10-Q
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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 September 30, 2021

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 November 5, 2021, the registrant had 80,698,017 shares of Class A common stock, $0.0001 par value per share, and 318,182,706 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 (the “Securities Act”), 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, stock compensation, 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 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 our material weaknesses in our internal control over financial reporting and any future material weaknesses; 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; management’s ability to manage our transition to being a public company; 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; 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 section entitled “Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 (“2020 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.

 


 

GOODRX HOLDINGS, INC.

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 Changes in Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

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

19

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

35

Item 4.

Controls and Procedures

35

 

 

 

PART II.

OTHER INFORMATION

 

Item 1.

Legal Proceedings

38

Item 1A.

Risk Factors

38

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

40

Item 3.

Defaults Upon Senior Securities

40

Item 4.

Mine Safety Disclosures

40

Item 5.

Other Information

40

Item 6.

Exhibits

41

 

Signatures

42

 

 

 


 

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

 

GoodRx Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

 

(in thousands, except par values)

 

September 30,
2021

 

 

December 31,
2020

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

912,023

 

 

$

968,691

 

Restricted cash

 

 

 

 

 

2,900

 

Accounts receivable, net

 

 

98,511

 

 

 

68,729

 

Prepaid expenses and other current assets

 

 

41,006

 

 

 

46,048

 

Total current assets

 

 

1,051,540

 

 

 

1,086,368

 

Property and equipment, net

 

 

21,837

 

 

 

23,057

 

Goodwill

 

 

329,696

 

 

 

261,116

 

Intangible assets, net

 

 

94,077

 

 

 

36,919

 

Capitalized software, net

 

 

39,254

 

 

 

19,800

 

Operating lease right-of-use assets

 

 

25,969

 

 

 

27,712

 

Deferred tax assets, net

 

 

45,824

 

 

 

13,117

 

Other assets

 

 

6,168

 

 

 

2,025

 

Total assets

 

$

1,614,365

 

 

$

1,470,114

 

Liabilities and stockholders' equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

17,279

 

 

$

10,291

 

Accrued expenses and other current liabilities

 

 

42,447

 

 

 

37,692

 

Current portion of debt

 

 

7,029

 

 

 

7,029

 

Operating lease liabilities, current

 

 

5,926

 

 

 

4,539

 

Total current liabilities

 

 

72,681

 

 

 

59,551

 

Debt, net

 

 

656,868

 

 

 

659,888

 

Operating lease liabilities, net of current portion

 

 

32,033

 

 

 

33,467

 

Other liabilities

 

 

6,387

 

 

 

5,849

 

Total liabilities

 

 

767,969

 

 

 

758,755

 

Commitments and contingencies (Note 8)

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

Preferred stock, $0.0001 par value; 50,000 shares
   authorized and
zero shares issued and outstanding
   at September 30, 2021 and December 31, 2020

 

 

 

 

 

 

Common stock, $0.0001 par value; Class A: 2,000,000 shares
   authorized,
78,550 and 63,071 shares issued and outstanding
   at September 30, 2021 and December 31, 2020, respectively; and
   Class B:
1,000,000 shares authorized, 320,131 and 328,589 
   shares issued and outstanding at September 30, 2021 and
   December 31, 2020, respectively

 

 

39

 

 

 

39

 

Additional paid-in capital

 

 

2,222,150

 

 

 

2,101,773

 

Accumulated deficit

 

 

(1,375,793

)

 

 

(1,390,453

)

Total stockholders' equity

 

 

846,396

 

 

 

711,359

 

Total liabilities and stockholders' equity

 

$

1,614,365

 

 

$

1,470,114

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

1


 

GoodRx Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

(in thousands, except per share amounts)

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Revenue

 

$

195,102

 

 

$

140,453

 

 

$

532,168

 

 

$

397,156

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

11,271

 

 

 

7,540

 

 

 

32,789

 

 

 

20,383

 

Product development and technology

 

 

35,073

 

 

 

15,846

 

 

 

90,800

 

 

 

38,133

 

Sales and marketing

 

 

95,651

 

 

 

65,113

 

 

 

263,726

 

 

 

180,195

 

General and administrative

 

 

35,947

 

 

 

108,479

 

 

 

119,312

 

 

 

120,698

 

Depreciation and amortization

 

 

10,161

 

 

 

5,160

 

 

 

23,891

 

 

 

14,026

 

Total costs and operating expenses

 

 

188,103

 

 

 

202,138

 

 

 

530,518

 

 

 

373,435

 

Operating income (loss)

 

 

6,999

 

 

 

(61,685

)

 

 

1,650

 

 

 

23,721

 

Other expense, net:

 

 

 

 

 

 

 

 

 

 

 

 

Other expense (income), net

 

 

 

 

 

1

 

 

 

 

 

 

(20

)

Interest income

 

 

(13

)

 

 

(24

)

 

 

(42

)

 

 

(140

)

Interest expense

 

 

5,928

 

 

 

6,264

 

 

 

17,739

 

 

 

21,697

 

Total other expense, net

 

 

5,915

 

 

 

6,241

 

 

 

17,697

 

 

 

21,537

 

Income (loss) before income taxes

 

 

1,084

 

 

 

(67,926

)

 

 

(16,047

)

 

 

2,184

 

Income tax (expense) benefit

 

 

(19,153

)

 

 

17,894

 

 

 

30,707

 

 

 

2,467

 

Net (loss) income

 

$

(18,069

)

 

$

(50,032

)

 

$

14,660

 

 

$

4,651

 

Net (loss) income attributable to common stockholders:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(18,069

)

 

$

(50,032

)

 

$

14,660

 

 

$

3,045

 

Diluted

 

$

(18,069

)

 

$

(50,032

)

 

$

14,660

 

 

$

3,092

 

(Loss) earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.04

)

 

$

(0.21

)

 

$

0.04

 

 

$

0.01

 

Diluted

 

$

(0.04

)

 

$

(0.21

)

 

$

0.03

 

 

$

0.01

 

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

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

411,223

 

 

 

241,061

 

 

 

408,604

 

 

 

233,727

 

Diluted

 

 

411,223

 

 

 

241,061

 

 

 

429,695

 

 

 

244,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation included in costs and
   operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

$

238

 

 

$

57

 

 

$

540

 

 

$

98

 

Product development and technology

 

 

10,333

 

 

 

2,958

 

 

 

26,656

 

 

 

4,772

 

Sales and marketing

 

 

5,638

 

 

 

4,284

 

 

 

16,158

 

 

 

5,762

 

General and administrative

 

 

23,771

 

 

 

99,574

 

 

 

83,828

 

 

 

100,572

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

2


 

GoodRx Holdings, Inc.

Condensed Consolidated Statements of Changes in Redeemable Convertible

Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited)

 

 

 

 Redeemable
Convertible Preferred Stock

 

 

 

 Class A and Class B
Common Stock

 

 

 Additional
Paid-in

 

 

 Accumulated

 

 

 Total
Stockholders'

 

(in thousands)

 

Shares

 

 

Amount

 

 

 

 Shares

 

 

 Amount

 

 

 Capital

 

 

 Deficit

 

 

 Equity

 

Balances 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 for tax obligations
   and net settlement

 

 

 

 

 

 

 

 

 

(324

)

 

 

 

 

 

(14,902

)

 

 

 

 

 

(14,902

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,668

 

 

 

1,668

 

Balances 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 for tax obligations
   and net settlement

 

 

 

 

 

 

 

 

 

(304

)

 

 

 

 

 

(11,383

)

 

 

 

 

 

(11,383

)

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,061

 

 

 

31,061

 

Balances at June 30, 2021

 

 

 

 

$

 

 

 

 

395,393

 

 

$

39

 

 

$

2,182,079

 

 

$

(1,357,724

)

 

$

824,394

 

Stock options exercised

 

 

 

 

 

 

 

 

 

2,733

 

 

 

 

 

 

14,135

 

 

 

 

 

 

14,135

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42,593

 

 

 

 

 

 

42,593

 

Vesting of restricted stock units

 

 

 

 

 

 

 

 

 

985

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock withheld for tax obligations
   and net settlement

 

 

 

 

 

 

 

 

 

(430

)

 

 

 

 

 

(16,657

)

 

 

 

 

 

(16,657

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,069

)

 

 

(18,069

)

Balances at September 30, 2021

 

 

 

 

$

 

 

 

 

398,681

 

 

$

39

 

 

$

2,222,150

 

 

$

(1,375,793

)

 

$

846,396

 

 

See accompanying Notes to Condensed Consolidated Financial Statements.

 

3


 

GoodRx Holdings, Inc.

Condensed Consolidated Statements of Changes in Redeemable Convertible

Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited)

 

 

 

 Redeemable
Convertible Preferred Stock

 

 

 

Common Stock

 

 

 Class A and Class B
Common Stock

 

 

 Additional
Paid-in

 

 

 Accumulated

 

 

 Total
Stockholders'

 

(in thousands)

 

Shares

 

 

Amount

 

 

 

Shares

 

 

Amount

 

 

 Shares

 

 

 Amount

 

 

 Capital

 

 

 Deficit

 

 

 Equity (Deficit)

 

Balances at December 31, 2019

 

 

126,046

 

 

$

737,009

 

 

 

 

229,750

 

 

$

460

 

 

 

 

 

$

 

 

$

8,788

 

 

$

(1,096,830

)

 

$

(1,087,582

)

Stock options exercised

 

 

 

 

 

 

 

 

 

467

 

 

 

1

 

 

 

 

 

 

 

 

 

691

 

 

 

 

 

 

692

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,501

 

 

 

 

 

 

2,501

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,346

 

 

 

27,346

 

Balances at March 31, 2020

 

 

126,046

 

 

$

737,009

 

 

 

 

230,217

 

 

$

461

 

 

 

 

 

$

 

 

$

11,980

 

 

$

(1,069,484

)

 

$

(1,057,043

)

Stock options exercised

 

 

 

 

 

 

 

 

 

222

 

 

 

1

 

 

 

 

 

 

 

 

 

530

 

 

 

 

 

 

531

 

Stock-based compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,440

 

 

 

 

 

 

2,440

 

Net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,337

 

 

 

27,337

 

Balances at June 30, 2020

 

 

126,046

 

 

$

737,009

 

 

 

 

230,439

 

 

$

462

 

 

 

 

 

$

 

 

$

14,950

 

 

$

(1,042,147