GoodRx (GDRX) Erupts 40% on Mixed Results but Analysts Praise Better Visibility

Shares of GoodRx (NASDAQ: GDRX) are up about 40% in premarket trading Tuesday after the company reported decent Q2 results and resolved the dispute between its pharmacy benefit management customers and Kroger.

The telemedicine company reported Q2 adjusted EPS of 6c, down from 8c in the year-ago period, and above the analyst consensus of 4c per share. GDRX reported second-quarter revenue of $191.8 million, up 8.6% YoY and topping the consensus projection of $184.9 million.

Adjusted EBITDA stood at $47.2 million in the quarter, down 14% YoY, but beating the consensus estimates of $34.8 million.

For Q3, GDRX expects revenue of around $185 million, missing the estimates of $200.8 million. It also expects a Q3 adjusted EBITDA of roughly 20%.

While GoodRx said it resolved its issue with the grocer Kroger, the company will not be providing FY guidance as the exact impact of the dispute remains unclear.

Morgan Stanley analyst Craig Hettenbach is positive about Kroger developments as it removes an overhang in the stock.

“Pharmacies may have more power/influence on consumer behavior then perceived, which ultimately could lead to additional price erosion over time. Moreover, excluding a $35-40mn drag expected from Kroger in 3Q, guidance implies y/y prescription transaction revenue growth is expected to be only +5%, raising questions on core growth and funnel conversion,” Hettenbach added in a note.

Goldman Sachs analyst Eric Sheridan remains Neutral-rated amid limited visibility into forward trends.

“We expect a return to more normalized growth and elements of margin structure as likely to remain top of investor focus looking beyond Q3 commentary into Q4 and the next year. Longer term, we still see GoodRx as an emerging multi-sided and multi-product platform that is delivering savings & conveniences to consumers and volumes to its industry partners in a fragmented end market (US healthcare) while also producing a rare mix of high growth and strong margins over our 5 year forecast period,” the analyst said.

By Senad Karaahmetovic

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