[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-…
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