GoodRx Holdings, Inc.: Form 10-Q for the period ended Mar 31, 2024

You should read the following discussion and analysis of our financial condition and results of operations together with

our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-

Q, as well as Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and

Part II, Item 8, “Financial Statements and Supplementary Data” included in our Annual Report on Form 10-K for the fiscal

year ended December 31, 2023 filed with the Securities and Exchange Commission ("SEC") on February 29, 2024 (“2023

10-K”). This discussion contains forward-looking statements based upon current plans, expectations and beliefs involving

risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements

as a result of various factors, including those set forth in the "Risk Factors" section of our 2023 10-K and other factors set

forth in other parts of this Quarterly Report on Form 10-Q and our filings with the SEC.

Glossary of Selected Terminology

As used in this Quarterly Report on Form 10-Q, unless the context otherwise requires, references to:

• “we,” “us,” “our,” the “Company,” “GoodRx,” and similar references refer to GoodRx Holdings, Inc. and its

consolidated subsidiaries.

• “Co-Founders” refers to Trevor Bezdek, our Chairman and a director of the Company, and Douglas Hirsch,

our Chief Mission Officer and a director of the Company.

• “consumers” refer to the general population in the United States that uses or otherwise purchases healthcare

products and services. References to “our consumers” or “GoodRx consumers” refer to consumers that

have used one or more of our offerings.

• “discounted price” refers to a price for a prescription provided on our platform that represents a negotiated

rate provided by one of our PBM partners at a retail pharmacy or under a direct contract with one of our

partner pharmacies. Through our platform, our discounted prices are free to access for consumers by saving a

GoodRx code to their mobile device for their selected prescription and presenting it at the chosen pharmacy.

The term “discounted price” excludes prices we may otherwise source, such as prices from patient assistance

programs for low-income individuals and Medicare prices, and any negotiated rates offered through our

subscription offerings: GoodRx Gold (“Gold”), and Kroger Rx Savings Club powered by GoodRx (“Kroger

Savings”).

• “GoodRx code” refers to codes that can be accessed by our consumers through our apps or websites or that

can be provided to our consumers directly by healthcare professionals, including physicians and pharmacists,

that allow our consumers free access to our discounted prices or a lower list price for their prescriptions when

such code is presented at their chosen pharmacy.

• “Monthly Active Consumers” refers to the number of unique consumers who have used a GoodRx code to

purchase a prescription medication in a given calendar month and have saved money compared to the list

price of the medication. A unique consumer who uses a GoodRx code more than once in a calendar month to

purchase prescription medications is only counted as one Monthly Active Consumer in that month. A unique

consumer who uses a GoodRx code in two or three calendar months within a quarter will be counted as a

Monthly Active Consumer in each such month. Monthly Active Consumers do not include subscribers to our

subscription offerings, consumers of our pharma manufacturer solutions offering, or consumers who used our

telehealth offering. When presented for a period longer than a month, Monthly Active Consumers is averaged

over the number of calendar months in such period. For example, a unique consumer who uses a GoodRx

code twice in January, but who did not use our prescription transactions offering again in February or March, is

counted as 1 in January and as 0 in both February and March, thus contributing 0.33 to our Monthly Active

Consumers for such quarter (average of 1, 0 and 0). A unique consumer who uses a GoodRx code in January

and in March, but did not use our prescription transactions offering in February, would be counted as 1 in

January, 0 in February and 1 in March, thus contributing 0.66 to our Monthly Active Consumers for such

quarter. Monthly Active Consumers from acquired companies are only included beginning in the first full

quarter following the acquisition.

• "partner pharmacies" refers to select licensed pharmacies with whom we have direct contractual agreements.
• “PBM” refers to a pharmacy benefit manager. PBMs aggregate demand to negotiate prescription medication

prices with pharmacies and pharma manufacturers. PBMs find most of their demand through relationships with

insurance companies and employers. However, nearly all PBMs also have consumer direct or cash network

pricing that they negotiate with pharmacies for consumers who choose to purchase prescriptions outside of

insurance.

• “pharma” is an abbreviation for pharmaceutical.
• “savings,” “saved” and similar references refer to the difference between the list price for a particular

prescription at a particular pharmacy and the price paid by the GoodRx consumer for that prescription utilizing

a GoodRx code available through our platform at that same pharmacy. In certain circumstances, we may show

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a list price on our platform when such list price is lower than the negotiated price available using a GoodRx

code and, in certain circumstances, a consumer may use a GoodRx code and pay the list price at a pharmacy

if such list price is lower than the negotiated price available using a GoodRx code. We do not earn revenue

from such transactions, but our savings calculation includes an estimate of the savings achieved by the

consumer because our platform has directed the consumer to the pharmacy with the low list price. This

estimate of savings when the consumer pays the list price is based on internal data and is calculated as the

difference between the average list price across all pharmacies where GoodRx consumers paid the list price

and the average list price paid by consumers in the pharmacies to which we directed them. We do not

calculate savings based on insurance prices as we do not have information about a consumer’s specific

coverage or price. We do not believe savings are representative or indicative of our revenue or results of

operations.

• “subscribers” and similar references refers to our consumers that are subscribed to either of our subscription

offerings, Gold or Kroger Savings. References to subscription plans as of a particular date represents an active

subscription to either one of our aforementioned subscription offerings as of the specified date. Each

subscription plan may represent more than one subscriber since family subscription plans may include multiple

members.

Certain monetary amounts, percentages, and other figures included in this Quarterly Report on Form 10-Q have been

subject to rounding adjustments. Percentage amounts included in this Quarterly Report on Form 10-Q have not in all cases

been calculated on the basis of such rounded figures, but on the basis of such amounts prior to rounding. For this reason,

percentage amounts in this Quarterly Report on Form 10-Q may vary from those obtained by performing the same

calculations using the figures in our condensed consolidated financial statements included elsewhere in this Quarterly

Report on Form 10-Q. Certain other amounts that appear in this Quarterly Report on Form 10-Q may not sum due to

rounding.

Overview

Our mission is to help Americans get the healthcare they need at a price they can afford. To achieve this, we are

building the leading consumer-focused digital healthcare platform in the United States. We believe our financial results

reflect the significant market demand for our offerings and the value that we provide to the broader healthcare ecosystem.

For the three months ended March 31, 2024 as compared to the same period of 2023:

• Revenue and Adjusted Revenue increased 8% to $197.9 million from $184.0 million;
• Net loss and net loss margin were $1.0 million and 0.5%, respectively, compared to net loss and net loss

margin of $3.3 million and 1.8%, respectively; and

• Adjusted EBITDA and Adjusted EBITDA Margin were $62.8 million and 31.7%, respectively, compared to $53.2

million and 28.9%, respectively.

Revenue, net loss and net loss margin are financial measures prepared in conformity with accounting principles

generally accepted in the United States ("GAAP"). Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA Margin are

non-GAAP financial measures. For a reconciliation and presentation of Adjusted Revenue, Adjusted EBITDA and Adjusted

EBITDA Margin to the most directly comparable GAAP financial measures, information about why we consider Adjusted

Revenue, Adjusted EBITDA and Adjusted EBITDA Margin useful and a discussion of the material risks and limitations of

these measures, please see “Key Financial and Operating Metrics—Non-GAAP Financial Measures" below.

Key Financial and Operating Metrics

We use Monthly Active Consumers, subscription plans, Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA

Margin to assess our performance, make strategic and offering decisions and build our financial projections. The number of

Monthly Active Consumers and subscription plans are key indicators of the scale of our consumer base and a gauge for our

marketing and engagement efforts. We believe these operating metrics reflect our scale, growth and engagement with

consumers.

We exited the first quarter of 2024 with approximately 8 million prescription-related consumers that used GoodRx

across our prescription transactions and subscription offerings. Our prescription-related consumers represent the sum of

Monthly Active Consumers for the three months ended March 31, 2024 and subscribers to our subscription plans as of

March 31, 2024.

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Monthly Active Consumers

(in millions)

Subscription Plans

Subscription plans have been impacted by a sequential decline in our subscription plans for Kroger Savings as a result

of reduced marketing spend in relation to that offering. We expect our subscription plans for Kroger Savings to continue to

sequentially decline through July 2024, the expected sunset of the program. Gold subscription plans increased year-over-

year and accounted for 708 thousand of our total subscription plans as of March 31, 2024.

(in thousands)

Non-GAAP Financial Measures

Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA Margin are key measures we use to assess our financial

performance and are also used for internal planning and forecasting purposes. We believe Adjusted Revenue, Adjusted

EBITDA and Adjusted EBITDA Margin are helpful to investors, analysts and other interested parties because they can assist

in providing a more consistent and comparable overview of our operations across our historical financial periods. In addition,

these measures are frequently used by analysts, investors and other interested parties to evaluate and assess performance.

We define Adjusted Revenue for a particular period as revenue excluding client contract termination costs associated

with restructuring related activities. We exclude these costs from revenue because we believe they are not indicative of past

or future underlying performance of the business.

We define Adjusted EBITDA for a particular period as net income or loss before interest, taxes, depreciation and

amortization, and as further adjusted, as applicable, for acquisition related expenses, stock-based compensation expense,

payroll tax expense related to stock-based compensation, loss on extinguishment of debt, financing related expenses, loss

on operating lease assets, restructuring related expenses, legal settlement expenses, charitable stock donation, gain on

sale of business and other income or expense, net. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage

of Adjusted Revenue.

Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures and are

presented for supplemental informational purposes only and should not be considered as alternatives or substitutes to

financial information presented in accordance with GAAP. These measures have certain limitations in that they do not

include the impact of certain costs that are reflected in our condensed consolidated statements of operations that are

necessary to run our business. Other companies, including other companies in our industry, may not use these measures or

may calculate these measures differently than as presented in this Quarterly Report on Form 10-Q, limiting their usefulness

as comparative measures.

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The following table presents a reconciliation of net loss and revenue, the most directly comparable financial measures

calculated in accordance with GAAP, to Adjusted EBITDA and Adjusted Revenue, respectively, and presents net loss

margin, the most directly comparable financial measure calculated in accordance with GAAP, with Adjusted EBITDA Margin:

(dollars in thousands)

(1) Financing related expenses include third party fees related to proposed financings.

(2) Acquisition related expenses principally include costs for actual or planned acquisitions including related third-party

fees, legal, consulting and other expenditures, and as applicable, severance costs and retention bonuses to

employees related to acquisitions and change in fair value of contingent consideration. From time to time,

acquisition related expenses may also include similar transaction related costs for business dispositions.

(3) Restructuring related expenses include employee severance and other personnel related costs in connection with

various workforce optimization and organizational changes to better align with our strategic goals and future scale.

(4) Legal settlement expenses consist of periodic settlement costs for significant and unusual litigation matters. We

believe these costs do not represent recurring expenses arising in the ordinary course of business that are

indicative of our overall operating performance.

(5) Revenue was equal to Adjusted Revenue as there was no client contract termination cost associated with

restructuring related activities in the periods presented.

Components of our Results of Operations

For a description of the components of our results of operations, refer to Note 2 to our audited consolidated financial

statements included in our 2023 10-K. In addition, for a description of primary drivers that may cause our revenue, costs and

operating expenses to fluctuate from period to period, including seasonality, refer to Part II, Item 7, “Management’s

Discussion and Analysis of Financial Condition and Results of Operations” included in our 2023 10-K.

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Results of Operations

The following table sets forth our results of operations for the three months ended March 31, 2024 and 2023:

(dollars in thousands)

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Revenue

All of our revenue has been generated in the United States.

Prescription transactions revenue increased $10.5 million, or 8%, year-over-year, primarily as a result of a 10% increase

in the number of our Monthly Active Consumers from organic growth, including expansion of our integrated savings program,

which integrates our discounts and pricing in a seamless experience at the pharmacy counter for eligible plan members

served by certain PBM partners. The impact from the increase in the number of our Monthly Active Consumers was partially

offset by an increase in consumer discounts, which are all recognized as a reduction of revenue beginning in December

2023 as a result of a change in some aspects of our consumer incentives program. For further information regarding our

consumer incentives program, see Note 2 to our audited consolidated financial statements included in our 2023 10-K.

Subscription revenue decreased $1.5 million, or 6%, year-over-year, primarily driven by a decrease in the number of

subscription plans due to the anticipated sunset of Kroger Savings with 778 thousand subscription plans as of March 31,

2024 compared to 1,007 thousand as of March 31, 2023. Given the subscription fee is higher for Gold relative to Kroger

Savings, we expect the anticipated sunset of Kroger Savings will result in a higher year-over-year decline in subscription

plans relative to subscription revenue.

Pharma manufacturer solutions revenue increased $4.1 million, or 20%, year-over-year, primarily driven by organic

growth as we continued to expand our market penetration with pharma manufacturers and other customers, partially offset

by a $2.4 million decrease in revenue contribution from vitaCare Prescription Services, Inc., a solution we de-prioritized in

connection with the restructuring of our pharma manufacturer solutions offering in the second half of 2023. We expect

pharma manufacturer solutions to continue to grow as a percentage of total revenue in the near to medium term as we

continue to scale and expand available services, capabilities and platforms of our pharma manufacturer solutions offering.

Costs and Operating Expenses

Cost of revenue, exclusive of depreciation and amortization

Cost of revenue decreased $4.2 million, or 25%, year-over-year, primarily driven by a $3.8 million decrease in

outsourced and in-house personnel and other costs related to consumer support and a $2.1 million decrease in allocated

overhead, both due to lower average headcount principally as a result of the restructuring of our pharma manufacturer

solutions offering in the second half of 2023. The impact from these drivers was partially offset by a $1.1 million increase in

processing fees.

Product development and technology

Product development and technology expenses decreased $1.9 million, or 6%, year-over-year, primarily driven by a

$3.0 million decrease in payroll and related costs largely due to higher capitalization of certain qualified costs related to the

development of internal-use software and lower average headcount.

Sales and marketing

Sales and marketing expenses increased $11.4 million, or 15%, year-over-year, primarily driven by a $10.1 million

increase in advertising expenses, a $7.3 million increase in payroll and related costs, principally from higher stock-based

compensation expense due to changes in our employee composition, and a $2.7 million increase in third-party marketing

expenses. The impact from these drivers was partially offset by a $9.7 million decrease in promotional expenses

substantially in the form of consumer discounts, whereas beginning in December 2023 these are recognized as a reduction

of revenue as described in our discussion and analysis of prescription transactions revenue above.

General and administrative

General and administrative expenses increased $11.5 million, or 39%, year-over-year, primarily driven by a net

$13.0 million estimated legal settlement loss recognized in the first quarter of 2024 with respect to an ongoing litigation (see

Note 7 to our condensed consolidated financial statements) and a $3.3 million increase in payroll and related expenses,

principally from equity awards granted to our Interim Chief Executive Officer in the second quarter of 2023 and first quarter

of 2024. The impact from these drivers was partially offset by a $4.5 million decrease in stock-based compensation expense

related to awards granted to our Co-Founders in 2020.

Depreciation and amortization

Depreciation and amortization expenses increased $1.0 million, or 7%, year-over-year, primarily driven by higher

amortization related to capitalized software due to higher capitalization costs for platform improvements and the introduction

of new products and features. The year-over-year change in depreciation and amortization was partially offset by lower

amortization related to certain intangible assets that were fully amortized in 2023 in connection with the restructuring of our

pharma manufacturer solutions offering in the second half of 2023.

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Other Expense

Other expense decreased by $1.8 million year-over-year, due to an impairment loss on one of our minority equity

interest investments recognized in the first quarter of 2023.

Interest Expense

Interest expense increased by $1.5 million, or 11%, year-over-year, primarily due to higher interest rates, partially offset

by lower average debt balances.

Income Taxes

For the three months ended March 31, 2024 and 2023, we had income tax expense of $1.3 million and $6.9 million,

respectively, and an effective income tax rate of 444.4% and 191.5%, respectively. The year-over-year decrease in our

income tax expense was primarily driven by a decrease in our estimated annual effective income tax rate due to the release

of our valuation allowance in the second quarter of 2023 and a decrease in our tax effects from our equity awards.

Liquidity and Capital Resources

Since our inception, we have financed our operations primarily through net cash provided by operating activities, equity

issuances, and borrowings under our long-term debt arrangements. Our principal sources of liquidity are our cash and cash

equivalents and borrowings available under our $100.0 million secured revolving credit facility which expires on July 11,

2025. As of March 31, 2024, we had cash and cash equivalents of $533.3 million and $91.7 million available under our

revolving credit facility. For additional information regarding our revolving credit facility and our term loan, see Note 6 to our

condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

As of March 31, 2024, there were no material changes to our primary short-term and long-term requirements for liquidity

and capital or to our contractual commitments as disclosed in Part II, Item 7, "Management's Discussion and Analysis of

Financial Condition and Results of Operations" of our 2023 10-K. Based on our current conditions, we believe that our net

cash provided by operating activities and cash on hand will be adequate to meet our operating, investing and financing

needs for at least the next twelve months from the date of the issuance of the accompanying unaudited condensed

consolidated financial statements. Our future capital requirements will depend on many factors, including the growth of our

business, the timing and extent of investments, sales and marketing activities, and many other factors as described in Part I,

There have been no material changes in our market risk from the disclosure included in Part II, Item 7A, “Quantitative

and Qualitative Disclosures About Market Risk” of our 2023 10-K.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, evaluated, as of

the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and

procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on that evaluation, our principal

executive officer and principal financial officer concluded that, as of March 31, 2024, our disclosure controls and procedures

were effective.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)

under the Exchange Act) during the three months ended March 31, 2024 that have materially affected, or are reasonably

likely to materially affect, our internal control over financial reporting.

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If necessary, we may borrow funds under our revolving credit facility to finance our liquidity requirements, subject to

customary borrowing conditions. To the extent additional funds are necessary to meet our long-term liquidity needs as we

continue to execute our business strategy, we anticipate that they will be obtained through the incurrence of additional

indebtedness, additional equity financings or a combination of these potential sources of funds; however, such financing

may not be available on favorable terms, or at all. If we are unable to raise additional funds when or on the terms desired,

our business, financial condition and results of operations could be adversely affected.

Holding Company Status

GoodRx Holdings, Inc. is a holding company that does not conduct any business operations of its own. As a result,

GoodRx Holdings, Inc. is largely dependent upon cash distributions and other transfers from its subsidiaries to meet its

obligations and to make future dividend payments, if any. Our existing debt arrangements contain covenants restricting

payments of dividends by our subsidiaries, including GoodRx, Inc., unless certain conditions are met. These covenants

provide for certain exceptions for specific types of payments. Based on these restrictions, all of the net assets of GoodRx,

Inc. were restricted pursuant to the terms of our debt arrangements as of March 31, 2024. Since the restricted net assets of

GoodRx, Inc. and its subsidiaries exceed 25% of our consolidated net assets, in accordance with Regulation S-X, see Note

18 to our consolidated financial statements included in our 2023 10-K for the condensed parent company financial

information of GoodRx Holdings, Inc.

Cash Flows

(in thousands)

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Net cash provided by operating activities

Net cash provided by operating activities consist of net loss or income adjusted for certain non-cash items and changes

in assets and liabilities. The $10.3 million year-over-year increase in net cash provided by operations was primarily due to a

$9.4 million net increase in cash inflow from changes in operating assets and liabilities principally driven by the timing of

payments of prepaid services and accounts payable, income tax payments and refunds as well as collections of accounts

receivable.

Net cash used in investing activities

Net cash used in investing activities generally consist of cash used for software development costs and capital

expenditures, and may also include cash used for acquisitions and investments that we may make from time to time. The

$6.3 million year-over-year increase in net cash used in investing activities was primarily driven by a $6.1 million increase in

cash paid for software development.

Net cash used in financing activities

Net cash used in financing activities primarily consist of payments related to our debt arrangements, repurchases of our

Class A common stock, and net share settlement of equity awards, partially offset by proceeds from exercise of stock

options. The $146.9 million year-over-year increase in net cash used in financing activities was primarily driven by a $143.7

million increase in payments for repurchases of our Class A common stock.

Recent Accounting Pronouncements

Refer to Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on

Form 10-Q.

Critical Accounting Policies and Estimates

During the three months ended March 31, 2024, there have been no significant changes to our critical accounting

policies and estimates compared with those disclosed in Part II, Item 7, “Management’s Discussion and Analysis of Financial

Condition and Results of Operations” of our 2023 10-K.