Thread by @marketplunger1

[THREAD]

GoodRX $GDRX filed their S-1 earlier this week.

I read It so you don't have to (but you should).

Here's a thread on what I found interesting, fascinating and down-right incredible from the company.

I'm starting at zero: sec.report/Document/00011…

cc: @saxena_puru

1/ High-level Facts & Figures:

- #1 most downloaded medical app

- 4.9M Monthly Active Users

- 80%+ Repeat Activity

- $20B+ in Consumer Savings

- 150B daily pricing data points

- 4 platform offerings

- Est. Market Cap: ~$9.9B

2/ Business Overview

Mission: To help Americans get the healthcare they need at a price they can afford.

So far it's working (really) well.

The company estimates 18M of their customers could NOT have afforded to fill their Rx without the company's savings tools.

3/ How GDRX Makes Money

- Receives fees from partners, which is mostly Pharmacy Benefit Managers (PBMs) when customer uses GDRX code

- Fees are % of fees that partners earn OR a fixed payment per transaction

- Recurring nature to GDRX model as code is saved to consumer profile

4/ Financial Results: GoodRX is growing both bottom and top-line at a rapid clip.

- GMV via prescription offering: $2.5B

- Compounded annual revenue growth rate: 57% since 2016

- Generated $388M Revenue in 2019

- Generated $66M Net Income in 2019

- 2019 Adj. EBITDA: $160M

5/ Solving Healthcare Consumer Issues

GoodRX notes 5 major healthcare consumer "lacks" in its S-1:

- Lack of Consumer-focused solutions

- Lack of Affordability

- Lack of transparency

- Lack of Access to Care

- Lack of Resources for Healthcare pros

6/ Total Addressable Market Opportunity

GoodRX estimates their TAM around $800B. That's a HUGE number.

Here's how it breaks down:

- $524B Prescription Care

- $30B Pharma manufacturer solutions

- $250B Telehealth

Initial Surprises: Telehealth is nearly 32% of TAM

7/ GoodRX Value Prop

It's the coveted win-win-win:

- Consumers: Simpler, more affordable Rxs

- Healthcare Pros: Increased medication adherence and greater price transparency (also links w/ EHR)

- Healthcare Co's: Reach & provide affordable solutions (Rxs) to customers

8/ What Makes GDRX Different

There's six strengths that reinforce GoodRX's powerful network effects:

- Leading platform
- Trusted Brand
- Scaled & Growing Network
- Consumer-focus
- Extensible Platform
- Cash generative monetization model

See image for descriptions...

9/ Analyzing Income Statement

- GDRX grew revenue from $99M in 2016 to $388M in 2019 (crazy growth)

- Biggest operating expense currently: SG&A, which was 46% of revenues last year

- Operating Margin: 36% (real nice)

- Pre-Tax Earnings: $83M (21% margin)

10/ Analyzing Income Statement Pt.2

- EPS grew from -$0.11 to $0.19 in four years (w/ growing share count)

- 2019 EPS of $0.19 is computed using weighted average shares post-IPO.

- Six-month ended YoY: $0.09 vs. $0.15 in 2020 on $15M more income

- SBC: <1% of revenues

11/ Analyzing Balance Sheet

- $126M in actual cash

- If you adjust for the pro-forma IPO, they get nearly $800M in cash

- Total Debt (incl. LT debt): $700M

- Total Est. Capitalization: $1.078B

- Financed Biz via Cash from Ops (crazy, right?)

See breakdown below ...

12/ Analyzing Balance Sheet Pt. 2 (Debt & Contractual Obligations)

<1YR: $41M

1-3YR: $85.6M

3-5YR: $82.7M

>5YR: $711M

13/ Key Operating Metrics

One of the most important KPI's to measure for GDRX is Monthly Active Users (MAU).

GDRX's MAU trend is absolutely incredible:

- 2016: 718k
- 2017: 1.28M
- 2018: 2.02M
- 2019: 3.18M
- 2020: 4.88M

14/ Where Will Growth Come From?

GDRX outlines 3 ways to grow revs outside Rx codes:

- Subscription offerings: Gold, Kroger Savings

- Pharma Manufacturing Solutions: Provide low-cost solutions to expensive brand-name meds

- Telehealth: Online visits / marketplace

15/ How To Track GDRX Bull Thesis:

- Monitor MAU growth & Repeat Activity

- Size + Strength of Healthcare Partner Network

- Growth of Platform & Telehealth

16/ Let's Meet The Founders: Doug Hirsch & Trevor Bezdek (Letter Analysis)

- Making healthcare easy is *crazy* hard

- Consumers (insured or not) needed tools to help

- Reduce cost of nearly every generic drug by >70%

- Prices are less than typical insurance

17/ Thinking about Valuation

At the current estimated IPO price and shares, GDRX will trade roughly:

- 25x 2019 Revenues

- 62x 2019 EBITDA

- 119x 2019 Pre-tax Profits

They're also growing 57% compounded since 2016.

18/ Concluding Thoughts

Alright, deep breath! We made it through another S-1.

Click below to read the unrolled thread version on the @MacroOps website. While you're there, don't be afraid to subscribe to our free newsletter: macro-ops.com/goodrx-gdrx-s-…