[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
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
- #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.
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
- 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
- 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
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
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
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...
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)
- 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
- 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 ...
- $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
<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
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
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
- 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
- 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.
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-…
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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