GoodRx (GDRX)

Healthcare tech company GoodRx (NASDAQ:GDRX) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 2.6% year on year to $203 million. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $825 million at the midpoint. Its non-GAAP profit of $0.09 per share was in line with 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 industry aims to improve accessibility, affordability, and convenience for patients seeking healthcare services. These companies typically leverage digital platforms to offer services such as prescription discounts, telemedicine consultations, and wellness products. Their business models often benefit from recurring revenues via subscription plans or marketplace commissions. The primary advantages of this sector include the scalability of digital platforms and growing consumer demand for on-demand healthcare. However, challenges arise from heavy reliance on marketing to acquire and retain customers, evolving regulatory backdrops, and continuing to convince newer cohorts (especially older individuals who tend to have more healthcare needs) that healthcare can be accessed online. Looking ahead, the industry stands to gain from tailwinds such as increasing consumer comfort with telehealth, rising healthcare costs driving demand for cost-saving tools, and broader adoption of personalized, digital-first healthcare. Technological advancements, including AI-powered health assessments and seamless user experiences, are likely to further enhance growth prospects. Conversely, headwinds include heightened competition from large tech companies entering the healthcare space or large healthcare companies investing in digital technologies.

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 $797.4 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 the best consistently grow over the long haul. Luckily, GoodRx’s sales grew at a solid 12.6% compounded annual growth rate over the last five years. Its growth beat 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 3.3% 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 6.4 million in the latest quarter. Over the last two years, GoodRx’s customer base averaged 5.3% year-on-year growth. Because this number is better than its revenue growth, we can see the average customer spent less money each year on the company’s products and services.

This quarter, GoodRx grew its revenue by 2.6% year on year, and its $203 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 4.8% over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below the sector average.

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 26.3%.

Analyzing the trend in its profitability, GoodRx’s adjusted operating margin decreased by 8.3 percentage points over the last five years, but it rose by 3 percentage points on a two-year basis. Still, shareholders will want to see GoodRx become more profitable in the future.

In Q1, GoodRx generated an adjusted operating profit margin of 25.5%, 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 2.9% compounded annual growth rate over the last five years, lower than its 12.6% 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 8.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q1, GoodRx reported EPS at $0.09, up from $0.08 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects GoodRx to perform poorly. Analysts forecast its full-year EPS of $0.34 will hit $0.43. This is unusual as its revenue and operating margin are anticipated to increase, signaling the fall likely stems from "below-the-line" items such as taxes.

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 18.7% over the last five years, quite impressive for a healthcare business.

Taking a step back, we can see that GoodRx’s margin dropped by 2.8 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

GoodRx burned through $12.46 million of cash in Q1, equivalent to a negative 6.1% margin. The company’s cash flow turned negative after being positive in the same quarter last year, suggesting its historical struggles have dragged on.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

GoodRx’s five-year average ROIC was negative 21.3%, 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. This is a good sign, but we recognize its lack of profitable growth during the COVID era was the primary reason for the change.

GoodRx reported $301 million of cash and $541.2 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 $267.3 million of EBITDA over the last 12 months, we view GoodRx’s 0.9× net-debt-to-EBITDA ratio as safe. We also see its $15.85 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 top analysts' EBITDA expectations. On the other hand, its customer additions fell short of Wall Street’s estimates. Overall, this was a mixed quarter, but the profit beat sent shares soaring 10.3% to $4.17 immediately after reporting.

Updated: July 11, 2025 at 12:01 AM EDT

Before investing in or passing on GoodRx, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

GoodRx doesn’t pass our quality test. Although its revenue growth was solid 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 11.5x. This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $6.32 on the company (compared to the current share price of $4.93).

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.