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Lockup Expiration Is A Bad Prescription For GoodRx

Mar. 19, 2021 3:00 PM ETGoodRx Holdings, Inc. (GDRX)12 Comments
Don Dion profile picture
Don Dion


  • 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.

March 22, 2021 concludes the 180-day lockup period of GoodRx Holdings Inc. (NASDAQ:GDRX).

Source: https://www.goodrx.com/

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.

(Source: S-1/A)

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

This article was written by

Don Dion profile picture
Don Dion is the CEO of Inland Management, a company focused on acquiring, subdividing, developing and marketing large tracts of land on the fringes of major metropolitan markets. Inland Management has sold land in all 48 contiguous states totaling billions of dollars. As CEO, Don is responsible for helping to maintain and enhance the firm’s strong financial position and identifying opportunities for growth. In addition to his role at Inland Management, Don Dion is the Chief Investment Officer of DRD Investments, LLC. Based in Naples, FL. and Williamstown, MA., DRD Investments is a family office focused on managing a long/short hedge fund, real estate, venture capital and various other financial assets for the Dion family. Don also serves as the trustee of the Dion Family Foundation, which focuses on helping individuals with tuition assistance at Catholic Institutions for grammar school, high school, and college education. The foundation also helps individuals by supporting Massachusetts General Hospital. Don is on two leadership boards and advisory committees at Massachusetts General Hospital and the Home Base Program (a partnership between Mass General and the Red Sox Foundation). He consults with Saint Dominic's Academy and serves as a trustee of Saint Michael’s College. Previously, Don was the founder and CEO of Dion Money Management, a fee-based investment advisory firm for affluent individuals, families and non-profit organizations. Founded in 1996 and based in Williamstown, MA. and Naples, FL., Dion Money Management managed approximately one billion in assets for clients in 49 states and 11 countries. While at Dion Money Management, Don was responsible for setting investment policy, creating custom portfolios, and overseeing the performance of client accounts. Don sold the firm to NYC-based Focus Financial Partners (FOCS) on September 1, 2007 and no longer manages money for other families or institutions. Don remains a shareholder of Focus Financial Partners (FOCS). Don is also the retired publisher of the Fidelity Independent Adviser family of newsletters, which provided a broad range of investor commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With nearly 100 thousand subscribers in the United States and 29 other countries, Fidelity Independent Adviser published two monthly newsletters and one weekly newsletter. The flagship publication, Fidelity Independent Adviser, was published monthly for 16 years and reached over 60,000 subscribers. In 2011 Don and his daughter Carolyn co-authored the Ultimate Guide to ETFs, available on Amazon.com. Prior to founding Dion Money Management, Don co-founded Litchfield Financial Corp. (LTCH) with Summit Partners. Don served as Chairman and CEO of Litchfield, which was listed on the Nasdaq in 1992 and acquired by Textron Corp. (TXT) in 1999. Don was also the Executive Vice President, CFO and General Counsel for Patten Corporation (BGX) from 1986 to 1988, where he played a critical role in the company’s successful initial public offering on the New York Stock Exchange. From 1983 to 1985, Don was a corporate lawyer with the Boston Law Firm of Warner and Stackpole. Before joining Warner and Stackpole, Don worked as a C.P.A. for Ernst and Young from 1979 to 1983. Don graduated with honors from Saint Michael’s College in 1976 with a B.S. degree in Economics and Business Administration. He received his J.D. from the University of Maine Law School in 1979 and his LL.M. from Boston University Law School in 1982. Don can be reached at donalddion@gmail.com

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.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (12)

itamarro profile picture
Seeing this article now as I'm researching $GDRX (seems like a solid company from what I see so far). I know hindsight is 20/20, but I had to comment how ill-timed this was ... as of this writing March 22nd would have been great day to "catch the knife" 🤣

Even more remarkable, this happened despite some insiders indeed cashing out: openinsider.com/...
apparently there's decent demand for the stock at this price level.

Now, don't get me wrong, the stock can head down further, but I wouldn't recommend shorting on such a limited catalyst.
Why bother reading this article? do the opposite.
Jeffrey Richman profile picture
@Don Dion there are also some inaccuracies here. PioneerRX, BestRx, etc as competitors? Those are pharmacy management softwares, not consumer prescription coupons. Also, there are 5.5 million active Monthly Active Users as defined by the company, 18 million is the number of site visitors.

This article right now is "Here is some information I copy pasted about GoodRx, but really, please just also short it pre lock-up so that I can profit on my short."
Just considering the factor of lockup expiration to short a stock is sure a short sighted approach. Look at the risk/reward factor, not promising. Company is doing well and stock is just up by 12% IPO price. Actually will add to my current long position averaging $38 now if it goes to $33 or down. Lock up expiration and insider selling in a good stock is actually a great opportunity to buy stock at a great discount. Insiders sell not always because they want but like employees compensated with stock options get the opportunity to withdraw some salary that they have been waiting for to run their lives and balance their lives. If I am an insider to any company I will do the same, balancing my life and my investments.
Who Dat? profile picture
The talk about lockup period selling is over rated. I’ve followed a few and it isn’t worth talking about.  It is not always as advertised. I am looking to get back in at $35-36 if I’m lucky.

As the economy opens up, more and more people will trust visiting their doctors to get their medical attention as many may have postponed going during the pandemic.
Amzn isn’t competition; they can actually work as a partnership. GoodRx can provide traffic to Amazon pharmacy. I realized alot of people don’t understand how much data Goodrx has. They know what disease you may have what medications and what part of the world your in, age, ethnicity, and etc..... If anything Amzn or a big tech that wants to get in the industry should buy them out.
Jeffrey Richman profile picture
Thanks for the article but this is a pretty short-sighted take missing key info about the potential risk/reward. I won't really bash short selling as I do it occasionally but I don't often see someone actually directly propose front-running employees and the risk taking investors that helped create a company.

Not my company of tea, but alas, to each their own.

Furthermore, there is ample research that shows that lockup periods don't always lead to a meaningful gap down, and in fact, the reverse can happen and shorts get squeezed (See YELP).

Lastly, the largest shareholder here is Silver Lake PE firm with 1/3rd of shares. They had bought in at the IPO price of $33 for *another* 100 million in equity. The price appreciation and liquidity isn't great enough now for the PE firm to likely want to dump any shares, nor have recent earnings provided ample reason to want to dump.

So sure, some employees will diverse their assets post lock-up. Everyone knows this and it likely hurt the stock last couple of weeks.

In short, the trade could work, but the risk-reward here likely sucks. I like shorts that are going to drop by 50-80%... not a day trade with a coin flip shot of working for 5-10%.
Don Dion profile picture
@jrichman short-sighted is the idea here. This puppy has been drifting down over the past month.
Jeffrey Richman profile picture
@Don Dion I suppose my best market oriented challenge to this is that data doesn't clearly support the hypothesis that lock up expiration leads to negative immediate returns for an equity. www.seeitmarket.com/...
Thanks, but I’m doing the opposite. Listen to their recent CC: pent up demand, under-diagnosed ppl, huge runway for growth. Another little fun fact, did you know roughly 65% of ppl that go to a doc, get a prescription. Short for very minimal downside at these levels, Buy for a ton of upside. Long $GDRX
@TheLastSKInvestor Pent up demand is the clincher. People have been avoiding and putting off doctor visits.
@LongyMcLongFace Yep. And they’re coming back sicker. I expect this stock to be a lot higher this time next year. Long $GDRX
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