5 Stocks Making Headlines Today

3. GoodRx Holdings, Inc. (NASDAQ:GDRX) has plummeted 7.21% as of 12:52 PM ET after the Santa Monica, California-based telemedicine platform was downgraded from an Outperform to a Neutral rating by Vikram Kesavabhotla at Baird. The analyst slashed the price target on GoodRx Holdings, Inc. (NASDAQ:GDRX) by 30% to $7. The first-quarter results of GoodRx Holdings, Inc. (NASDAQ:GDRX) highlighted disruption associated with a certain grocer, understood to be The Kroger Co. (NYSE:KR). The company is also the provider of a free-to-use website and mobile app that tracks the price of prescription medicines across the US. Kesavabhotla highlighted his concern about GoodRx Holdings, Inc.’s (NASDAQ:GDRX) ability to recover this volume as the world is recovering from the pandemic.

In its Q2 2021 investor letter, Saga Partners discussed its stance on GoodRx Holdings, Inc. (NASDAQ:GDRX). Here’s what the investment management firm said:

“The Saga Portfolio first bought GoodRx at the end of 2020 and has added to it throughout 2021. As it has become a larger position in the Portfolio, it makes sense to explain the investment thesis in more detail.

For those who don’t care to understand the prescription drug value chain, feel free to skip over this section. While few readers may really care about the fairly complicated prescription drug value chain, it is important to review in order to understand the role that GoodRx plays within the ecosystem. This is my best attempt in trying to explain it in a few paragraphs.

Like many other parts of the U.S. healthcare system, prescription drugs suffer from complex and non-transparent pricing with access largely controlled by health plan payers. The majority of people in the U.S. have insurance provided by either their employer or a government program such as Medicare or Medicaid. Consumers largely rely on third parties to determine which drugs are covered by their health plan, and therefore which drugs may or may not be affordable.

Pharmacy benefit managers (PBMs) play a significant role and sit in the middle of three different parties. They are the intermediary between health insurers, pharmacies, and drug manufacturers. Health insurers hire PBMs to manage prescription drug plans for their covered population. PBMs negotiate on behalf of the health insurer with pharmacies. Pharmacies enter pricing contracts with PBMs in an effort to drive more demand to the store…” (Click here to see the full text)

GoodRx Holdings, Inc. (NASDAQ:GDRX) was held by 24 hedge funds as of Q1 2022.