Investors in Santa Monica-based prescription drug discounter GoodRx Holdings Inc. have seen their shares take a bit of a roller-coaster ride in recent weeks.

After a prolonged share-price slump that was exacerbated by a months-long dispute last year with Cincinnati-based retail giant Kroger Co. and its pharmacy operations, GoodRx shares shot up twice last month on news of a deal with pharmacy benefit manager giant CVS Caremark and a subsequent analyst upgrade. The share price finished the month of July at $9.24, 70% higher than at the beginning of the month.

The stock has since come back down a bit, shedding 9% on Aug. 9 to $7.94 after investors apparently glommed on to some relatively disappointing nuggets in an overall strong quarterly earnings report.

The deal with CVS Caremark – a unit of Woonsocket, Rhode Island-based CVS Health Corp. – is a major milestone for GoodRx. When combined with a deal GoodRx announced last year with Bloomfield, Connecticut-based Cigna Group’s ExpressScripts, GoodRx will have direct access to roughly 70% of consumers who obtain prescription benefits through their employers, according to Scott Wagner, interim chief executive of GoodRx.

Pharmacy benefit management operators are third-party administrators of prescription drug benefit programs that employers provide as part of health care benefits for their employees. The market is dominated by three players: the two that GoodRx has deals with – CVS Caremark and Cigna ExpressScripts – and Minneapolis-based UnitedHealth Group’s Optum Rx.

Prior to the deal with CVS Caremark, a consumer with an employer-sponsored prescription benefit program could walk into a CVS pharmacy and either use their prescription benefit or their GoodRx discount card. But the consumer would have to figure out on the spot which was the better deal.

“Through this program, patients don’t have to choose between using their pharmacy benefit or using GoodRx to save on their prescriptions – now they can do both right at the counter so they have confidence they are always paying the lowest available price,” interim chief executive Wagner explained in the deal announcement.

GoodRx’ share price shot up 35% by the end of trading on the day following the July 12 announcement of the deal with CVS Caremark.

The price surged another 37% on July 31. Prior to the start of trading that day, Charles Rhyee, an analyst with New York-based TD Cowen, issued a report that upgraded GoodRx shares to “outperform” from “market perform” and nearly doubled the target share price to $12.

In his upgrade report, Rhyee called the deal with CVS Caremark a “game changer” for GoodRx. 

Medication management

Just days earlier, GoodRx had announced that it was getting into the medication management business, unveiling a new program it calls “Medicine Cabinet.”

GoodRx joins a whole host of companies in this burgeoning field of medication management, which is mostly aimed at helping patients remember to take their medications at the prescribed times and reminding patients when refills are due.

One local company that recently got into this business is Marina del Rey-based Wellth Inc., which has developed a phone app to remind patients to take their medications and then requires patients to submit time-stamped mobile phone photos of themselves taking the medications.

What sets GoodRx’s program apart is that it’s combined with the company’s ability to help patients locate the cheapest pharmacy price for those medications. As soon as the medications are purchased using GoodRx’ discounts, they are automatically entered into the medication management program.

Stock-price dip

After hitting a 52-week high on July 31, GoodRx shares started declining slightly. That drop accelerated after the company released second-quarter earnings last week, with the share price falling 9% during the trading session following the earnings release.

The overall earnings report appeared strong – at least compared to previous earnings reports over the past year. After four consecutive quarters of losses, GoodRx posted a positive net income of nearly $59 million for the quarter. And revenue was nearly $190 million, slightly higher than the company’s prior guidance.

“I’m encouraged by the progress made during the second quarter,” Wagner said. “We exceeded our revenue and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) expectations, with prescription transactions revenue and volume returning to year-over-year growth.”

But the overall revenue figure was still down 1% from the same quarter last year. And the net income gain was mostly due to an income tax benefit – the actual operating income rose by only $12 million.

What’s more, the company saw a decline in revenue from what had previously been a bright spot: contracts with pharmaceutical manufacturers. 

Revenue for this segment fell 8% to $24.3 million for the quarter. The company attributed the drop to a decision to prioritize those contracts that offered potential for higher levels of recurring revenue.

And the company revised its full-year revenue guidance, trimming the upper end of the range to $760 million from $775 million. (The low end of the range remained at $750 million.) That followed a more substantial downward revision in full-year guidance with the release of first-quarter earnings three months ago.