GoodRx Holdings, Inc.: Form 10-Q for the period ended Jun 30, 2024

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

our unaudited 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 June 30, 2024 as compared to the same period of 2023:

• Revenue and Adjusted Revenue increased 6% to $200.6 million from $189.7 million;
• Net income and net income margin were $6.7 million and 3.3%, respectively, compared to net income and net

income margin of $58.8 million and 31.0%, respectively; and

• Adjusted EBITDA and Adjusted EBITDA Margin were $65.4 million and 32.6%, respectively, compared to $53.5

million and 28.2%, respectively.

For the six months ended June 30, 2024 as compared to the same period of 2023:

• Revenue and Adjusted Revenue increased 7% to $398.5 million from $373.7 million;
• Net income and net income margin were $5.7 million and 1.4%, respectively, compared to net income and net

income margin of $55.5 million and 14.9%, respectively; and

• Adjusted EBITDA and Adjusted EBITDA Margin were $128.2 million and 32.2%, respectively, compared to

$106.7 million and 28.6%, respectively.

Revenue, net income and net income 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.

Recently, we have seen rapid changes in the U.S. retail pharmacy landscape with Rite Aid's store closures in addition to

announcements of store closures and reduction of footprint from various other retail pharmacies, including Walgreens.

Future store closures and reduction of footprint from retail pharmacies are expected to have an immediate adverse impact

on our prescription volume and prescription transactions revenue. However, we believe this impact to be largely transient as

we expect prescription volume to migrate to other in-network pharmacies in the near term. As an extension of the changing

retail pharmacy landscape, we expect heightened renegotiations between pharmacies and PBMs may occur as a result of

the pharmacies' increased focus on rationalizing of their spending, which in turn may have an impact on our prescription

transactions revenue.

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Recent Development

On July 10, 2024, we entered into the Sixth Amendment to First Lien Credit Agreement. See Note 6 to our condensed

consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

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 second quarter of 2024 with over 7 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 June 30, 2024 and subscribers to our subscription plans as of June 30, 2024.

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, which sunset in July 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.

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

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

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income 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 and losses on office

lease terminations 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) Loss on operating lease assets include losses incurred relating to the abandonment or sublease of certain leased

office spaces.

(6) 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

Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023

The following table sets forth our results of operations for the three months ended June 30, 2024 and 2023:

(dollars in thousands)

Revenue

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

Prescription transactions revenue increased $10.2 million, or 7%, year-over-year, primarily as a result of an 8% 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. We expect the recently announced Rite Aid's store closures to have a mid-single-digit

million dollar impact on prescription transactions revenue in the second half of 2024.

Subscription revenue decreased $1.9 million, or 8%, year-over-year, primarily driven by a decrease in the number of

subscription plans due to the sunset of Kroger Savings with 696 thousand subscription plans as of June 30, 2024 compared

to 969 thousand as of June 30, 2023. Given the subscription fee is higher for Gold relative to Kroger Savings, the sunset of

Kroger Savings resulted in a higher year-over-year decline in subscription plans relative to subscription revenue.

Pharma manufacturer solutions revenue increased $2.2 million, or 9%, 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 $2.7 million decrease in revenue contribution from vitaCare Prescription Services, Inc. ("vitaCare"), 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.

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Costs and Operating Expenses

Cost of revenue, exclusive of depreciation and amortization

Cost of revenue decreased $4.5 million, or 27%, year-over-year, primarily driven by a $4.1 million decrease in

outsourced and in-house personnel and other costs related to consumer support and a $1.7 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 $1.0 million increase in

processing fees.

Product development and technology

Product development and technology expenses decreased $0.4 million, or 1%, year-over-year, primarily driven by a

$2.3 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. The impact of this driver was partially offset by a $1.4

million increase in third-party services and contractors associated with product development and allocated overhead.

Sales and marketing

Sales and marketing expenses increased $16.0 million, or 21%, year-over-year, primarily driven by a $14.5 million

increase in payroll and related costs, principally from higher stock-based compensation expense due to a reversal

recognized in the second quarter of 2023 of previously recognized stock-based compensation expense as certain

performance milestones were no longer probable of being met, in addition to changes in our employee composition. The

year-over-year change was also driven by a $4.8 million increase in advertising expenses and a $2.5 million increase in

third-party marketing expenses. The impact from these drivers was partially offset by a $6.6 million decrease in promotional

expenses substantially in the form of consumer discounts. Beginning in December 2023, consumer discounts are

recognized as a reduction of revenue 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.

General and administrative

General and administrative expenses decreased $2.6 million, or 9%, year-over-year, primarily driven by a $4.2 million

decrease in stock-based compensation expense related to awards granted to our Co-Founders in 2020, partially offset by a

$1.0 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.

Depreciation and amortization

Depreciation and amortization expenses increased $0.9 million, or 5%, 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 impact from this driver was partially offset by lower amortization related to acquired

intangible assets as certain intangible assets were fully amortized in 2023 in connection with the restructuring of our pharma

manufacturer solutions offering in the second half of 2023.

Interest Income

Interest income decreased by $1.5 million year-over-year, primarily due to lower average balance of cash equivalents

held in U.S. treasury securities money market funds, partially offset by higher interest rates.

Interest Expense

Interest expense increased by $0.5 million, or 4%, year-over-year, primarily due to higher interest rates, partially offset

by lower average debt balances.

Income Taxes

For the three months ended June 30, 2024, we had income tax expense of $5.0 million compared to an income tax

benefit of $46.7 million for the three months ended June 30, 2023 and an effective income tax rate of 42.5% and (387.1%),

respectively. The year-over-year change in our income taxes was primarily driven by the release of our valuation allowance

against the majority of our net deferred tax assets recorded as a discrete tax benefit in the second quarter of 2023, partially

offset by a decrease in our tax effects from non-deductible officers’ stock-based compensation expense and our equity

awards. For information regarding our valuation allowance analysis in 2023, see Part II, Item 7, "Management’s Discussion

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and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—Income Taxes

• Valuation of Deferred Tax Assets" included in our 2023 10-K.

Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023

The following table sets forth our results of operations for the six months ended June 30, 2024 and 2023:

(dollars in thousands)

Revenue

The year-over-year changes in prescription transactions revenue, subscription revenue and pharma manufacturer

solutions revenue were driven by the same factors described above for the three months ended June 30, 2024 compared to

the same period of 2023.

For prescription transactions revenue, our Monthly Active Consumers increased 9% on a year-to-date basis compared

to the same period of 2023.

For pharma manufacturer solutions revenue, revenue contribution by vitaCare decreased $5.1 million on a year-to-date

basis compared to the same period of 2023 as the solution was de-prioritized in the second half of 2023. For expected

revenue trends, see our discussion and analysis above for the three months ended June 30, 2024 compared to the same

period of 2023.

Costs and Operating Expenses

Cost of revenue, exclusive of depreciation and amortization

Cost of revenue decreased $8.7 million, or 26%, year-over-year, primarily driven by a $7.9 million decrease in

outsourced and in-house personnel and other costs related to consumer support and a $3.8 million decrease in allocated

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

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solutions offering in the second half of 2023. The impact from these drivers was partially offset by a $2.1 million increase in

processing fees.

Product development and technology

Product development and technology expenses decreased $2.3 million, or 4%, year-over-year, primarily driven by a

$5.3 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. The impact of this driver was partially offset by a $2.2

million increase in third-party services and contractors associated with product development and allocated overhead.

Sales and marketing

Sales and marketing expenses increased $27.5 million, or 18%, year-over-year, primarily driven by a $21.8 million

increase in payroll and related costs, principally due to higher average headcount and higher stock-based compensation

expense due to a reversal of previously recognized stock-based compensation expense recorded in the second quarter of

2023 as certain performance milestones were no longer probable of being met in addition to changes in our employee

composition. The year-over-year change was also driven by a $14.9 million increase in advertising expenses and a $5.2

million increase in third-party marketing expenses. The impact from these drivers was partially offset by a $16.3 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 above.

General and administrative

General and administrative expenses increased $8.9 million, or 15%, 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 included elsewhere in this Quarterly Report on Form 10-Q) and a

$4.3 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 $8.7

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 $1.9 million, or 6%, 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 impact from this driver was partially offset by lower amortization related to acquired

intangible assets as certain intangible assets were fully amortized in 2023 in connection with the restructuring of our pharma

manufacturer solutions offering in the second half of 2023.

Other Expense

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

investments recognized in the first quarter of 2023.

Interest Income

Interest income decreased by $1.2 million year-over-year, primarily due to lower average balance of cash equivalents

held in U.S. treasury securities money market funds, partially offset by higher interest rates.

Interest Expense

Interest expense increased by $2.0 million, or 7%, year-over-year, primarily due to higher interest rates, partially offset

by lower average debt balances.

Income Taxes

For the six months ended June 30, 2024, we had an income tax expense of $6.3 million compared to a $39.8 million

income tax benefit for the six months ended June 30, 2023 and an effective income tax rate of 52.4% and (254.3%),

respectively. The year-over-year change in our income taxes was primarily driven by the release of our valuation allowance

against the majority of our net deferred tax assets recorded as a discrete tax benefit in the second quarter of 2023, partially

offset by a decrease in our tax effects from non-deductible officers’ stock-based compensation expense and our equity

awards.

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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. As described in Note 6 to our

condensed consolidated financial statements, in July 2024, we extended the maturity date on $88.0 million of our $100.0

million revolving credit facility to April 10, 2029, with the remaining $12.0 million maturing on July 11, 2025. As of June 30,

2024, we had cash and cash equivalents of $524.9 million and $91.7 million available under our revolving credit facility.

As of June 30, 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.

In July 2024, we amended our First Lien Credit Agreement to, among other things, establish a new $500.0 million term

loan with an original issue discount at 99.0% of the principal amount thereof. This new term loan requires quarterly principal

payments of $1.3 million, with the first payment payable at the end of March 2025, and any remaining principal balance due

upon maturity on July 10, 2029. Concurrent with the closing of the amendment, we repaid outstanding principal and accrued

interest under our then-existing term loan in full as well as all premiums, fees and expenses in connection with the

transactions using all of the proceeds from the new term loan and $167.2 million of cash on hand. For additional information,

see Note 6 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

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, Item 1A, "Risk Factors" of our 2023 10-K.

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 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 June 30, 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 income adjusted for certain non-cash items and changes in

assets and liabilities. The $9.9 million year-over-year decrease in net cash provided by operations was due to a $49.8 million

decrease in net income, offset by an increase of $70.8 million in non-cash adjustments. This net increase in net income after

adjusting for non-cash items was offset by a $30.9 million net increase in cash outflow from changes in operating assets and

liabilities. The changes in non-cash adjustments were primarily driven by changes in deferred income tax as a result of the

discrete tax benefit recognized related to the release of our valuation allowance in the second quarter of 2023 and an

increase in stock-based compensation. Changes in operating assets and liabilities were principally driven by the timing of

payments of prepaid services, accounts payable and accrued expenses, 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

$8.6 million year-over-year increase in net cash used in investing activities was primarily driven by a $8.4 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 and our employee stock purchase plan. The $133.8 million year-over-year increase in net cash used in financing

activities was primarily driven by a $134.8 million increase in payments for repurchases of our Class A common stock and a

$7.9 million increase in employee taxes paid related to net share settlement of equity awards, partially offset by a $10.5

million increase in proceeds from exercise of stock options.

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 June 30, 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.

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 June 30, 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 June 30, 2024 that have materially affected, or are reasonably

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

22

There have been no material changes to the risk factors previously disclosed in our 2023 10-K. For a discussion of

potential risks and uncertainties related to us, see the information included in Part I, Item 1A, "Risk Factors" of our 2023 10-

K.