GoodRx Holdings, Inc. (NASDAQ:GDRX) demonstrates superior capital efficiency with a ROIC of 21.60% compared to its WACC of 9.50%.
Competitors like American Well Corporation (AMWL) and Asana, Inc. (ASAN) show negative ROIC to WACC ratios, indicating struggles in generating returns above their cost of capital.
GoodRx’s strong financial performance and efficient use of capital set it apart in the competitive digital health sector.
GoodRx Holdings, Inc. (NASDAQ:GDRX) is a company that provides a platform to help consumers find affordable prescription medications. It operates in the healthcare sector, offering price comparisons and discounts on prescription drugs. GoodRx competes with other companies in the digital health and telemedicine space, such as American Well Corporation (AMWL) and Doximity, Inc. (DOCS).
In evaluating GoodRx’s financial performance, the Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) are key metrics. GoodRx has an impressive ROIC of 21.60% compared to its WACC of 9.50%, resulting in a ROIC to WACC ratio of 2.27. This indicates that GoodRx is effectively using its capital to generate returns well above its cost of capital.
When comparing GoodRx to its peers, it becomes evident that GoodRx is outperforming in terms of capital efficiency. For instance, American Well Corporation (AMWL) has a negative ROIC of -65.71% and a WACC of 8.62%, leading to a ROIC to WACC ratio of -7.63. This suggests that AMWL is not generating sufficient returns to cover its cost of capital.
Similarly, JFrog Ltd. (FROG) and Asana, Inc. (ASAN) also show negative ROIC to WACC ratios of -1.30 and -8.70, respectively. These figures highlight that both companies are struggling to generate returns above their cost of capital. In contrast, Doximity, Inc. (DOCS) has a positive ROIC to WACC ratio of 1.56, but it still lags behind GoodRx’s superior ratio of 2.27.
Overall, GoodRx’s strong ROIC to WACC ratio underscores its ability to efficiently utilize its capital, setting it apart from its peers in the digital health sector. This financial strength positions GoodRx favorably in the competitive landscape, as it continues to deliver value to its investors.
