Is GoodRx a buy?
It’s time to breakdown a healthcare technology name. Here is the breakdown on $GDRX, otherwise known as GoodRx.
Current Price: $51.50
52/Wk High: $64.22
52/Wk Low: $33.51
Market Cap: $20.2 Billion
Read below for the breakdown!
GoodRx ($GDRX) is a healthcare software company in which allows customers access to medication price comparison systems, telehealth consultations, and other healthcare resources and services.
One of the most popular services on the GoodRx platform is their medication tool, in which users can compare medication prices. In fact, according to the company, their subscription programs provide savings of up to 90% off over 1000 medications.
A growing sector within the company is their telehealth segments which launched in March 2020 under the name of both HeyDoctor and GoodRx Telehealth Marketplace, both of which allow customers to access more advanced healthcare services.
Throughout 2020 telehealth came to the forefront due to COVID-19, with leaders such as Teladoc and United Health outshining smaller competitors such as GoodRx, leading many to wonder if smaller names like GoodRx are a buy.
Since its IPO in mid-2020, GoodRx has moved to the upside by 27.66% on a year to date basis but continues to sit lower than its high of $64.22/share.
Digging into the numbers, GoodRx beat Q3 2020 expectations with an EPS of $0.09, better than the EPS consensus estimate of $0.08. The positivity continued with management delivering solid growth under the hood.
GoodRx went on to report revenues of $140.5 million, representing a 38% year over year gain, much better than the $101.745 million in revenues from Q3 2019.
Furthermore, monthly active consumers continued its trend to the upside, increasing by 29% year over year to 4.9 million consumers, marking a record number of users for the company.
On the downside, GoodRx continued to report a net loss, reporting a net loss of $50 million, a big decline from the net income of $19.619 million in Q3 2019, representing a -355% year over year change.
As for EBITDA, GoodRx reported an adjusted EBITDA of $53.2 million and an adjusted net income of $35.6 million, representing a 53% increase on a year over year basis.
Shifting into cash provided by operations, GoodRx reported a cash provided by operations level of $32.6 million, 98% higher than the Q3 2019 level of $16.497 million.
When it comes to prescriptions, prescription transaction revenues increased by 30% on a year-over-year basis to a solid $124.4 million, which according to management was made possible due to a 29% increase in monthly active consumers.
Rounding out the earnings numbers, GoodRx reported an adjusted EBITDA margin of 37.8%, which declined 11% from the Q3 2019 level of 42.4%.
GoodRx also provided solid guidance with high expectations. Management expects revenues to total $148 million in Q4, representing a 31% year-over-year increase. Furthermore, management also expects Q4 adjusted EBITDA margin to land within a range of 30% to 31%.
Rounding out the full year, management expects FY 2020 revenues to total $545 million, representing a 40% year-over-year gain, with an adjusted EBITDA margin landing at 36.5%.
Shifting into the balance sheet the numbers are not bad.
Total Debt: $696 Million
Total Liabilities: $790 Million
Total Assets: $1.547 Billion
Cash & Short Term Inv: $1.075 Billion
On the basis of valuation, GoodRx does trade at a lofty premium.
Price to Sales: 39.24x
Price to Cash Flow: 26.34x
Given the numbers the analysts are bearish with a mean price target of $42.44/share, representing a -17.59% loss.
It is also important to note that the high price target is $56.00/share, representing an 8.74% upside, while the low price target is $29.00/share, representing a -43.69% downside.
The big money is quite involved as well, with 88.97% of GoodRx being owned by institutions. Top holders include Light Street Capital Management, The Vanguard Group, and T. Rowe Price Associates.
On a technical basis, GoodRx is bullish. According to the six-month charts, the MACD is moving higher with significant momentum within a range of 2.09 down to 1.38.
The six-month charts are also indicating an RSI of 65.80 and CCI of 112.90, both of which are on the higher end.
In short, GoodRx is a solid long term pick within the technology healthcare industry, with consistent consumer growth, a growing brand, and a useful platform.
EAT - SLEEP - PROFIT
Disclaimer: This is not direct financial advice, simply an opinion based on independent research.