Digital healthcare platform GoodRx had good news to share during its second-quarter earnings call as it settled a costly spat with a grocery chain's drug store and posted financial results that beat Wall Street forecasts.
But GoodRx executives also warned that it would take time for the company to regain lost sales. The company still isn’t providing a full-year financial forecast after it retracted guidance in May when one grocery chain stopped accepting discounts for certain drugs, representing a sizable chunk of its grocery prescription business, executives said.
Despite the cautious sales guidance, shares of GoodRx shot up as much as 50% in after-hours trade on Aug. 8, and over 20% in early action Tuesday morning. GoodRx shares are still down about 70% year-to-date.
GoodRx CFO Karsten Voermann said during the second-quarter earnings call that weekly volume at the grocer chain was now down 85% and would not bounce back overnight.
"It is unclear how many GoodRx consumers that switched to their insurance or another form of savings at the grocer during the second quarter will return to using GoodRx. And if they do return, how quickly that will happen," he said.
GoodRx, best known for providing prescription drug discounts, posted revenue of $192 million during the quarter, up 9% from $177 million a year.
Prescription transaction revenue decreased 7% year-over-year to $134 million due to the grocery issue.
"The second quarter was particularly disappointing due to the impact of the grocery issue we discussed, which was in line with the expected $30 million revenue hit we estimated on our first-quarter earnings call," Trevor Bezdek, co-founder and co-chief executive officer at GoodRx.
"Despite that headwind, our revenue and to a greater extent, our adjusted EBITDA, came in ahead of our expectations for the quarter, as prescription transactions revenue, subscriptions revenue and pharma manufacturer solutions revenue each performed slightly better than we anticipated," he said.
Second quarter subscription revenue grew 82% year-over-year to $26 million and pharma manufacturer solutions revenue grew 102% year-over-year to $26.6 million.
The company posted a loss of $1.4 million during the second quarter, down from a profit of $31 million during the same quarter a year ago.
Per-share earnings on an adjusted basis came in at 6 cents. The results beat Wall Street analysts' expectations. The consensus estimate was 4 cents a share (adjusted) on $184.7 million in revenue for the quarter.
Bezdek said 30% of GoodRx revenues now come from non-core offerings, up from 5% three years ago. The company expects to see continued growth as more pharma ad spend shifts to digital as drug manufacturers recognize attractive returns on their marketing spend and look to leverage the platform's broad provider and consumer audiences, he noted.
"With over 825,000 prescribers using GoodRx since June of 2021 and more than 300,000 healthcare plans who have opted into the GoodRx provider mode so far, we believe there is an enormous opportunity for us to meet providers' unique needs with innovative solutions while helping them achieve better patient outcomes. With our incredible offering rate to our GoodRx providers' platform, we believe we are on the path to becoming one of the largest provider platforms in the U.S.," he said.
The company expects third-quarter revenue to be roughly $185 million, lower than the $201.2 million expected. The issue with the grocery chain hit revenue more in the current quarter than in the second quarter, GoodRx executives said.
Despite the disruption from the grocery chain and a weak sales outlook for the third quarter, GoodRx executives were bullish on the company's long-term growth.
"We've historically been able to deliver a strong combination of growth and margin, and we want to make sure that continues to be the case in the future. We're confident in our ability to continue to drive our mission to help Americans get the health care they need at a price they can afford. And we believe the current macroeconomic environment that increases many people's need to trade off expenses as inflation rises, makes everything we do more and more relevant for all Americans," Voermann said.
Fertility benefits are proving to be recession-proof and that's good news for Progyny, a seven-year-old company that provides fertility benefits for employees at large firms and has doubled its client base in just the past year.
The company's second-quarter revenue grew 52% to reach $195 million, up from $129 million a year ago. The company brought in a quarterly profit of $8.8 million and net income of 9 cents per share.
The results topped Wall Street expectations. The average estimate of three analysts surveyed by Zacks Investment Research was for earnings of 2 cents per share and revenue of $191 million.
For the current quarter ending in October, Progyny said it expects revenue in the range of $190 million to $197 million.
The company expects full-year earnings to be 14 cents to 19 cents per share, with revenue ranging from $750 million to $775 million.
Progyny reported adjusted EBITDA of $32.9 million, an increase of 78%, or $14.4 million, from the $18.5 million reported in the second quarter of 2021. Net cash generated by operating activities for the second quarter of 2022 was $19.2 million, compared to net cash used by operating activities of $7.5 million in the prior year period.
Despite inflation and a potential softening in the economy, Progyny is seeing strong customer demand and is confident about its ability to bring on new clients.
"The strength in this quarter results reflect that member activity continues to be healthy and at the levels we would expect to see further affirming both the essential need for fertility treatment as well as the strong desire our members have in pursuing the care necessary to realize their family-building goals," said Progyny CEO Pete Anevski during the second-quarter earnings call.
Recent survey data continues to reveal that fertility is one of the most sought-after benefits amongst the millennial population in their workforce, he noted.
"Despite the presence of inflationary headwinds and tighter monetary policy, unemployment remains at historic lows and the labor market remains extremely tight, with more than two job listings for every one employed -- unemployed person," he said.
He added, "A recent survey from Mercer highlights that compensation alone doesn't build engagement as much as a well-designed benefits program does and goes on to site women's reproductive health and fertility, in particular, as the top areas employers are focused on to meet the needs and expectations of employees. In short, we believe the macro trends continue to be very supportive for fertility benefits, and we're seeing that reflected in the positive momentum of our current selling season."
The first fertility benefits management company to ever go public, Progyny has grown its client base to more than 273 large self-insured employers, up from 182 clients a year ago. Those clients represent about 4.3 million covered lives.
Progyny expects third-quarter revenue is projected to be $190 million to $197 million, reflecting growth of 55% to 61%. Net income is projected to be $1.9 million to $3.3 million.
The company revenue is now projected to be $750 million to $775 million, reflecting growth of 50% to 55%. Net income is projected to be $13.8 million to $19.5 million for 2022.