Field Notes | Pharmacy Check | April Volume Back to Trend & GDRX is Still the Only Brand People Know

Overview

Highlights

• Prescription volume picked up in March:  Sequential growth had been steady through the end of the year into January, but February was a terrible month. Growth stalled and February was flat vs. January, nothing stood out as a headwind. March rebounded and his stores recovered to trend, making up for the weak February and April was back on trend, in line with our current thinking.
• Pent-Up Demand is emerging, more to come: Plenty of anecdotes that the medical demand "is bigger than we think." This would be additive to the pent-up demand tailwind.
• GoodRx the only discount card around: SingleCare made a push, but there aren't really any alternatives. Volumes for GoodRx will rise as prescriptions increase with some share of total volume increase, but not much. He has not seen Amazon at all.  
• Opioid Prescriptions a good indicator of pent-up demand: It takes an in-person visit for a physician to write a scheduled pain drug. Patients have been getting unscheduled drugs, but starting to see opiates pick up and switch over.
• India may cause some supply disruption problems:  The deteriorating COVID-19 situation in India is a concern. For the first time, our contact is seeing "odd" stock outages on some generics that are typically easy to get. The delays resolve quickly but could be a reason for worry if it becomes more of an issue and pharmacies start ordering extra inventory all at once.

Call Notes

• Flu vaccines - we game a lot of them, but there was no flu season. People were not getting out - I don’t recall even normal flu discussions. A weird but helpful side effect of COVID-19.
• Started COVID testing in November, but couldn’t find the right vendor/test. Using all three: antibody, got rapid antigen after thanksgiving, now PCR. I like having all three. There’s a window when antibody is helpful. We're not billing insurance, cash only.
• The PCR swab is in-house, billing in-house, but we overnight to the lab - Bridge Diagnostics. Started in late December. We receive overnight results - any PCR. UPS picks up at 4:30, have it the next day. Labcorp wants to sell him the PCR tests (not bad, but Bridge gives him the test - zero inventory) UPS envelope, label, etc. no capital deployed - charge a customer administration fee). Bridge bills for test… charging $40 - probably a little low, but trying to be fair.

• PCR and COVID testing generally may relax a bit. The PCR we are doing is mostly for international travel. The tests we're doing for domestic reasons are for ballgames, soccer, back to school, or even travel to US-owned islands. (St. Thomas). The volume for international travel will remain - or move with international travel.
• Rapid antigen costs less than $10, we charge ~$80 vs. most others at ~$100. We think that's fair. People come in every day due to exposure. That'll drop off (due to vaccinations and getting toward herd immunity).
• There could be a lot fewer if at-home tests take off -problem w/ those, not accepting them for proof of travel or return to school. More convenience/curiosity. For us, if we cover costs, I don't need a point-of-care box.

• February was a crappy month. Dead of winter - people weren’t traveling/getting out, the vaccine just started (ramping). March, as we moved toward Easter and Spring Break, we started giving more shots, nobody had died from the vaccine.
• We were giving more J&J than Moderna.… started to feel good ~2-3 weeks into March. We did a lot of PCR tests, especially around Spring Break and Easter, and then a lot of rapids.
• We didn't get the vaccine originally - nobody knows who decided what (Federal vs. State). We've been giving the shots for 3-4 weeks. Things were going well w/ the J&J vaccines, but then that paused and we got an email alert that we'd have Moderna the next morning. Then, we got another shipment of J&J again (100 this morning).
• There's a bit of a glut of vaccine doses - have more than I need right now. Hoping to see that absorbed - have about 30-40% of our population vaccinated, so we have enough shots.

• I don’t think customers understand or care about full FDA approval. Yesterday, a lady said, “You have Moderna and J&J, what’s the higher risk?” Driving to the pharmacy is a higher risk.
• Requiring employees to get vaccinated? No. All pharmacists have been though. 

• February #s were weal - we were open a year and started to comp against the opening day. Feb vs. Jan and Dec, every month has seen great growth month/month. However, February was flat vs. January. We took the 3 fewer days into consideration.
• March came roaring back as if February didn’t go flat. The jump from Jan -> March was enough. April was up 8-9% vs. March, and March was up 15% over January (caveat is new growth).

• No. None of our stores have that problem; however, I went out to eat and there was no staff at any of the restaurants we tried to go to. If I lost a technician, I think that could be a problem in this environment. I’d be worried about the rate and finding the right person. 

• SingleCare making a push but every interaction - 95%+ - is "GoodRx." I don’t recall the last time a customer used a cash discount card name other than GoodRx - it hasn’t been this year. Regardless of that, it's the name. Nobody says SingleCare or Blink.
• I don't have hard data, but it feels like a slight increase in total transactions (discount card) and people are talking about it more: "Wow, the copay is $X, but I can use GoodRx and it's cheaper." Total volume is up a little, with GoodRx up with it, with a little bump in share.

• I think it’s a bigger number than people want to admit. A man came in to get the COVID-19 vaccine. I've never seen him before. Gave him the shot and sat with him for 15 min. He's late 60s, had been going to Publix for his prescriptions, but said he hasn't been feeling well - head hurts, legs sore, and diabetic... hasn't been getting his refills because Publix stopped filling it. No PCP, on Medicaid. I think that story is rampant among the poor or uneducated. The geriatric crowd - more are in sad shape that don’t even know it. 
• And people are still hiding out. We have people walk in from around the corner to get the vaccine that I haven't seen or met before - they haven't been out of the house in a year.

• I think so. Visits are back, for sure. Specialist visits, etc. I see maintenance meds coming back (help control blood pressure). Opioids are another one. We've seen an uptick in pain meds/opioids (controlled substances) that require a face-to-face visit before a script can be written (also, patients couldn't doctor jump).
• ADHD meds - schedule 2 narcotic/stimulant - slow growth all last fall and winter. That exploded in March and April - filling up +30% (9 SKUs, 2 meds, different strengths) Adzenys - by Aytu/Neos - and Cotempla (3 SKUS, methylphenidate); Adderall and Concerta-like - the new drugs have only been on the market a few years. 4th generation. Sales reps are likely getting back to doctors as well.

• When COVID started, we went through a month or two of shortages that were more delivery-related.
• It’s not terrible now - i.e., not as bad as it was a year ago. No issues with albuterol or other inhaled medications.
• Over the last few weeks, some odd things have come up and we're asking, "How is all that out of stock?" Examples:
• Buspirone - 3-4 different strengths for anxiety/depression. We've never had a problem, but all three strengths out in multiple generics. One source/distributor had a bottle of 1k. That hiccup lasted for 2 weeks and came back.
• Atorvastatin the other day, a couple of generic manufacturers were out and it came back a week later. Feels like there are more of those. If I'm a bit worried about ordering more, and everyone else is, then there could be shortages. if everyone does that, there will be shortages.
• Epinephrine is another one - by law we must keep some for vaccinations. Seems like there's more demand than supply.
• >90% of our medication comes through ABC, so if they are short, Walgreens is too.

• Well, we do ~16 turns per year. Some specialty medication skews it a little. Without specialty, it's 14 turns. 

• Most of the prenatal vitamins are OTC - it feels like more women are coming in. Now that I think about it, we sold several bottles this week. Feels like a recent shift.

• Disappointing.
• Expecting big things, but mail order and a cash program? Are they going after GoodRx, SingleCare? That whole thing has not been a big splash and has had zero impact at the store level. Nobody ever asks about Amazon Pharmacy or Amazon Care. I think they are committed to it, but hard to know.

• Leaving traditional healthcare for cash/GoodRx? We never want to use it. We're better off using cash price if you feel good about it. The chains are different - the pharmacist has no ability to do things on his/her own. That said, we want our customers to be happy - we take it. It's hard to win customers back if you lose them.
• Customer asks, "Would this card help?" We say, "You have insurance, you can’t use both..." - that's what typically happens. The historical default = insurance. Now, with GoodRx/coupons, what we normally say is, "We accept GoodRx, let me tell you what my cash price is… (important to be clear with this message)." The consumer doesn't know the GoodRx price at this point [if they don't have the app up]. Then, sometimes we'll see what's cheaper - that's how it works at the >20k independents in America.

• Is kind of underwhelming. Square footage has nothing to do w/ it - I just don't think it's going to work. I opened one of the first Minute Clinics - it's just not growing like it was, and what remains to be seen is if the new, beautiful stores will attract patients.

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Thomas Tobin
Managing Director


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Justin Venneri
Director, Primary Research


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William McMahon
Analyst


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