GoodRx Gains, Loses in First Earnings Report

GoodRx Gains, Loses in First Earnings Report
GoodRx co-founders Doug Hirsch and Trevor Bezdek received $98 million when the company went public.

In its first quarterly earnings report last week as a public company, GoodRx Holdings Inc. posted solid revenue gains.

But the Santa Monica-based company reported an eye-popping $50 million loss attributed to initial public offering-related payouts to co-founders and Co-Chief Executives Trevor Bezdek and Doug Hirsch.

GoodRx, which operates a website that offers consumers comparison pricing for prescription drugs, created a splash when it premiered as a public company two months ago.

The company’s IPO had a total haul of $1.1 billion, well above the $100 million initial goal.

GoodRx was founded in 2011 after Hirsch realized that there is a considerable spread in pharmacy retail pricing for identical prescriptions. The company’s website searches for the best local pricing deal for consumers among 70,000 pharmacies.

When it went public in September, the company was a relative rarity in that it had posted solid profitability numbers on rapid revenue growth. Revenue quadrupled from 2016 through 2019, reaching $388 million last year.

That growth has continued in 2020 despite the Covid-19 pandemic, with GoodRx recording $256.7 million in the first six months of 2020, well above the $173.2 million for the first six months of 2019.

Net income growth was also solid for the first six months of 2020, coming in at $54.7 million, up from $31.2 million for the first half of 2019.

Revenue growth continued in the third quarter, with GoodRx on Nov. 12 reporting revenue of $140.5 million, up 38% from third quarter 2019.

In an earnings call with investors, Bezdek said the revenue jump was primarily driven by 30% growth in prescription transactions — the company gets a slice of each transaction by GoodRx customers with pharmacy retailers.

Bezdek said GoodRx grew to a record 4.9 million customers in the third quarter, with 80% of all transactions coming from repeat business.

Other services, including monthly subscriptions and recently added telehealth offerings, grew more than 170% compared to the third quarter of 2019.

But GoodRx’s third-quarter earnings took a major hit from the IPO, specifically the payouts to Bezdek and Hirsch.

According to a letter to shareholders from the co-chief executives, “The loss was primarily due to a $105.9 million year-over-year increase in stock-based compensation, including $98.1 million of stock-based compensation related to the co-chief executive officers’ awards made in connection with the IPO.”

Setting aside that one-time payout, the company posted adjusted EBIDTA of $53.2 million, up 23% from third quarter 2019.

Shareholders didn’t take well to the earnings release, sending GoodRx’s share price down 6.5% on Nov. 12 to close at $47.77, a significantly larger decrease than the 0.7% decline in the overall Nasdaq market.

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Howard Fine
Howard Fine is a 23-year veteran of the Los Angeles Business Journal. He covers stories pertaining to healthcare, biomedicine, energy, engineering, construction, and infrastructure. He has won several awards, including Best Body of Work for a single reporter from the Alliance of Area Business Publishers and Distinguished Journalist of the Year from the Society of Professional Journalists.

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