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Amazon vs GoodRx: Why GoodRx Stock Falls and What’s Next?

GoodRx stock crash

From 56.63 USD to 7.74 USD – within a year! That’s how fast GoodRx stock tumbled. And the worst indication is, it is still falling! So, what’s causing this fall? Well, to understand it in detail, we have to first understand how GoodRx makes money.

How does GoodRx make money?

GoodRx with its mobile and web app enables users to compare prescription drug prices and purchase drugs at almost 60 to 90% of a discounted price.

The following is how GoodRx makes money even after giving such a huge discount.

Revenue stream #1: PBMs (Pharmacy Benefit Managers)

GoodRx works with PBMs (Pharmacy Benefit Managers) who coordinate directly with drug manufacturers and balance the price of a drug which is currently in demand.

Pharmacy Benefit Managers negotiate the price of drugs on behalf of users and bring it down by almost 90% as they deal with manufacturers and pharmacies for bulk drug pricing.

So, whatever they manage to save on drug pricing, they keep a few percentages of it with them and share a few percentages with GoodRx.

And pharmacies, well, they receive more customers as GoodRx is diverting its tremendous traffic to that particular pharmacy which has tied up with GoodRx.

Here, it is worth noting that this single revenue stream accounts for almost 80% of total GoodRx revenue.

Revenue stream #2: Subscription plan

GoodRx offers monthly family and individual subscription plans called GoodRx Gold which facilitates users to claim higher discounts on prescription drugs.

It costs $9.99 per month and delivers exclusive access to low-price drugs. If a user wants to add family members – up to 5 members – they need to go for the $19.99 plan. In this plan, users can add their pets too.

Revenue stream #3: Telehealth services

Like other healthcare startups and enterprises which have recently – after the pandemic – rolled out telehealth services from their online platforms, GoodRx also rolled out telehealth service.

With it, users can virtually talk to GoodRx’s healthcare providers and receive instant care for their healthcare and wellness problems.

If a user has a GoodRx Gold membership, a single virtual visit with a doctor costs him only $19 and if not, it costs him $49.

Though the idea was solid, it wasn’t successful. GoodRx’s telehealth services contribute less than 10% to its overall revenue. The reason is pretty simple. The telehealth market in the USA is very intensified and some old players have already been dominating it.

Revenue stream #4: Telehealth marketplace

This is a very smart move by GoodRx. GoodRx allows individual healthcare providers to register on its platform and serve patients virtually. On every successful televisit, the registered healthcare provider pays a fixed percentage of commission to GoodRx.

But here too, GoodRx does not make more money and always struggles to deliver a consistent care experience to patients as GoodRx does not have higher control over registered providers.

So, now that you know how GoodRx makes money, it will be much easier for you to understand why GoodRx stock has been falling.

Why has GoodRx stock been falling?

GoodRx is losing the game on multiple fronts while a new rivalry is popping up – Amazon vs GoodRx!

Reason #1: Very high dependency on only 1 revenue stream

As we discussed, GoodRx makes money with a total of 4 revenue streams. But the other side of the story is, that it makes 80% of the total revenue with only 1 revenue stream and the rest 20% of total revenue with 3 revenue streams. This unequal distribution puts GoodRx at very high risk.

Reason #2: Very high dependency on only 3 Pharmacy Benefit Managers

GoodRx relies heavily on only 3 Pharmacy Benefit Managers who help GoodRx to generate more than 60% of its revenue. Here too, GoodRx puts itself in a very risky position if one of these Pharmacy Benefit Managers gives up on the partnership.

Reason #3: A big grocery chain steps back

GoodRx has partnerships with big pharmacies and grocery chains from where users can buy prescription drugs at a discounted price. But recently, a prominent grocery chain has discontinued its partnership with GoodRx. With this, GoodRx will be unable to achieve its full-year guidance.

Reason #4: It’s now Amazon vs GoodRx

With every passing day, it is getting clear that Amazon has a solid plan to dominate the US healthcare industry. It has a robust tech infrastructure, a huge user base, its own pharmacy named PillPack and an unbeatable distribution and delivery network. It can easily win the Amazon vs GoodRx game!

What’s next for GoodRx? Will GoodRx survive its rivalry with Amazon?

This question is very tough to answer. But if we connect the dots of what Amazon has rolled out and acquired in the last few years, we can conclude very easily. And our conclusion is that GoodRx will have a difficult time!

Amazon acquired a New-York based pharmacy startup named PillPack a few years ago and it was the time when many industry experts caught the healthcare ambition of Amazon for the first time.

Amazon has real plans to conquer the world of pharmacy with what they have built over the decade. The CEO and co-founder of PillPack is now leading all pharmacy operations of Amazon under the brand name Amazon Pharmacy.

Amazon’s plan to bring its millions of Prime users under its Amazon Pharmacy brand will prove lethal for GoodRx. This gives Amazon instant access to millions of potential customers for its pharmacy services.

Where Amazon is doing an extraordinary job is its tech infrastructure and delivery network. Amazon accommodates the world’s some of the very smartest tech engineers who make it easy for Amazon to leverage product-led growth.

And its outstanding delivery network facilitates next-day or same-day delivery of prescription drugs. Amazon also serves users with insurance by partnering with top payers and for uninsured prime users, Amazon delivers 90% of the saving on prescriptions out of the box!

Amazon also provides telehealth services and at-home follow-up care for labs, tests, and treatment nationwide under its Amazon Care brand. And as if this is not enough, it also targets seniors’ well-being with the Amazon Together brand.

This way, when it comes to the user base, tech infrastructure, healthcare services, discounted drugs and delivery, Amazon is clearly winning – on its own without having a dependency on any partners!

Amazon and GoodRx don’t give a damn to your health tech idea and vision. But we do!

We are an Ontario-based healthcare-focused IT company. If you have a healthcare idea, we have the knowledge to convert it into reality.

Being in the healthcare industry for 7+ years, we understand the fact that the market only welcomes either a unique idea executed in a common way or a common idea but executed in a unique way.

So, even if you want to achieve some very common health tech vision, we can make it huge and profitable with the perfect fusion of our healthcare knowledge and passion. And if you have a unique healthcare idea, we have a unique healthcare mindset and team.

Our team includes 50+ healthcare IT professionals (app developers, UI/UX designers, business analysts, QA engineers and compliance experts) who understand ins and outs of healthcare.

Not only this, but our team also includes healthcare professionals who help us to add clinical value to tech products.

So, let’s have a talk if you are serious about finding a tech partner who understands healthcare and has the same intensity of healthcare passion that you have!