On May 9, GoodRx Holdings Inc. (GDRX) posted a beat quarterly report for Q1 2022 with revenue and earnings both above expectations. But concerns over a grocery chain issue have the company slashing down its 2022 guidance. The company said it is unlikely to achieve the previously provided outlook for the year. Thus, despite the beat earnings, the outlook worries caused the stock to tank in the pre-market.
GDRX, hence, declined by a huge 36.19% in the pre-market while 30,968 shares traded hands. The stock was then trading at a price of $6.86 per share while it closed the prior session at $10.75 apiece. Thus, the stock registered a new 52-week low in the pre-market against the previous $10.66.
GDRX’s Q1 2022 Earnings Preview
For the March quarter of fiscal 2022, the company reported revenue of $203.3 million which increased by a nice 27% YOY. Surpassing consensus estimate by 1.74%, the revenue improved from $160.4 million in the year-ago quarter.
Moreover, the adjusted net income for the quarter was $41.3 million with quarterly earnings of 10 cents a share. This surpassed the consensus estimate of 8 cents per share for the quarter while improving 30% YOY on an adjusted basis.
While the monthly active consumers went up by 12% YOY, subscription plans increased by 29%. The adjusted EBITDA grew by 27% YOY to reach $64.7 million in the quarter.
On the other hand, certain changes in operating activities, accrued and prepaid expenses, and account receivables collection resulted in a YOY decline of 34% in cash provided by operating activities.
What’s with the Outlook Cut Down?
In the letter to shareholders regarding the quarterly earnings, GDRX said that near the end of Q1 a grocery chain took actions that impacted acceptance of discounted pricing for a subset of drugs from PBMs which are its customers. This was declared to have an immaterial impact on the company’s subscription revenues in Q1 but the impact is expected to be huge in the ongoing Q2.
The dynamic intensified in April as it impacted more drugs in more of the grocer’s pharmacies which will lead to a significant loss in volume. Subsequently, the company now expected Q2 revenue to be roughly $190 million while it remains uncertain of the impact on the full-year revenue.
Due to an issue with a grocer, GDRX is now expecting lower revenue in the ongoing quarter and is uncertain how much the full-year revenue will be impacted. Thus, despite a beat earnings report, the outlook worries caused the stock to plunge in the pre-market on Monday.