Why Did GoodRx Stock Fall?
GoodRx (ticker: GDRX) is a company that provides discounts on prescription drugs. In May, GoodRx announced that a key grocer—analysts suggested it was Kroger (KR)—was renegotiating contracts with all pharmacy-benefit managers, or PBMs, on a subset of drugs. This resulted in GoodRx not being able to offer discounts at the grocery chain’s locations, which accounted for 25% of its transactions. On August 9th, GoodRx stock fell by more than 20%.
What Caused the Stock to Fall?
The primary cause of the stock’s decline was the announcement that GoodRx would no longer be able to offer discounts at Kroger locations. This was a major blow to GoodRx, as Kroger accounted for 25% of its transactions. This meant that GoodRx would lose a significant amount of revenue from its largest customer.
In addition to the loss of revenue, the announcement also caused investors to question the long-term viability of GoodRx’s business model. GoodRx had been relying heavily on Kroger for its revenue, and investors were concerned that the company would not be able to make up for the lost revenue.
What Are the Solutions?
GoodRx is looking for ways to make up for the lost revenue from Kroger. One solution is to expand its partnerships with other retailers. GoodRx has already announced partnerships with Walmart, Walgreens, and CVS, and is looking to expand its partnerships with other retailers.
GoodRx is also looking to expand its services to include more than just discounts on prescription drugs. The company is exploring ways to offer additional services, such as telemedicine, to its customers. This could help to make up for the lost revenue from Kroger.
Finally, GoodRx is looking to expand its presence in international markets. The company is looking to expand its services to countries such as Canada and the United Kingdom. This could help to offset the lost revenue from Kroger and provide GoodRx with a new source of revenue.
Related Topics
GoodRx vs. Other PBMs
GoodRx is not the only PBM in the market. There are several other PBMs, such as Express Scripts and CVS Caremark, that offer similar services. These companies may be able to offer better discounts than GoodRx, which could lead to customers switching to other PBMs.
Competition from Other Companies
GoodRx is not the only company offering discounts on prescription drugs. There are several other companies, such as Blink Health and SingleCare, that offer similar services. These companies may be able to offer better discounts than GoodRx, which could lead to customers switching to other companies.
The Impact of the Coronavirus Pandemic
The coronavirus pandemic has had a major impact on the healthcare industry. Many people are now opting to purchase their prescription drugs online, which has led to an increase in competition for GoodRx. This could lead to customers switching to other companies that offer better discounts.
Conclusion
GoodRx stock fell after the company announced that it would no longer be able to offer discounts at Kroger locations. This was a major blow to GoodRx, as Kroger accounted for 25% of its transactions. GoodRx is looking for ways to make up for the lost revenue, such as expanding its partnerships with other retailers, offering additional services, and expanding its presence in international markets. The company is also facing competition from other PBMs and companies offering similar services, as well as the impact of the coronavirus pandemic.
In order to make up for the lost revenue, GoodRx must continue to innovate and find new ways to attract customers. The company must also focus on providing the best discounts and services possible in order to remain competitive.
“The key to success is to focus our conscious mind on things we desire not things we fear.” – Brian Tracy
GoodRx has faced a difficult situation, but with the right strategies and focus, the company can make up for the lost revenue and remain competitive in the market.
References:
1. https://www.fool.com/investing/2020/08/10/why-goodrx-stock-fell-20-in-august/
2. https://www.fool.com/investing/2020/09/02/goodrx-stock-is-a-buy-after-its-recent-pullback/
3. https://www.fool.com/investing/2020/08/20/goodrx-stock-is-a-buy-after-its-recent-pullback/