Healthcare tech company GoodRx (NASDAQ:GDRX) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 2.6% year on year to $203 million. The company’s outlook for the full year was close to analysts’ estimates with revenue guided to $825 million at the midpoint. Its non-GAAP profit of $0.09 per share was in line with analysts’ consensus estimates.
Revenue: $203 million vs analyst estimates of $202.3 million (2.6% year-on-year growth, in line)
Adjusted EPS: $0.09 vs analyst estimates of $0.10 (in line)
Adjusted EBITDA: $69.81 million vs analyst estimates of $67.29 million (34.4% margin, 3.7% beat)
The company reconfirmed its revenue guidance for the full year of $825 million at the midpoint
EBITDA guidance for the full year is $280 million at the midpoint, in line with analyst expectations
Operating Margin: 11.5%, up from 3.7% in the same quarter last year
Free Cash Flow was -$12.46 million, down from $42.18 million in the same quarter last year
Customers: 6.4 million, down from 6.6 million in the previous quarter
Market Capitalization: $1.45 billion
“Since stepping into this role, I have dedicated my time strengthening our leadership team, gaining a deeper understanding of our business, meeting with key partners, understanding the macroeconomic environment, and identifying key capabilities and growth opportunities,” said Wendy Barnes, Chief Executive Officer and President of GoodRx.
Started in 2011 to tackle the problem of high prescription drug costs in America, GoodRx (NASDAQ:GDRX) operates a digital platform that helps consumers find lower prices on prescription medications through price comparison tools and discount codes.
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Thankfully, GoodRx’s 12.6% annualized revenue growth over the last five years was solid. Its growth beat the average healthcare company and shows its offerings resonate with customers.
GoodRx Quarterly Revenue
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. GoodRx’s recent performance shows its demand has slowed as its annualized revenue growth of 3.3% over the last two years was below its five-year trend.
GoodRx Year-On-Year Revenue Growth
We can dig further into the company’s revenue dynamics by analyzing its number of customers, which reached 6.4 million in the latest quarter. Over the last two years, GoodRx’s customer base averaged 5.3% year-on-year growth. Because this number is better than its revenue growth, we can see the average customer spent less money each year on the company’s products and services.
GoodRx Customers
This quarter, GoodRx grew its revenue by 2.6% year on year, and its $203 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 4.8% over the next 12 months. While this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.
Adjusted operating margin is one of the best measures of profitability because it tells us how much money a company takes home after subtracting all core expenses, like marketing and R&D. It also removes various one-time costs to paint a better picture of normalized profits.
GoodRx has been an efficient company over the last five years. It was one of the more profitable businesses in the healthcare sector, boasting an average adjusted operating margin of 26.3%.
Analyzing the trend in its profitability, GoodRx’s adjusted operating margin decreased by 8.3 percentage points over the last five years, but it rose by 3 percentage points on a two-year basis. Still, shareholders will want to see GoodRx become more profitable in the future.
This quarter, GoodRx generated an adjusted operating profit margin of 25.5%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
GoodRx’s EPS grew at an unimpressive 2.9% compounded annual growth rate over the last five years, lower than its 12.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
GoodRx Trailing 12-Month EPS (Non-GAAP)
We can take a deeper look into GoodRx’s earnings to better understand the drivers of its performance. As we mentioned earlier, GoodRx’s adjusted operating margin was flat this quarter but declined by 8.3 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q1, GoodRx reported EPS at $0.09, up from $0.08 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects GoodRx to perform poorly. Analysts forecast its full-year EPS of $0.34 will hit $0.43. This is unusual as its revenue and operating margin are anticipated to increase, signaling the fall likely stems from “below-the-line” items such as taxes.
It was good to see GoodRx top analysts’ EBITDA expectations. On the other hand, its customer additions fell short of Wall Street’s estimates. Overall, this was a mixed quarter, but the profit beat sent shares soaring 10.3% to $4.17 immediately after reporting.
