GoodRx Holdings (GDRX) Shares Crash 30% After Earnings and Guidance Miss, Prompting Several Downgrades

Shares of GoodRx Holdings (NASDAQ: GDRX) are down more than 32% in premarket trading Tuesday after the company reported worse-than-expected results.

The company reported results for the fiscal fourth quarter, posting adjusted EPS of 9c, missing the consensus estimates of 10c per share. Revenue in Q4 came in at $213.3 million, also below the analyst consensus of $217.7 million. Adjusted EBITDA was reported at $62.3 million, short of the expected $66.1 million.

For the current first quarter, GoodRx expects revenue of roughly $200 million, well below the consensus estimates of $228.5 million. The company anticipates an adjusted EBITDA margin in the range of 28% to 30%.

For the full-fiscal 2022, GoodRx said it expects adjusted EBITDA margin between 31% and 33% and revenue growth of about 23%.

"We see significant opportunities to build on our 2021 growth and success to deliver a very strong 2022, reaching more consumers and providers and bringing more value to each stage of the health care journey," GoodRx said in a letter to investors.

Credit Suisse analyst Jailendra Singh downgraded shares to Neutral from Outperform with a $27.00 per share price target (down from $41.00). The analyst “prefers to stay on the sideline until we see data points related to growth acceleration.”

“As the pharmacy landscape continues to evolve and the competition increasing (e.g. Amazon, Walmart, Mark Cuban Cost Plus Drug Company, etc.), the visibility on how the core GoodRx PTR model evolves is lower relative to two years ago,” Singh said in a client note.

Cowen analyst Charles Rhyee also downgraded to Market Perform from Outperform as 2022 is likely to be a transitional year.

“2022 guidance came in below expectations as positive thesis for PTR has been impacted by COVID and Mfr Solutions appears impacted by late launch of physician module. Mgmt expects growth to accelerate in 2023, and there is potential for guidance upside, but w/ limited N-T catalysts we believe Market Perform is appropriate for now,” Rhyee said.

BofA analyst Justin Post also maintained a Neutral rating and lowered the price target to $28.00 per share from the prior $42.00.

“We remain constructive on GoodRx's ability to increase TAM as medicine goes digital. However, we think there is less likelihood of a COVID snap-back surprise and would expect the market to favor other reopening stocks nearterm. One Of Our concerns has been stock valuation at well over 10x revenue, and while we see valuation (at 9x '22 revenue using AH price of $19.7) as more supportive here, comps are down significantly as well,” Posto wrote in a memo.

By Senad Karaahmetovic | [email protected]

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