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GoodRx Holdings IPO: What Investors Need To Know

September 22, 2020

Prescription pricing platform GoodRx Holdings will hit the public markets this week.

The Filing: Good Rx Holdings NASDAQGDRX plans to sell 34.6 million shares in a pricing range of $24 to $28. At a pricing of $26, the company will be valued at around $10 billion based on over 384 million shares out.

Silver Lake, which owns over 35% of the company, will invest another $100 at the IPO price along with the offering.

One of the items featured in the amended S-1 was “Founders Award” for co-founders Douglas Hirsch and Trevor Bezdek, who own around 1.3% of the company. The two will have the change to earn 25 million shares in the company through time-based and performance-based milestones.

About GoodRx Holdings: Launched in 2011, GoodRx has the mission to “help Americans get the healthcare they need at a price they can afford.” The company reports that 20%to 30% of prescriptions are left at pharmacy counters due to customers not being able to afford them.

The company had 15 million monthly visitors in the second quarter and 4.9 million monthly active users. Over 80% place repeat orders with the GoodRx platform.

GoodRx offers four items targeting prescriptions, subscriptions, manufacturer solutions and telehealth.

Financials: Revenue has also grown at a compound annual growth rate of 57% since 2016.

GoodRx reported revenue of $388 million in 2019. First half 2020 revenue grew 48% to $257 million. Revenue was under $100 million back in 2016.

GoodRx has been profitable since 2015, something highlighted in the offering.

Net income was $66 million in fiscal 2019. First half 2020 net income grew to $54.7 million.

Market Size: GoodRx lists a total addressable market size of $800 billion. This is broken down to market sizes of $524 billion for prescriptions, $30 billion for manufacturing solutions, and $250 billion for telehealth.

Growing Telehealth Market: GoodRx purchased telehealth provider HeyDoctor in 2019.

“We plan to significantly invest in our telehealth offerings, as we see this as an opportunity to add another key consumer entry point into our platform,” the filing reads.

The company announced in July that HeyDoctor by GoodRx was now available in all 50 states and Washington D.C. The telehealth platform was seeing 1000 patients per day last quarter with increased COVID-19 related demand. 

Since the March launch, 130,000 customers had started a telehealth visit with HeyDoctor. Services like pediatrics, prescription refills, online counseling and prescription mail delivery were added.

Teladoc Health TDOC 6.29% has been one of the hottest stay at home stocks in 2020, with shares up 142%. The company has seen increased visits and revenue due to the COVID-19 pandemic. The company now has a $16.5 billion valuation.

Telehealth company American Well AMWL 8.61% went public last week. Shares priced at $18 and traded as high as $25.90 on their first public day. Shares now trade at $23.46 and have a market capitalization of $5 billion.

Subscription Offerings: GoodRx has a partnership with The Kroger Co KR 0.81% that includes subscription offerings.

“The usage of Gold and Kroger Savings has increased significantly. We will continue to increase the value proposition for consumers by bundling various existing and new offerings in affordable and consumer-friendly subscription packages,” the filing reads.

Growth Plans: Along with growing telehealth and subscription offerings, the company is putting an emphasis on growing its customer base, increase the number of offerings used by each customer, build the GoodRx brand, offer additional solutions to pharmaceutical manufacturers, and pursue strategic partnerships and acquisitions.

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