GoodRx Holdings, Inc. (GDRX) Bundle
Understanding GoodRx Holdings, Inc. (GDRX) Revenue Streams
Understanding GoodRx Holdings, Inc.’s Revenue Streams
GoodRx Holdings, Inc. generates revenue through multiple streams, primarily focusing on prescription transactions, subscription services, and pharma manufacturer solutions. Here’s a detailed breakdown of these revenue sources:
Revenue Breakdown by Source
| Revenue Source | Q3 2024 Revenue (in thousands) | Q3 2023 Revenue (in thousands) | Change ($) | Change (%) |
|---|---|---|---|---|
| Prescription Transactions Revenue | $140,419 | $135,427 | $4,992 | 4% |
| Subscription Revenue | $21,306 | $23,240 | ($1,934) | (8%) |
| Pharma Manufacturer Solutions Revenue | $28,136 | $15,897 | $12,239 | 77% |
| Other Revenue | $5,390 | $5,394 | ($4) | 0% |
| Total Revenue | $195,251 | $179,958 | $15,293 | 8% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, total revenue increased to $593.7 million, compared to $553.6 million for the same period in 2023, reflecting a year-over-year growth rate of 7%.
Contribution of Different Business Segments to Overall Revenue
In the third quarter of 2024, prescription transactions revenue accounted for 72% of total revenue, while subscription revenue made up 11%, and pharma manufacturer solutions contributed 14%.
Analysis of Significant Changes in Revenue Streams
The most notable change in revenue streams is the substantial growth in pharma manufacturer solutions revenue, which increased by 77% year-over-year, primarily due to a significant client contract termination payment recognized in the previous year. Conversely, subscription revenue saw an 8% decline, primarily due to the sunset of the Kroger Savings program, which contributed $2.1 million in subscription revenue in Q3 2023 but generated none in Q3 2024.
This analysis underscores the dynamic nature of GoodRx's revenue streams and highlights the importance of adapting to changes in consumer demand and market conditions.
A Deep Dive into GoodRx Holdings, Inc. (GDRX) Profitability
A Deep Dive into GoodRx Holdings, Inc.'s Profitability
Gross Profit Margin: The gross profit margin for the three months ended September 30, 2024, was 94.0%, compared to 89.6% for the same period in 2023. For the nine months ended September 30, 2024, the gross profit margin was 93.9%, an increase from 90.1% in 2023.
Operating Profit Margin: The operating income for the three months ended September 30, 2024, was $20.4 million, yielding an operating margin of 10.5%. In contrast, for the same period in 2023, the operating loss was ($38.3 million), reflecting an operating margin of (21.3%). For the nine months ended September 30, 2024, the operating income reached $47.7 million, equating to an operating margin of 8.0%, compared to an operating loss of ($8.7 million) or (1.6%) in 2023.
Net Profit Margin: The net income for the three months ended September 30, 2024, was $4.0 million, resulting in a net profit margin of 2.0%, compared to a net loss of ($38.5 million) and a margin of (21.4%) in 2023. For the nine months, net income was $9.7 million, yielding a net profit margin of 1.6%, down from 3.1% in the same period of 2023.
Trends in Profitability Over Time
Over the past year, the company has shown a significant turnaround in profitability metrics. The gross profit margin improved consistently, reflecting better cost management. Operating income has shifted from substantial losses in 2023 to positive figures in 2024, indicating improved operational efficiency.
Comparison of Profitability Ratios with Industry Averages
The average gross profit margin for the healthcare technology industry typically ranges from 60% to 80%. The company's gross profit margin of 94.0% for Q3 2024 significantly exceeds this benchmark. The operating and net profit margins, however, are still below the industry average, which generally stands around 15% to 20% for operating margins and 5% to 10% for net margins.
Analysis of Operational Efficiency
- Cost Management: Total costs and operating expenses for the three months ended September 30, 2024, were $174.8 million, a decrease of 20% from $218.3 million in Q3 2023.
- Gross Margin Trends: The gross margin has increased due to a reduction in cost of revenue, which fell by 38% year-over-year, from $18.7 million to $11.7 million.
- Operating Expenses: Operating expenses for product development and technology decreased by 24%, from $39.6 million to $30.1 million.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Gross Profit Margin | 94.0% | 89.6% | 4.4% |
| Operating Income | $20.4 million | ($38.3 million) | 153.2% |
| Net Income | $4.0 million | ($38.5 million) | 110.4% |
| Total Costs and Operating Expenses | $174.8 million | $218.3 million | (20.0%) |
Debt vs. Equity: How GoodRx Holdings, Inc. (GDRX) Finances Its Growth
Debt vs. Equity: How GoodRx Holdings, Inc. Finances Its Growth
Debt Levels
As of September 30, 2024, the company had a total debt of $491.3 million, comprising a principal balance of $500.0 million under the 2024 Term Loan Facility, with unamortized debt issuance costs of $8.7 million. This represents a significant shift from the previous year when total debt stood at $656.5 million as of December 31, 2023. The company had no borrowings against its Revolving Credit Facility as of September 30, 2024.
Debt-to-Equity Ratio
The debt-to-equity ratio for GoodRx Holdings, Inc. as of September 30, 2024, is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Stockholders' Equity
Total Stockholders' Equity as of September 30, 2024, was $696.4 million. Therefore, the debt-to-equity ratio is:
Debt-to-Equity Ratio = $491.3 million / $696.4 million = 0.705
This ratio indicates a lower reliance on debt compared to the industry average, which typically ranges between 1.0 and 1.5 for similar companies in the healthcare sector.
Recent Debt Issuances
On July 10, 2024, the company entered into a Sixth Amendment to its First Lien Credit Agreement, establishing a new $500.0 million term loan maturing on July 10, 2029. This amendment also extended the maturity of $88.0 million of the Revolving Credit Facility to April 10, 2029. The effective interest rate on the term loans for the three months ended September 30, 2024, was 9.60%, compared to 8.80% for the same period in 2023.
Credit Ratings
The company's credit ratings have not been explicitly detailed; however, the financial covenants under the Credit Agreement require maintaining a First Lien Net Leverage Ratio not to exceed 8.2 to 1.0. This suggests a focus on maintaining manageable debt levels in relation to earnings.
Balancing Debt Financing and Equity Funding
GoodRx has strategically managed its capital structure by balancing debt and equity financing. The company has engaged in equity repurchases, with a total of $290.2 million available under its stock repurchase program as of September 30, 2024. The balance sheet reflects total stockholders' equity of $696.4 million, indicating a prudent approach to funding growth while controlling debt.
| Debt Type | Amount (in millions) | Maturity Date | Interest Rate |
|---|---|---|---|
| 2024 Term Loan Facility | $500.0 | July 10, 2029 | 9.60% |
| Revolving Credit Facility | $100.0 | April 10, 2029 | Not specified |
| First Lien Term Loan Facility (previous) | $661.8 | October 10, 2025 | Not specified |
Assessing GoodRx Holdings, Inc. (GDRX) Liquidity
Assessing GoodRx Holdings, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, GoodRx Holdings, Inc. reported a current ratio of 3.20, indicating a strong liquidity position to cover short-term liabilities.
Quick Ratio: The quick ratio stands at 3.10 as of the same date, reflecting a solid ability to meet obligations without relying on inventory sales.
Analysis of Working Capital Trends
Working capital, defined as current assets minus current liabilities, was reported at $309.3 million as of September 30, 2024. This represents an increase from $273.7 million at the end of 2023, indicating improved operational efficiency and liquidity management.
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|---|
| September 30, 2024 | $423,777 | $114,361 | $309,416 |
| December 31, 2023 | $451,600 | $122,559 | $329,041 |
Cash Flow Statements Overview
The cash flow from operating activities for the nine months ended September 30, 2024, was $139.1 million, compared to $122.4 million for the same period in 2023, indicating a strong operating cash flow performance.
Cash flows from investing activities showed a net outflow of $53.7 million in 2024, up from $42.9 million in 2023, primarily due to increased investments in capitalized software.
Cash flows from financing activities reflected a significant outflow of $334.0 million for the nine months ended September 30, 2024, compared to $41.8 million in 2023, largely due to stock repurchase activities and repayments of long-term debt.
| Cash Flow Component | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $139,149 | $122,424 |
| Investing Activities | ($53,703) | ($42,894) |
| Financing Activities | ($334,965) | ($41,790) |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, GoodRx held cash and cash equivalents of $423.8 million, with an additional $91.7 million available under its revolving credit facility. This liquidity cushion supports its operational needs and potential growth initiatives.
Despite high cash reserves, the substantial cash outflow in financing activities could indicate aggressive capital management strategies, including stock repurchases that may impact future liquidity if not managed carefully.
Overall, the company's liquidity position appears robust, with adequate cash flow from operations and a favorable current and quick ratio, minimizing immediate liquidity concerns.
Is GoodRx Holdings, Inc. (GDRX) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, we will analyze key financial ratios such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA), along with stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a crucial indicator of market valuation. As of September 30, 2024, the company's diluted earnings per share (EPS) was $0.01, resulting in a P/E ratio of approximately 7.57 based on a stock price of $0.76.
Price-to-Book (P/B) Ratio
The P/B ratio offers insight into how the market values the company's equity compared to its book value. As of September 30, 2024, the book value per share was approximately $1.83, resulting in a P/B ratio of around 0.42.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio is another critical metric for evaluating company valuation. The enterprise value as of September 30, 2024, was approximately $1.82 billion, and the EBITDA for the trailing twelve months was about $193.2 million, resulting in an EV/EBITDA ratio of approximately 9.43.
Stock Price Trends
The stock price has shown significant volatility over the past year. The closing price as of September 30, 2024, was $0.76, down from a 52-week high of $7.57. The average stock price over the last 12 months was approximately $3.25.
Dividend Yield and Payout Ratios
As of September 30, 2024, the company does not pay a dividend, resulting in a dividend yield of 0%. The lack of dividends indicates a reinvestment strategy rather than returning capital to shareholders.
Analyst Consensus on Stock Valuation
Analysts generally hold a cautious outlook on the stock. As of October 2024, the consensus rating is Hold, with a median price target of approximately $1.00. This reflects a potential upside of about 31.6% from the current price of $0.76.
| Metric | Value |
|---|---|
| P/E Ratio | 7.57 |
| P/B Ratio | 0.42 |
| EV/EBITDA Ratio | 9.43 |
| Stock Price (as of 09/30/2024) | $0.76 |
| 52-Week High | $7.57 |
| Average Stock Price (12 months) | $3.25 |
| Dividend Yield | 0% |
| Analyst Consensus Rating | Hold |
| Median Price Target | $1.00 |
| Potential Upside | 31.6% |
Key Risks Facing GoodRx Holdings, Inc. (GDRX)
Key Risks Facing GoodRx Holdings, Inc.
GoodRx Holdings, Inc. is exposed to several internal and external risks that could impact its financial health significantly. Below is an overview of these risks:
Industry Competition
The competitive landscape within the digital healthcare sector is intensifying. Major players, including traditional pharmacies and emerging health tech companies, are increasingly vying for market share. In the previous quarter, the company reported a 4% increase in prescription transactions revenue, indicating a growth trend, yet the competition remains fierce.
Regulatory Changes
Changes in healthcare regulations can have profound effects on operations. Compliance with healthcare laws, such as those governing pharmacy benefit managers (PBMs) and pricing strategies, is critical. Recent legislative shifts may impose new compliance burdens, potentially increasing operational costs.
Market Conditions
Fluctuations in market conditions, including economic downturns, can reduce consumer spending on healthcare services. The company noted a projected mid-single-digit million dollar impact on prescription transactions revenue due to recent store closures by Rite Aid, which could reverberate across the sector.
Operational Risks
Operational risks include the potential for disruptions in the supply chain and technology failures. The company has been restructuring its pharma manufacturer solutions, which led to a $7.6 million loss on the disposal of capitalized software last year. Additionally, the average Monthly Active Consumers decreased to 6.5 million in Q3 2024, down from 6.7 million in Q1 2024, highlighting a potential operational setback.
Financial Risks
Financial risks are evident in the company’s debt obligations. As of September 30, 2024, GoodRx had a $700 million term loan maturing on October 10, 2025, and a $100 million revolving credit facility. The company incurred an interest expense of $41.6 million for the nine months ended September 30, 2024. Additionally, the effective income tax rate rose to 51.1% in Q3 2024 from 17.4% in Q3 2023, indicating increased financial strain.
Strategic Risks
Strategic risks involve challenges in executing business plans and achieving growth targets. The company has seen a 30% decline in subscription revenue due to the sunset of the Kroger Savings program, leading to a drop in subscription plans from 930,000 to 701,000. This shift could hinder long-term strategic objectives and revenue growth.
Litigation Risks
The company is currently involved in ongoing litigation, which may pose financial risks. The outcome of such legal matters is uncertain and could result in substantial costs. As of 2024, GoodRx has initiated arbitration against a former partner, with the potential for financial repercussions.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition in the digital healthcare space | 4% increase in prescription transactions revenue |
| Regulatory Changes | Compliance with evolving healthcare regulations | Potential increase in operational costs |
| Market Conditions | Economic downturns affecting consumer spending | Mid-single-digit million dollar impact on revenue |
| Operational Risks | Supply chain disruptions and technology failures | Loss of $7.6 million on software disposal |
| Financial Risks | Debt obligations and rising interest expenses | Interest expense of $41.6 million |
| Strategic Risks | Challenges in executing growth strategies | 30% decline in subscription revenue |
| Litigation Risks | Ongoing legal disputes | Potential for substantial legal costs |
Future Growth Prospects for GoodRx Holdings, Inc. (GDRX)
Future Growth Prospects for GoodRx Holdings, Inc.
Analysis of Key Growth Drivers
The company has identified several key growth drivers that are expected to contribute to its expansion in the coming years:
- Product Innovations: The launch of new digital healthcare solutions and enhancements to existing offerings are aimed at improving user engagement and retention.
- Market Expansions: Geographic expansion into underserved markets is a priority, targeting areas with high demand for affordable healthcare solutions.
- Acquisitions: Strategic acquisitions are being pursued to enhance service offerings and increase market share.
Future Revenue Growth Projections and Earnings Estimates
Revenue projections for the upcoming fiscal periods indicate a positive trend:
- For the fiscal year ending December 31, 2024, total revenue is expected to reach $800 million, representing a growth rate of 10% compared to 2023.
- Adjusted EBITDA is projected to be approximately $250 million with a margin of 31.25%.
Strategic Initiatives or Partnerships That May Drive Future Growth
The company is actively pursuing various strategic initiatives:
- Partnerships with Pharmacy Benefit Managers (PBMs): Collaborations are being strengthened to enhance integrated savings programs.
- Digital Marketing Campaigns: Increased spending on targeted digital marketing is expected to boost consumer awareness and engagement.
Competitive Advantages That Position the Company for Growth
Several competitive advantages position the company favorably within the market:
- Extensive Consumer Base: The company has over 7 million Monthly Active Consumers, providing a solid foundation for future growth.
- Brand Recognition: Strong brand presence and trust established in the digital healthcare space enhance customer loyalty.
| Metric | 2024 Estimate | 2023 Actual | Change (%) |
|---|---|---|---|
| Total Revenue | $800 million | $727 million | 10% |
| Adjusted EBITDA | $250 million | $215 million | 16.3% |
| Monthly Active Consumers | 7 million | 6.5 million | 7.7% |
Overall, the combination of strategic growth initiatives, a robust consumer base, and ongoing product innovations positions the company well for future expansion in the competitive digital healthcare market.
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Resources:
- GoodRx Holdings, Inc. (GDRX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of GoodRx Holdings, Inc. (GDRX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View GoodRx Holdings, Inc. (GDRX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.