Shares of GoodRx Holdings Inc. sank in after-hours trading Monday after the company, which offers tools that help consumers compare drug prices, exceeded expectations with its March-quarter results but disclosed that it is unlikely to achieve its full-year outlook due to recent actions taken by a grocery chain.
The company noted in a letter to shareholders that a grocer took actions in the latter part of the first quarter that impacted acceptance of discounted pricing for certain drugs from pharmacy benefit managers, who are GoodRx’s
customers. While the change had an “immaterial adverse impact” on first-quarter results, it is expected to impact financials more materially going forward.
“In April, this dynamic intensified, impacting more drugs in more of the grocer’s pharmacies, leading to significant lost volume and an expected greater impact on our Q2 and full-year prescription transactions revenue,” the company said in the letter.
Shares were off more than 35% in after-hours trading Monday.
GoodRx expects about $190 million in revenue for its second quarter, below the FactSet consensus, which was for $215.6 million. The forecast assumes that the issue with the grocery chain continues through the quarter “without amelioration” and assigns an estimated revenue impact of about $30 million to the dynamic.
The company also acknowledged that the grocer issue is likely to impact the achievability of its previously issued full-year outlook. That called for about 23% growth in revenue from a year prior.
“At this time, we believe it is unlikely we will be able to achieve the FY 2022 guidance we provided on our fourth-quarter earnings call,” GoodRx said in its shareholder letter. “We will not be providing full-year expectations at this time as the full-year impact of the grocer issue is difficult to estimate because there are several variables including, among others, eventual consumer pricing and returning usage levels that have yet to be determined.”
The company generated first-quarter net income of $12.3 million, or 3 cents a share, compared with $1.7 million, or breakeven on a per-share basis, in the year-prior period.
After adjusting for stock-based compensation and other expenses, GoodRx earned 10 cents a share, up from 7 cents a share a year prior, while analysts tracked by FactSet were expecting 8 cents a share.
GoodRx’s first-quarter revenue climbed to $203.3 million from $160.4 million and exceeded the FactSet consensus, which was for $200.5 million.