GoodRx(GDRX) - 2024 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section presents the unaudited condensed consolidated financial statements and management's financial analysis Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, cash flows, and accompanying notes Condensed Consolidated Balance Sheets Total assets decreased to $1,475.4 million at June 30, 2024, driven by reduced cash, while liabilities and equity also declined | Metric | Dec 31, 2023 (in thousands) | Jun 30, 2024 (in thousands) | Change (in thousands) | | :------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Cash and cash equivalents | $672,296 | $524,903 | $(147,393) | | Total current assets | $872,790 | $750,555 | $(122,235) | | Total assets | $1,588,800 | $1,475,390 | $(113,410) | | Total current liabilities | $122,559 | $102,473 | $(20,086) | | Total liabilities | $826,842 | $805,991 | $(20,851) | | Total stockholders' equity | $761,958 | $669,399 | $(92,559) | Condensed Consolidated Statements of Operations Q2 2024 revenue increased 5.8% YoY to $200.6 million, but net income significantly decreased 88.6% YoY to $6.7 million due to a prior-year tax benefit | Metric (in thousands) | Q2 2024 | Q2 2023 | YoY Change ($) | YoY Change (%) | YTD Q2 2024 | YTD Q2 2023 | YTD Change ($) | YTD Change (%) | | :-------------------- | :---------- | :---------- | :------------- | :------------- | :---------- | :---------- | :------------- | :------------- | | Revenue | $200,610 | $189,677 | $10,933 | 5.8% | $398,490 | $373,663 | $24,827 | 6.6% | | Operating income | $19,878 | $18,308 | $1,570 | 8.6% | $27,259 | $29,611 | $(2,352) | (7.9%) | | Net income | $6,694 | $58,786 | $(52,092) | (88.6%) | $5,685 | $55,496 | $(49,811) | (89.8%) | | Basic EPS | $0.02 | $0.14 | $(0.12) | (85.7%) | $0.01 | $0.13 | $(0.12) | (92.3%) | | Diluted EPS | $0.02 | $0.14 | $(0.12) | (85.7%) | $0.01 | $0.13 | $(0.12) | (92.3%) | Condensed Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased to $669.4 million at June 30, 2024, primarily due to $154.8 million in stock repurchases and a Q1 net loss | Metric (in thousands) | Dec 31, 2023 | Mar 31, 2024 | Jun 30, 2024 | | :--------------------------- | :----------- | :----------- | :----------- | | Total Stockholders' Equity | $761,958 | $631,069 | $669,399 | | Repurchases of Class A stock | — | $(154,814) | $290 | | Stock-based compensation | — | $28,891 | $30,885 | | Net income (loss) | — | $(1,009) | $6,694 | Condensed Consolidated Statements of Cash Flows YTD Q2 2024 operating cash flow decreased by $9.9 million, investing cash flow increased by $8.6 million, and financing cash flow increased by $133.8 million due to stock repurchases | Metric (in thousands) | YTD Q2 2024 | YTD Q2 2023 | YoY Change ($) | | :------------------------------------ | :---------- | :---------- | :------------- | | Net cash provided by operating activities | $52,287 | $62,154 | $(9,867) | | Net cash used in investing activities | $(37,844) | $(29,247) | $(8,597) | | Net cash used in financing activities | $(161,836) | $(28,084) | $(133,752) | | Net change in cash and cash equivalents | $(147,393) | $4,823 | $(152,216) | | Cash and cash equivalents, End of period | $524,903 | $761,988 | $(237,085) | Notes to Condensed Consolidated Financial Statements These notes provide detailed explanations for the financial statements, covering accounting policies, debt, revenue, equity, and subsequent events 1. Description of Business GoodRx provides a prescription drug price comparison platform, generating revenue primarily from PBMs, pharma solutions, subscriptions, and telehealth - GoodRx operates a price comparison platform for prescription drugs, providing negotiated prices to consumers for free[20] - Revenue is primarily earned from PBMs, with additional offerings including pharma manufacturer solutions, subscriptions, and telehealth services[20] 2. Summary of Significant Accounting Policies Financial statements adhere to GAAP and SEC rules, with no material policy changes in Q2 2024, and the company evaluates new accounting standards - Financial statements conform to GAAP and SEC rules, with no material changes in accounting policies during Q2 2024[21][22][23] - Estimates are used, and actual results may differ[23] - The company faces credit risk concentrations in cash, cash equivalents, and accounts receivable[24] - One customer accounted for 11% of revenue in Q2 2024 and 14% of accounts receivable at June 30, 2024[24][26] - GoodRx holds minority equity interests in privately-held companies, valued at $15.0 million as of June 30, 2024 and December 31, 2023[27] - An impairment loss of $1.8 million was recognized in Q1 2023 due to a decline in one investee's financial condition[27] - The company is evaluating the impact of new FASB ASUs 2023-09 (Income Taxes) and 2023-07 (Segment Reporting), effective for fiscal years beginning after December 15, 2024, and December 15, 2023, respectively[28] 3. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets increased to $63.9 million at June 30, 2024, driven by higher insurance recovery and income taxes receivable | (in thousands) | June 30, 2024 | December 31, 2023 | | :----------------------------------- | :------------ | :---------------- | | Insurance recovery receivable | $14,900 | $12,900 | | Income taxes receivable | $12,904 | $3,537 | | Reimbursable third-party payments | $14,186 | $15,481 | | Other prepaid expenses and other current assets | $21,888 | $24,968 | | Total prepaid expenses and other current assets | $63,878 | $56,886 | 4. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities increased to $73.2 million at June 30, 2024, mainly due to a significant rise in accrued legal settlement | (in thousands) | June 30, 2024 | December 31, 2023 | | :----------------------------------- | :------------ | :---------------- | | Accrued bonus and other payroll related | $17,743 | $30,401 | | Accrued legal settlement | $27,500 | $12,500 | | Accrued marketing | $13,607 | $10,650 | | Deferred revenue | $5,988 | $7,105 | | Other accrued expenses | $8,334 | $10,673 | | Total accrued expenses and other current liabilities | $73,172 | $71,329 | - Substantially all deferred revenue at June 30, 2024, is expected to be recognized within the subsequent twelve months[33] 5. Income Taxes The effective income tax rate for Q2 2024 was 42.5%, a significant change from Q2 2023's (387.1%) due to a prior-year valuation allowance release | Metric | Q2 2024 | Q2 2023 | YTD Q2 2024 | YTD Q2 2023 | | :---------------------- | :------ | :------ | :---------- | :---------- | | Effective income tax rate | 42.5% | (387.1%) | 52.4% | (254.3%) | - The primary drivers for the effective tax rate differences from the federal statutory rate include non-deductible officers' stock-based compensation, state income taxes, R&D tax credits, and tax effects from equity awards[34] 6. Debt The company had a $700.0 million term loan and $100.0 million revolving credit facility as of June 30, 2024, and refinanced debt post-period | Debt Metric (in thousands) | June 30, 2024 | December 31, 2023 | | :------------------------------------ | :------------ | :---------------- | | Principal balance First Lien Term Loan Facility | $656,524 | $661,797 | | Effective interest rate (Q2) | 8.75% | 8.37% | | Effective interest rate (YTD Q2) | 8.76% | 8.09% | | Revolving Credit Facility outstanding | $0 | $0 | | Letters of credit outstanding | $8,300 | $9,200 | - On July 10, 2024, GoodRx established a new $500.0 million term loan maturing July 10, 2029, and extended $88.0 million of its $100.0 million Revolving Credit Facility to April 10, 2029[36] - The previous term loan was fully repaid using proceeds from the new loan and $167.2 million cash on hand[36][37] 7. Commitments and Contingencies GoodRx faces multiple class action lawsuits regarding consumer privacy, with an estimated $28.0 million probable loss accrued for settlements - GoodRx faces multiple class action lawsuits regarding consumer privacy and data sharing[38] - An estimated probable loss of $28.0 million for legal settlements was determined as of March 31, 2024, and June 30, 2024, with $27.5 million accrued in current liabilities[39][40] - The company is vigorously defending against a securities class action and a derivative lawsuit related to a "grocer issue" in Q1 2022, with no loss accrued as it's not probable or estimable[40] - GoodRx received an arbitration award, including damages and a permanent injunction, against Famulus Health, LLC, with court confirmation pending[40] 8. Revenue Total revenue increased 6% YoY to $200.6 million in Q2 2024, driven by prescription transactions, while subscription revenue declined | Revenue Stream (in thousands) | Q2 2024 | % of Total (Q2 2024) | Q2 2023 | % of Total (Q2 2023) | YoY Change ($) | YoY Change (%) | | :---------------------------- | :---------- | :------------------- | :---------- | :------------------- | :------------- | :------------- | | Prescription transactions | $146,748 | 73% | $136,540 | 72% | $10,208 | 7% | | Subscription | $21,953 | 11% | $23,878 | 13% | $(1,925) | (8%) | | Pharma manufacturer solutions | $26,504 | 13% | $24,330 | 13% | $2,174 | 9% | | Other | $5,405 | 3% | $4,929 | 3% | $476 | 10% | | Total Revenue | $200,610 | | $189,677 | | | | | Revenue Stream (in thousands) | YTD Q2 2024 | % of Total (YTD Q2 2024) | YTD Q2 2023 | % of Total (YTD Q2 2023) | YoY Change ($) | YoY Change (%) | | :---------------------------- | :---------- | :----------------------- | :---------- | :----------------------- | :------------- | :------------- | | Prescription transactions | $292,143 | 73% | $271,447 | 73% | $20,696 | 8% | | Subscription | $44,554 | 11% | $48,021 | 13% | $(3,467) | (7%) | | Pharma manufacturer solutions | $51,013 | 13% | $44,765 | 12% | $6,248 | 14% | | Other | $10,780 | 3% | $9,430 | 3% | $1,350 | 14% | | Total Revenue | $398,490 | | $373,663 | | | | 9. Stockholders' Equity A new $450.0 million stock repurchase program was approved in February 2024, with $295.5 million remaining, and 20.9 million shares repurchased in March - A new $450.0 million stock repurchase program for Class A common stock was approved in February 2024, with $295.5 million remaining as of June 30, 2024[43] - In March 2024, 20.9 million shares of Class A common stock were repurchased from Spectrum and Francisco Partners for $151.4 million[43] | (in thousands) | Q2 2024 | Q2 2023 | YTD Q2 2024 | YTD Q2 2023 | | :---------------------------- | :------ | :------ | :---------- | :---------- | | Number of shares repurchased | — | 1,663 | 21,329 | 3,233 | | Cost of shares repurchased ($) | $(290) | $8,920 | $154,524 | $18,437 | 10. Basic and Diluted Earnings Per Share Basic and diluted EPS for Q2 2024 were $0.02, down from $0.14 in Q2 2023, primarily due to reduced net income | Metric | Q2 2024 | Q2 2023 | YTD Q2 2024 | YTD Q2 2023 | | :---------------------- | :------ | :------ | :---------- | :---------- | | Net income (in thousands) | $6,694 | $58,786 | $5,685 | $55,496 | | Weighted average shares - basic (in thousands) | 376,254 | 412,221 | 386,153 | 412,322 | | Weighted average shares - diluted (in thousands) | 384,732 | 414,335 | 393,620 | 414,373 | | Basic EPS | $0.02 | $0.14 | $0.01 | $0.13 | | Diluted EPS | $0.02 | $0.14 | $0.01 | $0.13 | 11. Subsequent Event On July 10, 2024, GoodRx amended its First Lien Credit Agreement, establishing a new $500.0 million term loan and extending its revolving credit facility - On July 10, 2024, GoodRx executed the Sixth Amendment to its First Lien Credit Agreement, as described in Note 6[47] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition, results of operations, liquidity, capital resources, and critical accounting policies Glossary of Selected Terminology This section defines key terms like Monthly Active Consumers, subscribers, and savings, providing clarity for report metrics - "Monthly Active Consumers" are unique consumers using a GoodRx code for prescription purchases, saving money compared to list price, averaged over the period[49] - "Subscribers" refer to consumers with active Gold or Kroger Rx Savings Club subscriptions, with family plans potentially including multiple members[51] - "Savings" represent the difference between the list price and the price paid by a GoodRx consumer using a GoodRx code, including estimates for cases where the list price is lower than the negotiated price[51] Overview GoodRx aims to be a leading digital healthcare platform, with Q2 2024 revenue up 6% to $200.6 million, but net income significantly down due to a prior-year tax benefit - GoodRx's mission is to help Americans access affordable healthcare through its digital platform[52] | Metric (in millions) | Q2 2024 | Q2 2023 | YoY Change ($) | YoY Change (%) | YTD Q2 2024 | YTD Q2 2023 | YTD Change ($) | YTD Change (%) | | :------------------- | :------ | :------ | :------------- | :------------- | :---------- | :---------- | :------------- | :------------- | | Revenue | $200.6 | $189.7 | $10.9 | 6% | $398.5 | $373.7 | $24.8 | 7% | | Net income | $6.7 | $58.8 | $(52.1) | (89%) | $5.7 | $55.5 | $(49.8) | (90%) | | Net income margin | 3.3% | 31.0% | | | 1.4% | 14.9% | | | | Adjusted EBITDA | $65.4 | $53.5 | $11.9 | 22% | $128.2 | $106.7 | $21.5 | 20% | | Adjusted EBITDA Margin | 32.6% | 28.2% | | | 32.2% | 28.6% | | | - Rapid changes in the U.S. retail pharmacy landscape, including store closures (e.g., Rite Aid, Walgreens), are expected to have a transient adverse impact on prescription volume and revenue, with volume expected to migrate to other in-network pharmacies[52] Recent Development GoodRx executed the Sixth Amendment to its First Lien Credit Agreement on July 10, 2024, as detailed in Note 6 - GoodRx entered into the Sixth Amendment to its First Lien Credit Agreement on July 10, 2024, as described in Note 6[53] Key Financial and Operating Metrics GoodRx uses MACs, subscription plans, Adjusted Revenue, and Adjusted EBITDA to evaluate performance, with MACs increasing and subscriptions decreasing Monthly Active Consumers Monthly Active Consumers increased to 6.6 million as of June 30, 2024, reflecting organic growth and integrated savings program expansion | (in millions) | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | | :--------------------- | :----------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Monthly Active Consumers | 6.6 | 6.7 | 6.4 | 6.1 | 6.1 | 6.1 | Subscription Plans Subscription plans decreased to 696 thousand as of June 30, 2024, primarily due to reduced marketing for and the sunset of Kroger Savings | (in thousands) | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | | :----------------- | :----------- | :----------- | :----------- | :----------- | :----------- | :----------- | | Subscription plans | 696 | 778 | 884 | 930 | 969 | 1,007 | - The sequential decline in subscription plans is due to reduced marketing spend for Kroger Savings, which sunset in July 2024[56] Non-GAAP Financial Measures GoodRx uses Adjusted Revenue, Adjusted EBITDA, and Adjusted EBITDA Margin as non-GAAP measures for performance assessment and internal planning - Adjusted Revenue, Adjusted EBITDA, and Adjusted EBITDA Margin are non-GAAP measures used for performance assessment and internal planning, providing a more consistent overview of operations[58] - Adjusted Revenue excludes client contract termination costs[58] - Adjusted EBITDA excludes interest, taxes, depreciation, amortization, acquisition-related expenses, stock-based compensation, restructuring expenses, legal settlement expenses, and other non-recurring items[58] | (dollars in thousands) | Q2 2024 | Q2 2023 | YTD Q2 2024 | YTD Q2 2023 | | :--------------------------------- | :---------- | :---------- | :---------- | :---------- | | Net income | $6,694 | $58,786 | $5,685 | $55,496 | | Adjusted EBITDA | $65,412 | $53,466 | $128,199 | $106,703 | | Revenue and Adjusted Revenue | $200,610 | $189,677 | $398,490 | $373,663 | | Net income margin | 3.3% | 31.0% | 1.4% | 14.9% | | Adjusted EBITDA Margin | 32.6% | 28.2% | 32.2% | 28.6% | Components of our Results of Operations Refer to the 2023 10-K for detailed descriptions of revenue, costs, operating expenses, and their primary drivers, including seasonality - For detailed descriptions of revenue, costs, operating expenses, and their drivers, refer to Note 2 and Part II, Item 7 of the 2023 10-K[60] Results of Operations This section provides a detailed comparative analysis of financial performance for the three and six months ended June 30, 2024, versus 2023 Three Months Ended June 30, 2024 Compared to Three Months Ended June 30, 2023 This section compares Q2 2024 financial performance against Q2 2023, detailing revenue streams, operating expenses, and other income/expenses Revenue Total revenue increased 7% YoY to $200.6 million, driven by prescription transactions, while subscription revenue decreased due to Kroger Savings sunset | Revenue Stream (in thousands) | Q2 2024 | Q2 2023 | YoY Change ($) | YoY Change (%) | | :---------------------------- | :---------- | :---------- | :------------- | :------------- | | Prescription transactions | $146,748 | $136,540 | $10,208 | 7% | | Subscription | $21,953 | $23,878 | $(1,925) | (8%) | | Pharma manufacturer solutions | $26,504 | $24,330 | $2,174 | 9% | | Other | $5,405 | $4,929 | $476 | 10% | | Total Revenue | $200,610 | $189,677 | $10,933 | 6% | - Prescription transactions revenue increased 7% YoY, driven by an 8% increase in Monthly Active Consumers, including expansion of the integrated savings program[61] - Rite Aid store closures are expected to have a mid-single-digit million dollar impact in H2 2024[61] - Subscription revenue decreased 8% YoY due to a decline in subscription plans, primarily from the sunset of Kroger Savings, with 696 thousand plans as of June 30, 2024, compared to 969 thousand a year prior[61] - Pharma manufacturer solutions revenue increased 9% YoY, driven by organic growth and market penetration, partially offset by a $2.7 million decrease from de-prioritized vitaCare[61] - This segment is expected to grow as a percentage of total revenue[61] Costs and Operating Expenses Total costs and operating expenses increased 5.5% YoY to $180.7 million, with sales and marketing up significantly, while cost of revenue decreased Cost of revenue, exclusive of depreciation and amortization Cost of revenue decreased 27% YoY by $4.5 million, primarily due to reduced consumer support costs and allocated overhead from restructuring - Cost of revenue decreased 27% YoY, driven by a $4.1 million reduction in consumer support costs and a $1.7 million decrease in allocated overhead due to lower headcount from restructuring[62] Product development and technology Product development and technology expenses decreased 1% YoY by $0.4 million, mainly due to lower payroll from higher software capitalization - Product development and technology expenses decreased 1% YoY, primarily due to a $2.3 million reduction in payroll from higher capitalization of software development costs and lower headcount[63] Sales and marketing Sales and marketing expenses increased 21% YoY by $16.0 million, driven by higher payroll, advertising, and third-party marketing, partially offset by reduced promotions - Sales and marketing expenses increased 21% YoY, driven by a $14.5 million increase in payroll (including stock-based compensation), $4.8 million in advertising, and $2.5 million in third-party marketing[64] - A $6.6 million decrease in promotional expenses was observed, as consumer discounts are now recognized as a reduction of revenue since December 2023[64] General and administrative General and administrative expenses decreased 9% YoY by $2.6 million, mainly due to lower Co-Founders' stock-based compensation, partially offset by Interim CEO payroll - General and administrative expenses decreased 9% YoY, mainly due to a $4.2 million reduction in Co-Founders' stock-based compensation, partially offset by increased payroll for the Interim CEO[65] Depreciation and amortization Depreciation and amortization expenses increased 5% YoY by $0.9 million, primarily due to higher capitalized software amortization - Depreciation and amortization increased 5% YoY, driven by higher capitalized software amortization, partially offset by lower amortization of fully amortized acquired intangible assets[66] Interest Income Interest income decreased 19% YoY by $1.5 million due to a lower average balance of cash equivalents, despite higher interest rates - Interest income decreased 19% YoY ($1.5 million) due to lower average cash equivalents, despite higher interest rates[67] Interest Expense Interest expense increased 4% YoY by $0.5 million due to higher interest rates, partially offset by lower average debt balances - Interest expense increased 4% YoY ($0.5 million) due to higher interest rates, partially offset by lower average debt balances[68] Income Taxes Income tax shifted from a $46.7 million benefit in Q2 2023 to a $5.0 million expense in Q2 2024, driven by a prior-year valuation allowance release - Income tax shifted from a $46.7 million benefit in Q2 2023 to a $5.0 million expense in Q2 2024, with the effective tax rate changing from (387.1%) to 42.5%[69] - The change was primarily due to the release of a valuation allowance against net deferred tax assets in Q2 2023[69] Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023 This section compares YTD Q2 2024 financial performance against YTD Q2 2023, detailing revenue streams, operating expenses, and other income/expenses Revenue Total revenue increased 7% YoY to $398.5 million for YTD Q2 2024, driven by prescription transactions, while subscription revenue declined | Revenue Stream (in thousands) | YTD Q2 2024 | YTD Q2 2023 | YoY Change ($) | YoY Change (%) | | :---------------------------- | :---------- | :---------- | :------------- | :------------- | | Prescription transactions | $292,143 | $271,447 | $20,696 | 8% | | Subscription | $44,554 | $48,021 | $(3,467) | (7%) | | Pharma manufacturer solutions | $51,013 | $44,765 | $6,248 | 14% | | Other | $10,780 | $9,430 | $1,350 | 14% | | Total Revenue | $398,490 | $373,663 | $24,827 | 7% | - Monthly Active Consumers for prescription transactions increased 9% year-to-date[71] - Pharma manufacturer solutions revenue was impacted by a $5.1 million decrease from de-prioritized vitaCare[71] Costs and Operating Expenses Total costs and operating expenses increased 7.9% YoY to $371.2 million, with sales and marketing up, and general and administrative impacted by a legal settlement Cost of revenue, exclusive of depreciation and amortization Cost of revenue decreased 26% YoY by $8.7 million, primarily due to reduced consumer support costs and allocated overhead from restructuring - Cost of revenue decreased 26% YoY, driven by a $7.9 million reduction in consumer support costs and a $3.8 million decrease in allocated overhead due to lower headcount from restructuring[73] Product development and technology Product development and technology expenses decreased 4% YoY by $2.3 million, mainly due to lower payroll from higher software capitalization - Product development and technology expenses decreased 4% YoY, primarily due to a $5.3 million reduction in payroll from higher capitalization of software development costs and lower headcount[74] Sales and marketing Sales and marketing expenses increased 18% YoY by $27.5 million, driven by higher payroll, advertising, and third-party marketing, partially offset by reduced promotions - Sales and marketing expenses increased 18% YoY, driven by a $21.8 million increase in payroll (including stock-based compensation), $14.9 million in advertising, and $5.2 million in third-party marketing[75] - A $16.3 million decrease in promotional expenses was observed, as consumer discounts are now recognized as a reduction of revenue since December 2023[75] General and administrative General and administrative expenses increased 15% YoY by $8.9 million, primarily due to a $13.0 million legal settlement loss and Interim CEO payroll - General and administrative expenses increased 15% YoY, primarily due to a $13.0 million legal settlement loss and a $4.3 million increase in Interim CEO payroll, partially offset by an $8.7 million decrease in Co-Founders' stock-based compensation[76] Depreciation and amortization Depreciation and amortization expenses increased 6% YoY by $1.9 million, primarily due to higher capitalized software amortization - Depreciation and amortization increased 6% YoY, driven by higher capitalized software amortization, partially offset by lower amortization of fully amortized acquired intangible assets[78] Other Expense Other expense decreased by $1.8 million YoY due to the absence of impairment losses on minority equity investments recognized in Q1 2023 - Other expense decreased by $1.8 million YoY due to the absence of impairment losses on minority equity investments recognized in Q1 2023[79] Interest Income Interest income decreased 8% YoY by $1.2 million due to a lower average balance of cash equivalents, despite higher interest rates - Interest income decreased 8% YoY ($1.2 million) due to lower average cash equivalents, despite higher interest rates[80] Interest Expense Interest expense increased 7% YoY by $2.0 million due to higher interest rates, partially offset by lower average debt balances - Interest expense increased 7% YoY ($2.0 million) due to higher interest rates, partially offset by lower average debt balances[81] Income Taxes Income tax shifted from a $39.8 million benefit in YTD Q2 2023 to a $6.3 million expense in YTD Q2 2024, driven by a prior-year valuation allowance release - Income tax shifted from a $39.8 million benefit in YTD Q2 2023 to a $6.3 million expense in YTD Q2 2024, with the effective tax rate changing from (254.3%) to 52.4%[82] - The change was primarily due to the release of a valuation allowance against net deferred tax assets in Q2 2023[82] Liquidity and Capital Resources GoodRx's liquidity includes $524.9 million cash and equivalents, with debt refinanced post-period to secure a new $500.0 million term loan - As of June 30, 2024, liquidity included $524.9 million in cash and cash equivalents and $91.7 million available under a $100.0 million revolving credit facility[83] - In July 2024, the company refinanced its debt, securing a new $500.0 million term loan maturing in 2029 and extending $88.0 million of the revolving credit facility to 2029[83] - Management believes current cash and operating activities will meet liquidity needs for the next twelve months, but future capital requirements may necessitate additional debt or equity financing[83] Holding Company Status GoodRx Holdings, Inc. is a holding company dependent on subsidiary cash distributions, which are restricted by debt covenants - GoodRx Holdings, Inc. is a holding company reliant on subsidiary cash distributions, which are restricted by debt covenants[84] - As of June 30, 2024, all net assets of GoodRx, Inc. were restricted under debt arrangements[84] Cash Flows This section details changes in cash flows from operating, investing, and financing activities for the six months ended June 30, 2024, versus 2023 Net cash provided by operating activities Net cash from operating activities decreased by $9.9 million YoY to $52.3 million, driven by lower net income, partially offset by non-cash adjustments - Net cash from operating activities decreased by $9.9 million YoY to $52.3 million, driven by lower net income, partially offset by non-cash adjustments (deferred income tax, stock-based compensation)[86] Net cash used in investing activities Net cash used in investing activities increased by $8.6 million YoY to $37.8 million, primarily due to higher software development costs - Net cash used in investing activities increased by $8.6 million YoY to $37.8 million, mainly due to an $8.4 million increase in software development costs[87] Net cash used in financing activities Net cash used in financing activities significantly increased by $133.8 million YoY to $161.8 million, driven by substantial stock repurchases - Net cash used in financing activities increased by $133.8 million YoY to $161.8 million, primarily due to a $134.8 million increase in Class A common stock repurchases[88] Recent Accounting Pronouncements Refer to Note 2 of the condensed consolidated financial statements for details on recent accounting pronouncements - Refer to Note 2 for details on recent accounting pronouncements[89] Critical Accounting Policies and Estimates No significant changes to critical accounting policies and estimates occurred during the three months ended June 30, 2024 - No significant changes to critical accounting policies and estimates occurred during Q2 2024[90] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes in market risk were reported compared to the 2023 10-K - No material changes in market risk were reported compared to the 2023 10-K[91] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes in internal control over financial reporting Evaluation of Disclosure Controls and Procedures Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2024 - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2024[91] Changes in Internal Control Over Financial Reporting No material changes in internal control over financial reporting occurred during the three months ended June 30, 2024 - No material changes in internal control over financial reporting occurred during Q2 2024[92] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity security sales, defaults, and other miscellaneous information Item 1. Legal Proceedings Information on legal proceedings is incorporated by reference from Note 7 to the condensed consolidated financial statements - Information on legal proceedings is incorporated by reference from Note 7 of the condensed consolidated financial statements[93] Item 1A. Risk Factors No material changes to the risk factors were reported compared to the company's 2023 10-K disclosure - No material changes to risk factors were reported compared to the 2023 10-K[94] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports on unregistered sales of equity securities and the use of IPO proceeds, including details on stock repurchases Unregistered Sales of Equity Securities There were no unregistered sales of equity securities during the reporting period - No unregistered sales of equity securities occurred[94] Use of Proceeds Approximately $426.4 million of IPO net proceeds were used for acquisitions and stock repurchases, with $460.5 million remaining invested - Approximately $426.4 million of IPO net proceeds have been used: $164.4 million for acquisitions and $262.0 million for Class A common stock repurchases[95] - $460.5 million in estimated remaining IPO net proceeds are invested in investment grade, interest-bearing instruments[95] Issuer Repurchases of Equity Securities No share repurchases occurred under the stock repurchase program for the three months ended June 30, 2024 - No share repurchases occurred under the stock repurchase program during Q2 2024[96] Item 3. Defaults Upon Senior Securities There were no defaults upon senior securities reported during the period - No defaults upon senior securities were reported[96] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[96] Item 5. Other Information This section provides information on insider trading arrangements, specifically modifications to Rule 10b5-1 Trading Plans for Co-Founders Insider Trading Arrangements Co-Founders Trevor Bezdek and Douglas Hirsch modified their Rule 10b5-1 Trading Plans on June 7, 2024, allowing for periodic sales of Class A common stock - On June 7, 2024, Co-Founders Trevor Bezdek and Douglas Hirsch modified their Rule 10b5-1 Trading Plans[96][97][98] - Each modified plan allows for periodic sales of up to 2,632,721 shares of Class A common stock, plus shares underlying 256,595 unvested restricted stock units, until June 6, 2025, or earlier[97][98] Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including organizational documents, credit agreements, and certifications - The report includes exhibits such as the Amended and Restated Certificate of Incorporation, Bylaws, Form of Certificate of Class A and B Common Stock, Executive Severance Plan, Non-Employee Director Compensation Program, Sixth Amendment to First Lien Credit Agreement, and various certifications[99] SIGNATURES The report was signed by the Interim CEO, CFO, and Chief Accounting Officer on August 8, 2024, certifying compliance with the Securities Exchange Act - The report was signed by the Interim CEO, CFO, and Chief Accounting Officer on August 8, 2024[102][103]