023.
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Sales and marketing expenses decreased $1.7 million, or 2%, year-over-year, primarily driven by a $5.5 million
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litigation.
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Depreciation and amortization expenses decreased $15.5 million, or 47%, year-over-year, primarily driven by $17.5
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million of amortization recognized last year related to certain intangible assets, which had been accelerated in connection
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We recognized other expense of$2.7 million in thethree months ended September 30, 2024 related tothird-party
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transaction costs as a result of our debt refinance in July 2024. For additional information, see Note 6 to our condensed
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expense of$2.2 million in thethree months ended September 30, 2023 related to an impairment loss on one of our minority
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equity interest investments.
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Loss on Extinguishment of Debt
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We recognized a loss on extinguishment of debt of$2.1 million in thethree months ended September 30, 2024 related
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•Revenue and Adjusted Revenue increased 6% to$200.6 million from$189.7 million;
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income margin of$58.8 million and 31.0%, respectively; and
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million and 28.2%, respectively.
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•Net income andnet income margin were$5.7 million and 1.4%, respectively, compared tonet income andnet
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income margin of$55.5 million and 14.9%, respectively; and
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•Adjusted EBITDA and Adjusted EBITDA Margin were$128.2 million and 32.2%, respectively, compared to
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$106.7 million and 28.6%, respectively.
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retail pharmacy landscape, we expect heightened renegotiations between pharmacies and PBMs may occur as a result of
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transactions revenue.
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Recent Development
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On July 10, 2024, we entered into the Sixth Amendment to First Lien Credit Agreement. See Note 6 to our condensed
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consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.
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Margin:
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(3)Restructuring related expenses include employee severance and other personnel related costsand losses on office
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(6)Revenue was equal to Adjusted Revenue as there was no client contract termination cost associated with
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restructuring related activities in the periods presented.
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by a $2.7 million decrease in revenue contribution from vitaCare Prescription Services, Inc. ("vitaCare"), a solu tion we de-
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offering.
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Cost of revenue decreased $4.5 million, or 27%, year-over-year, primarily driven by a $4.1 million decrease in
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solutions offering in the second half of 2023. The impact from these drivers was partially offset by a $1.0 million increase in
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development of internal-use software and lower average headcount. The impact of this driver was partially offset by a $1.4
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increase in payroll and related costs, principally from higher stock-based compensation expense due to a reversal
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recognized in the second quarter of 2023 of previously recognized stock-based compensation expense as certain
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Depreciation and amortization expenses increased $0.9 million, or 5%, year-over-year, primarily driven by higher
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intangible assets as certain intangible assets were fully amortized in 2023 in connection with the restructuring of our pharma
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Interest expense increased by$0.5 million, or 4%, year-over-year, primarily due to higher interest rates, partially offset
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by lower average debt balances.
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awards. For information regarding our valuation allowance analysis in 2023, see Part II, Item 7, "Management’s Discussion
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and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Income Taxes
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—Valuation of Deferred Tax Assets" included in our 2023 10-K.
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Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
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the same period of 2023.
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basis compared to the same period of 2023 as the solution was de-prioritized in the second half of 2023. For expected
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period of 2023.
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Cost of revenue decreased $8.7 million, or 26%, year-over-year, primarily driven by a $7.9 million decrease in
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solutions offering in the second half of 2023. The impact from these drivers was partially offset by a $2.1 million increase in
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processing fees.
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development of internal-use software and lower average headcount. The impact of this driver was partially offset by a $2.2
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Sales and marketing expenses increased $27.5 million, or 18%, year-over-year, primarily driven by a $21.8 million
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General andadministrative
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Reworded paragraphs (97)
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•“Co-Founders” refers to Trevor Bezdek, our Chairman and a director of the Company, and Douglas Hirsch,
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•“Co-Founders” refers to Trevor Bezdek, our Chairman and a director of the Company, and Douglas Hirsch, a
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•Net income andnet income margin were$6.7 million and 3.3%, respectively, compared tonet income andnet
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•Net income andnet income margin were$4.0 million and 2.0%, respectively, compared tonet loss andnet
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•Adjusted EBITDA and Adjusted EBITDA Margin were$65.4 million and 32.6%, respectively, compared to$53.5
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•Adjusted EBITDA and Adjusted EBITDA Margin were$65.0 million and 33.3%, respectively, compared to$53.5
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For thesix months ended June 30, 2024 as compared to the same period of 2023:
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For thenine months ended September 30, 2024 as compared to the same period of 2023:
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•Revenue and Adjusted Revenue increased 7% to$398.5 million from$373.7 million;
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•Revenue increased 7% to$593.7 million from$553.6 million;
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Revenue, net income andnet income margin are financial measures prepared in conformity with accounting principles
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Revenue, net income (loss) andnet income (loss) margin are financial measures prepared in conformity with
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generally accepted in the United States ("GAAP"). Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA Margin are
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accounting principles generally accepted in the United States ("GAAP"). Adjusted Revenue, Adjusted EBITDA and Adjusted
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non-GAAP financial measures. For a reconciliation and presentation of Adjusted Revenue, Adjusted EBITDA and Adjusted
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EBITDA Margin are non-GAAP financial measures. For a reconciliation and presentation of Adjusted Revenue, Adjusted
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EBITDA Margin to the most directly comparable GAAP financial measures, information about why we consider Adjusted
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EBITDA and Adjusted EBITDA Margin to the most directly comparable GAAP financial measures, information about why we
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Revenue, Adjusted EBITDA and Adjusted EBITDA Margin useful and a discussion of the material risks and limitations of
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consider Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA Margin useful and a discussion of the material risks
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these measures, please see “Key Financial and Operating Metrics—Non-GAAP Financial Measures" below.
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and limitations of these measures, please see “Key Financial and Operating Metrics—Non-GAAP Financial Measures"
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announcements of store closures and reduction of footprint from various other retail pharmacies, including Walgreens.
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announcements of store closures and reduction of footprint from various other retail pharmacies, including Walgreens and
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Future store closures and reduction of footprint from retail pharmacies are expected to have an immediate adverse impact
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CVS. Future store closures and reduction of footprint from retail pharmacies are expected to have an immediate adverse
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on our prescription volume and prescription transactions revenue. However, we believe this impact to be largely transient as
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impact on our prescription volume and prescription transactions revenue. However, we believe this impact to be largely
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we expect prescription volume to migrate to other in-network pharmacies in the near term. As an extension of the changing
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transient as we expect prescription volume to migrate to other in-network pharmacies in the near term. As an extension of
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the pharmacies' increased focus on rationalizing of their spending, which in turn may have an impact on our prescription
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pharmacies and PBMs as a result of the pharmacies' increased focus on rationalizing of their spending, which in turn has
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We exited thesecond quarter of 2024 with over 7 million prescription-related consumers that used GoodRx across our
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We exited thethird quarter of 2024 with over 7 million prescription-related consumers that used GoodRx across our
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The following table presents a reconciliation ofnet income and revenue, the most directly comparable financial
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The following table presents a reconciliation ofnet income (loss) and revenue, the most directly comparable financial
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income margin, the most directly comparable financial measure calculated in accordance with GAAP, with Adjusted EBITDA
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income (loss) margin, the most directly comparable financial measure calculated in accordance with GAAP, with Adjusted
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(1)Financing related expenses include third party fees relatedto proposed financings.
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(1)Financing related expenses include third-party fees related to proposed financings.
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lease terminations in connection with various workforce optimization and organizational changes to better align with
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(3)Restructuring related expenses include costs for various workforce optimization and organizational changes to
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our strategic goals and future scale.
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better align with our strategic goals and future scale including employee severance and other personnel related
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Prescription transactions revenue increased $10.2 million, or 7%, year-over-year, primarily as a result of an 8% increase
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Prescription transactions revenue increased $5.0 million, or 4%, year-over-year, primarily as a result of a 7% increase in
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in the number of our Monthly Active Consumers from organic growth, including expansion of our integrated savings program,
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the number of our Monthly Active Consumers from organic growth, including expansion of our integrated savings program,
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which integrates our discountsand pricing in a seamless experience at the pharmacy counter for eligible plan members
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which integrates our discounts and pricing in a seamless experience at the pharmacy counter for eligible plan members
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served by certain PBMpartners. We expect the recently announced Rite Aid's store closures to have a mid-single-digit
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served by certain PBM partners. We estimate the recently announced Rite Aid's store closures to have a mid-single-digit
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million dollar impact on prescription transactions revenue in the second half of 2024.
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million dollar impact on prescription transactions revenuein the second half of 2024 with approximately half of this impact
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subscription plans due to the sunset of Kroger Savings with 696 thousand subscription plans as of June 30, 2024 compared
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subscription plans due to the sunset of Kroger Savings with 701 thousand subscription plans as of September 30, 2024
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to 969 thousand as of June 30, 2023. Given the subscription fee is higher for Gold relative to Kroger Savings, the sunset of
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third quarter 2023 and nil for the same period of 2024. Given the subscription fee is higher for Gold relative to Kroger
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Kroger Savings resulted in a higher year-over-year decline in subscription plans relative to subscription revenue.
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Savings, the sunset of Kroger Savings resulted in a higher year-over-year decline in subscription plans relative to
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Pharma manufacturer solutions revenue increased $2.2 million, or 9%, year-over-year, primarily driven by organic
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Pharma manufacturer solutions revenue increased $12.2 million, or 77%, year-over-year, primarily driven by a $10.0
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growth as we continued to expand our market penetration with pharma manufacturers and other customers, partially offset
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was also driven by organic growth as we continued to expand our market penetration with pharma manufacturers and other
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expect pharma manufacturer solutions to continue to grow as a percentage of total revenue in the near to medium term as
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percentage of total revenue in the near to medium term as we continue to scale and expand available services, capabilities
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we continue to scale and expand available services, capabilities and platforms of our pharma manufacturer solutions
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and platforms of our pharma manufacturer solutions offering.
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outsourced and in-house personnel and other costs related to consumer support and a $3.8 million decrease in allocated
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outsourced and in-house personnel and other costs related to consumer support due to lower average headcount principally
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Product development and technology expenses decreased $0.4 million, or 1%, year-over-year, primarily driven by a
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Product development and technology expenses decreased $9.5 million, or 24%, year-over-year, primarily driven by a
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expenses substantially in the form of consumer discounts. Beginning in December 2023, consumer discounts are
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decrease in promotional expenses substantially in the form of consumer discounts. Beginning in December 2023, consumer
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recognized as a reduction of revenue as a result of a change in some aspects of our consumer incentives program. For
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discounts are recognized as a reduction of revenue as a result of a change in some aspects of our consumer incentives
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third-party marketing expenses. The impact from these drivers was partially offset by a $6.6 million decrease in promotional
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program. The impact from this driver was partially offset by a $2.2 million increase in third-party marketing expenses. For
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General and administrative expenses decreased $2.6 million, or 9%, year-over-year, primarily driven by a $4.2 million
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General and administrative expenses decreased $9.7 million, or 27%, year-over-year, primarily driven by a $4.0 million
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had and may continue to have an impact on our prescription transactions revenue.
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Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 10-
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as a result of the restructuring of our pharma manufacturer solutions offering in the second half of 2023.
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in this Quarterly Report on Form 10-Q.
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partially offset by higher interest rates.
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compared to the same period of 2023.
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above for thethree months ended September 30, 2024 compared to the same period of 2023.
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with product development and allocated overhead.
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our Chief Mission Officer and a director of the Company.
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performance milestones were no longer probable of beingmet, in addition to changes in our employee composition. The
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year-over-year change was also driven by a $4.8 million increase in advertising expenses anda $2.5 million increase in
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manufacturer solutions offering in the second half of 2023.
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overhead, both due to lower average headcount principally as a result of the restructuring of our pharma manufacturer
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$5.3 million decrease in payroll and related costs largelydue to higher capitalization of certain qualified costs related to the
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million increase in third-party services and contractors associated with product development and allocated overhead.
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Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q) and a
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$4.3 million increase in payroll and related expenses, principally from equity awards granted to our Interim Chief Executive
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Officer in the second quarter of 2023 and first quarter of 2024. The impact from these drivers was partially offset by a$8.7
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amortization related to capitalized software due to higher capitalization costs for platform improvements and the introduction
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manufacturer solutions offering in the second half of 2023.
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against the majority of our net deferred tax assets recorded as a discrete tax benefit in the second quarter of 2023, partially
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offset by adecrease in our tax effects from non-deductible officers’ stock-based compensation expense and our equity
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million increase in proceeds from exercise of stock options.