GoodRX (GDRX) S-1 Breakdown Analysis

GoodRX (GDRX) filed their S-1 earlier this week. I read It so you don’t have to (but you should). Here’s a thread on what I found interesting, fascinating and down-right incredible from the company. I’m starting at zero. Follow along here. 

GDRX Facts & Figures

  • #1 most downloaded medical app
  • 4.9M Monthly Active Users
  • 80%+ Repeat Activity
  • $20B+ in Consumer Savings
  • 150B daily pricing data points
  • 4 platform offerings
  • Est. Market Cap: ~$9.9B

Business Overview

Mission: To help Americans get the healthcare they need at a price they can afford.
 
So far it’s working (really) well.
 
The company estimates 18M of their customers could NOT have afforded to fill their Rx without the company’s savings tools.

How GoodRX Makes Money

Receives fees from partners, which is mostly Pharmacy Benefit Managers (PBMs) when customer uses GDRX code.
 
Fees are % of fees that partners earn OR a fixed payment per transaction.
 
Recurring nature to GDRX model as code is saved to consumer profile. 

Financial Results

  • GMV via prescription offering: $2.5B
  • Compounded annual revenue growth rate: 57% since 2016
  • Generated $388M Revenue in 2019
  • Generated $66M Net Income in 2019
  • 2019 Adj. EBITDA: $160M

Solving Healthcare Consumer Issues

GoodRX notes 5 major healthcare consumer “lacks” in its S-1:
  • Lack of Consumer-focused solutions
  • Lack of Affordability
  • Lack of Transparency
  • Lack of Access to Care
  • Lack of Resources for Healthcare pros

GDRX Total Addressable Market

GoodRX estimates their TAM around $800B. That’s a HUGE number.
 
Here’s how it breaks down:
  • $524B Prescription Care
  • $30B Pharma manufacturer solutions
  • $250B Telehealth
Initial Surprises: Telehealth is nearly 32% of TAM

The GoodRX Value Proposition

It’s the coveted win-win-win:
 
– Consumers: Simpler, more affordable Rxs
 
– Healthcare Pros: Increased medication adherence and greater price transparency (also links w/ EHR)
 
– Healthcare Co’s: Reach & provide affordable solutions (Rxs) to customers

What Makes GoodRX Different

There’s six strengths that reinforce GoodRX’s powerful network effects:
  1. Leading platform
  2. Trusted Brand
  3. Scaled & Growing Network
  4. Consumer-focus
  5. Extensible Platform
  6. Cash generative monetization model
See image for descriptions…

Analyzing Income Statement

– GDRX grew revenue from $99M in 2016 to $388M in 2019 (crazy growth)
 
– Biggest operating expense currently: SG&A, which was 46% of revenues last year
 
– Operating Margin: 36% (real nice)
 
– Pre-Tax Earnings: $83M (21% margin)
– EPS grew from -$0.11 to $0.19 in four years (w/ growing share count)
 
– 2019 EPS of $0.19 is computed using weighted average shares post-IPO.
 
– Six-month ended YoY: $0.09 vs. $0.15 in 2020 on $15M more income
 
– SBC: <1% of revenues

Analyzing Balance Sheet

– $126M in actual cash
 
– If you adjust for the pro-forma IPO, they get nearly $800M in cash
 
– Total Debt (incl. LT debt): $700M
 
– Total Est. Capitalization: $1.078B
 
– Financed Biz via Cash from Ops (crazy, right?)
 
See breakdown below …
(Debt & Contractual Obligations)
 
  • <1YR: $41M
  • 1-3YR: $85.6M
  • 3-5YR: $82.7M
  • >5YR: $711M

GDRX Key Operating Metrics

One of the most important KPI’s to measure for GDRX is Monthly Active Users (MAU).
 
GDRX’s MAU trend is absolutely incredible:
 
– 2016: 718k
– 2017: 1.28M
– 2018: 2.02M
– 2019: 3.18M
– 2020: 4.88M

Where Will Future Growth Come From?

GDRX outlines 3 ways to grow revs outside Rx codes:
 
– Subscription offerings: Gold, Kroger Savings
 
– Pharma Manufacturing Solutions: Provide low-cost solutions to expensive brand-name meds
 
– Telehealth: Online visits / marketplace

Recap: How To Track GDRX Bull Thesis

– Monitor MAU growth & Repeat Activity
 
– Size + Strength of Healthcare Partner Network
 
– Growth of Platform & Telehealth

Meet The Founders (Letter Analysis)

– Making healthcare easy is *crazy* hard
 
– Consumers (insured or not) needed tools to help
 
– Reduce cost of nearly every generic drug by >70%
 
– Prices are less than typical insurance

Thinking About GDRX Valuation

At the current estimated IPO price and shares, GDRX will trade roughly:
 
– 25x 2019 Revenues
 
– 62x 2019 EBITDA
 
– 119x 2019 Pre-tax Profits
 
They’re also growing 57% compounded since 2016.

Related Posts

An Unparalleled Investment Research Community For Traders and Investors.

Facebook-f Twitter Linkedin-in
Navigation
Contact
Subscribe to our Newsletter

All content in this page, on our website, all emails, social media posts, comments on other websites or other material generated by Macro Ops is intended for general information and educational purposes only. NOT INVESTMENT ADVICE. Click here for full disclaimer.

© 2022.  MACRO-OPS.COM  | All Rights Reserved.
© 2022.  MACRO-OPS.COM.
All Rights Reserved.

Subscribe To Our Newsletter

Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.

Linkedin-in Twitter

AK

Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Youtube

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Linkedin-in Twitter

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.

Linkedin-in Twitter