GoodRx (GDRX)

Healthcare tech company GoodRx (NASDAQ:GDRX) reported Q3 CY2025 results exceeding the market’s revenue expectations, but sales were flat year on year at $196 million. Its non-GAAP profit of $0.08 per share was 12.3% below analysts’ consensus estimates.

Company Overview

Started in 2011 to tackle the problem of high prescription drug costs in America, GoodRx (NASDAQ:GDRX) operates a digital platform that helps consumers find lower prices on prescription medications through price comparison tools and discount codes.

The consumer-focused healthcare technology sector leverages digital platforms to make healthcare more accessible and affordable, offering services like telemedicine and prescription discounts. Looking forward, growth is supported by increasing consumer comfort with telehealth and the demand for cost-saving tools amidst rising healthcare expenses. AI-powered diagnostics and personalized digital care also present significant opportunities. However, the sector faces headwinds from heightened competition as large technology and established healthcare companies expand their digital presence.

GoodRx competes with other prescription discount providers like SingleCare and RxSaver, pharmacy benefit managers such as CVS Caremark (NYSE:CVS) and Express Scripts (part of Cigna Group, NYSE:CI), and digital healthcare platforms including Amazon Pharmacy (NASDAQ:AMZN) and Mark Cuban Cost Plus Drug Company.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With just $800.7 million in revenue over the past 12 months, GoodRx is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive.

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, GoodRx’s sales grew at a decent 9.4% compounded annual growth rate over the last five years. Its growth was slightly above the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. GoodRx’s recent performance shows its demand has slowed as its annualized revenue growth of 3.5% over the last two years was below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its number of customers, which reached 5.4 million in the latest quarter. Over the last two years, GoodRx neither added nor lost customers. Because this number is lower than its revenue growth, we can see the average customer spent more money each year on the company’s products and services.

This quarter, GoodRx’s $196 million of revenue was flat year on year but beat Wall Street’s estimates by 1.1%.

Looking ahead, sell-side analysts expect revenue to grow 2.4% over the next 12 months, similar to its two-year rate. This projection doesn't excite us and indicates its products and services will see some demand headwinds.

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.

GoodRx has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average adjusted operating margin of 25.4%.

Analyzing the trend in its profitability, GoodRx’s adjusted operating margin decreased by 4.4 percentage points over the last five years, but it rose by 2.8 percentage points on a two-year basis. Still, shareholders will want to see GoodRx become more profitable in the future.

In Q3, GoodRx generated an adjusted operating margin profit margin of 24.3%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

GoodRx’s EPS grew at an unimpressive 1.2% compounded annual growth rate over the last five years, lower than its 9.4% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Diving into the nuances of GoodRx’s earnings can give us a better understanding of its performance. As we mentioned earlier, GoodRx’s adjusted operating margin was flat this quarter but declined by 4.4 percentage points over the last five years. Its share count also grew by 44.3%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q3, GoodRx reported adjusted EPS of $0.08, in line with the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects GoodRx’s full-year EPS of $0.35 to grow 27.7%.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

GoodRx has shown robust cash profitability, giving it an edge over its competitors and the ability to reinvest or return capital to investors. The company’s free cash flow margin averaged 21.4% over the last five years, quite impressive for a healthcare business.

Taking a step back, we can see that GoodRx’s margin expanded by 7.4 percentage points during that time. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability fell.

GoodRx’s free cash flow clocked in at $113.9 million in Q3, equivalent to a 58.1% margin. This result was good as its margin was 13.8 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

GoodRx’s five-year average ROIC was negative 14.2%, meaning management lost money while trying to expand the business. Its returns were among the worst in the healthcare sector.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, GoodRx’s ROIC has increased significantly. This is a good sign, and we hope the company can continue improving.

GoodRx reported $273.5 million of cash and $545.1 million of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $272.6 million of EBITDA over the last 12 months, we view GoodRx’s 1.0× net-debt-to-EBITDA ratio as safe. We also see its $12.89 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was good to see GoodRx narrowly top analysts’ revenue expectations this quarter. On the other hand, its EPS missed and its customer base fell slightly short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock remained flat at $3.28 immediately after reporting.

Updated: December 4, 2025 at 10:52 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in GoodRx.

GoodRx doesn’t pass our quality test. Although its revenue growth was decent over the last five years, it’s expected to deteriorate over the next 12 months and its relatively low ROIC suggests management has struggled to find compelling investment opportunities. And while the company’s rising returns show management's prior bets are at least better than before, the downside is its subscale operations give it fewer distribution channels than its larger rivals.

GoodRx’s P/E ratio based on the next 12 months is 6.8x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $5.09 on the company (compared to the current share price of $2.76).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.