GoodRx, the consumer drug pricing and digital health company, is facing blowback from the stock market after a rocky third-quarter earnings report.
The Santa Monica, California-based company’s total revenue decreased 4% to $187.3 million from $195.1 million in the corresponding period last year. The prescriptions transactions business, which is GoodRx’s largest source of revenue, fell 16% from $155.7 million to $131.2 million. The company recorded a net loss of $41.7 million for the quarter.
GoodRx’s stock is trading at $4.16 per share as of press time, down 20% since the markets closed Tuesday. Shares have fallen 90% since November 2021, when they were trading at around $42 per share.
Stephanie Davis, analyst at SVB securities, wrote in a note to investors that GoodRx is facing a transition year in 2023 and will have to establish a track record of profitability to win back investors. Other direct-to-consumer health companies are facing similar challenges in a difficult macroeconomic environment, she wrote.
GoodRx’s challenges with its prescription business came to light in May when the grocery chain Kroger stopped accepting GoodRx discounts. GoodRx reduced its quarterly revenue guidance by $40 million because the retailer represented a sizable portion of its prescription transactions business. The company said it resolved the issue by August, but it continues to affect its business.
During a call with investors on Tuesday, GoodRx executives said that they expect the dispute with Kroger will impact revenue into the third quarter of next year. The company’s fourth quarter revenue projection to $175 million to $180 million were below analyst estimates of $209 million, primarily because of the Kroger matter.
GoodRx co-CEO Trevor Bezdek said on the call that the company is focused on profitability rather than growth. Like other direct-to-consumer digital health companies, GoodRx has reduced advertising spending, he said.
The company laid off 140 employees, or 16% of its workforce, in September, primarily in its technology and marketing groups. GoodRx said at the time that it was focusing on its prescription transactions and pharmaceutical manufacturer solutions businesses.
Update: GoodRx said Thursday it was selling its backend virtual technology to Wheel Health, a virtual health platform and provider network, for $19.5 million in cash.
