GoodRx IPO Shows Low Drug Prices Can Still Mean Big Money

Shares of drug pricing company GoodRx soared on Wednesday, up 53% from its initial IPO list price of $33 at market close. The company best known for its drug discount coupons is also cashing in on the virtual care boom set off by the Covid-19 pandemic through its telemedicine services. The company started trading at $46 per share, $13 above its expected price, and  ended at $50.50 per share.The company’s market cap was $19.4 billion..

“This is my first time going through an IPO and it is definitely arduous and painful at times,” says co-CEO and cofounder Doug Hirsch. “But the net result was positive and now I can go back to my day job.”

The Santa Monica, California-based company was founded in 2011 with a mission to make drug prices more transparent. Since then, the company has expanded into multiple sectors of healthcare, including a telemedicine marketplace feature where patients can compare the costs of different telemedicine providers. Just before the pandemic the company acquired telemedicine provider HeyDoctor. 

The Covid-19 pandemic is “changing the way people deal with healthcare,” Hirsch says. More people are reluctant to leave their homes to go to the doctor or pharmacy, and virtual health services have boomed. Hirsch says that GoodRx customers can make a telehealth appointment on the platform, see a physician, and then get medications delivered directly to their homes. “We’re trying to give people options beyond the usual ways of doing business,” he says. 

Though it may seem counterintuitive to build a company around lowering prices, the idea has clearly worked. GoodRx has been profitable since 2016, and revenue grew 48% in the first half of 2020 to $257 million according  to the company’s S-1 filing. Hirsch says the company has found success by patching a hole in the healthcare industry. “Healthcare [in America] is so broken and so messed up,” he says, “that there’s an opportunity for us to help people and create a successful business opportunity along the way.” 

And successful it is. Hirsch and cofounder Trevor Bezdek each own 4.5 million shares of the company, a stake worth about $225 million each as of Wednesday’s market close. Hisch, Bezdek and a third cofounder Scott Marlette are also managing members of Idea Men, LLC, which holds 60 million shares. If the ownership of Idea Men is evenly split between the three, each could be a billionaire. Another 1 million shares are reserved to fund the company’s philanthropic arm, GoodRxHelps, which works to provide access to healthcare in low-income communities according to Hirsch. 

Though it’s been an exciting day for the company, the work is far from over. Hirsch says that the company’s next steps include expanding their reach to brand-name drug discounts and more telemedicine services.