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GoodRx adds Silver Lake to investor roster, sets sights on growth and diversification

  • JP Morgan, Triple Tree advise GoodRx
  • Company plans to look beyond prescription-drug savings
  • Reported $2.8 bln valuation

GoodRx has gained another backer, selecting Silver Lake Partners to join its investor base, following discussions over the summer that sources said took place with both financial and strategic buyers.

The tech-focused investor joins Francisco Partners and Spectrum Equity, both of which invested in the prescription-drug-transparency startup in 2015.

GoodRx Co-CEO Doug Hirsch declined comment on deal specifics or financials. He said Aug. 6 that the company has explored a wide range of opportunities and partnerships, having been approached by various parties since its inception seven years ago.

CNBC reported that the transaction values the Santa Monica, California, company at about $2.8 billion, with Silver Lake acquiring about a third of the company in equity. A source told Buyouts that Silver Lake is taking a minority stake.

Buyouts reported in July that JP Morgan Securities was providing financial advice to GoodRx, with price talk in the $2.5 billion range. Triple Tree was also an adviser to the company, the announcement said.

GoodRx, which helps consumers save money through discount cards that can be applied to prescription drugs at the pharmacy, was marketed off an adjusted Ebitda figure of about $130 million, sources previously said.

One of the sources described leverageable Ebitda as closer to about $100 million. A $2.8 billion valuation would suggest an EV-to-Ebitda multiple in the 21x to 28x range.

The company held discussions with both sponsors and strategics, sources previously said. But because the company is “growing and profitable like crazy,” as one source put it recently, raising a chunk of capital made for a more logical outcome as opposed to an outright sale at 20x-plus.

Hirsch, a former Facebook and Yahoo exec, said the digital-health company was impressed by Silver Lake’s knowledge and existing portfolio of investments. He added that the firm shared its vision of helping consumers find more affordable healthcare.

Silver Lake’s healthcare-related investments include A Place for Mom, which provides senior-living-referral services. Through Silver Lake Sumeru, the firm backs Influence Health, a provider of customer-relationship-management software that hospitals use to attract and retain patients. The latter tapped Houlihan Lokey in August 2017 to explore a sale, Buyouts previously reported.

GoodRx — which compares retail prices of prescription drugs from different pharmacies — intends to grow first and foremost by expanding the number of prescriptions it impacts, Hirsch said. “Today we help [consumers find better prices on] about 3 percent of prescriptions. We’d like to make it 30 percent. And beyond.”

But the executive also suggested that GoodRx has a broader long-term vision as it relates to lowering healthcare costs for consumers, with the opportunity to expand into segments beyond prescription drugs.

“Everything is on the table,” Hirsch said, declining to elaborate other than to say the company wants to grow quickly. “We’re looking at all sorts of cool stuff.”

The executive also didn’t rule out M&A, pointing to the company’s January 2017 purchase of medication-transparency startup Iodine.

Hirsch went on to describe GoodRx as a patient-advocacy organization: “We spend our days working with the existing [healthcare] system to lower the price of drugs. … We’re constantly threading the needle, trying to figure that out.”

The company’s biggest challenge? Hirsch said it comes down to reaching individuals that “don’t understand or know this exists.”

“Everyone has to rethink how they consume healthcare, and consumers are the first that need to do that,” Hirsch said. “You can’t help someone until they know there are other options.”

Representatives of Silver Lake declined to comment, while those with Francisco Partners and Spectrum couldn’t be reached.

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