- When the GDRX IPO lockup expires on Monday, March 22nd, pre-IPO shareholders and company insiders will be able to sell millions of currently-restricted shares.
- Significant sales of currently restricted shares could flood the market and negatively impact the price of GDRX when the lockup expires.
- Investors should short shares of GDRX before March 22nd or in the early hours of the March 22nd trading session.
When the lockup period ends for GoodRx, its pre-IPO shareholders and company insiders will have the opportunity to sell millions of currently-restricted shares.
The potential for a sudden increase in stock flooding into the secondary market may negatively impact the share price of GoodRx.
Currently, GoodRx trades in the $36 to $37 range, a return from IPO of nearly 12%.
Business Overview: Provider of Telemedicine Platform
GoodRx began as an online tool to compare prescription prices. Today, the company offers a variety of telemedicine services across its expanded platform including medical provider consultations and other health related services and information.
Users access the platform from either a mobile app or their website. GoodRx tracks the prices of prescription drug prices in the U.S., and it offers free coupons for discounts on the medications. Its platform monitors over 75,000 pharmacies, and as of February 2020 had over 14 million online visitors per month.
The company was founded in 2011 in California. GoodRx partnered with major drug companies in 2017 to secure lower prescription medication costs. In 2019, the company acquired HeyDoctor, which is a telemedicine provider. HeyDoctor was rebranded to GoodRx Care. The GoodRx platform enables individuals to meet with a physician online and get a prescription for certain medications starting at $19 regardless of insurance. In addition, the platform offers medical testing services.
As of the second quarter of 2020, GoodRx had 15 million monthly active users. The company reports that its services saved consumers approximately $20 billion through June 2020. GoodRx has been the most downloaded mobile app in the Google Play Store and the Apple App Store for the last 3 years. The app rating in the Apple Store is 4.8 out of 5.0 stars. Its rating in the Google Play Store is 4.7 out of 5.0 stars. The app has more than 700,000 ratings across both stores. The HeyDoctor app is rated 5.0 out of 5.0 stars and more than 8,000 reviews.
According to its SEC filings, the company reported a net profit of $85 million in the first 6 months of 2020. This is an increase over $66 million for the same time period in 2019.
GoodRx reported the following financial highlights for the 4th quarter of 2020:
Revenue was $153.5 million for an increase of 36% over the same quarter of 2019.
Net loss was $298.3 million representing $(0.74) per share. This is in contrast to LY net income of $15.2 million for $0.04 per share.
Adjusted net income was $32.2 million for the fourth quarter for $0.08 per share. This is up from $23 million for $0.06 per share year over year.
Prescription drug transaction revenue was $131.3 million for an increase of 26% over LY. Monthly active users increased 32% year over year.
Other revenue increased by 153% to $22.2 million.
Co-founder and CEO Douglas Hirsch has also been on the board of directors since the company’s inception in 2011. He has served as Co-CEO since 2015. His previous experience includes senior positions at DailyStrength Inc., Yahoo!, and Facebook. Mr. Hirsh earned a B.A. in political science at Tufts University.
Co-founder and Co-CEO Trevor Bezdek is also on the board of directors. He also serves as CEO and President of two wholly-owned subsidiaries. His previous experience comes from senior positions at Tryarc, LLC, and Biowire. He earned a B.S. in biological sciences from Stanford University.
Competition: Amazon Pharmacy and Other Online Providers
An increasing number of online platforms are offering similar services to GoodRx. Most notably, Amazon launched its pharmacy services in November 2020. Other competitors include BestRx, GoodPx, Abacus Pharmacy, OptumPx, PioneerRx.
Early Market Performance
The underwriters priced the IPO at $33 per share. The stock opened on its first day of trading at $50.50. The price rose to $57.16 on October 6 then dropped precipitously to $33.76 on November 18. It rose again to reach %56.99 on February 10 only to decline again. Currently, the price trades in the $37 to $38 range.
Summary: Short GDRX ahead of IPO Lockup Expiration
When the GDRX IPO lockup expires, pre-IPO shareholders and company insiders will be able to sell millions of currently-restricted shares. An influx of shares to the market could cause a sharp, short-term dip in the GDRX share price.
Risk tolerant investors should consider shorting shares of GDRX either ahead of the IPO lockup expiration or early in the trading session on Monday March 22nd. Investors should cover positions during the March 23rd and 24th trading sessions.
This article was written by
Analyst’s Disclosure: I am/we are short GDRX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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