Send me real-time posts from this site at my email
Motley Fool

If You Thought Snowflake's IPO Was Exciting, You'll Want To Watch This Healthcare Tech Stock

The recent flood of IPOs is threatening to submerge the stock market. One that's standing out like a life raft is GoodRx, a company with a unique business model and several other attributes that are sure to draw a lot of investor attention.

Its core product is a price-searching service for prescription medications, which it offers through a dedicated smartphone app. The company is paid a percentage of every sale, hewing to the classic middleman business model.

GoodRx's aim is to utilize this platform to offer a host of other healthcare services. One of these is a telemedicine product, HeyDoctor, which is roughly comparable to that of Teladoc Health (NYSE: TDOC). Teladoc has been a standout performer this year thanks to the wild popularity of telemedicine as a segment; GoodRx management is smart to play up the company's involvement in that healthcare niche.

Image source: Getty Images.

At the moment, though, prescription commissions account for the vast majority of its revenues -- 94% in 2019. It's clearly a strong core product -- overall top line grew at a 56% year-over-year clip last year (although acquisitions have also contributed to that expansion). Also, GoodRx is one of the rare tech-leaning start-ups that's profitable. Its annual net margins over the last three years have been around 17% to 18%.

It remains to be seen how the company will fare in other segments, notably telemedicine, where competition is heating up to the boiling point. Still, its robust prescription business and high profitability should make it a popular stock from the get-go.

GoodRx is slated to begin trading on the Nasdaq Wednesday under the ticker symbol GDRX. In the IPO, the company is selling just over 23.4 million shares of Class A common stock; current shareholders are divesting nearly 11.2 million more. The price range has been set at $24 to $28 per share.

10 stocks we like better than Teladoc Health
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Teladoc Health wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of August 1, 2020

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Teladoc Health. The Motley Fool has a disclosure policy.


Source

Popular posts

Welcome! Is it your First time here?

What are you looking for? Select your points of interest to improve your first-time experience:

Apply & Continue