After several quarters of struggle with its main consumer-oriented prescription comparison price service – and a near 90% plunge in share price over the past year – Santa Monica-based GoodRx Holdings Inc. on Oct. 13 sought to turn the page with the formal launch of a major new service offering for physician practices and other health care providers.
Called “provider mode,” this new platform offers physicians a personalized dashboard with the most searched drugs and content written for physician groups; a redesigned prescription savings flow, including the ability to compare drugs in the same class; and a faster, more customized experience.
In addition, physicians will now be able to send GoodRx discounts for the drugs they prescribe directly to patients, taking some of the burden off patients to do their own comparison shopping.
According to GoodRx, since June of last year, more than 850,000 prescribers had already been using the GoodRx website to look up drug prices, available discounts and information on the latest drugs. GoodRx’ main platform allows consumers and other users to locate the pharmacy offering the cheapest price for a particular prescription medication; the platform has more than 70,000 participating pharmacies. The provider mode platform now gathers all this pricing information and prescription drug research content in one place, tailored specifically for medical care practitioners.
“For more than a decade, both consumers and providers have used GoodRx to find information and savings for their medications, but what we’ve learned is that they use GoodRx in different ways,” Doug Hirsch, co-chief executive and co-founder of GoodRx, said in the announcement.
“Our new provider mode experience makes finding patient savings faster and easier for health care professionals, which helps them achieve better patient outcomes,” Hirsch added.
Pharma company ad revenue
According to the announcement, this new platform offering is free for health care providers.
Instead, GoodRx is turning to advertising from drug manufacturers to generate revenue from this provider platform. The idea is to tap into the roughly $30 billion spent annually on the marketing of drugs by pharmaceutical manufacturers and distributors.
“Providers consult GoodRx at the point of prescribing to help their patients with access and affordability challenges, which allows manufacturers to reach large, high intent audiences at key junctures in the provider and patient journey,” the announcement said.
Furthermore, strategic relationships within the GoodRx provider platform allows physicians and other providers to develop smarter connections with manufacturers so they can get the information and resources they need, the announcement added.
Physicians that have used the provider site during a soft launch period that began last winter have sought to learn more about discount programs that drug manufacturers have for their own drugs and to compare the effectiveness and cost of drugs within a certain class of medications, according to GoodRx spokeswoman Lauren Casparis.
Costly dispute
It’s no coincidence that GoodRx is trying to boost revenue from drug manufacturers. That revenue stream, while still fairly small for the company, is the fastest-growing segment, roughly doubling in size over the past year to $27 million in the second quarter.
GoodRx’s largest revenue segment – transaction revenue from the filling of prescriptions, dropped 7% in the second quarter to $134 million, compared to the second quarter last year. That drop was due to a dispute that GoodRx had with a major pharmacy operator over GoodRx’s prescription discount program. The pharmacy operator – which had previously accounted for roughly 25% of GoodRx’s prescription transaction revenue – refused to honor the GoodRx prescription discounts for roughly three months until the dispute was resolved during midsummer.
While GoodRx did not name the pharmacy operator, analysts and trade publications said it was most likely Cincinnati, Ohio-based Kroger Co., which operates Ralphs grocery stores locally and has recently agreed to acquire rival Boise, Idaho-based Albertsons Inc. for $25 billion, subject to regulatory approvals.
The dispute cut sharply into GoodRx prescription transaction revenue during the months of May, June and July.
“The resolution did not come without collateral damage,” wrote Stephanie Davis, an analyst with SVB Securities, a unit of Santa Clara-based SVB Financial Group, in her Aug. 9 report on GoodRx following the release of GoodRx’s second quarter earnings. Davis said GoodRx estimated the dispute resulted in a quarterly “go forward” revenue hit of up to $40 million, plus another expense of up to $10 million per quarter from having to retool portions of the GoodRx website during the dispute.
The impact was so severe that in late August, GoodRx announced it was laying off 140 employees, or 16% of its workforce.
All this was bad news for investors, as GoodRx shares had already been in free-fall before word of the dispute hit. A year ago, shares were trading in the $40 to $50 range; by March, shares had plunged below $15. During the dispute, the selloff continued, with the share price falling to $6. Since then, the price has continued to drift down, hitting an all-time low of $4.67 on September 30. The stock closed at $4.90 on October 18.
Other ventures
The physician/provider platform is one of many forays GoodRx has made outside its traditional core business of a price comparison platform for consumers.
In recent years, GoodRx has bought a telehealth service, a drug research content database, two rival pharmacy discount operators, a company focused on specialty drugs and even a company that matches physicians with available consulting roles.
GoodRx has entered into an even greater number of partnerships with a wide array of health care businesses, from the aforementioned pharmaceutical companies to a discounter of brand-name medications to San Francisco-based DoorDash Inc.
At the time each of these acquisitions and partnerships was announced, they were heralded as game changers for the company.
But according to John Ransom, medical technology analyst with St. Petersburg, Florida-based Raymond James & Associates, taken all together, these acquisitions and partnerships have netted little overall return.
Ransom said in a September research note on GoodRx that the company has spent roughly $390 million since April 2019 on acquisitions, but concluded that, “it does not appear that any acquisitions actually make money.”
Regarding the numerous partnerships, Ransom said his concern was that the company was spending too much attention on crafting the partnerships and not enough on making the company run more efficiently.
“These partnerships at least have the surface appeal of not diluting capital, but they can dilute management attention,” Ransom wrote.
Can the tide be turned?
The question going forward is whether GoodRx’s new push into the medical provider market to tap into more pharma company ad revenue will pay off more handsomely than the company’s previous forays and provide a sustained boost to the company’s share price.
For now, GoodRx is focusing its marketing on the time savings and convenience of its platform and database for physicians.
“There is an incredible need among health care professionals for time-saving tools that help minimize the administrative burden that we face,” Preeti Parikh, GoodRx’s medical director, said in the announcement.
“Doctors want to spend more hours of our day seeing and helping patients, not doing paperwork, and the provider mode experience is designed to help us do just that,” Parikh continued. “It puts cost, savings, and healthcare information at our fingertips so we can better help our patients at the point of care and make sure they are getting the treatment they need.”
GoodRx recently announced it’s working on developing an integration with Culver City-based RxVantage Inc., which will offer providers the ability to communicate with more than 70,000 pharma representatives within the provider mode platform to get answers to questions about new therapies, brand resources, and patient assistance programs. Additionally, through a planned integration with Orlando, Florida-based AssistRx Inc. and its platform, providers will be able to find real-time information about patients’ insurance coverage, transparent pricing, affordability support, and details needed to streamline the prior authorization process.
The hope for GoodRx is that more and more physicians will discover these advantages. More physicians using the platform translates into more eyeballs for pharma company ads that support the site.
The provider mode platform “allows manufacturers to reach high-intent audiences who they know are trying to find ways to afford the medication,” GoodRx spokeswoman Casparis said. “So, there’s really a benefit to the full GoodRx business.”
