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How The 2020 Presidential Election Could Impact Health Care Stocks
With the 2020 presidential election right around the corner, investors are making predictions on the sectors and stocks that could see big changes. One sector that could change dramatically based on the next occupant of the White House is health care.
Benzinga · 9h ago
Why GoodRx Stock Is Now a Screaming ‘BUY’
When GoodRx (NASDAQ:GDRX) stock debuted in September, its price immediately leaped 60%, peaking at $57 in early October. Regular investors couldn’t have bought shares at any reasonable value, so I wrote GDRX stock off as “yet another high-priced 2020 IPO.” Source: II.studio / Shutterstock.com Shares, however, have since declined to a more reasonable $52. At this price, it’s time to take a serious look into this game-changing company. That’s because, in April, the federal agency responsible for Medicare changed its guidelines on telemedicine reimbursements. With insurers now required to cover remote doctor visits at parity, the floodgates for telehealth companies like GoodRx have finally opened. And with its high-growth strategy and proven executive team, GoodRx is in pole position to become the next Amazon of healthcare.InvestorPlace - Stock Market News, Stock Advice & Trading Tips GoodRx Stock: From Pharmacy to Telehealth As I’ve emphasized before, investments with 1,000% potential returns need three key things: A growing market. A proven product or management team. A catalyst that tells us, “why now?” The fourth qualification — price — is also essential, but depends more on market size. Miss one of them, and you end up with either 1) a well-run but slow-growing company or 2) a high-potential firm that goes nowhere. Fortunately for investors, GoodRx hits all three qualifications for a 1,000% returner. The company was founded in 2011 by former Facebook (NASDAQ:FB) engineers, and its flagship product, an online prescription price comparison tool, already has almost 5 million monthly users. The firm is highly profitable, and its telehealth marketplace opened at just the right moment in history. 7 Airline Stocks to Buy on Pelosi Stimulus Hopes So, for those who are tired of high-priced, money-losing IPOs, here’s why GoodRx stock looks different. Reason No. 1: CMS Gives GoodRx Stock A Real Catalyst With new technologies, people should always ask: “Why now?” That’s because innovations often need the right environment to grow. Video sharing sites like ShareYourWorld.com (founded in 1997) wouldn’t have worked until high-speed broadband came around in the mid-2000s. And in medicine, mail-order pharmacies and telehealth companies have been around for years. Pharmacy benefit management (PBM) company Catamaran had a large mail service pharmacy, which UnitedHealth (NYSE:UNH) eventually bought in 2015 for $12.8 billion. Teladoc (NYSE:TDOC), a telemedicine company, has been around since 2002. Yet, telehealth still makes up just 1.5% of the healthcare market. And that’s why catalysts are so crucial to high-growth companies like GoodRx. Covid-19 Creates a Catalyst In April, the Centers for Medicare & Medicaid Services (CMS) created a flurry of new reimbursement regulations to allow doctors and patients to stay home. Under Section 1135 waivers, healthcare providers can now provide virtually all non-physical services online. That includes everything from new patient visits to wheelchair management training. And where Medicare goes, the rest of insurance follows. As private insurers realign billing practices to mirror Medicare, investors should expect both supply and demand of telehealth medicine to skyrocket. And that’s where GoodRx comes in. Reason No. 2: GoodRx and a Growing Market Today, GoodRx earns money from its prescription drug price comparison website. Users can search for the cheapest drug providers, and GoodRx receives a commission from PBMs for the referral. It’s an extremely lucrative business (earning the company eye-popping 36% margins in 2019) and growing revenues at 50% per year. Independently, GoodRx might be worth $20 billion in that space. Then something even more interesting happened. In April 2019, the company acquired telehealth company HeyDoctor, and in March 2020, it launched the GoodRx Telehealth marketplace. These additions couldn’t have come at a better time. In 2018, Americans spent $335 billion on prescription drugs, according to the CMS. And a large portion is still covered by insurance, reducing the usefulness of GoodRx’s price comparison tool. On the other hand, physician services took in $564 billion, which makes it a far broader market for telehealth. And that doesn’t include possible telehealth applications, in-home healthcare ($102 billion annual spend), other personal care ($552 billion) or nursing care ($168 billion). If GoodRx can turn its highly efficient marketing funnel toward acquiring telehealth customers, the company could become worth multiples of its current valuation. Reason No. 3: Strong Product, Strong Management The numbers paint a flattering picture of the online health company. GoodRx has been profitable since 2016, an impressive feat for a fast-growing software company. It’s consistently kept R&D and administrative spending under control, using just 3.7% of revenues on overhead costs. And its share-based compensation of just $3.7 million in 2019 also indicates a focus on shareholder value. Recent IPO Snowflake (NYSE:SNOW), by comparison, awarded $78.3 million in share-based compensation in 2020, despite generating just 68% of GoodRx’s revenue and negative profits. And what about its actual product? App reviews are overwhelmingly positive, with users applauding the company over their prescription drug savings. GoodRx needs excellent customer experiences to keep its pipeline of referrals up. What’s GoodRx Stock Worth? Here’s where investors should rightly worry. The company’s monthly users dropped from 5 million in March to 4.2 million in April when the coronavirus pandemic took hold. Though users have steadily climbed back to 4.9 million, it’s a reminder that GoodRx must fight for repeat customers. (Mail-order pharmacies, on the other hand, generate endless income streams from chronic prescriptions). There are also other concerns: Single-payer healthcare reform could instantly sink the GoodRx pharmacy franchise — users would no longer have a reason to price-compare drugs. A stronger competitor could also derail the online healthcare firm’s growth. And that makes GoodRx challenging to value. A traditional two-stage DCF model that grows revenues to $9 billion by 2030 pegs the company at a $34 billion enterprise value, or $92 per share. That’s an 84% upside. However, raising the discount rate (a measure of risk) to 11% drops fair enterprise value to $20.2 billion, or $52 per share. A more aggressive approach might use a venture-capital (VC) method of market sizing. It’s less precise but gives better insight into untapped markets. Currently, analysts expect the global telehealth industry to grow 23.4% annually through 2026. Suppose we assume that U.S. telehealth grows faster at 55% (thanks to the CMS rule change). That suggests a $142 billion market by 2026, or 2.5% of total healthcare spending. If GoodRx receives a 12% “take rate” and obtains a 30% market share, it would earn $5.1 billion from telehealth revenues alone. Adding another $4 billion from pharmacy services and a 8x price-sales (PS) multiple puts value at $72.8 billion, or almost $200 per share. All this means that GoodRx still has a lot to prove. Even though it hits all three “high-growth” company points, we won’t know for years if it’s the next successful Amazon or the next failing Overstock (NASDAQ:OSTK). But until then, it could be worthwhile to make a small wager. Because in the world of high-growth investing, it just takes one winner to make your portfolio shine. On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article. Tom Yeung, CFA, is a registered investment advisor on a mission to bring simplicity to the world of investing. More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets Revolutionary Tech Behind 5G Rollout Is Being Pioneered By This 1 Company The post Why GoodRx Stock Is Now a Screaming ‘BUY’ appeared first on InvestorPlace.
InvestorPlace · 5d ago
GoodRx Announces Date for Third Quarter 2020 Earnings Release and Conference Call
GoodRx Holdings Inc. (Nasdaq: GDRX), a leading consumer-focused digital healthcare platform in the United States, today announced it will release its third quarter 2020 financial results before U.S. markets open on Thursday, November 12, 2020. GoodRx management will hold a conference call and webcast that day at 5:30 a.m. Pacific Time (8:30 a.m. Eastern Time) to discuss the results and the Company’s business outlook. Prior to the call, GoodRx will issue a press release containing a link to a shareholder letter and the Company’s third quarter 2020 financial results on its investor relations website at https://investors.goodrx.com.
Business Wire · 6d ago
Shopify Too Pricey? This Is Why $1,000 Stocks Shouldn't Scare You
Investor's Business Daily · 6d ago
GoodRx stock falls as more than half of Wall Street’s analysts don’t recommend buying
Shares of GoodRx Holdings Inc. dropped Monday, after the prescription-drug pricing app received a less-than-enthusiastic endorsement from more than half of...
MarketWatch · 10/19 15:49
Credit Suisse Initiates Coverage On GoodRx Holdings with Outperform Rating, Announces Price Target of $60
Credit Suisse analyst Jailendra Singh initiates coverage on GoodRx Holdings (NASDAQ:GDRX) with a Outperform rating and announces Price Target of $60.
Benzinga · 10/19 13:47
Goldman Sachs Initiates Coverage On GoodRx Holdings with Neutral Rating, Announces Price Target of $48
Goldman Sachs initiates coverage on GoodRx Holdings (NASDAQ:GDRX) with a Neutral rating and announces Price Target of $48.
Benzinga · 10/19 13:41
Citigroup Initiates Coverage On GoodRx Holdings with Buy Rating, Announces Price Target of $70
Citigroup analyst Nicholas Jones initiates coverage on GoodRx Holdings (NASDAQ:GDRX) with a Buy rating and announces Price Target of $70.
Benzinga · 10/19 13:34
Raymond James Initiates Coverage On GoodRx Holdings with Market Perform Rating
Raymond James initiates coverage on GoodRx Holdings (NASDAQ:GDRX) with a Market Perform rating.
Benzinga · 10/19 11:21
RBC Capital Initiates Coverage On GoodRx Holdings with Sector Perform Rating, Announces Price Target of $55
RBC Capital analyst Mark Mahaney initiates coverage on GoodRx Holdings (NASDAQ:GDRX) with a Sector Perform rating and announces Price Target of $55.
Benzinga · 10/19 11:15
Morgan Stanley Initiates Coverage On GoodRx Holdings with Overweight Rating, Announces Price Target of $57
Morgan Stanley initiates coverage on GoodRx Holdings (NASDAQ:GDRX) with a Overweight rating and announces Price Target of $57.
Benzinga · 10/19 11:09
GoodRx $20 Billion Value May Draw Caution Amid Telemedicine Boom
Telemedicine site and prescription-drug pricing app GoodRx Holdings Inc. may draw a wary eye from analysts starting their coverage after the company’s 54% boom to an eye-watering $20 billion valuation.
Bloomberg · 10/16 14:06
GoodRx: In The Early Stages Of Transforming Consumer Health
GoodRx went public in September at $33 per share, and the stock has been a hit, up ~60% since the offering.The company helps consumers save on prescription drugs by finding them the lowest pricing available. Average savings are around ~70% off list price.Since its founding in 2011, the company has surpassed 15 million monthly site visits and >$500 million in annualized revenue.GoodRx is certainly expensive at >40x FY21 expected revenues, but its diversity of monetization opportunities plus its profitability make it a solid long-term investment.
Seekingalpha · 10/15 04:44
Q3 The Busiest Since 2014 For IPOs, Led By Unicorns, SPACs
The third quarter saw 86 companies go public via a traditional IPO. In the third quarter, 165 special purpose acquisition companies also raised funds. Breaking Down IPO Trends: Health care and technology were the two largest sectors in the third quarter for funds raised.
Benzinga · 10/12 19:25
Chamath Palihapitiya, The Sultan Of SPACs, Fails; Perils And Profits; And A Guide
If Mr. Palihapitiya, the king of SPACs, can pick a lame candidate for reverse merger, what does that say for the less capably out there?There is just a huge flood of funds out there, you have too many dollars chasing just a few good deals. That means high prices for dumb ideas.Also prepare yourselves for scams when there is so much money out there. It's just too juicy a target.Rule number ONE be a contrarian. If a bunch of target companies get announced for a reverse merger and they all crowd into one space like EVs, look somewhere else. For the other rules, read on.At the end, I list three SPACs and their merger candidates that I like and am in. I don't give any details. I want you to investigate as I describe in the article.
Seekingalpha · 10/12 16:11
Max Levchin's lending start-up Affirm confidentially files to go public
Founded in 2013 by PayPal co-founder Max Levchin, Affirm has become one of the fastest-growing "buy now pay later" start-ups.
CNBC.com · 10/08 19:45
GoodRx and Kroger Health Agree to Multiyear Renewal of Kroger Rx Savings Club Relationship
GoodRx Holdings, Inc. (Nasdaq: GDRX), America’s source for affordable and convenient healthcare, today announced it had agreed with Kroger Health – the healthcare division of The Kroger Co. (NYSE: KR) - to a three-year renewal of their relationship, enabling customers across the country to continue to
Business Wire · 10/08 15:00
Is GoodRx Stock a Buy?
MotleyFool.com · 10/08 07:03
Q3 2020: An unbeaten quarter for IPO activity
The third quarter was an outstanding three months for IPO activity, with 81 IPOs raising $28.5B vs. 39 IPOs raising $10.8B in Q3 a year earlier.Healthcare was the most active sector, producing nearly
Seekingalpha · 10/07 15:28
3Q20: An unbeaten quarter for IPO activity
3Q20 was an outstanding quarter for IPO activity, with 81 IPOs raising $28.5B vs. 39 IPOs raised $10.8B in 3Q19. Healthcare was the most active sector, producing nearly half of the quarter’s
Seekingalpha · 10/07 15:28
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About GDRX
GoodRx Holdings, Inc. is a holding company that provides price comparison tool for prescriptions. The Company provides GoodRx platform, which aggregates and analyzes pricing data from a number of different sources. Its platform also provides access to medication savings programs, medical provider consultations and lab tests through its telehealth offerings, HeyDoctor and the GoodRx Telehealth Marketplace, and other healthcare related content. Its prescription offering provides price comparisons and negotiated prices on prescriptions. Its subscription offerings provide consumers and their families with access to lower prescription prices on select medications in select pharmacies for a monthly or annual subscription fee. Its pharmaceutical manufacturer solutions offering provides advertising and integrated consumer affordability solutions to pharmaceutical manufacturers.
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