GoodRx Strengthens Core Business With New Initiatives, Analyst Upgrades On Potential Opportunities

RBC Capital Markets issued an upgrade for GoodRx Holdings Inc GDRX shares.

The analyst stated the Integrated Savings Program (ISP) and direct contracting (DC) initiatives, along with the expansion of its manufacturing solutions business, offered significant new growth opportunities and strengthened the stability of its core Rx transaction business.

Related: Change Healthcare Cyberattack: GoodRx Expects Low Single Digit Million-Dollar Impact In 2024.

“We think this ‘hybrid’ approach presents both some incremental revenue opportunity while also better insulating GDRX from PBM-retailer disruptions like what happened with Kroger in mid-2022,” RBC wrote.

GoodRx announced a new direct contracting agreement with Kroger Co. KR earlier this month.

As a result of the agreement, patients will be able to present a GoodRx coupon at Kroger Pharmacies to receive more savings on the expected patient price for most generics, beginning on June 1.

With the initial selling and contracting largely completed — GoodRx has secured agreements with five pharmacy benefit managers (PBMs) and seven of the top 10 pharmacies, RBC writes the company has a clear path to achieving a mid-teens+ annual EBITDA growth rate over the next three years.

The analyst noted this plan would help adjust the current 10x ’25 EBITDA valuation to better reflect its growth rate and align it with the 14x peer average.

RBC has raised the price target from $8 to $10 and upgraded the stock from Sector Perform to Outperform.

Read Next: Telemedicine GoodRx Has Potential To Excel, Close Valuation Gap By 2025, Analyst Says.

GDRX Price Action: GoodRX Holdings shares are up 2.92% at $7.41 at publication on Thursday.