Shareholders of Santa Monica-based GoodRx Holdings Inc. have undergone a considerable amount of pain as the digital health care company goes through a major transition in its business model.

Over the last couple years – particularly since Chief Executive Wendy Barnes took the helm at the beginning of 2025 – GoodRx has seen its traditional pharmacy transaction model shrink as that sector has contracted.

The company is racing to ramp up two other business pillars to offset the falling revenue stream. One area is partnership deals involving discount programs of pharmaceutical manufacturers, and the other focus is subscription packages for telemedicine consultations and prescriptions centered on specific medical conditions.

However, while expanding rapidly, these two revenue streams have yet to fully counter the declines in pharmacy prescription transactions. And that has left investors caught in this timing gap. As a result, the stock price has plunged more than 50% since last summer’s peak of about $5 a share. The price briefly dipped below $2 a share at the end of February before rebounding a bit this month to $2.25 as of last week.

Barnes and other GoodRx executives tried to reassure wary investors in the company’s most recent earnings call, terming this a case of short-term pain for long-term gain.

“These choices will impact prescription transaction revenue in the near term as we transition to improve the durability of the offering and bolster the growth of ‘pharma direct’ and subscription revenue in the long term,” Barnes told analysts in the conference call.

The prescription medication marketplace is amid a historic change as consumers alter their methods of obtaining their medications, she said.

“Health care is becoming more consumer-driven,” she said. “Manufacturers are playing a more active role in pricing and access. Retail economics continue to evolve. Those dynamics require new models.”

Barnes then tried to put how the company is adapting in context.

“We have been intentional about building the capabilities and partnerships that allow GoodRx Holdings Inc. to meet that moment,” she said. “We have made clear choices on when and how to compete.”

RiteAid bankruptcy impact

Perhaps the greatest sign of how the pharmacy retail marketplace has been hammered by these changing patterns was the bankruptcy filing and then ultimate closure last summer of Camp Hill, Pennsylvania-based Rite Aid Corp.’s nationwide store network. Twenty years ago, Rite Aid had nearly 5,000 stores.

RiteAid has not been alone. Rival Walgreen Co. of Deerfield Illinois has closed some 2,000 stores in the past decade, according to a statement from its chief executive last year. And Woonsocket, Rhode Island-based CVS Health, which operates the CVS Pharmacy chain, has closed nearly 1,500 of its stores in the past five years.

Since its founding in 2011, GoodRx primarily generates revenue from prescription transactions. Its core business model involves receiving a percentage of a customer’s payment each time they use the GoodRx platform to get a discounted prescription at the pharmacy.

These pharmacy transactions are key to one of GoodRx’s core metrics: the number of monthly active consumers, which dropped about 20% last year to 5.3 million as of Dec. 31.

But it’s not just the number of consumers. GoodRx’s share of each prescription transaction has also been shrinking, according to John Ransom, health care analyst with St. Petersburg, Florida-based Raymond James Financial Inc.

“Management believes it is ‘necessary and prudent’ to proactively renegotiate the economics with their pharmacy network to ensure sustainability of the network and avoid surprises,” Ransom wrote in a research note.

“Basically, the fee per prescription is moving lower across the board,” he added.

Last summer’s closure of Rite Aid stores hit GoodRx particularly hard.

“We had significant revenue coming from Rite Aid and some of our other partner programs during 2025 that will not recur in 2026,” Chris McGinnis, GoodRx’ chief financial officer, told analysts in the conference call.

Overall, the company’s prescription transaction revenue fell 14% during the fourth quarter to about $125 million. For the entire year, prescription transaction revenue fell 6% to $544 million. Despite the drop, prescription transaction revenue still comprised more than two-thirds of overall revenue of just under $797 million last year.

Manufacturer partnerships surge

Despite a fall in prescription transaction revenue, GoodRx’s pharmaceutical manufacturing partnerships (Pharma Direct) revenue sharply rose, soaring 41% to $151 million.

During the earnings call, Barnes acknowledged that this business segment “has become a key growth driver” for the company.

“The (pharmacy) industry dynamics I just discussed, combined with tighter insurance coverage, are fundamentally changing how prescriptions are accessed,” she said. “Affordability decisions are moving earlier in the journey, forcing patients to play a more active role in how medications are selected, paid for and filled. At the same time, the rapid growth of GLP-1 through obesity (weight loss drugs such as Wegovy and Ozempic) has accelerated direct-to-consumer models and heightened expectations around transparency and convenience.”

These trends are driving accelerated growth in GoodRx’s Pharma Direct division, which partners with pharmaceutical companies to market their drug discount programs. Some of these discount programs are required due to federal and state regulations.

On the federal end, the 2022 Inflation Reduction Act required the Centers for Medicare and Medicaid Services to negotiate lower prices for high-cost drugs. There have been two rounds of negotiations with both President Joe Biden and President Donald Trump’s administrations over drug pricing, including for drugs like Thousand Oaks-based Amgen Inc.’s Enbrel. More negotiation rounds are expected. In addition, pharmaceutical companies face mounting pressure to lower drug prices to avoid further government mandates.

Also, GoodRx has agreed to participate in the current administration’s newly unveiled TrumpRx direct-to-consumer platform that provides so-called “most favored nation” discount pricing for dozens of drugs. Pharmaceutical manufacturers must agree to each brand name discount price.

The end result of all these trends and requirements, Barnes said, is that “pharmaceutical manufacturers are investing more in patient-facing strategies to meet consumers earlier and need partners that can execute those strategies at scale,” Barnes said. “That is where GoodRx Holdings Inc. stands apart.”

Ramping up programs

Over nearly two years, GoodRx has also launched several subscription programs that are centered on specific conditions. These programs consist of GoodRx’s traditional drug discount service, combined with telehealth visits with doctors that have the authority to write prescriptions and information on the latest research and treatment offerings for the condition. Three of these condition-specific programs – erectile dysfunction, hair loss and obesity – launched after Barnes took over as chief executive at the beginning of last year.

“We simplify the entire journey, from virtual consultation to prescription to fulfillment, at nearly every pharmacy nationwide,” Barnes said. “We use only FDA-approved therapies and pair them with transparent, industry-leading, discounted cash prices, powered through our direct relationships with pharmaceutical manufacturers.”

This strategy has become key in the weight loss arena, which is now dominated by GLP-1 class drugs – such as Ozempic, Wegovy and Zepbound.

In a related development, Bagsvaerd, Denmark-based Novo Nordisk, which created the Wegovy and Ozempic drugs, announced in January a pill form of Wegovy with doses for self-paying patients starting as low as $149 per month, an 89% reduction from the monthly price for Wegovy injections just two years ago. GoodRx was one of the launch collaborators, offering the drug at that price on its website.

Last month, GoodRx established yet another new business line with the launch of its “Employer Direct” program, which enables employers to lower the cost of certain brand medications through the targeting of subsidies to the discounted prices offered by pharmaceutical manufacturers.

Under the program, employers can also allow their employees to use telemedicine appointments for specific conditions such as weight loss and hair loss, where the treatments are often not covered by traditional insurers.

In its announcement of the program last month, GoodRx said it is intended to “complement, not replace, traditional health plans.”

Waiting for ‘long-term durability’

GoodRx executives hope all these new programs will boost overall revenue to offset the declining sales from traditional prescription transactions. But they warned in the earnings call that it will take time. Indeed, overall subscription revenue last year fell 3% to $84 million from 2024 levels as the new programs had yet to be reflected in the financial results.

“We have seen strong early adoption related to our condition-specific subscriptions, particularly around weight loss, which started late in 2025,” Chief Financial Officer McGinnis said. “We expect it will contribute more meaningfully to overall subscription revenue in 2026.”

He then echoed Barnes in warning investors to expect some less-than-favorable earnings results over the next quarter or two before the expected new revenue sources hit their full stride.

“We have made deliberate choices to favor long-term durability and certainty that will negatively impact our near-term unit economics,” McGinnis said.