GoodRx Q2 Earnings Preview

Core Viewpoint - GoodRx is facing significant industry headwinds and needs to double its market growth to support its current price target, which is challenging given its recent performance and market conditions [35][38]. Financial Performance - GoodRx is expected to report Q2 2024 revenue of approximately $200 million, reflecting a year-over-year increase of about 5% from $189.7 million in Q2 2023 [4]. - For FY 2024, revenue is projected to be around $800 million, up from $750.3 million in FY 2023, indicating a growth rate of approximately 7% to 8% [4]. - The company has struggled with cost growth outpacing revenue, necessitating a growth rate of over 10% to justify its stock price [7]. Market Position and Challenges - GoodRx currently holds only a 2% market share in its core business, indicating limited traction in a competitive landscape [9]. - The pharmaceutical industry is expected to grow at a compound annual growth rate (CAGR) of 6.15%, and GoodRx's growth is forecasted to align with this market growth, suggesting a lack of competitive advantage [25][26]. - The company has seen a 10% year-over-year increase in monthly active consumers, but this has been offset by a decline in subscription plans, which are crucial for stability [32]. Guidance and Valuation - Management's guidance suggests a high-end growth rate of 12%, but even this would only yield a minimal 4% upside based on discounted cash flow (DCF) analysis [35]. - The average price target for GoodRx is set at $7.50, indicating a potential downside of 13% from current pricing [3][35]. - Wall Street's price target has increased to $9.60, but this remains below the high-end of the analyst's expectations [16]. Strategic Initiatives - There is potential upside if GoodRx can secure major corporate or insurance partnerships, similar to its deal with Kroger, which could provide a steady customer base [1]. - Management has outlined several initiatives, including GLP-1, that are not fully accounted for in current guidance, but these are seen as necessary to address growth gaps [9].