GoodRx(GDRX) - 2023 Q4 - Annual Report

PART I Business GoodRx operates a digital healthcare platform offering prescription price comparison, subscriptions, and pharma solutions, generating revenue primarily from PBM fees - The company's mission is to help Americans access healthcare at affordable prices by building a leading consumer-focused digital platform[21] - GoodRx estimates its total addressable market (TAM) to be between $534 billion and $607 billion, comprising a prescription opportunity and a pharma manufacturer solutions opportunity[27] - The business model primarily relies on its prescription transactions offering, where it earns a fee from PBMs when a consumer saves money on a prescription using a GoodRx code, also having direct contractual agreements with select pharmacies[34][36][39] - Key growth strategies include attracting new consumers, encouraging existing consumers to adopt multiple offerings, building the brand, investing in product expansion, and pursuing strategic partnerships[50][51][52] Employee Headcount as of December 31, 2023 | Category | Number of Employees | | :--- | :--- | | Total Employees | 694 | | Product Development & Technology | 373 | | Sales & Marketing | 175 | | General & Administrative | 135 | | Customer Service | 11 | - The company is subject to numerous data privacy and security laws, including HIPAA, the CCPA/CPRA, and a negotiated settlement with the Federal Trade Commission (FTC)[68] Risk Factors GoodRx faces risks from revenue concentration, PBM reliance, competitive pressures, evolving regulations, and its dual-class stock structure - The company's revenue is highly concentrated in its prescription transactions offering, which accounted for 73% of total revenue for the year ended December 31, 2023[93] - A significant portion of revenue is derived from a limited number of PBMs; in 2023, the three largest PBM partners accounted for 32% of total revenue, and the loss of any major PBM could negatively impact consumer pricing[103] - The "grocer issue," where a large grocery chain stopped accepting certain PBM pricing in 2022, had a material adverse impact on results and is expected to continue to have a sustained adverse impact[96][108] - The company faces risks from actual or perceived failures to comply with data protection and privacy laws, such as the CCPA and HIPAA, and is subject to a negotiated settlement with the FTC regarding its privacy and security practices[148][153][155] - GoodRx is a "controlled company" due to significant voting power held by certain stockholders, which exempts it from certain Nasdaq corporate governance requirements, such as having a majority-independent board[247] Unresolved Staff Comments The company reports that there are no unresolved staff comments - Not applicable[274] Cybersecurity GoodRx maintains comprehensive cybersecurity and privacy programs with Board oversight, reporting no material risks or incidents - The company has established Cybersecurity and Privacy Programs that include security and privacy awareness training, risk assessments, an incident response plan, and a third-party risk management process[275][276] - The Board's Compliance Committee oversees cybersecurity and data privacy risks, receiving periodic reports from management, with the full Board receiving a comprehensive review at least annually[277][278] - GoodRx has not identified any risks from known cybersecurity threats or prior incidents that are reasonably likely to materially affect the company[276] Properties GoodRx's corporate headquarters is leased in Santa Monica, California, with additional satellite offices deemed adequate - Corporate headquarters are leased in Santa Monica, California, covering approximately 74,000 square feet with a lease term expiring in 2031[281] Legal Proceedings GoodRx faces privacy-related class action lawsuits, accruing a $13.0 million probable loss for a proposed settlement - The company is a defendant in multiple putative class action lawsuits alleging improper communication of consumer information to third parties and violations of various privacy laws[541] - A proposed settlement agreement has been reached for $13.0 million to resolve a nationwide class action matter, accrued as a probable loss as of December 31, 2023, though subject to final court approval[544][546] Mine Safety Disclosures The company reports that this item is not applicable - Not applicable[283] PART II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities GoodRx's Class A common stock trades on Nasdaq, with no planned dividends, and recent share repurchases totaling 14.1 million shares - The company does not intend to pay dividends for the foreseeable future, retaining earnings to finance operations and growth[288][257] Q4 2023 Share Repurchases | Period | Total Shares Repurchased | Average Price Paid per Share | | :--- | :--- | :--- | | Oct 2023 | — | $ — | | Nov 2023 | 13,058,343 | $5.50 | | Dec 2023 | 1,003,953 | $5.98 | | Total Q4 | 14,062,296 | | - As of December 31, 2023, approximately $44.3 million remained available for repurchases under the existing program, with a new $450.0 million stock repurchase program authorized on February 27, 2024[292][304] - As of December 31, 2023, the company had used approximately $281.4 million of its IPO net proceeds for acquisitions ($164.4 million) and stock repurchases ($117.0 million), with $605.5 million remaining[295] Management's Discussion and Analysis of Financial Condition and Results of Operations GoodRx's 2023 revenue decreased to $750.3 million, with an improved net loss and increased Adjusted EBITDA, while implementing a restructuring plan Key Financial Results (FY 2023 vs. FY 2022) | Metric | 2023 | 2022 | | :--- | :--- | :--- | | Revenue | $750.3 million | $766.6 million | | Net Loss | $(8.9) million | $(32.8) million | | Net Loss Margin | (1.2%) | (4.3%) | | Adjusted EBITDA | $217.4 million | $213.5 million | | Adjusted EBITDA Margin | 28.6% | 27.8% | - The August 2023 Restructuring Plan, which de-prioritized certain pharma manufacturer solutions, is expected to generate $18.0 million to $22.0 million in annualized run-rate cash savings[300] Key Operating Metrics | Metric | Q4 2023 | Q4 2022 | | :--- | :--- | :--- | | Monthly Active Consumers | 6.4 million | 5.9 million | | Subscription Plans (as of period end) | 884 thousand | 1,030 thousand | - Prescription transactions revenue remained flat year-over-year at $550.7 million, as a 3% increase in average Monthly Active Consumers was offset by pricing effects from the "grocer issue"[324][325] - Pharma manufacturer solutions revenue decreased 14% to $85.1 million, primarily driven by a $10.0 million contract termination payment related to the Restructuring Plan[324][327] - The company released $54.6 million of its valuation allowance against deferred tax assets in 2023, resulting in an income tax benefit of $46.7 million for the year[343][526] - As of December 31, 2023, the company had strong liquidity with $672.3 million in cash and cash equivalents and $90.8 million available under its revolving credit facility[344] Quantitative and Qualitative Disclosures About Market Risk GoodRx's primary market risk is interest rate fluctuations on its floating-rate debt, with no foreign currency exposure - The primary market risk is interest rate risk from debt with floating interest rates; a hypothetical 100 basis point rate increase would have increased 2023 interest expense by $6.7 million[369] - The company operates only within the United States and has no foreign currency exposure[368] Financial Statements and Supplementary Data This section formally incorporates the company's audited consolidated financial statements and supplementary data, which are appended to the report starting on page F-1 - This item refers to the full financial statements and supplementary data appended to the Form 10-K, which can be found in Item 15[371] Changes in and Disagreements with Accountants on Accounting and Financial Disclosure The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[372] Controls and Procedures Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023 - Management concluded that as of December 31, 2023, the company's disclosure controls and procedures were effective[374] - Management concluded that the company's internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework[377] - No changes in internal control over financial reporting occurred during the quarter ended December 31, 2023, that materially affected, or are reasonably likely to materially affect, internal controls[379] Other Information No directors or officers adopted or terminated Rule 10b5-1 trading plans during Q4 2023 - No directors or officers adopted or terminated a Rule 10b5-1 trading plan or any non-Rule 10b5-1 trading arrangement during the fourth quarter of 2023[380] PART III Directors, Executive Officers and Corporate Governance Information on directors, executive officers, and corporate governance is incorporated by reference from the 2024 Proxy Statement - As of February 29, 2024, key executive officers include Scott Wagner (Interim CEO), Karsten Voermann (CFO), Trevor Bezdek (Chairman), and Douglas Hirsch (Chief Mission Officer)[384] - The required information for this item is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[384] Executive Compensation The information regarding executive compensation is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - The required information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[385] Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The information regarding security ownership of certain beneficial owners and management is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - The required information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[386] Certain Relationships and Related Transactions, and Director Independence The information regarding certain relationships, related transactions, and director independence is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - The required information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[387] Principal Accountant Fees and Services The information regarding principal accountant fees and services is incorporated by reference from the company's definitive Proxy Statement for its 2024 Annual Meeting of Stockholders - The required information is incorporated by reference from the definitive Proxy Statement for the 2024 Annual Meeting of Stockholders[388] PART IV Exhibits, Financial Statement Schedules This section lists all exhibits filed with the Form 10-K and notes the omission of financial statement schedules - This item provides an index of all exhibits filed as part of the Annual Report, including corporate governance documents, material contracts, and executive compensation plans[392][393] - All financial statement schedules were omitted because they were not applicable, not material, or the information was included elsewhere in the filing[391] Form 10-K Summary The company reports that there is no Form 10-K summary - None[399] Financial Statements and Notes The audited consolidated financial statements for 2023 present assets, liabilities, net loss, and cash flows, with detailed notes on key accounting policies and contingencies Consolidated Balance Sheet Highlights (as of December 31, 2023) | Account | Amount (in millions) | | :--- | :--- | | Cash and cash equivalents | $672.3 | | Total Assets | $1,588.8 | | Total Liabilities | $826.8 | | Total Stockholders' Equity | $762.0 | Consolidated Statement of Operations (Year Ended December 31, 2023) | Account | Amount (in millions) | | :--- | :--- | | Total Revenue | $750.3 | | Operating Loss | $(27.0) | | Net Loss | $(8.9) | | Loss Per Share (Basic & Diluted) | $(0.02) | Consolidated Statement of Cash Flows (Year Ended December 31, 2023) | Account | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $138.3 | | Net cash used in investing activities | $(55.8) | | Net cash used in financing activities | $(167.4) | - The August 2023 Restructuring Plan resulted in total costs of $75.2 million for the year, comprising $55.7 million in non-cash charges (primarily accelerated amortization) and $19.4 million in cash charges (personnel and contract termination costs)[573][574] - The company has a First Lien Term Loan Facility with a principal balance of $661.8 million as of December 31, 2023, maturing in October 2025[532][536]