GoodRx Picks Its Battles With Amazon And Healthcare Costs


The market is wondering what to make of GoodRx after a mixed earnings report last week. Q1 revenue was up 20 percent, rising to $160.4 million from $133.4 million a year earlier. But net income was a miss — down $27.3 million to $1.7 million, a situation the company attributed to bringing on $46.5 million in stock-based compensation expenses.

“We’re transitioning from the COVID crisis into the other healthcare crisis, which is that people simply cannot afford their care,” Co-CEO Doug Hirsch said in an interview on CNBC. “We feel like our business is rock-solid and just getting better.”

The market agreed with the analysis, as GoodRx saw its stock price tick up 10 percent as the results went public on Friday (May 14). Such movement in stock price has been the exception rather than the rule since the digital prescription firm first went public last September.

Among investors’ main fears for GoodRx’s future is Amazon, which last fall announced intentions to level up its pharmacy game — a move that sent GoodRx’s stock price spiraling down 22.5 percent in a single trading session, based on concerns that the small, up-and-coming digital pharmacy firm would not be able to compete once retail’s resident 800-lb. gorilla stepped into the competitive arena.

It’s a threat that the GoodRx team has downplayed in the past, and was quick to attempt to deflate during its earnings call with investors last week, noting that for all the press Amazon has gotten for its various moves to take on the medical segment and prescription market, its actual success in doing anything but generating a lot of headlines is in fact pretty limited.

“Based on third-party data, they have not been successful. Mail-order prescriptions only make up about 5 percent of fill count in the U.S. Even through COVID, mail has remained a small piece of overall volume, and is now actually starting to decrease as COVID eases,” GoodRx CFO Karsten Voermann told investors during the earnings call last week. “Third-party data indicates that Amazon Pharmacy is not gaining momentum and that their volume remains incredibly small.”

Building out on that comment, CEO Hirsch noted the GoodRx business is durable, highly predictable and able to provide value to its customers across the board — all attributes that no one, including Amazon, can match, given GoodRx’s unique ability to open new revenue streams and new methods of communication with consumers.

Moreover, Voermann told investors that GoodRx is cheaper than Amazon about 90 percent of the time and offers a lower retail price almost 100 percent of the time, based on its internal research. “I’d have you also remember that 70 percent of consumers still don’t know prescription prices can vary significantly across pharmacies. And so if awareness of this topic increases, we believe we will only benefit,” he said.

But the company has been less sure of late. Earlier this month, GoodRx saw its stock price take a 5 percent dive on Amazon’s announcement that Prime members can now search for a drug and compare prices at Amazon Pharmacy and more than 60,000 pharmacies nationwide that accept the discount benefit, and that Prime customers can now determine their expected co-pay for a medication before ordering.

“As more and more people look to complete everyday errands from home, pharmacy is an important and needed addition to the Amazon online store,” Doug Herrington, senior vice president of North American consumer, Amazon, said in a statement. “PillPack has provided exceptional pharmacy service for individuals with chronic health conditions for over six years. Now, we’re expanding our pharmacy offering to, which will help more customers save time, save money, simplify their lives and feel healthier.”

GoodRx is still a powerful player in the digital pharmacy scene: To date, it still tops PYMNTS’ Provider Rankings of pharmacy players by a healthy 10+ point margin.

But the competition is coming — from both Amazon and a host of startups looking to nudge GoodRx out of that top spot as soon as possible. The firm is still growing, and in recent weeks has made acquisitions to expand. But investors still seem unsure of whether GoodRx can build a big enough lead to stay healthy if the competition from a mega-player like Amazon heats up much more.

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May 17, 2021 at 07:03PM