GoodRx raises $1.1B in IPO as it sell shares above target

Buoyed by strong demand for its stock, GoodRx raised $1.1 billion in its initial public offering after pricing its deal well above its expected price range.

The GoodRx IPO began trading Wednesday at $46 per share, 39% above its $33 per share offering price. GoodRx stock rose above $49 per share in early afternoon action, reported. That boosted the consumer healthcare technology firm's market cap to about $12.7 billion.

The prescription drug shopping site filed to go public Aug. 28.

The startup, which helps consumers find deals on their prescription medications, had planned to sell 34.6 million shares in its IPO at a target range of $24 to $28 per share, according to a filing with the U.S. Securities and Exchange Commission.

Late Tuesday, the Santa Monica, California-based company announced it had instead sold 34.6 million shares at $33 each. 

Of the offered shares, 23.4 million shares are being offered by GoodRx, and 11.2 million shares are being offered by certain of GoodRx’s existing selling shareholders. 

GoodRx will receive net proceeds of approximately $725 million after deducting underwriting discounts and commissions and offering expenses, and it intends to use the net proceeds from the IPO for general corporate purposes to support the growth of its business, the company said.

In addition, private equity firm Silver Lake Partners will add to its investment with a $125 million private placement of 3.8 million shares. Silver Lake will have a one-third stake post-GoodRx IPO.

RELATED: GoodRx files to go public, boasting track record of profitability

Its shares are trading on the Nasdaq market under the ticker "GDRX." Morgan Stanley, Goldman Sachs, JPMorgan and Barclays are underwriters on the deal,

The past 12 months has been the year of the healthcare IPO with companies including Livongo, Phreesia, Health Catalyst, Change Healthcare, Progyny, One Medical, Accolade and GoHealth all testing the public market. It signaled the end of what many market analysts considered a three-year drought of new digital health public offerings. 

Telehealth company Amwell raised $742 million when it hit the public market earlier this month.

Unlike many other digital health companies that have gone public, GoodRx has been profitable since 2016, the earliest year included in its IPO prospectus.

Last year, GoodRx reported revenues of $388 million, up 55% from $250 million in 2018. The company pulled in $66 million in profits in 2019, up 50% from $43 million the previous year.  

RELATED: Telehealth company Amwell spikes in public debut with outsized $742M IPO

The majority of the company's revenue, 97%, comes from its prescription offering in which it collects fees from pharmacy benefit managers when consumers use a GoodRx code to fill a prescription. 

The company started in 2011 with a price comparison tool for prescriptions, offering consumers free access to lower prices on their medication. With the acquisition of telemedicine company HeyDoctor in September 2019, GoodRx expanded its services to include virtual care.

The company's philanthropic arm, GoodRx Helps, helps provide medications to people across America who have nowhere else to turn. GoodRx plans to set aside more than 1 million shares from its IPO to dramatically expand this program, company co-CEOs Doug Hirsch and Trevor Bezdek wrote in a blog post.

GoodRx has seen strong growth during the COVID-19 pandemic as its revenue grew 48% in the first half of 2020 to $257 million, up from $173 million in the first half of 2019. GoodRx also brought in $55 million in profit in the first half of 2020, up from $31 million in the first half of 2019.

The company's revenue has grown at a compound annual growth rate of 57% since 2016, GoodRx said in its S-1 filing.

According to its S-1, GoodRx helped its users save an aggregate of $5 billion in 2019 and $20 billion in total.

However, the company faces a number of business challenges and expects its growth rate to slow, according to the prospectus. 

GoodRx relies significantly on its prescription offering and may not be successful in expanding its offerings within certain markets, particularly the U.S. prescriptions market, or to other segments of the healthcare industry, the company said.