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Below is an excerpt from a complimentary research note by our Healthcare Team of Tom Tobin, William McMahon, and Justin Venneri. We are pleased to announce our new Sector Pro Product Health Care Pro. Click HERE to learn more. |
If you missed The Pitch, Tom highlighted our thesis on GoodRx ($GDRX), noting that the timing is "much more attractive" today.
And, with the new vaccine data (see below for more on that), we think the story will play out within the next 4-6 weeks (the earnings date has yet to be announced, but the company is in its quiet period).
As a quick reminder, we started looking at GDRX with a skeptical eye, but quickly came to appreciate the potential of the coupon business and the durability of the niche GDRX occupies/owns in the U.S. Medical Economy.
The pent up demand and rebound in care provide near-term tailwinds, and its focus on the consumer (and brand strength) are novel. The deficit that opened up after prescriptions were pulled forward at the beginning of the pandemic last March will come back and then some if we're correct, and with 70-75% of office visits resulting in one or more scripts, some percentage of those people will use GDRX.
With the company clearing ~$8 per user per month, and an easy 2Q COVID-comp, we think the narrative will shift (+) and the huge - arguably too large - TAM will look more achievable than ever. We're about $100MM ahead of the Street this year and see the potential for $1.1B in revenue next year.
Put whatever multiple on it, the stock should move higher as the vaccines reach more Americans and people go back to the doctor (in-person). Here are a couple of updated slides highlighting important data that we monitor:
VACCINE DATA RELEASED
First, 1.54MM jabs in 24 hours is just ~20k share of the highwater mark to date.
The target dates have not changed and as you know, we think distribution and administration will accelerate with another vaccine (or two) available in the market.
Within the past 12 hours, we’ve gotten updates from both Novavax (NVAX) at 89% efficacy and J&J (JNJ) at 85%.
Both have caveats but should be good enough to help near term (i.e., early-mid-Feb) - we’ll just have to wait to see what the FDA thinks of protein-based (NVAX) and adenovirus (JNJ) vaccines, respectively.
