In times of inflation, wages often don't rise as quickly as the prices. Companies that can offer consumers lower prices on the products they need have a chance to capitalize on this opportunity. GoodRx (NASDAQ.GDRX), is one such company. Brian Feroldi, a Motley Fool Live contributor, explains why the prescription coupon service is poised to prosper during inflation in a Motley Fool Live Episode recorded June 17.Brian Feroldi. I approached the question from a different perspective when I was trying to figure out what stock would be most successful in an inflationary environment. GoodRx is the ticker for this company. Inflation is when prices go up, but wages tend to be a slow indicator. Because wages don't rise as quickly as the prices, there is a delay between employees saying "hey, I need to raise these prices" and companies offering to pay them. Employees are being squeezed in between. Their purchasing power is decreasing. Inflation is not a new phenomenon in the healthcare sector. The prices in the healthcare industry have been increasing for, is that forever at a higher rate then the overall inflation rate. This is why GoodRx has seen a surge in popularity.GoodRx is a mission driven company. Their sole purpose is to help Americans get the healthcare that they need at a cost they can afford. This company is a coupon platform that allows consumers to get prescriptions at the lowest possible price. This is a huge problem because 20-30% of prescriptions in America are never filled. Cost is the number one reason they don't get filled. Americans can't afford them so they don't get the medicine.GoodRx works behind the scenes. It is in direct contact with pharmacies, manufacturers and Medicare. It works like an online shopping portal, providing a coupon that allows consumers to visit a pharmacy to get the lowest price. Inflation is a possibility, and consumers will want to find ways to save money. GoodRx would be a great way to do that.GoodRx is a great investment because both consumers and healthcare professionals love it. The chart shows the net promoter score. The net promoter score for consumers is 90, while the score for physicians is 86. Compare those scores to Netflix. Netflix has a score of 64. This is an excellent score. GoodRx is a popular tool that people love. It's free and you can save money on your drugs.This is why the number of people who are using it has risen like a clockwork since its inception. It is currently used by approximately 5.7 million people. How do they make their money? There are a few ways to make money. Coupons are the most popular way to make money. GoodRx receives a cut of the coupon sales when a drug is purchased through GoodRx's platform.The company has experienced phenomenal growth, with a 54 percent compound annual growth rate over the past five years. This company is extremely profitable. Its adjusted EBITDA rate is around 40-ish percent. Although it's not my preferred metric to measure profitability, it's one I will continue to use. The most recent quarter saw revenue growth of only 25 percent. Prescription was flat as consumers have difficulty getting prescriptions. However, their other revenue segment, which includes telehealth and subscription businesses to get even lower savings is growing at a triple-digit pace.Net income is a small amount of what was once a very profitable company. It reported a net income of 1.6million, however, almost all of it is due to stock-based rewards related to the IPO. For the quarter, they actually generated $43 million in cash flow free of charge, which was between 20-30X and 20-30X the net income. Net income is not a reliable indicator of performance. The management projects a 41% revenue growth in the next quarter, and a 36% revenue growth for this year. If inflation happens, there might be some upside.The potential for this business is huge, It is 30% larger than the real estate industry. According to the company, its total market potential is approximately $800 billion. Does that sound close to reality? I'm not sure. Even though that may seem a bit extreme, it still leaves plenty of potential for the company to grow. Two of its co-founders are also running it. It's valued at approximately 25x sales today and 100x forward earnings. This company's embedded growth rate is not too high, so I don't believe that it's excessive. GDRX, so GoodRx.
