Evolent Health (NYSE:EVH) versus GoodRx (NASDAQ:GDRX) Financial Analysis

GoodRx (NASDAQ:GDRX) and Evolent Health (NYSE:EVH) are both small-cap healthcare companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.

Profitability

This table compares GoodRx and Evolent Health’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
GoodRx	2.07%	7.22%	2.53%
Evolent Health	-24.08%	-4.27%	-1.06%

Institutional and Insider Ownership

63.8% of GoodRx shares are owned by institutional investors. 5.9% of GoodRx shares are owned by company insiders. Comparatively, 1.5% of Evolent Health shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

GoodRx has a beta of 1.6, meaning that its share price is 60% more volatile than the S&P 500. Comparatively, Evolent Health has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for GoodRx and Evolent Health, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
GoodRx	3	6	4	0	2.08
Evolent Health	1	4	12	0	2.65

GoodRx presently has a consensus target price of $4.14, suggesting a potential upside of 10.16%. Evolent Health has a consensus target price of $5.96, suggesting a potential upside of 34.54%. Given Evolent Health’s stronger consensus rating and higher possible upside, analysts clearly believe Evolent Health is more favorable than GoodRx.

Earnings and Valuation

This table compares GoodRx and Evolent Health”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
GoodRx	$785.23 million	1.64	$30.44 million	$0.04	93.88
Evolent Health	$1.88 billion	0.27	-$534.51 million	($4.57)	-0.97

GoodRx has higher earnings, but lower revenue than Evolent Health. Evolent Health is trading at a lower price-to-earnings ratio than GoodRx, indicating that it is currently the more affordable of the two stocks.

Summary

GoodRx beats Evolent Health on 10 of the 14 factors compared between the two stocks.

About GoodRx

GoodRx Holdings, Inc., together with its subsidiaries, offers information and tools that enable consumers to compare prices and save on their prescription drug purchases in the United States. The company operates a price comparison platform that provides consumers with curated, geographically relevant prescription pricing, and access to negotiated prices. It also offers other healthcare products and services, including subscriptions, and pharma manufacturer solutions, as well as telehealth services through the GoodRx Care platform. It serves pharmacy benefit managers who manage formularies and prescription transactions, including establishing pricing between consumers and pharmacies. The company was founded in 2011 and is headquartered in Santa Monica, California.

About Evolent Health

Evolent Health, Inc., through its subsidiary, Evolent Health LLC, offers specialty care management services in oncology, cardiology, and musculoskeletal markets in the United States. The company provides platform for health plan administration and value-based business infrastructure. It offers administrative services, such as health plan services, pharmacy benefits management, risk management, analytics and reporting, and leadership and management; and Identifi, a proprietary technology system that aggregates and analyzes data, manages care workflows, and engages patients. In addition, the company provides holistic total cost of care management. Evolent Health, Inc. was founded in 2011 and is headquartered in Arlington, Virginia.