| Author | Message | ||
     Entrepreneur Kurra Bewarse Username: Entrepreneur Post Number: 3550 Registered: 05-2011 Posted From: 65.35.45.47 Rating: N/A |
GDRX GoodRx is showing healthy gains today after reporting in-line EPS and revenue (31.16 +2.89) GoodRx (GDRX +10%) is showing healthy gains today after reporting EPS and revenue in-line with consensus. GoodRx mainly offers price comparisons on prescription medicine, and it gets a slice of each sale. About 84% of the company's revenue is generated through prescription transactions when customers use a GoodRx discount. Its other businesses include GoodRX Care, its telehealth subscription service, and GoodRx Gold, its monthly membership program. Despite some initial excitement when GDRX made its IPO debut in September 2020, the stock has fallen over 30% since then. The main catalyst for the downside has been competitive concerns. For example, Amazon (AMZN) launched Amazon Pharmacy in November, and Uber (UBER) announced it was expanding into drug delivery before that. Other factors for the decline have been a general rotation out of tech stocks, rising interest rates, and inflation fears. With earnings only meeting analysts' expectations, what is causing the stock to run today? We think the main reason the stock is up is because GDRX provided bullish FY21 guidance. Specifically, management increased FY21 revenue guidance to $750-760 mln from $735-755 mln. This stands out because with Q1 being just in-line, increasing guidance for the full year is a bullish signal. We also think that in-line results look pretty good considering that Q1 was a weaker cold and flu season due to social distancing. Drug store stains like Rite Aid (RAD) reported weak results for this reason, so in-line looks pretty good by comparison. Other metrics did well. Specifically, monthly active consumers were also up 17% yr/yr to 5.7 mln, with subscriptions doubling to 931K. Subscription growth was also a standout metric in Q1. GDRX's subscription-based revenue, including GoodRx Care and GoodRx Gold, jumped 154% yr/yr. Subscription services provide a steady revenue stream and can be easily scaled, helping improve margins in the future. Tech stocks are bouncing today after several sessions of weakness, so that's adding some winds to GRDX's sails. Also, the stock has sold off more than 25% in May, so it was due for a bounce. In sum, investors are happy today. Despite the headwinds from a weaker cold and flu season in Q1, GDRX was still able to deliver results in line with expectations. As we move out of the pandemic and patients feel more comfortable returning to their doctors, GDRX should experience a nice tailwind for the remainder of 2021. The bullish guidance seems to indicate this. With subscriptions doubling and active customers growing nicely yr/yr, it seems GDRX is holding its own on the competitive front at least for now. We note that the competitive landscape could quickly change given the size of AMZN, but we think the stock's recent sell-off has improved its risk-reward profile. |