10-Q 1 gdrx-20220630.htm 10-Q 10-Q
October 11, 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 10-Q

 

 

(Mark One)

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

OR

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39549

 

 

GoodRx Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware

47-5104396

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer
Identification No.)

 

 

2701 Olympic Boulevard

Santa Monica, CA

90404

(Address of principal executive offices)

(Zip Code)

(855) 268-2822

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Class A common stock, $0.0001 par value per share

 

GDRX

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

 

 

Accelerated filer

 

 

 

 

 

 

 

 

Non-accelerated filer

 

 

Smaller reporting company

 

 

 

 

 

 

 

 

Emerging growth company

 

 

 

 

 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of August 2, 2022, the registrant had 84,394,840 shares of Class A common stock, $0.0001 par value per share, and 313,731,628 shares of Class B common stock, $0.0001 par value per share, outstanding.

 

 


 

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements regarding our future results of operations and financial position, industry and business trends, the impact of a grocery chain not accepting PBM pricing on our future results of operations, stock compensation, our stock repurchase program, business strategy, plans, market growth and our objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, risks related to our limited operating history and early stage of growth; our ability to achieve broad market education and change consumer purchasing habits; our ability to continue to attract, acquire and retain consumers in a cost-effective manner; our reliance on our prescription transactions offering and ability to expand our offerings; changes in medication pricing and pricing structures; our inability to control the categories and types of prescriptions for which we can offer savings or discounted prices; our reliance on a limited number of industry participants; the competitive nature of industry; risks related to pandemics, epidemics or outbreak of infection disease, including the COVID-19 pandemic; the accuracy of our estimate of our total addressable market and other operational metrics; the development of the telehealth market; our ability to maintain and expand a network of skilled telehealth providers; risks related to negative media coverage; our ability to respond to changes in the market for prescription pricing and to maintain and expand the use of GoodRx codes; our ability to maintain positive perception of our platform and brand; risks related to any failure to maintain effective internal control over financial reporting; risks related to use of social media, emails, text messages and other messaging channels as part of our marketing strategy; our ability to accurately forecast revenue and appropriately plan our expenses in the future; risks related to information technology and cyber-security; compliance with government regulation of the internet, e-commerce and data and other regulations; our ability to utilize our net operating loss carryforwards and certain other tax attributes; our ability to attract, develop, motivate and retain well-qualified employees; risks related to general economic factors, natural disasters or other unexpected events; risks related to our acquisition strategy; risks related to our debt arrangements; interruptions or delays in service on our apps or websites; our reliance on third-party platforms to distribute our platform and offerings; our reliance on software as-a-service technologies from third parties; systems failures or other disruptions in the operations of these parties on which we depend; changes in consumer sentiment or laws, rules or regulations regarding tracking technologies and other privacy matters; the increasing focus on environmental sustainability and social initiatives; risks related to our intellectual property; risks related to operating in the healthcare industry; risks related to our organizational structure; risks related to fluctuations in our tax obligations and effective income tax rate which could materially and adversely affect our results of operations; as well as the other important factors discussed in the sections entitled “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (“2021 10-K”) and this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (“SEC”). The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

 


 

 

Table of Contents

 

 

 

Page

 

 

 

PART I.

FINANCIAL INFORMATION

 

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

1

 

Condensed Consolidated Balance Sheets

1

 

Condensed Consolidated Statements of Operations

2

 

Condensed Consolidated Statements of Stockholders’ Equity

3

 

Condensed Consolidated Statements of Cash Flows

5

 

Notes to Condensed Consolidated Financial Statements

6

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

16

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

28

Item 4.

Controls and Procedures

29

 

 

 

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

30

Item 1A.

Risk Factors

30

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

30

Item 3.

Defaults Upon Senior Securities

30

Item 4.

Mine Safety Disclosures

30

Item 5.

Other Information

30

Item 6.

Exhibits

31

 

Signatures

32

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

 

GoodRx Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

(in thousands, except par values)

 

June 30,
2022

 

 

December 31,
2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

730,540

 

 

$

941,109

 

Accounts receivable, net

 

 

122,878

 

 

 

118,080

 

Prepaid expenses and other current assets

 

 

40,539

 

 

 

29,638

 

Total current assets

 

 

893,957

 

 

 

1,088,827

 

Property and equipment, net

 

 

22,877

 

 

 

21,612

 

Goodwill

 

 

415,256

 

 

 

329,696

 

Intangible assets, net

 

 

131,719

 

 

 

88,791

 

Capitalized software, net

 

 

61,700

 

 

 

44,987

 

Operating lease right-of-use assets

 

 

28,507

 

 

 

27,705

 

Other assets

 

 

37,980

 

 

 

6,007

 

Total assets

 

$

1,591,996

 

 

$

1,607,625

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

16,825

 

 

$

17,501

 

Accrued expenses and other current liabilities

 

 

49,766

 

 

 

50,732

 

Current portion of debt

 

 

7,029

 

 

 

7,029

 

Operating lease liabilities, current

 

 

5,998

 

 

 

5,851

 

Total current liabilities

 

 

79,618

 

 

 

81,113

 

Debt, net

 

 

653,830

 

 

 

655,858

 

Operating lease liabilities, net of current portion

 

 

33,600

 

 

 

33,592

 

Deferred tax liabilities, net

 

 

455

 

 

 

244

 

Other liabilities

 

 

6,553

 

 

 

5,138

 

Total liabilities

 

 

774,056

 

 

 

775,945

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 50,000 shares authorized and
    
zero shares issued and outstanding at June 30, 2022 and
    December 31, 2021

 

 

 

 

 

 

Common stock, $0.0001 par value; Class A: 2,000,000 shares
   authorized,
84,176 and 85,028 shares issued and outstanding at
   June 30, 2022 and December 31, 2021, respectively; and
   Class B:
1,000,000 shares authorized, 313,732 and 315,534
   shares issued and outstanding at June 30, 2022 and
   December 31, 2021, respectively

 

 

40

 

 

 

40

 

Additional paid-in capital

 

 

2,222,729

 

 

 

2,247,347

 

Accumulated deficit

 

 

(1,404,829

)

 

 

(1,415,707

)

Total stockholders' equity

 

 

817,940

 

 

 

831,680

 

Total liabilities and stockholders' equity

 

$

1,591,996

 

 

$

1,607,625

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

1


 

GoodRx Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended
June 30,

 

 

Six Months Ended
June 30,

 

(in thousands, except per share amounts)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

191,798

 

 

$

176,635

 

 

$

395,127

 

 

$

337,066

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue, exclusive of depreciation and
   amortization presented separately below

 

 

18,044

 

 

 

11,090

 

 

 

30,324

 

 

 

21,518

 

Product development and technology

 

 

35,404

 

 

 

29,567

 

 

 

70,446

 

 

 

55,727

 

Sales and marketing

 

 

94,338

 

 

 

88,381

 

 

 

187,288

 

 

 

168,075

 

General and administrative

 

 

34,740

 

 

 

39,579

 

 

 

66,663

 

 

 

83,365

 

Depreciation and amortization

 

 

13,319

 

 

 

8,369

 

 

 

24,692

 

 

 

13,730

 

Total costs and operating expenses

 

 

195,845

 

 

 

176,986

 

 

 

379,413

 

 

 

342,415

 

Operating (loss) income

 

 

(4,047

)

 

 

(351

)

 

 

15,714

 

 

 

(5,349

)

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

 

(857

)

 

 

(13

)

 

 

(909

)

 

 

(29

)

Interest expense

 

 

6,969

 

 

 

5,906

 

 

 

12,838

 

 

 

11,811

 

Total other expense, net

 

 

6,112

 

 

 

5,893

 

 

 

11,929

 

 

 

11,782

 

(Loss) income before income taxes

 

 

(10,159

)

 

 

(6,244

)

 

 

3,785

 

 

 

(17,131

)

Income tax benefit

 

 

8,744

 

 

 

37,305

 

 

 

7,093

 

 

 

49,860

 

Net (loss) income

 

$

(1,415

)

 

$

31,061

 

 

$

10,878

 

 

$

32,729

 

(Loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.00

)

 

$

0.08

 

 

$

0.03

 

 

$

0.08

 

Diluted

 

$

(0.00

)

 

$

0.07

 

 

$

0.03

 

 

$

0.08

 

Weighted average shares used in computing
   (loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

412,135

 

 

 

408,363

 

 

 

413,405

 

 

 

407,273

 

Diluted

 

 

412,135

 

 

 

428,867

 

 

 

423,077

 

 

 

429,228

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation included in costs and
   operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

100

 

 

$

181

 

 

$

54

 

 

$

302

 

Product development and technology

 

 

9,820

 

 

 

7,987

 

 

 

17,298

 

 

 

16,323

 

Sales and marketing

 

 

5,839

 

 

 

5,262

 

 

 

11,233

 

 

 

10,520

 

General and administrative

 

 

15,874

 

 

 

27,246

 

 

 

33,197

 

 

 

60,057

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

2


 

GoodRx Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

 

 

 

Class A and Class B
Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total
Stockholders'

 

(in thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2021

 

 

400,562

 

 

$

40

 

 

$

2,247,347

 

 

$

(1,415,707

)

 

$

831,680

 

Stock options exercised

 

 

749

 

 

 

 

 

 

3,699

 

 

 

 

 

 

3,699

 

Stock-based compensation

 

 

 

 

 

 

 

 

32,161

 

 

 

 

 

 

32,161

 

Vesting of restricted stock units

 

 

822

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock withheld related to
   net share settlement

 

 

(364

)

 

 

 

 

 

(9,561

)

 

 

 

 

 

(9,561

)

Repurchases of Class A common stock

 

 

(5,637

)

 

 

 

 

 

(83,765

)

 

 

 

 

 

(83,765

)

Net income

 

 

 

 

 

 

 

 

 

 

 

12,293

 

 

 

12,293

 

Balance at March 31, 2022

 

 

396,132

 

 

$

40

 

 

$

2,189,881

 

 

$

(1,403,414

)

 

$

786,507

 

Stock options exercised

 

 

1,176

 

 

 

 

 

 

4,109

 

 

 

 

 

 

4,109

 

Stock-based compensation

 

 

 

 

 

 

 

 

33,466

 

 

 

 

 

 

33,466

 

Vesting of restricted stock units

 

 

1,059

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock withheld related to
   net share settlement

 

 

(459

)

 

 

 

 

 

(4,727

)

 

 

 

 

 

(4,727

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

(1,415

)

 

 

(1,415

)

Balance at June 30, 2022

 

 

397,908

 

 

$

40

 

 

$

2,222,729

 

 

$

(1,404,829

)

 

$

817,940

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

3


 

GoodRx Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

 

 

 

 

Class A and Class B
Common Stock

 

 

Additional
Paid-in

 

 

Accumulated

 

 

Total
Stockholders'

 

(in thousands)

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Equity

 

Balance at December 31, 2020

 

 

391,660

 

 

$

39

 

 

$

2,101,773

 

 

$

(1,390,453

)

 

$

711,359

 

Stock options exercised

 

 

513

 

 

 

 

 

 

2,680

 

 

 

 

 

 

2,680

 

Stock-based compensation

 

 

 

 

 

 

 

 

48,254

 

 

 

 

 

 

48,254

 

Vesting of restricted stock units

 

 

608

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock withheld related to
   net share settlement

 

 

(324

)

 

 

 

 

 

(14,902

)

 

 

 

 

 

(14,902

)

Net income

 

 

 

 

 

 

 

 

 

 

 

1,668

 

 

 

1,668

 

Balance at March 31, 2021

 

 

392,457

 

 

$

39

 

 

$

2,137,805

 

 

$

(1,388,785

)

 

$

749,059

 

Stock options exercised

 

 

2,609

 

 

 

 

 

 

13,291

 

 

 

 

 

 

13,291

 

Stock-based compensation

 

 

 

 

 

 

 

 

42,366

 

 

 

 

 

 

42,366

 

Vesting of restricted stock units

 

 

631

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock withheld related to
   net share settlement

 

 

(304

)

 

 

 

 

 

(11,383

)

 

 

 

 

 

(11,383

)

Net income

 

 

 

 

 

 

 

 

 

 

 

31,061

 

 

 

31,061

 

Balance at June 30, 2021

 

 

395,393

 

 

$

39

 

 

$

2,182,079

 

 

$

(1,357,724

)

 

$

824,394

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

 

4


 

GoodRx Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

 

 

 

Six Months Ended
June 30,

 

(in thousands)

 

2022

 

 

2021

 

Cash flows from operating activities

 

 

 

 

 

 

Net income

 

$

10,878

 

 

$

32,729

 

Adjustments to reconcile net income to net cash provided by
   operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

24,692

 

 

 

13,730

 

Amortization of debt issuance costs

 

 

1,710

 

 

 

1,727

 

Non-cash operating lease expense

 

 

1,509

 

 

 

1,791

 

Stock-based compensation expense

 

 

61,782

 

 

 

87,202

 

Change in fair value of contingent consideration

 

 

240

 

 

 

 

Deferred income taxes

 

 

(336

)

 

 

(364

)

Loss on abandonment of operating lease assets

 

 

 

 

 

780

 

Changes in operating assets and liabilities, net of effects of business acquisitions

 

 

 

 

 

 

Accounts receivable

 

 

(4,362

)

 

 

(12,873

)

Prepaid expenses and other assets

 

 

(8,439

)

 

 

(47,241

)

Accounts payable

 

 

(1,860

)

 

 

4,917

 

Accrued expenses and other current liabilities

 

 

(2,089

)

 

 

(1,897

)

Operating lease liabilities

 

 

(2,156

)

 

 

(590

)

Other liabilities

 

 

(400

)

 

 

500

 

Net cash provided by operating activities

 

 

81,169

 

 

 

80,411

 

Cash flows from investing activities

 

 

 

 

 

 

Purchase of property and equipment

 

 

(3,172

)

 

 

(3,058

)

Acquisitions, net of cash acquired

 

 

(156,853

)

 

 

(125,728

)

Capitalized software

 

 

(22,977

)

 

 

(13,630

)

Investment in minority equity interest

 

 

(15,007

)

 

 

 

Net cash used in investing activities

 

 

(198,009

)

 

 

(142,416

)

Cash flows from financing activities

 

 

 

 

 

 

Payments on long-term debt

 

 

(3,515

)

 

 

(3,515

)

Payment for contingent consideration

 

 

 

 

 

(832

)

Repurchases of Class A common stock

 

 

(83,765

)

 

 

 

Proceeds from exercise of stock options

 

 

7,839

 

 

 

15,481

 

Employee taxes paid related to net share settlement of equity awards

 

 

(14,288

)

 

 

(26,017

)

Net cash used in financing activities

 

 

(93,729

)

 

 

(14,883

)

Net change in cash, cash equivalents and restricted cash

 

 

(210,569

)

 

 

(76,888

)

Cash, cash equivalents and restricted cash

 

 

 

 

 

 

Beginning of period

 

 

941,109

 

 

 

971,591

 

End of period

 

$

730,540

 

 

$

894,703

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

Non cash investing and financing activities:

 

 

 

 

 

 

Right-of-use assets obtained in exchange for new operating lease liabilities

 

$

2,311

 

 

$

471

 

Stock-based compensation included in capitalized software

 

 

3,845

 

 

 

3,418

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

5


 

GoodRx Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business

GoodRx Holdings, Inc. was incorporated in September 2015 and has no material assets or standalone operations other than its ownership in its consolidated subsidiaries. GoodRx, Inc. (“GoodRx”), a Delaware corporation initially formed in September 2011, is a wholly-owned subsidiary of GoodRx Intermediate Holdings, LLC, which itself is a wholly-owned subsidiary of GoodRx Holdings, Inc.

GoodRx Holdings, Inc. and its subsidiaries (collectively, "we," "us" or "our") offer information and tools to help consumers compare prices and save on their prescription drug purchases. We operate a price comparison platform that provides consumers with curated, geographically relevant prescription pricing, and provides access to negotiated prices through our codes that can be used to save money on prescriptions across the United States. These services are free to consumers and we primarily earn revenue from our core business from pharmacy benefit managers ("PBMs") that manage formularies and prescription transactions including establishing pricing between consumers and pharmacies. We also offer other healthcare products and services, including subscriptions, pharma manufacturer solutions and telehealth services.

2. Summary of Significant Accounting Policies