GoodRx, a telehealth and drug-pricing comparison software company, acquired competitor RxSaver for $50 million in cash.
The company closed the deal in late April, GoodRx reported during its first-quarter 2021 earnings call Thursday. RxSaver, which was owned by Vericast Corp., the payment and marketing company controlled by billionaire Ronald Perelman, operates a price comparison platform to provide discount offerings through partnerships with pharmacy benefit managers.
The acquisition will expand GoodRx's business capabilities and consumer reach, particularly with respect to its prescription offering, the company said in its first-quarter 2021 earnings report.
"We believe M&A can play an important role in helping us build the leading digital platform in consumer healthcare," said Trevor Bezdek, co-founder and co-CEO. during the earnings call.
The company also acquired health video company HealthiNation in April for $75 million, expanding its reach into consumer education.
GoodRx reported mixed results in its first-quarter 2021 financial performance as revenue came in just a hair below Wall Street expectations. The company brought in $160.4 million in quarterly revenue, up 20% year over year but below analysts' estimate of $160.6 million, according to MarketWatch.
GoodRx said it earned $1.7 million in profit, breaking even on a per-share basis, in the quarter, compared with $27.3 million, or 8 cents a share, in the year-ago quarter. Adjusted for one-time items, the company earned 7 cents a share, which just met Wall Street expectations, MarketWatch reported.
First-quarter profit was impacted by $46 million of stock-based compensation expense, which includes $30 million of stock-based compensation expense related to equity awards made to the co-CEOs, Bezdek and Doug Hirsch, in connection with the IPO, according to the earnings report.
Adjusted EBITDA came to $51 million compared to $52 million in the same quarter a year ago. Adjusted EBITDA margin was 31.8% compared to 38.9% a year ago due to continued investments in product development and technology, the growth of the company's telehealth platform and investments in general and administrative infrastructure.
Investors wary of Amazon competition
Shares of GoodRx fell more than 5% in the extended session Thursday but rebounded Friday, jumping 10%. GoodRx shares have slipped more than 40% since the company went public in September, Bloomberg reported. The company has lost about $3.9 billion in value in May, and, while its stock rebounded Friday to trade above $30, shares remain below their initial offering price of $33, representing losses for early investors, according to Bloomberg.
Investors are concerned about competition from Amazon and the threat it poses to GoodRx’s discount cards and price-comparison platform for prescription medicines. The online retail behemoth bought PillPack in 2018, launched Amazon Pharmacy last year and just this week added new drug price comparison tools.
During the earnings call, GoodRx Chief Financial Officer Karsten Voermann said Amazon Pharmacy, so far, has a minimal impact on the company's business and on the market.
GoodRx's prices for mail-order prescription drugs are lower than Amazon's prices about 90% of the time, and it offers a lower price at retail almost 100% of the time, he said.
"Amazon acquired PillPack in 2018 and has been trying to grow a pharmacy delivery business. Based on third-party data, they have not been successful," he said.
Mail-order prescriptions only make up about 5% of fill count in the U.S.
"Third-party data indicates that Amazon Pharmacy is not gaining momentum and that their volume remains incredibly small," he said.
Q1 financial results
First-quarter prescription transactions revenue grew 9% year over year to $134 million, driven primarily by a 17% increase in the number of the company's average monthly active consumers. GoodRx's monthly active consumers rose 17% to 5.7 million people, according to its earnings report.
GoodRx's prescription continues to be impacted by COVID-19 headwinds as many consumers canceled or delayed doctor visits, increasing the undiagnosed condition backlog. This, coupled with an unusually weak cold and flu season, negatively impacted prescription volume in the first quarter of 2021, Voermann said.
"We estimate that the non-recurring lack of flu resulting from this winter's potent precautions had a total negative impact of approximately $5 million on prescription transactions revenue with the vast majority of this impact felt in the first quarter of 2021," he said.
Voermann said the company is well positioned to capitalize on the "inevitable rebound and doctor visits, prescription fills, and new therapy starts" as consumers resume typical healthcare purchases and start clearing a substantial backlog that has built up over the last year.
"Recent acuity data has shown that the 1 billion backlog of 2020 diagnosis visits in the U.S. has continued to grow to over 1.1 billion, so the entirety of the rebound remains ahead of us," he said. "We anticipate that the trend of delaying care will reverse in the second half of the year and we will begin narrowing the gap and clearing this massive diagnosis backlog, benefiting from the realities that diagnoses generally result in prescriptions."
Revenue for the company's other lines of business, such as its subscription offerings, including Gold and Kroger Savings, pharmaceutical manufacturer solutions and telehealth business called GoodRx Care, grew 154% to $26.4 million
GoodRx is expecting second-quarter revenue between $172 million and $176 million and full-year 2021 revenue between $740 million and $760 million.