GoodRx is an online health platform that provides consumers with discounts on thousands of medications by comparing the cost of the medications.
GoodRx earns money when a prescription transaction is made through a partner’s website or location. GoodRx generated revenue of almost $388 million in 2019, mostly from prescription transactions.
GoodRx is a web and mobile application that enables customers to compare prescription prices across 70,000 pharmacies across the country. In addition, GoodRx’s coupons allow users to save money on their medicines.
GoodRx business model is based on Coupon redemption fees, membership fees, advertising on the platform, and online healthcare offerings.
GoodRx was founded in 2011 and is based in Santa Monica. A major player in the healthcare industry since its inception, the company has become one of the largest online companies.
The company went public in 2020. GoodRx has helped clients save more than $20 billion on prescriptions since it was founded.
What is GoodRx?
A health care app and website, GoodRx, lets you compare prescription drug prices and find savings at participating pharmacies in the United States.
The company collaborates with approximately 70,000 pharmacies throughout the United States, including Walmart, Kroger, CVS Pharmacy, and Walgreens.
GoodRx enables users to compare prescription prices and find coupons at more than 60,000 pharmacies nationwide.
Pharmacy and healthcare providers across the country work together with GoodRx to offer the general public affordable prescription medicines and medical services. A user may check the quality and cost of a variety of medications online and compare them.
Among its other services, it provides information about medical services and low-cost medicines that have saved at least 20 million people around $20 billion in prescription costs.
GoodRx is worth $21.8 billion in 2020, and it generates $550.7 million each year. Statistics and polls show that 325,000 healthcare providers and around 70,000 pharmacies use the company.
GoodRx users can either visit the company’s website or download one of its mobile applications (available for Android and iOS devices).
In the next step, they enter the name of the medication they wish to compare pricing for. Once the customer has a coupon, he or she can present it to their pharmacist.
It is important to note that GoodRx cannot be combined with insurance. Instead, the company compares the cash price that users are required to pay.
In general, the service is used when insurance doesn’t cover the prescription (or partially covers it).
Users also have other ways to interact with the company besides comparing drug prices.
GoodRx offers monthly membership packages (called GoodRx Gold) that include discounts on drug costs, a telemedicine service (called HeyDoctor by GoodRx), and a marketplace for testing labs.
Additionally, GoodRx provides a range of instructional content related to medications and overall health.
What are the Mission, Vision, and principles of GoodRx?
The mission of GoodRx is to “Assist Americans in obtaining the healthcare they require at an affordable price.”
As part of this mission, the company’s digital platform aims to “resolve the barriers that consumers face when it comes to an understanding, accessing, and affording healthcare.”
The platform, which offered prescription drug price comparisons, now offers various services (including telehealth and additional healthcare products).
As stated on GoodRx’s website, it is committed to “doing what’s right for customers and healthcare in general.”
However, what is GoodRx’s possible market size next? Next, what are GoodRx business model and distribution system like? Finally, how does GoodRx generate revenue?
GoodRx Business Model
GoodRx is an online healthcare company that offers prescriptions, subscriptions, pharmaceutical manufacturing solutions, and telemedicine.
They offer public discounts for prescriptions and medical services through a network of pharmacies and healthcare providers.
GoodRx offers the following services:
- Doctors will be able to consult with patients online at discounted rates.
- GoodRx Gold gives you a discount on over-the-counter drugs each month.
- Numerous lab tests are offered at discounted rates in a given location.
- There is an online medical resource and a telephone consultation service.
- Resource improvements for medical workers on the front lines
Publicly available material will be made available to the general public once it has become public. This will not allow various organizations to exploit the people by charging outrageous fees regardless of the situation.
Moreover, GoodRx purchased HeyDoctor, and the company became widely accessible after releasing its telehealth services.
During the Covid-19 epidemic, GoodRx provided testing locations and telemedicine to the public for regular consultations with virus patients and other immune-compromised individuals.
How Does GoodRx Work?
Using the GoodRx platform is pretty simple!
You can enter your drug information on the GoodRx website if you plan to pay without insurance.
You will then be presented with a list of GoodRx prices at participating pharmacies in your area, which you can print or save to the Good Rx app.
When you visit the pharmacy counter, you simply show the coupon, just as you would with a grocery store coupon.
How Does GoodRx Make Money?
GoodRx earns money through coupon redemption fees, a monthly subscription fee, online healthcare services, and advertising on the platform.
GoodRx earns money in many different ways. The corporation generates revenue, in part, from developing technology and selling advertisements.
Pharmaceutical companies use GoodRx ads campaigns to promote their patented medications for a limited time. In terms of revenue, the company earns a charge for each campaign.
Referral fees are another source of income for the platform. An online and telephone consultation is available in addition.
Next, let’s talk about telehealth as a revenue stream. For example, a third-party provider of medical care may provide the consumer with health treatment or simple consultation. As a result, the company receives a commission charge.
Another source is subscription fees. GoodRx Gold subscribers receive discounts on prescriptions and health care services for a fixed monthly fee.
The primary source of revenue is the coupons distributed to patients to save money on prescriptions.
Let us understand the revenue source of GoodRx in details:
GoodRx Gold Subscription
GoodRx Gold, a premium subscription service, was launched in 2017. The program offers discounts on more than 1,000 prescription medications and healthcare services.
GoodRx Gold is accepted by thousands of pharmacies nationwide, including Safeway, Kroger, Albertsons, and CVS.
GoodRx makes money from the two programs it offers. Subscribers can subscribe for $5.99 per month, while families can subscribe for $9.99 per month.
GoodRx Gold users save an average of $106 per prescription, according to the firm. In addition, just like any other membership service, gold can be canceled at any time and is free for the first 30 days.
GoodRx has developed a range of telehealth-related products, including general health screenings and Covid-19 testing.
It provides its medical examinations (through HeyDoctor by GoodRx) and a comparison platform for third-party medical services.
Using GoodRx’s HeyDoctor, patients can connect directly with doctors who now workGoodRx does not employ them with the company to provide a wide range of medical services.
Hair loss treatment, acne treatment, anxiety treatment, and depression treatment are among the services offered. GoodRx makes money by charging patients for consultations. The cost of a visit is $19, and there is no insurance coverage.
Secondly, the organization operates an online marketplace where medical experts can advertise their services (even if they are not employed by GoodRx). So again, there is a wide range of services available, including almost anything remotely manageable.
GoodRx earns money from commissions on the online marketplace. For example, when a third-party medical practitioner refers a patient to it, it earns a commission.
The majority of GoodRx’s revenue comes from the coupons it provides to patients, which allow them to save money on medications.
GoodRx provides over 150 billion prescription cost data points on its comparison platform. In addition, more than 70,000 pharmacies across the country accept promo codes as well.
GoodRx earns money when a consumer uses the code to fill a prescription.
Afterward, the company receives compensation from its partners, the majority of whom are PBMs. Fees can be calculated as a percentage of the commissions earned by our partners or as a fixed (already agreed on) payment per transaction.
Every time a customer’s prescription is refilled, GoodRx earns revenue. Consumers’ pharmacy profiles are updated when they redeem a coupon. It is common for the coupon to be applied to all subsequent refills after that.
According to the firm’s S-1 filing, coupon redemptions account for more than 90% of its annual income.
GoodRx receives about 20% of its queries for brand-name drugs (a drug protected by a trademark).
This makes these drugs quite expensive due to their limited capabilities. Furthermore, not all insurance policies are available at all times.
Pharmaceutical companies have developed various ways to make medications more affordable, including co-pay cards and patient assistance programs.
As a result, GoodRx promotes these affordable options to its subscribers in collaboration with these pharmaceutical businesses.
For improving visibility on the company’s platform, the company most commonly receives a predetermined price. In addition, according to the agreement, these advertising programs have a limited duration.
Success Story of GoodRx
GoodRx was founded in 2011 by Doug Hirsch, Trevor Bezdek (who also serves as co-CEO), and Scott Marlette.
Bezdek graduated from Stanford in 1999 with a degree in Biosciences and Computer Science. He founded his debut company within a year of graduation.
Bioware is a company that creates information tools for scientists.
The enterprise never got off the ground. Yet, it taught him some fundamental principles about entrepreneurship, which he applied to the launch of his second business.
Tryarc was a technology strategy and implementation consulting firm specializing in healthcare and media companies.
By 2007, the company had grown into one of California’s most prominent information technology service providers.
Marlette and Hirsch met while working in separate product and engineering roles at Facebook.
He previously served as a senior manager at Yahoo from 1996 to 2001, where he made his mark in the technology sector.
His first job with Facebook was as Vice President of Products, where he co-created Facebook Photos, where he met Marlette, who was working as an engineer at the time.
Marlette stayed with the company for five more years, but Hirsch left after less than a year to found DailyStrength, a health-focused social network.
The company raised $5 million in investment funding and was eventually acquired by HSW International in November 2008.
Hirsch remained at HSW to assist with the migration and oversee DailyStrength as a company subsidiary.
His decision to leave HSW at the end of 2009 was subsequently due to another healthcare business idea he had conceived. That company will eventually be called GoodRx if you haven’t already guessed.
Hirsch turned 40 around this time. His leave proceeds enabled him to pursue the things he’d always wanted to do in life, which he’d compiled a few years earlier.
However, the first scheduled a series of doctor consultations to ensure that he was physically prepared.
A dermatologist wrote him a prescription, which he took to the pharmacy down the street.
Hirsch was surprised to discover a $612 charge from the pharmacists, prompting him to seek a different pharmacy.
It goes on and on. Finally, he was quoted $416 by the pharmacist at CVS, where he completed his medical journey, prompting him to leave the store right away.
Hirsch was astounded when the pharmacist ran after him and offered to sell him the medicines for $300.
Despite Hirsch’s prior accomplishments in healthcare, he began to wonder if other pharmacies were willing to bargain costs to attract consumers.
Within a few months, he interviewed (medical) specialists and scoured the internet for information about how medicine prices are set. Moreover, he observed significant disparities in pricing for pharmaceuticals.
In terms of pricing, the manufacturer (in this case, a pharmaceutical company such as Johnson & Johnson) establishes a list price (sometimes referred to as the wholesale acquisition cost (WAC)). This is the official price of the medication.
The producer then sells the medicine to a wholesaler, typically at a discount of 2% to 5%. A wholesaler establishes an AWP, which is the listing price plus a markup. About 20% of the cost is marked up.
This is where the pharmacist comes into play. It buys the medication at a wholesale price, less a modest markdown (to give the wholesaler a small profit).
In turn, the pharmacy decides the usual and customary (U&C) price, which is the drug’s full retail price (the one customers pay).
However, it is important to note that U&C prices can vary significantly based on what a pharmacist ultimately deems appropriate. In addition, there are many payment options for the patient: cash, a discounted price (provided through coupons), a co-pay, a co-insurance payment, or a manufacturer’s coupon.
Furthermore, pharmacists may work with pharmacy benefit managers (PBMs) to negotiate a price for insured and uninsured patients. The payment method could, therefore, increase price volatility further.
GoodRx co-founders Bezdek and Marlette were persuaded to become his partners by Hirsch. The business was launched at Health 2.0 2011 in San Francisco following more than a year of full-time effort.
When GoodRx launched, it already listed almost 2,000 different medications and over a million drug prices. A mobile iPhone application was launched soon after that, mimicking the website experience.
Aside from customers, the business idea instantly appealed to others as well. GoodRx raised $1 million in seed funding in February 2012 from leading venture capital firms, including Founders Fund, GRP Partners, Highland Capital, and SV Angel.
GoodRx continued to grow steadily over the next few years, adding users steadily to its platform.
The company partnered with Iodine, a company founded in 2014 that provides tools for assessing the quality of drugs and providing information about them.
Having raised $748.8 million from private equity firm Silver Lake in 2018, GoodRx achieved unicorn status, and its total valuation is $2.8 billion.
The company had been in takeover talks with a few interested parties (including McKesson) for a price of $3 billion before the funding. However, there was never any progress on these transactions.
GoodRx achieved another milestone in its history in 2019: $10 billion in overall savings on prescription medicine for its consumers.
GoodRx had grown to the point where it could not only assist its customers to save money but also expand to new markets.
HeyDoctor, an online medical service provider, was acquired by the company in September 2019 for an undisclosed amount. As a result, GoodRx can now offer remote health consultations to its customers for as little as $20. (Distributed by GoodRx Care).
Only a few months later, it developed a telehealth marketplace and COVID-19 test.
It appears that saving others money on medicines benefits your karma and price your bottom line as well.
Following GoodRx’s development program, GoodRx eventually went public in September 2020.
Marlette, Bezdek, and Hirsch earned more than $1 billion in the IPO. In addition, GoodRx’s S-1 filing disclosed that the company had been profitable for nearly three years – a rarity in the current technology industry.
Despite the firm’s excellent reputation, at least one case of criticism has been brought against it in the past.
Consumer Report discovered in March 2020 that GoodRx shared sensitive customer data with over 20 third-party companies, including privacy luminaries such as Google and Facebook.
GoodRx indicated that it would immediately cease all data sharing and focus on improving user encryption.
Amid reports that Amazon is extending its healthcare services, GoodRx has recently placed a premium on growth.
GoodRx acquired HealthiNation (a website featuring educational films on health topics) and RxSaver (a similar service to GoodRx) for $75 million and $50 million, respectively.
Each month, the firm’s app and website are accessed by about 18 million users. GoodRx has helped the company save more than $20 billion on prescriptions for its existence. Additionally, the organization now employs close to 300 people.
When Should You Use GoodRx?
GoodRx may be beneficial if you are uninsured or will pay for a drug without insurance.
GoodRx may be able to assist you in establishing a baseline for the amount you may be required to pay out of pocket, as well as potentially saving you money with a coupon.
Rates listed on GoodRx’s website are not always the best available, as they only display and offer coupons for partners and paying advertisers.
Therefore, it should be viewed as a recommendation rather than an absolute truth.
Do Pharmacies Lose Money With GoodRx?
Many pharmacies lose money when they use GoodRx.
The margins on prescription drugs are razor-thin as it is, and GoodRx’s fee on top of the PBM fee almost certainly puts them in the red.
So why do they do it?
Although some pharmacies believe that taking these coupons will lead to more clients, allowing them to offer additional non-prescription items soon.
The new business should compensate for the pharmacy’s loss on every prescription, even though it incurs a loss on every medication.
GoodRx is also why many small, non-chain pharmacies refuse to accept it.
The majority of their revenue comes from prescription drugs.
It is unlikely that an independent pharmacy can offset prescription losses by selling convenience store merchandise (i.e., greeting cards, snacks, etc.).
Smaller pharmacies that cannot handle such losses can suffer serious losses as a result.
Who is the Owner of GoodRx?
GoodRx was a private company before going public in 2020. However, as a publicly traded company on the NASDAQ stock exchange, the company is owned by its stockholders. So if you bought shares of the company, you might even be one of them.
Individuals hold just 9% of their shares.
Some GoodRx major shareholders include BAMCO, Light Street Capital Management, and the Vanguard Group. In addition, mutual funds, index funds, and large institutions hold most of GoodRx’s shares.
What Is GoodRx Worth?
GoodRx has grown to a market capitalization of about $21.6 billion since its NASDAQ IPO.
As a publicly listed company, its value fluctuates based on the value of individual shares. It’s safe to say that GoodRx as a company is quite valuable at the moment.
Investors can benefit from their stable revenue stream, which is expected to grow over time.
What is the Funding of GoodRx?
GoodRx has raised $872.9 million in equity capital over six rounds of funding, according to Crunchbase. The company plans to rake in $1.1 billion more when it went public in September 2020.
Silver Lake, Francisco Partners, Founders Fund, and Spectrum Equity are among the company’s notable investors.
GoodRx does not employ them
GoodRx went public in 2020 at a valuation of $12.7 billion. The company is currently valued at $21.86 billion.
In the fiscal year 2020, GoodRx reported revenues of $550.7 million, increasing 42% from last year ($388.0 million).
Key Takeaways from GoodRx Business Model
GoodRx is a website that provides prescription drug pricing comparisons and discounts. Additionally, it offers Telehealth consultations.
GoodRx collaborates with physicians and healthcare organizations to incorporate its pricing. When users discover GoodRx’s cost comparisons, the platform’s ability to convert them into loyal, repeat clients increases. GoodRx generates most of its revenue from prescription transactions.
The GoodRx subscription plans (Gold and Kroger) have become an integral part of the GoodRx offering because they enable further savings and facilitate repeat purchases.
In addition, GoodRx generates revenue from platform advertising, which is typically driven by pharmaceutical manufacturer placements or performance-based campaigns. One of the primary growth channels for GoodRx is word-of-mouth, collaborations, and direct advertising.
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