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What changed in GoodRx Holdings, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of GoodRx Holdings, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+482 added−454 removedSource: 10-K (2024-02-29) vs 10-K (2023-03-01)

Top changes in GoodRx Holdings, Inc.'s 2023 10-K

482 paragraphs added · 454 removed · 358 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

73 edited+23 added−28 removed58 unchanged
Biggest changeWe acquire new consumers through a variety of channels, including: (i) direct to consumer marketing which includes TV, paid search or other digital campaigns; (ii) marketing through healthcare partnerships which includes marketing materials in physician offices, integrating pricing from our platform into electronic health record providers, or EHRs, prescribing workflows so that healthcare professionals can provide prices from our platform to their patients at the point of prescribing; (iii) marketing through partnerships with other affiliates to distribute our discounts and solutions to a broader target audience outside of the healthcare ecosystem; (iv) offer incentives to certain consumers (who are not our customers) that further reduce discounted prices offered on our platform for a limited time and on a limited number of prescription drugs to attract new and re-engage existing consumers; and (v) through content creation which increases traffic to the GoodRx apps and websites such as from GoodRx Health and HealthiNation Inc., our wholly-owned subsidiary, which provides visitors with thousands of articles with research-backed answers to health questions and provides us with more opportunities to convert visitors to active consumers.
Biggest changeWe acquire new consumers through a variety of channels, including: (i) direct to consumer marketing which includes TV, paid search or other digital campaigns; (ii) marketing through healthcare partnerships which includes marketing materials in physician offices and integrating pricing from our platform into EHR providers' prescribing workflows so that healthcare professionals can provide prices from our 10 Table of Contents platform to their patients at the point of prescribing; (iii) marketing through partnerships with other affiliates to distribute our discounts and solutions to a broader target audience outside of the healthcare ecosystem; and (iv) through content creation which increases traffic to the GoodRx apps and websites such as from GoodRx Health, which provides visitors with thousands of articles with research-backed answers to health questions and provides us with more opportunities to convert visitors to active consumers.
Through the deep relationships that we have developed with these stakeholders over many years, we are able to continually improve our offerings and achieve better pricing outcomes for consumers. o Pharmacy Benefit Managers: PBMs aggregate consumer demand to negotiate prescription medication prices with pharmacies and manufacturers. PBMs aggregate most of their demand through relationships with insurance companies and employers.
Through the deep relationships that we have developed with these stakeholders over many years, we are able to continually improve our offerings and achieve better pricing outcomes for consumers. ◦ Pharmacy Benefit Managers: PBMs aggregate consumer demand to negotiate prescription medication prices with pharmacies and manufacturers. PBMs aggregate most of their demand through relationships with insurance companies and employers.
We receive a percentage of this amount or a fixed payment from the PBM as compensation for directing the consumer to that PBM’s pricing and the pharmacy. As we help more consumers save money on their medications and drive additional traffic through various PBMs, we increase our scale, which over time leads to lower prices for our consumers.
We receive a percentage of this amount or a fixed payment from the PBM as compensation for directing the consumer to that PBM’s pricing and the pharmacy. As we help more consumers save money on their medications and drive additional traffic through various PBMs, we increase our scale, which we believe over time leads to lower prices for our consumers.
If 16 we or our commercial partners act in a manner that violates such laws or otherwise engage in misconduct, we may be subject to civil or criminal penalties as well as exclusion from government healthcare programs.” Healthcare Reform A primary trend in the U.S. healthcare industry is cost containment.
If we or our commercial partners act in a manner that violates such laws or otherwise engage in misconduct, we may be subject to civil or criminal penalties as well as exclusion from government healthcare programs.” Healthcare Reform A primary trend in the U.S. healthcare industry is cost containment.
We collect and may use personal information to help run our business (including for analytical and marketing purposes) and to communicate and otherwise reach our consumers. In some instances, we may use third party service providers to assist us in the above. 15 We endeavor to treat our consumers’ data with respect and maintain consumer trust.
We collect and may use personal information to help run our business (including for analytical and marketing purposes) and to communicate and otherwise reach our consumers. In some instances, we may use third party service providers to assist us in the above. We endeavor to treat our consumers’ data with respect and maintain consumer trust.
We have a multi-prong approach for this strategy which includes: o Pharma Manufacturer Solutions Offering: We believe our trusted brand, large volume of high intent consumers and easy-to-use consumer experience make our offering highly attractive to pharma manufacturers.
We have a multi-prong approach for this strategy which includes: ◦ Pharma Manufacturer Solutions Offering: We believe our trusted brand, large volume of high intent consumers and easy-to-use consumer experience make our offering highly attractive to pharma manufacturers.
Government Regulation Data Privacy and Security Laws The data we collect and process is an integral part of our products and services, allowing us to ensure our prices are accurate, surface the most relevant prices and reach and advertise to consumers with savings information.
Government Regulation Data Privacy and Security Laws The data we collect and process is an integral part of our products and services, allowing us to ensure our prices are accurate, surface the most relevant prices and reach consumers with savings information.
Consumers can use GoodRx at nearly every retail pharmacy in the United States. o Pharma Manufacturers: Brand medications tend to be more expensive than generics, and insurance coverage is complicated.
Consumers can use GoodRx at nearly every retail pharmacy in the United States. ◦ Pharma Manufacturers: Brand medications tend to be more expensive than generics, and insurance coverage is complicated.
We plan to continue to expand the number of 12 pharma manufacturers with which we work, increase brand penetration, and increase the number of solutions each of them uses, as well as enhance our existing offerings and introduce new integrated technology solutions that will allow manufacturers to interact with our consumer base more effectively. o Subscription Offerings: We believe our subscription offerings, and our Gold subscription offering in particular, have higher lifetime value than our prescription transactions offering.
We plan to continue to expand the number of pharma manufacturers with which we work, increase brand penetration, and increase the number of solutions each of them uses, as well as enhance our existing offerings and introduce new integrated technology solutions that will allow manufacturers to interact with our consumer base more effectively. ◦ Subscription Offerings: We believe our subscription offerings, and our Gold subscription offering in particular, have higher lifetime value than our prescription transactions offering.
This price comparison platform processes over 260 billion pricing data points every day and integrates that data into a user-friendly interface which provides consumers with curated, geographically relevant prescription pricing, and access to negotiated prices through GoodRx codes that can be used to save money on prescriptions across the United States.
This price comparison platform processes over 320 billion pricing data points every day and integrates that data into a user-friendly interface which provides consumers with curated, geographically relevant prescription pricing, and access to negotiated prices through GoodRx codes that can be used to save money on prescriptions across the United States.
We provide consumers with expert medication information, as well as pricing and coverage information made possible 8 through our robust data sources and staff of experienced researchers.
We provide consumers with expert medication information, as well as pricing and coverage information made possible through our robust data sources and staff of experienced researchers.
We expand the market for PBMs by increasing their cash network transaction volumes and by adding new consumers to the overall prescriptions market, many of whom, both insured and uninsured, would otherwise not fill their prescriptions because of high deductibles or prices. For many of our PBM partners, we are their only significant direct-to-consumer channel.
We expand the market for PBMs by increasing their cash network transaction volumes and by adding new consumers to the overall prescriptions market, many of whom, both insured and uninsured, would otherwise not fill their prescriptions because of high deductibles or prices. We believe that, for many of our PBM partners, we are their only significant direct-to-consumer channel.
Industry Challenges Despite the approximately $4.0 trillion U.S. healthcare market being one of the largest sectors of the U.S. economy, it remains opaque and highly fragmented for consumers. Even simple healthcare transactions, such as finding a doctor or filling a prescription at an affordable price, are often difficult.
Industry Challenges Despite the approximately $4.5 trillion U.S. healthcare market being one of the largest sectors of the U.S. economy, it remains opaque and highly fragmented for consumers. Even simple healthcare transactions, such as finding a doctor or filling a prescription at an affordable price, are often difficult.
In addition, we have registered domain names for websites that we use in our business, such as www.goodrx.com. We continually review our development efforts to assess the existence and patentability of new intellectual property and we intend to pursue additional intellectual property protection to the extent we believe it would advance our business objectives.
Additionally, we have registered domain names for websites that we use in our business, such as www.goodrx.com We continually review our development efforts to assess the existence and patentability of new intellectual property and we intend to pursue additional intellectual property protection to the extent we believe it would advance our business objectives.
Our competitors vary in size and breadth of their offerings. • In prescriptions discounts and price comparisons, our competition is fragmented and consists of competitors that are both larger and smaller than us in scale, including large e-commerce companies. • Our pharma manufacturer solutions offering competes for advertising and market access budget allocation against platforms on which manufacturers can reach consumers, including health-related websites and mobile apps, and services supporting patient access.
Our competitors vary in size and breadth of their offerings. • In prescriptions discounts and price comparisons, our competition is fragmented and consists of competitors that are both larger and smaller than us in scale, including large e-commerce companies. 12 Table of Contents • Our pharma manufacturer solutions offering competes for advertising and market access budget allocation against platforms on which manufacturers can reach consumers, including health-related websites and mobile apps, and services supporting patient access.
We also deploy a variety of consumer retention tools on our platform, such as savings information retained in pharmacy database so consumers do not have to re-present GoodRx codes, providing alerts and refill reminders to consumers and 11 links to our other offerings to improve consumer's overall experience using our platform, and strong consumer support and patient advocacy services to help consumers understand how best to afford their medication.
We also deploy a variety of consumer retention tools on our platform, such as savings information retained in pharmacy databases so consumers do not have to re-present GoodRx codes, providing alerts and refill reminders to consumers and links to our other offerings to improve consumer's overall experience using our platform, and strong consumer support and patient advocacy services to help consumers understand how best to afford their medication.
Item 1. Bu siness. 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. GoodRx was founded to solve the challenges that consumers face in understanding, accessing, and affording healthcare.
Item 1. Business. 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. GoodRx was founded to solve the challenges that consumers face in understanding, accessing, and affording healthcare.
If we are unable to retain favorable contractual arrangements with our PBMs, including any successor PBMs should there be further consolidation of 13 PBMs, we may lose them as customers, or the negotiated rates provided by such PBMs may become less competitive, which could have an adverse impact on our platform.
If we are unable to retain favorable contractual arrangements with our PBM partners, including any successor PBMs should there be further consolidation of PBMs, we may lose them as customers, or the negotiated rates provided by such PBMs may become less competitive, which could have an adverse impact on our platform.
We believe that this will result in higher consumer satisfaction and be accretive to our consumer lifetime value and to our margins in the medium to long term, without significant additional consumer acquisition costs. • Continue to Build the GoodRx Brand: We believe that there are significant opportunities to increase awareness and educate healthcare consumers regarding prescription pricing, as well as our platform and solutions.
We believe that this will result in higher consumer satisfaction and be accretive to our consumer lifetime value and to our margins in the medium to long term, without significant additional consumer acquisition costs. • Continue to Build the GoodRx Brand: We believe that there are significant opportunities to increase awareness and educate healthcare consumers regarding prescription pricing, as well as our platform and 11 Table of Contents solutions.
Since we receive, use, transmit, disclose and store personally identifiable information, including health-related information, we are subject to numerous state and federal laws and regulations that address privacy, data protection and the collection, storing, sharing, use, transfer, disclosure and protection of certain types of data.
Since we receive, use, transmit, disclose and store personal information, including health-related information, we are subject to numerous state and federal laws and regulations that address privacy, data protection and the collection, storing, sharing, use, transfer, disclosure and protection of certain types of data.
To date, no PBM has terminated a relationship with GoodRx, Inc., which highlights the strength of our relationships alongside the value we deliver. o Pharmacies: With GoodRx, pharmacies can reduce ‘walk away’ patients and prescriptions abandoned at the counter due to high cost, and can also increase overall sales through additional foot-traffic.
To date, no PBM 8 Table of Contents has terminated a relationship with GoodRx, Inc., which highlights the strength of our relationships alongside the value we deliver. ◦ Pharmacies: With GoodRx, pharmacies can reduce ‘walk away’ patients and prescriptions abandoned at the counter due to high cost, and can also increase overall sales through additional foot-traffic.
We also enable consumers to save on brand medications. We believe that the prices available through our platform are highly competitive, for both insured and uninsured consumers, and our platform enables consumers to save on prescription medications regardless of whether the consumer is insured or not.
We believe that the prices available through our platform are highly competitive, for both insured and uninsured consumers, and our platform enables consumers to save on prescription medications regardless of whether the consumer is insured or not.
We believe we can drive significant growth in our prescription opportunity through our ability to continue to provide attractive prescription pricing to consumers. Pharma Manufacturer Solutions Opportunity Brand medications tend to be expensive, and insurance coverage is complicated and may be restrictive.
We believe we can drive significant growth in our prescription opportunity through our ability to continue to provide attractive prescription pricing to consumers. 7 Table of Contents Pharma Manufacturer Solutions Opportunity Brand medications tend to be expensive, and insurance coverage is complicated and may be restrictive.
We provide consumers options designed to allow them to control the use and disclosure of their data, such as allowing consumers to opt out of any marketing requests, opt out of the use of marketing cookies, pixels and technologies on our platform, and request deletion of their data.
We provide consumers options designed to allow them to control the use and disclosure of their data, such as allowing consumers to opt out of marketing communications, opt out of the use of marketing and advertising cookies, pixels and technologies on our platform, and request deletion of their data.
These solutions increase medication adherence, reduce strain on hospital emergency departments and physicians, and improve health outcomes. o Our prescription transactions offering provides curated, geographically relevant price comparisons and negotiated prices on prescriptions that generate substantial savings to our consumers. Our negotiated prices for prescriptions are often cheaper than insurance co-pays.
These solutions increase medication adherence, reduce strain on hospital emergency departments and physicians, and improve health outcomes. ◦ Our prescription transactions offering, part of our prescription marketplace, provides curated, geographically relevant price comparisons and negotiated prices on prescriptions that generate substantial savings to our consumers. Our negotiated prices for prescriptions are often cheaper than the average commercial insurance co-pays.
As we continue to grow our brand awareness and consumer base, selling additional products and services into our large acquired base will drive an attractive incremental margin opportunity. • Pursue Strategic Partnerships and Acquisitions: We are a valuable partner to a variety of healthcare constituents.
As we continue to grow our brand awareness and consumer base, selling additional products and services into our large acquired base will drive an attractive incremental margin opportunity. • Pursue Strategic Partnerships and Acquisitions: We are a valuable partner to a variety of healthcare constituents. We have entered into a number of strategic agreements in recent years.
Non-white employees make up 59% (546 employees) of our workforce who have chosen to identify their ethnicity/race. Diversity, equity and inclusion ("DEI") are top of mind, and we strive to build a workforce that can represent the clients, customers and partners that we serve everyday.
Non-white employees make up 50% (330 employees) of our workforce who have chosen to identify their ethnicity/race. Diversity, equity and inclusion ("DEI") are important considerations, and we strive to build a workforce that can represent the clients, customers and partners that we serve everyday.
Today, we believe our expanded platform improves the health and financial well-being of American families by providing easy access to price transparency and affordability solutions for generic and brand medications both for consumers and healthcare providers, affordable and convenient medical provider consultations and lab tests and other healthcare and wellness related content.
Today, we believe our expanded platform improves the health and financial well-being of American families by providing easy access to price transparency and affordability solutions for generic and brand medications both for consumers and healthcare providers, other healthcare services, including telehealth services, and wellness related content.
DEI considerations touch all facets of our employee lifecycle, from onboarding to experience, performance, tenure and succession planning. In January 2023, we launched 5 Community Resource Groups (CRGs) that advocate for the needs of our members across a diverse range of identities and experiences.
DEI considerations touch all facets of our employee lifecycle, from onboarding to experience, performance, tenure and succession planning. In 2023, we launched 5 Community Resource Groups ("CRGs") that advocate for the needs of our members across a diverse range of identities and experiences. The CRGs have appointed leads, executive sponsors, and subpillar leads for recruiting, company events and community impact.
This, in turn, can drive beneficial and self-reinforcing network effects. Our value proposition by stakeholder is described below: • Consumers: Our platform provides consumers with a variety of mobile-first offerings designed to make their access to healthcare simple and more affordable.
We believe that consumers, healthcare providers, PBMs, pharmacies and pharma manufacturers all win with GoodRx. This, in turn, can drive beneficial and self-reinforcing network effects. Our value proposition by stakeholder is described below: • Consumers: Our platform provides consumers with a variety of mobile-first offerings designed to make their access to healthcare simple and more affordable.
GoodRx works with pharma manufacturers to advertise, integrate and enhance consumer awareness, access and uptake of their various savings solutions for brand medications, increasing the likelihood that a consumer will start or continue to take their prescribed medication.
GoodRx works with pharma manufacturers to advertise, integrate and enhance consumer awareness, access and uptake of their various savings solutions for brand medications, increasing the likelihood that a consumer will start or continue to take their prescribed medication. Our Offerings Prescription Marketplace Our prescription marketplace consists of our prescription transactions offering and our supplemental subscription and telehealth offerings.
Our employees are split among the following departments and functions: 254 principally in customer service, 392 in product development and technology, 175 in sales and marketing, and 133 in general and administrative functions. Women make up 50% (425 employees) of our workforce who have chosen to identify their gender.
Our employees are split among the following departments and functions: 11 principally in customer service, 373 in product development and technology, 175 in sales and marketing, and 135 in general and administrative functions. Women make up 45% (312 employees) of our workforce who have chosen to identify their gender.
We believe that our sources of pricing are sufficiently broad and robust that the loss of any one PBM or other healthcare partner would generally result in minimal disruption in our ability to provide competitive discounts and pricing.
We believe that our sources of pricing are sufficiently broad and robust that the loss of any one PBM or other healthcare partner would generally result in minimal disruption in our ability to provide competitive discounts and pricing. Although the majority of our pricing information comes from PBMs, we also collect pricing data points from other sources.
We believe this offering can deliver incremental margin as we deploy these solutions across our existing base of consumers and visitors, introduce new solutions, and increase the number of brands and manufacturers with which we work.
We believe this offering can deliver incremental margin as we deploy these solutions across our existing base of consumers and visitors, introduce new solutions, and increase the number of brands and manufacturers with which we work. Our Value Proposition We positively impact many key stakeholders in the healthcare ecosystem.
Subscribers access lower prescription prices at Kroger pharmacies. We manage key aspects of the program, including subscriber registration, consumer billing, transaction processing and marketing services under an agreement that allows subscriber enrollment through July 1, 2023 in order to continue to fully serve enrolled consumers through the expected sunset of the program in July 2024.
We manage key aspects of the program, including subscriber registration, consumer billing, transaction processing and marketing services under an agreement where subscribers were able to enroll in the Kroger Savings through July 1, 2023 in order to continue to fully serve enrolled consumers through the expected sunset of the program in July 2024.
PBM mix and relative share on our platform has varied over time as we have added new PBMs and as certain PBMs have delivered more or less favorable pricing relative to other PBMs. Even as the mix has changed, we have continued to grow and deliver a strong value proposition to our consumers.
PBM mix and relative share on our platform has varied over time as we have added new PBMs and as certain PBMs have delivered more or less favorable pricing relative to other PBMs.
We believe our trusted brand, large volume of high intent consumers and easy-to-use interface make our platform highly attractive to pharma manufacturers. These solutions generally increase medication awareness, access and adherence and can lead to faster treatment and better patient outcomes. For example, our acquisition of vitaCare Prescription Services, Inc.
In addition, the patient can sign up for ongoing savings alerts related to that medication. We believe our trusted brand, large volume of high intent consumers and easy-to-use interface make our platform highly attractive to pharma manufacturers. These solutions generally increase medication awareness, access and adherence and can lead to faster treatment and better patient outcomes.
At our Investor Relations website, investors.goodrx.com, we make available free of charge a variety of information for investors, including our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (“SEC”).
At our Investor Relations website, investors.goodrx.com, we make available free of charge a variety of information for investors, including our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the SEC. 15 Table of Contents Our Code of Business Conduct and Ethics applies to all of our directors, officers and employees, including our principal executive officer and our principal financial officer.
Consumers can choose the lowest price from a selection of nearby pharmacies, save a GoodRx code to their mobile device for free and present that code at their pharmacy to access that low price. 9 Once a consumer has used a GoodRx code from our platform to purchase a prescription, that code is recorded in the pharmacy’s database and the consumer is not required to present their GoodRx code again for subsequent prescription refills, or, in many cases, for additional prescriptions that the consumer purchases at that pharmacy.
Once a consumer has used a GoodRx code from our platform to purchase a prescription, that code is recorded in the pharmacy’s database and the consumer is not required to present their GoodRx code again for subsequent prescription refills, or, in many cases, for additional prescriptions that the consumer purchases at that pharmacy.
To read more about our approach to privacy laws and the regulations, please see Part I, Item 1A, “Risk Factors—Risks Related to Our Business—Actual or perceived failures to comply with applicable data protection, privacy and security, advertising and consumer protection laws, regulations, standards and other requirements could adversely affect our business, financial condition and results of operations.” State Licensing Requirements Certain states have enacted laws regulating companies that offer and market discount medical plans, including prescription drug plans, subscription membership programs or discount cards, such as our prescription transactions offering, Gold, Kroger Savings, and any other subscription products we may develop in the future, including with respect to our telehealth offering.
To read more about our approach to privacy laws and the regulations, please see Part I, Item 1A, “Risk Factors—Risks Related to Our Business—Actual or perceived failures to 14 Table of Contents comply with applicable data protection, privacy and security, advertising and consumer protection laws, regulations, standards and other requirements could adversely affect our business, financial condition and results of operations.” State Licensing Requirements Certain states have enacted laws regulating companies that offer and market discount prescription drug coupons and/or medical services.
For further information, please see Part I, Item 1A, “Risk Factors—Risks Related to the Healthcare Industry—Our telehealth offering offered to consumers is subject to laws, rules and policies governing the practice of medicine and medical board oversight.” and “Risk Factors—Risks Related to the Healthcare Industry—In our telehealth offering, we are dependent on our relationships with affiliated professional entities, which we do not own and principally supported by our arrangement with Wheel, to provide healthcare services, and our business would be adversely affected if those relationships were disrupted.” Healthcare Fraud and Abuse Laws Although the consumers who use our offerings do so outside of any medication or other health benefits covered under their health insurance, including any commercial or government healthcare program, we may nonetheless be subject to a number of federal and state healthcare regulatory laws that restrict business practices in the healthcare industry.
For further information, please see Part I, Item 1A, “Risk Factors—Risks Related to the Healthcare Industry—Our telehealth offering offered to consumers is subject to various state laws and regulations governing the provision of telehealth services.” and “Risk Factors—Risks Related to the Healthcare Industry—Our telehealth offering and relationships with our affiliated physician-owned professional entities may implicate laws governing the practice of medicine and fee-splitting.” Healthcare Fraud and Abuse Laws Although the consumers who use our offerings do so outside of any medication or other health benefits covered under their health insurance, including any commercial or government healthcare program, we may nonetheless be subject to a number of federal and state healthcare regulatory laws that restrict certain business practices in the healthcare industry.
This can be accomplished by providing a healthcare platform that allows consumers to search a broad range of choices and offerings, discover what is best for them, transact based on their preferences, and receive the best price while doing so. 7 We believe this market opportunity is substantial and estimate the total addressable market ("TAM") for our current solutions to be approximately $800.0 billion.
This can be accomplished by providing a healthcare platform that allows consumers to search a broad range of choices and offerings, discover what is best for them, transact based on their preferences, and receive the best price while doing so.
We structure and normalize the presentation of the data to give consumers curated, geographically relevant pricing information that is accessible through our apps or websites for free.
Our proprietary technology enables us to aggregate prescription pricing data points from sources spanning the healthcare industry. We structure and normalize the presentation of the data to give consumers curated, geographically relevant pricing information that is accessible through our apps or websites for free.
For example, a consumer searching for a brand medication on our platform can select their insurance status and related criteria so that we can automatically determine their eligibility for specific manufacturer savings solutions, and route them to the best option. In addition, the patient can sign up for ongoing savings alerts related to that medication.
We partner with pharma manufacturers to advertise and integrate these affordability solutions into our platform. For example, a consumer searching for a brand medication on our platform can select their insurance status and related criteria so that we can automatically determine their eligibility for specific manufacturer savings solutions, and route them to the best option.
Access to discounted prices is free for consumers through our platform. o Our pharma manufacturer solutions offering provides advertising and integrated consumer affordability solutions to pharma manufacturers with the goal of improving access to and affordability of brand medications for consumers. o Our subscription offerings provide consumers and their families with access to even lower prescription prices on select medications in select pharmacies for a monthly or annual subscription fee.
Access to discounted prices is free for consumers through our platform. ◦ Our subscription offerings, part of our prescription marketplace, provide consumers and their families with access to even lower prescription prices on select medications in select pharmacies for a monthly or annual subscription fee.
We launched our first subscription offering, Gold, in 2017, and added a second offering, Kroger Savings, in 2018. • Gold: We offer a subscription savings program whereby subscribers generally pay a monthly or annual fee for access to even lower prices in select participating pharmacies amongst other benefits, including a mail delivery feature as well as access to discounted telehealth services. • Kroger Savings: We partner with Kroger, one of the largest retail pharmacies in the United States, to offer a tailored subscription product to Kroger consumers for an annual fee, a portion of which we share with Kroger.
Our subscription offerings are designed to be easy to use and provide subscribers with added benefits and features, such as increased discounts on prescription prices, discounted virtual care visits, and free home delivery on eligible medications. • Gold: We offer a subscription savings program whereby subscribers generally pay a monthly or annual fee for access to even lower prices in select participating pharmacies amongst other benefits, including a mail delivery feature. • Kroger Savings: We partner with Kroger, one of the largest retail pharmacies in the United States, to offer a tailored subscription product to Kroger consumers for an annual fee, a portion of which we share with Kroger.
As of December 31, 2022, we employed 954 employees, of which 952 are full-time and 2 are part-time employees. Of our total employees, 300 are based at our headquarters in Santa Monica, California.
As of December 31, 2023, we employed 694 employees, all of which are full-time employees. Of our total employees, 215 are based at our headquarters in Santa Monica, California.
We work closely with pharmacies to ensure that pharmacists are educated on how to use our apps and websites, and know how to apply GoodRx codes at the point of sale.
We work closely with pharmacies to ensure that pharmacists are educated on how to use our apps and websites, and know how to apply GoodRx codes at the point of sale. Additionally, we enter into direct contractual agreements with select pharmacies to provide consumers access to discounted prices and further drive incremental sales to these partner pharmacies.
Such regulations include the CAN-SPAM Act, the Telephone Consumer Protection Act of 1991, the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), Section 5(a) of the Federal Trade Commission Act, certain state data privacy and security laws, including the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act (“CPRA”) and the Virginia Consumer Data Protection Act; the violation of any such laws and regulations could result in legal remedies that could materially impact our business or financial performance.
Such regulations include the CAN-SPAM Act, the Telephone Consumer Protection Act of 1991, the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act (together with their implementing regulations, collectively, “HIPAA”), Section 5(a) of the Federal Trade Commission Act, certain state data privacy and security laws, including, but not limited to, the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act (“CPRA”) and the Virginia Consumer Data Protection Act.
As of December 31, 2022, we owned four issued patents and three pending patent applications in the United States. One issued patent relates to our ability to combine prices from multiple PBMs together in a single consumer interface. Our issued patents begin expiring in 2034, excluding any patent term adjustment.
Our patents and patent applications relate to software and services, including our ability to combine prices from multiple PBMs together in a single consumer interface. Our issued patents begin expiring in 2034, excluding any patent term adjustment.
In addition, we intend to post on our website all disclosures that are required by law concerning any amendments to, or waivers from, any provision of our Code of Business Conduct and Ethics. The information found on our website is not part of this or any other report we file with, or furnish to, the SEC. 17
A copy of the code is available on our website at www.goodrx.com in the “Governance” section of the “Investors” page. In addition, we intend to post on our website all disclosures that are required by law concerning any amendments to, or waivers from, any provision of our Code of Business Conduct and Ethics.
Failure to obtain the required licenses, certifications or registrations to offer and market our subscription discount programs and pharmacy services may result in civil penalties, receipt of cease and desist orders, or a restructuring of our operations.
Failure to obtain and maintain the required licenses, certifications or registrations to provide these offerings, as well as to abide by applicable regulations governing these offerings, may result in civil penalties, receipt of cease and desist orders, or a restructuring of our operations.
Generally, we believe that we are able to compete effectively against these organizations based on our brand, scale, pricing and consumer experience.
We principally compete with companies that provide prescription savings and solutions to pharma manufacturers. New entrants may also enter our industry and compete with us. Generally, we believe that we are able to compete effectively against these organizations based on our brand, scale, pricing and consumer experience.
Steps we have taken include our commitment to embrace both hybrid and remote working for our employees as we believe that our business continuity plan and technology platform will continue to support the effectiveness of our employees that work remotely.
We continue to embrace both hybrid and remote working for our employees as we believe that our business continuity plan and technology platform will continue to support the effectiveness of our employees that work remotely. We also continue to provide robust benefits, including health insurance for employees and dependents, 401(k) match, fertility benefits, paid parental leave and discretionary vacation.
We enter into management services agreements with these physician-owned professional entities pursuant to which we provide them with billing, scheduling and a wide range of other services, and they pay us for those services. In addition, our telehealth platform enables consumers to opt in to use our prescription transactions offering and/or fill their prescriptions through a third-party mail delivery pharmacy.
We enter into management services agreements with these physician-owned professional entities pursuant to which we provide them with billing, scheduling and a wide range of other non-clinical services, and, in return, these professional entities pay us a management fee for those services.
We play a valuable role within the healthcare ecosystem by aggregating, normalizing, and presenting information from all of these constituents on a single platform for the consumer.
We help physicians engage with patients more efficiently through our products and services. • Healthcare Companies: PBMs, pharmacies and pharma manufacturers use our platform to reach and provide affordability solutions to consumers. We play a valuable role within the healthcare ecosystem by aggregating, normalizing, and presenting information from all of these constituents on a single platform for the consumer.
We will continue to increase the value proposition for consumers by bundling various existing and new offerings in affordable and consumer-friendly subscription packages. o Telehealth Offering: We believe our telehealth offering contributes to the growth of our other offerings, including our prescription transactions offering and Gold.
We will continue to increase the value proposition for consumers by bundling various existing and new offerings in affordable and consumer-friendly subscription packages. • Future Expansion Opportunities: We believe there are many other areas of healthcare that could benefit from the transparency and accessibility provided by our platform.
Gold also provides mail delivery and discounted access to our GoodRx Care service for no additional subscription cost. o Our telehealth offering provides access to online doctor visits and lab test providers. o Our platform provides educational resources to help inform consumers about their healthcare.
Gold also provides mail delivery and discounted access to our GoodRx Care telehealth services at no additional cost. ◦ Our pharma manufacturer solutions offering provides advertising and integrated consumer affordability solutions to pharma manufacturers with the goal of improving access to and affordability of brand medications for consumers. ◦ Our platform provides educational resources to help inform consumers about their healthcare.
Pharma manufacturers provide affordability solutions such as co-pay cards, patient assistance programs, care portals and other savings options so that consumers can access their medications. We partner with pharma manufacturers to advertise and integrate these affordability solutions into our platform.
Pharma Manufacturer Solutions Offering Brand medications tend to be expensive, and insurance coverage is complicated and may be restrictive. As a result, many consumers are not able to access or afford these medications. Pharma manufacturers provide affordability solutions such as co-pay cards, patient assistance programs, care portals and other savings options so that consumers can access their medications.
We expect to continue to grow this offering through further engagement with pharma manufacturers. We believe this offering can deliver incremental margin as we deploy these solutions across our existing base of consumers and visitors. 10 Subscription Offerings Our subscription offerings are natural extensions of our prescription transactions offering.
We believe this offering can deliver incremental margin as we deploy these solutions across our existing base of consumers and visitors. Sales & Marketing Consumers come to our platform organically and also through our sales and marketing initiatives.
We believe that our primary barrier to adoption is awareness. Americans have historically not had to be active consumers of healthcare since benefit plans were more generous and open than they are today.
Americans have historically not had to be active consumers of healthcare since benefit plans were more generous and open than they are today. Many consumers are not aware that prices for the same prescription vary between pharmacies or that there are competitive cash prices available that may be lower than insurance prices.
This includes a $524.0 billion prescription opportunity, inclusive of prescriptions that are written but not filled, a $30.0 billion pharma manufacturer solutions opportunity and a $250.0 billion telehealth opportunity. Prescription Opportunity We started our business with a focus on the U.S. prescriptions market. The vast majority of the utilization of our platform relates to generic medications.
Prescription Opportunity We started our business with a focus on the U.S. prescriptions market. The majority of the utilization of our platform relates to generic medications. We also enable consumers to save on brand medications.
Our respect for laws and regulations regarding the collection and processing of personal data underlies our strategy to improve our customer experience and build trust.
The violation of any such laws and regulations and/or the FTC Order could result in legal remedies that could materially impact our business or financial performance. Our respect for laws and regulations regarding the collection and processing of personal information underlies our strategy to improve our consumer experience and build trust.
("vitaCare") in 2022 provides a pharmacy services solution that helps patients understand their coverage and identify available savings opportunities, and facilitates communication with their healthcare provider. Our pharma manufacturer solutions offering delivers a product that both increases overall consumer satisfaction and drives incremental consumer lifetime value at a low incremental cost to us.
We believe our pharma manufacturer solutions offering delivers a product that both increases overall consumer satisfaction and drives incremental consumer lifetime value at a low incremental cost to us. We expect to grow this offering through further engagement with pharma manufacturers.
Telehealth Offering Through our GoodRx Care platform, we offer access to telehealth visits to provide consumers with quick, easy and affordable access to healthcare which are offered to patients on a cash-pay basis outside of insurance.
Through our GoodRx Care platform, we offer consumers access to telehealth visits on a cash-pay basis outside of insurance. We believe our telehealth offering principally enhances the accessibility of our prescription transactions and subscription offerings for consumers. Prescription Transactions Offering We have built a vast network of relationships, contracts and integrations with key stakeholders in the healthcare industry.
The biggest perk of all is knowing that the work performed has a meaningful impact on our consumers.
We foster a tight-knit corporate culture through company events, team building offsites, happy hours, game and movie nights, and pet-friendly offices. The biggest perk of all is knowing that the work performed has a meaningful impact on our consumers.
Every quarter, our employees nominate and vote for nonprofit organizations and causes they believe in, to which we then make a donation. We have made financial contributions to a broad range of organizations, including those dedicated to helping our most vulnerable communities, addressing important issues like conservation, and improving healthcare access, education, and research.
These nonprofit organizations were nominated and voted for by our employees, furthering our efforts to support our workforce and nurture our company value of "Doing Good." We have made financial contributions to a broad range of organizations, including those dedicated to helping our most vulnerable communities, addressing important issues such as youth mentorship, healthcare research, and social services.
These state laws are intended to protect consumers from fraudulent, unfair or deceptive marketing, sales and enrollment practices by such plans. It is possible that other states may enact new requirements or interpret existing requirements to include our programs. In addition, vitaCare is also subject to licensure and certification requirements, including state licensing of pharmacies and pharmacists.
These laws implicate a variety of services that we offer, such as our prescription transactions offering, Gold and Kroger Savings, and may implicate other products we may develop in the future. These state laws are intended to protect consumers from fraudulent, unfair or deceptive marketing, sales and enrollment practices by such plans.
Additionally, there are a number of key partnerships that we have cultivated externally with to invest in our DEI commitment.
Furthermore, in 2023, we rolled out an enhanced training pertaining to performance management, interview, microaggression and unconscious bias training. Coaching, mentorship, and building community are top of mind to foster psychological safety and collaboration. Additionally, there are a number of key partnerships that we have cultivated externally with to invest in our DEI efforts.
Our employees also volunteered throughout the year at healthcare pop-ups in underserved communities and our leaders sponsored team members as they raised money for breast cancer awareness, the fight against leukemia, and other nonprofits. In addition, through "Good To Give," our employee-led donation program, we have supported over 15 nonprofit organizations in 2022 with donations totaling approximately $100,000.
In addition, through "Good To Give," our employee-led donation program, we have supported over 20 nonprofit organizations in 2023, with donations totaling approximately $50,000.
In addition, in 2022, we launched our collaboration with Express Scripts where eligible Express Scripts members will automatically be able to access GoodRx prices as part of their pharmacy benefit and we also began to enter into selective direct contractual agreements with pharmacies to complement the existing contractual agreements with our PBMs.
Eligible plan members only need to utilize their existing benefit card at their preferred in-network pharmacy to benefit from our discounts and pricing, with no further action required. In 2022, we began to enter into direct contractual agreements with select pharmacies to complement the existing contractual agreements with our PBM partners.
As of December 31, 2022, we held thirteen registered trademarks in the United States, including trademarks for our brand, GoodRx, and for the use of the color yellow in the prescription discounts space. Additionally, we had two trademark applications pending as of December 31, 2022, one of which is for our new company logo.
Our most material trademark asset is the registered trademark for our brand, “GoodRx,” and for the use of the color yellow in the prescription discounts space.
Although the majority of our pricing information comes from PBMs, we also collect pricing data points from other sources in order to help save our consumers as much money as possible. In 2022, we began to enter into selective direct contractual agreements with pharmacies to complement the existing contractual agreements with our PBMs.
For example, in 2022, we began to enter into direct contractual agreements with select pharmacies to complement the existing contractual agreements with our PBM partners.
Removed
Telehealth Opportunity Our telehealth offering can provide consumers with a convenient and affordable way to receive a diagnosis and a prescription online, when medically appropriate, and we believe our telehealth offering will continue to enhance the accessibility to our prescription and subscription offerings for these consumers; see below for information regarding our subscription offerings.
Added
We believe this market opportunity is substantial and estimate the total addressable market ("TAM") for our primary solutions to be between $534 billion and $607 billion. This includes a $515 billion to $588 billion prescription opportunity, which is inclusive of our estimated value of prescriptions that are written but not filled, and a $19 billion pharma manufacturer solutions opportunity.
Removed
Consumers may opt in to use our prescription transactions offering, our subscription offerings, or our mail delivery service after completing their telehealth visit in order to fill their prescriptions. Our Value Proposition We positively impact many key stakeholders in the healthcare ecosystem. We believe that consumers, healthcare providers, PBMs, pharmacies and pharma manufacturers all win with GoodRx.
Added
Consumers can choose the lowest price from a selection of nearby pharmacies, save a GoodRx code to their mobile device for free and present that code at their pharmacy to access that low price.
Removed
We help people fill prescriptions that they may otherwise not have filled due to cost, and enable them to access treatments through telehealth that they may otherwise have delayed due to long wait times for in-person visits.
Added
Even as the 9 Table of Contents mix has changed, we have continued to grow the number of pricing data points processed by our platform and deliver a strong value proposition to our consumers.
Removed
We help physicians engage with patients more efficiently both directly through our telehealth offering and through our prescription transactions offering and subscription offerings. • Healthcare Companies: PBMs, pharmacies and pharma manufacturers use our platform to reach and provide affordability solutions to consumers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result of regulatory enforcement proceedings and inquiries, there may be settlements, enforcement actions, or related litigation that could include monetary penalties and/or compliance requirements that may (1) impose significant and material costs, (2) require us to make modifications to our data practices and our marketing programs, (3) result in negative publicity, or (4) have a negative impact on consumer demand for our products and services, or on our commercial or industry relationships.
Biggest changeIn February 2023, we reached a negotiated settlement with the FTC with respect to an investigation of our privacy and security practices which included a monetary settlement amount of $1.5 million and agreements to effect or maintain, as applicable, certain changes to our business practices, policies and compliance requirements. 31 Table of Contents As a result of regulatory enforcement proceedings and inquiries, we have been, and may in the future be, subject to related litigation, settlements or enforcement actions that have included or could include monetary penalties and/or compliance requirements that (1) impose significant and material costs, (2) require us to make modifications to our data practices and our marketing programs, (3) result in negative publicity, or (4) have a negative impact on consumer demand for our products and services, or on our commercial or industry relationships.
While we have contractual and non-contractual relationships with certain industry participants, such as pharmacies, PBMs and pharma manufacturers, these and other industry participants often negotiate complex and multi-party pricing structures, and we have no control over these participants and the policies and strategies that they implement in negotiating these pricing structures.
While we have contractual and non-contractual relationships with certain industry participants, such as pharmacies, PBMs and pharma manufacturers, these and other industry participants often negotiate complex and multi-party pricing structures, and we have no control over these participants and the policies and strategies that they implement in negotiating these multi-party pricing structures.
In addition, the government may assert that a claim including items and services resulting from a violation of the U.S. federal Anti-Kickback Statute or Stark Law constitutes a false or fraudulent claim for purposes of the civil False Claims Act; • HIPAA imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs.
In addition, the government may assert that a claim including items and services resulting from a violation of the U.S. federal Anti-Kickback Statute or Stark Law constitutes a false or fraudulent claim for purposes of the civil False Claims Act; • HIPAA, which imposes criminal and civil liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs.
As a result of any such election, our board of directors would not have a majority of independent directors, our compensation committee would not consist entirely of independent directors and our directors would not be nominated or selected by independent directors, as applicable.
As a result of any such election, our Board would not have a majority of independent directors, our compensation committee would not consist entirely of independent directors and our directors would not be nominated or selected by independent directors, as applicable.
The market price of our Class A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial conditions and results of operations; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments; • changes in stock market valuations and operating performance of other healthcare and technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our board of directors or management; • sales of large blocks of our Class A common stock, including sales by certain affiliates of Silver Lake, Francisco Partners, Spectrum, Idea Men, LLC, our Co-Founders or our executive officers and directors; 56 • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations or government policies applicable to our business; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging and other derivative transactions involving our capital stock; • general economic conditions in the United States; • other events or factors, including those resulting from war, pandemics (including COVID-19), incidents of terrorism or responses to these events; and • the other factors described in this Part I, Item 1A, “Risk Factors.” The stock market has recently experienced extreme price and volume fluctuations.
The market price of our Class A common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated fluctuations in our financial conditions and results of operations; • the financial projections we may provide to the public, any changes in these projections or our failure to meet these projections; • failure of securities analysts to initiate or maintain coverage of our company, changes in financial estimates or ratings by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, results of operations or capital commitments; • changes in stock market valuations and operating performance of other healthcare and technology companies generally, or those in our industry in particular; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • changes in our Board or management; • sales of large blocks of our Class A common stock, including sales by certain affiliates of Silver Lake, Francisco Partners, Spectrum, Idea Men, LLC, our Co-Founders or our executive officers and directors; • lawsuits threatened or filed against us; • anticipated or actual changes in laws, regulations or government policies applicable to our business; • changes in our capital structure, such as future issuances of debt or equity securities; • short sales, hedging and other derivative transactions involving our capital stock; • general economic conditions in the United States; • other events or factors, including those resulting from war, pandemics (such as COVID-19), incidents of terrorism or responses to these events; and • the other factors described in this Part I, Item 1A, “Risk Factors.” The stock market has recently experienced extreme price and volume fluctuations.
Unlike the federal Anti-Kickback Statute, the Stark Law is violated if the financial arrangement does not meet an applicable exception, regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral; • the U.S. federal false claims laws, including the civil False Claims Act (which can be enforced through “qui tam,” or whistleblower actions, by private citizens on behalf of the federal government), which prohibits any person from, 45 among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment of government funds or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the U.S. federal government.
Unlike the federal Anti-Kickback Statute, the Stark Law is violated if the financial arrangement does not meet an applicable exception, regardless of any intent by the parties to induce or reward referrals or the reasons for the financial relationship and the referral; • the U.S. federal false claims laws, including the civil False Claims Act (which can be enforced through “qui tam,” or whistleblower actions, by private citizens on behalf of the federal government), which prohibits any person from, among other things, knowingly presenting, or causing to be presented false or fraudulent claims for payment of government funds or knowingly making, using or causing to be made or used, a false record or statement material to an obligation to pay money to the government or knowingly and improperly avoiding, decreasing or concealing an obligation to pay money to the U.S. federal government.
Certain of the facilities we rely on, including but not limited to offices and network infrastructure, are located in areas that have experienced, and are projected to continue 39 to experience, various meteorological phenomena (such as drought, heatwaves, wildfire, storms, and flooding, among others) or other catastrophic events that may disrupt our or our suppliers’ operations, require us to incur additional operating or capital expenditures, or otherwise adversely impact our business, financial condition, or results of operations.
Certain of the facilities we rely on, including but not limited to offices and network infrastructure, are located in areas that have experienced, and are projected to continue to experience, various meteorological phenomena (such as drought, heatwaves, wildfire, storms, and flooding, among others) or other catastrophic events that may disrupt our or our suppliers’ operations, require us to incur additional operating or capital expenditures, or otherwise adversely impact our business, financial condition, or results of operations.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain stockholder litigation matters and the federal district courts of the United 52 States is the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the sole and exclusive forum for certain stockholder litigation matters and the federal district courts of the United States is the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, employees or stockholders.
For example, integration of PBMs and pharmacy providers could result in pricing structures whereby such entities would have greater pricing power and flexibility or industry players could implement direct to consumer initiatives that could significantly alter existing pricing structures, either of which would have an adverse impact on our ability 22 to present competitive and low prices to consumers and, as a result, the value of our platform for consumers and our results of operations.
For example, integration of PBMs and pharmacy providers could result in pricing structures whereby such entities would have greater pricing power and flexibility or industry players could implement direct to consumer initiatives that could significantly alter existing pricing structures, either of which would have an adverse impact on our ability to present competitive and low prices to consumers and, as a result, the value of our platform for consumers and our results of operations.
Even when the parties to our stockholders agreement cease to own shares of our stock representing a majority of the total voting power, for so long as the parties to our stockholders agreement continue to own a significant percentage of our stock, particularly our Class B common stock, they will still be able to significantly influence or effectively control the composition of our board of directors and the approval of actions requiring stockholder approval through their voting power.
Even when the parties to our stockholders agreement cease to own shares of our stock representing a majority of the total voting power, for so long as the parties to our stockholders agreement continue to own a significant percentage of our stock, particularly our Class B common stock, they will still be able to significantly influence or effectively control the composition of our Board and the approval of actions requiring stockholder approval through their voting power.
There are also legislative discussions regarding the changing of rules relating to post-grant review of patents through IPR or covered business method (“CBM”) review. For example, current case law holds that the Patent Trial and Appeal Board 54 (“PTAB”) has the sole authority to determine whether to institute an IPR or CBM, and such decision is unreviewable on appeal.
There are also legislative discussions regarding the changing of rules relating to post-grant review of patents through IPR or covered business method (“CBM”) review. For example, current case law holds that the Patent Trial and Appeal Board (“PTAB”) has the sole authority to determine whether to institute an IPR or CBM, and such decision is unreviewable on appeal.
Our ability to successfully grow through these types of strategic transactions depends upon our ability to identify, negotiate, complete and integrate suitable target businesses, technologies and products and to obtain any necessary financing, and is subject to numerous risks, including: • failure to identify acquisition, investment or other strategic alliance opportunities that we deem suitable or available on favorable terms; • problems integrating the acquired business, technologies or products, including issues maintaining uniform standards, procedures, controls and policies; • unanticipated costs associated with acquisitions, investments or strategic alliances; • adverse impacts on our overall margins; • diversion of management’s attention from our existing business; • adverse effects on existing business relationships with consumers, pharmacies and PBMs; • risks associated with entering new markets in which we may have limited or no experience; • potential loss of key employees of acquired businesses; and • increased legal and accounting compliance costs.
Our ability to successfully grow through these types of strategic transactions depends upon our ability to identify, negotiate, complete and integrate suitable target businesses, technologies and products and to obtain any necessary financing, and is subject to numerous risks, including: • failure to identify acquisition, investment or other strategic alliance opportunities that we deem suitable or available on favorable terms; • problems integrating the acquired business, technologies or products, including issues maintaining uniform standards, procedures, controls and policies; • unanticipated costs associated with acquisitions, investments or strategic alliances; • adverse impacts on our overall margins; • diversion of management’s attention from our existing business; • adverse effects on existing business relationships with consumers, pharmacies, PBMs and pharma manufacturers; • risks associated with entering new markets in which we may have limited or no experience; • potential loss of key employees of acquired businesses; and • increased legal and accounting compliance costs.
Although we try to ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that 55 we or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer.
Although we try to ensure that our employees, consultants, and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these individuals have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer.
As a result of our current or future use of open 44 source software, we may face claims or litigation, be required to release our proprietary source code, pay damages for breach of contract, re-engineer our solutions, discontinue making our solutions available in the event re-engineering cannot be accomplished on a timely basis or take other remedial action.
As a result of our current or future use of open source software, we may face claims or litigation, be required to release our proprietary source code, pay damages for breach of contract, re-engineer our solutions, discontinue making our solutions available in the event re-engineering cannot be accomplished on a timely basis or take other remedial action.
We may face increased competition from those that attempt to replicate our business model or marketing tactics, such as discount websites, e-commerce websites, apps, cash back and loyalty programs and new comparison shopping sites from various industry 24 participants, any of which could impact our ability to attract and retain consumers.
We may face increased competition from those that attempt to replicate our business model or marketing tactics, such as discount websites, e-commerce websites, apps, cash back and loyalty programs and new comparison shopping sites from various industry participants, any of which could impact our ability to attract and retain consumers.
Such ESG matters may also impact our suppliers and customers, which may compound or cause new impacts on our business, financial condition, or results of operations. 40 Risks Related to Intellectual Property We may be unable to establish, maintain, protect and enforce our intellectual property and proprietary rights or prevent third parties from making unauthorized use of our technology.
Such ESG matters may also impact our suppliers and customers, which may compound or cause new impacts on our business, financial condition, or results of operations. Risks Related to Intellectual Property We may be unable to establish, maintain, protect and enforce our intellectual property and proprietary rights or prevent third parties from making unauthorized use of our technology.
For example, we have implemented work-from-home measures, which have required us to provide technical support to our employees to enable them to connect to our systems from their homes. We may experience an increased risk of security breaches, loss of data, and other disruptions as a result of accessing sensitive information from remote locations.
For example, we implemented work-from-home measures, which required us to provide technical support to our employees to enable them to connect to our systems from their homes. We may experience an increased risk of security breaches, loss of data, and other disruptions as a result of accessing sensitive information from remote locations.
We have engaged outside consultants who function in the capacity of an internal audit group, and we plan to continue to hire additional consultants, accounting and financial staff with appropriate public company experience and technical accounting 28 knowledge as needed to maintain the system and process documentation necessary to perform the evaluation needed to comply with Section 404.
We have engaged outside consultants who function in the capacity of an internal audit group, and we plan to continue to hire additional consultants, accounting and financial staff with appropriate public company experience and technical accounting knowledge as needed to maintain the system and process documentation necessary to perform the evaluation needed to comply with Section 404.
Additionally, if we do not effectively manage the growth of our business and operations, the quality 19 of our platform and offerings could suffer, which could negatively affect our reputation and brand, business, financial condition and results of operations. Risks Related to Our Business We may be unsuccessful in achieving broad market education and changing consumer purchasing habits.
Additionally, if we do not effectively manage the growth of our business and operations, the quality of our platform and offerings could suffer, which could negatively affect our reputation and brand, business, financial condition and results of operations. Risks Related to Our Business We may be unsuccessful in achieving broad market education and changing consumer purchasing habits.
Because we derive a vast majority of our revenue from our prescription transactions offering, any material decline in the use of such offering or in the fees we receive from our partners in connection with such offering would have a pronounced impact on our future revenue and results of operations, particularly if we are unable to expand our offerings overall.
Because we derive a majority of our revenue from our prescription transactions offering, any material decline in the use of such offering or in the fees we receive from our partners in connection with such offering would have a pronounced impact on our future revenue and results of operations, particularly if we are unable to expand our offerings overall.
This inability could result in lower net income or greater net loss in a given quarter than expected. 53 We may experience fluctuations in our tax obligations and effective income tax rate, which could materially and adversely affect our results of operations. We are subject to U.S. federal and state income taxes.
This inability could result in lower net income or greater net loss in a given quarter than expected. We may experience fluctuations in our tax obligations and effective income tax rate, which could materially and adversely affect our results of operations. We are subject to U.S. federal and state income taxes.
In particular, for so long as the parties to our stockholders agreement continue to own a significant percentage of our stock, particularly our Class B common stock, the parties to our stockholders agreement may be able to cause or prevent a change of control of our company or a change in the composition of our board of directors, and could preclude any unsolicited acquisition of our company.
In particular, for so long as the parties to our stockholders agreement continue to own a significant percentage of our stock, particularly our Class B common stock, the parties to our stockholders agreement may be able to cause or prevent a change of control of our company or a change in the composition of our Board, and could preclude any unsolicited acquisition of our company.
These requirements may be interpreted and applied in a manner that varies from one 32 jurisdiction to another and/or may conflict with other law, regulations and regulatory interpretations. As a result, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements and obligations.
These requirements may be interpreted and applied in a manner that varies from one jurisdiction to another and/or may conflict with other law, regulations and regulatory interpretations. As a result, our practices may not have complied or may not comply in the future with all such laws, regulations, requirements and obligations.
Furthermore, according to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce and thus violate Section 5(a) of the FTC Act. It may also violate one or more FTC-enforced rules.
According to the FTC, violating consumers’ privacy rights or failing to take appropriate steps to keep consumers’ personal information secure may constitute unfair acts or practices in or affecting commerce and thus violate Section 5(a) of the FTC Act. It may also violate one or more FTC-enforced rules.
We rely significantly on our prescription transactions offering and may not be successful in expanding our offerings within our markets, particularly the U.S. prescriptions market, or to other segments of the healthcare industry. To date, the vast majority of our revenue has been derived from our prescription transactions offering.
We rely significantly on our prescription transactions offering and may not be successful in expanding our offerings within our markets, particularly the U.S. prescriptions market, or to other segments of the healthcare industry. To date, the majority of our revenue has been derived from our prescription transactions offering.
Our PBM contracts generally, including our contracts with MedImpact, Navitus, and Express Scripts, have a tiered fee structure based on volume generated in the applicable payment period. Our PBM contracts, including our contracts with MedImpact, Navitus, and Express Scripts, do not contain minimum volume requirements, and thus do not provide for any assurance as to minimum payments to us.
Our PBM contracts generally, including our contracts with Navitus and Express Scripts, have a tiered fee structure based on volume generated in the applicable payment period. Our PBM contracts, including our contracts with Navitus and Express Scripts, do not contain minimum volume requirements, and thus do not provide for any assurance as to minimum payments to us.
The Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010 (collectively, the “ACA”), 47 enacted in March 2010, made major changes in how healthcare is delivered and reimbursed, and increased access to health insurance benefits to the uninsured and underinsured population of the United States.
The Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010 (collectively, the “ACA”), enacted in March 2010, made major changes in how healthcare is delivered and reimbursed, and increased access to health insurance benefits to the uninsured and underinsured population of the United States.
We have made significant investments related to consumer acquisition and expect to continue to spend significant amounts to acquire additional customers. We cannot assure you that this spending will be effective or that revenue from new consumers that we acquire will ultimately exceed the cost of acquiring those consumers.
We have made significant investments related to consumer acquisition and expect to continue to spend significant amounts to acquire additional consumers. We cannot assure you that this spending will be effective or that revenue from new consumers that we acquire will ultimately exceed the cost of acquiring those consumers.
Alternatively, 20 we have and may continue to focus on the efficiency of our spending on customer acquisition related strategies, which may impact our ability to acquire or retain consumers. If we fail to deliver reliable and significant discounted prices for prescription medications, we may be unable to acquire or retain consumers.
Alternatively, we have and may continue to focus on the efficiency of our spending on customer acquisition related strategies, which may impact our ability to acquire or retain consumers. If we fail to deliver reliable and significant discounted prices for prescription medications, we may be unable to acquire or retain consumers.
Medication pricing is also impacted by health insurance companies and the extent to which a health insurance plan provides for, among other things, covered medications, preferred tiers for different medications and high or low deductibles. A vast majority of the utilization of our platform relates to generic medications.
Medication pricing is also impacted by health insurance companies and the extent to which a health insurance plan provides for, among other things, covered medications, preferred tiers for different medications and high or low deductibles. A majority of the utilization of our platform relates to generic medications.
As a result, we may not be successful in future efforts to expand into or achieve profitability from new markets, new business models or strategies or new offering types, and our ability to generate revenue from our current offerings and continue our existing business may be negatively affected.
As a result, we may not be successful in future efforts to expand into or achieve profitability from new markets, new business models or strategies, new partnerships or new offering types, and our ability to generate revenue from our current offerings and continue our existing business may be negatively affected.
Such claims and litigation may involve patent holding companies or other adverse intellectual property rights holders who have no relevant product revenue, and therefore our own pending patents and other intellectual property rights 41 may provide little or no deterrence to these rights holders in bringing intellectual property rights claims against us.
Such claims and litigation may involve patent holding companies or other adverse intellectual property rights holders who have no relevant product revenue, and therefore our own pending patents and other intellectual property rights may provide little or no deterrence to these rights holders in bringing intellectual property rights claims against us.
Adverse legal or regulatory developments could substantially harm our business. 31 Our business relies on email, mail and other messaging channels and any technical, legal or other restrictions on the sending of such correspondence or a decrease in consumer willingness to receive such correspondence could adversely affect our business.
Adverse legal or regulatory developments could substantially harm our business. Our business relies on email, mail and other messaging channels and any technical, legal or other restrictions on the sending of such correspondence or a decrease in consumer willingness to receive such correspondence could adversely affect our business.
Our TAM is based on internal estimates and third-party estimates regarding the size of each of the U.S. prescriptions market, pharma manufacturer solutions market and telehealth market, and is subject to significant uncertainty and is based on assumptions that may not prove to be accurate.
Our TAM is based on internal estimates and third-party estimates regarding the size of each of the U.S. prescriptions market and pharma manufacturer solutions market, and is subject to significant uncertainty and is based on assumptions that may not prove to be accurate.
We generally seek to address such unauthorized copying or use, but we have not always been successful in stopping all unauthorized use of our content or other intellectual property or technology, and may not be successful in doing so in the 42 future.
We generally seek to address such unauthorized copying or use, but we have not always been successful in stopping all unauthorized use of our content or other intellectual property or technology, and may not be successful in doing so in the future.
Our amended and restated certificate of incorporation provides that, unless we otherwise consent in writing, (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the Delaware General Corporation Law confers exclusive jurisdiction on the Court of Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Our amended and restated certificate of incorporation provides that, unless we otherwise consent in writing, (A) (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer, other employee or stockholder of the Company to the Company or the Company’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, our amended and restated certificate of incorporation or our amended and restated bylaws (as either may be amended or restated) or as to which the Delaware General Corporation Law confers exclusive jurisdiction on the Court of 48 Table of Contents Chancery of the State of Delaware or (iv) any action asserting a claim governed by the internal affairs doctrine of the law of the State of Delaware shall, to the fullest extent permitted by law, be exclusively brought in the Court of Chancery of the State of Delaware or, if such court does not have subject matter jurisdiction thereof, the federal district court of the State of Delaware; and (B) the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act.
Some of our PBM contracts provide for these continuing payments for so long as negotiated rates related to the applicable 23 PBM contract continue to be used after termination, and other contracts provide for these continuing payments for specified multi-year payment periods after termination.
Some of our PBM contracts provide for these continuing payments for so long as negotiated rates related to the applicable PBM contract continue to be used after termination, and other contracts provide for these continuing payments for specified multi-year payment periods after termination.
Certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • amendments to certain provisions of our amended and restated certificate of incorporation or amendments to our amended and restated bylaws generally require the approval of at least 66 2/3% of the voting power of our outstanding capital stock; • our dual class common stock structure, which provides certain affiliates of Silver Lake, Francisco Partners, Spectrum, Idea Men, LLC and our Co-Founders, individually or together, with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock and Class B common stock; • our staggered board; 51 • at any time when the holders of our Class B common stock no longer beneficially own, in the aggregate, at least the majority of the voting power of our outstanding capital stock, our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; • our amended and restated certificate of incorporation does not provide for cumulative voting; • vacancies on our board of directors are able to be filled only by our board of directors and not by stockholders, subject to the rights granted pursuant to the stockholders agreement; • a special meeting of our stockholders may only be called by the chairperson of our board of directors, our Chief Executive Officer or our Co-Chief Executive Officers, as applicable, or a majority of our board of directors; • restrict the forum for certain litigation against us to Delaware or the federal courts, as applicable; • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures apply for stockholders (other than the parties to our stockholders agreement) to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
Certain provisions in our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that may make the acquisition of our company more difficult, including the following: • amendments to certain provisions of our amended and restated certificate of incorporation or amendments to our amended and restated bylaws generally require the approval of at least 66 2/3% of the voting power of our outstanding capital stock; • our dual class common stock structure, which provides certain affiliates of Silver Lake, Francisco Partners, Spectrum, Idea Men, LLC and our Co-Founders, individually or together, with the ability to significantly influence the outcome of matters requiring stockholder approval, even if they own significantly less than a majority of the shares of our outstanding Class A common stock and Class B common stock; • our staggered Board; • at any time when the holders of our Class B common stock no longer beneficially own, in the aggregate, at least the majority of the voting power of our outstanding capital stock, our stockholders will only be able to take action at a meeting of stockholders and will not be able to take action by written consent for any matter; • our amended and restated certificate of incorporation does not provide for cumulative voting; 47 Table of Contents • vacancies on our Board are able to be filled only by our Board and not by stockholders, subject to the rights granted pursuant to the stockholders agreement; • a special meeting of our stockholders may only be called by the chairperson of our Board, our Chief Executive Officer or a majority of our Board; • restrict the forum for certain litigation against us to Delaware or the federal courts, as applicable; • our amended and restated certificate of incorporation authorizes undesignated preferred stock, the terms of which may be established and shares of which may be issued without further action by our stockholders; and • advance notice procedures apply for stockholders (other than the parties to our stockholders agreement) to nominate candidates for election as directors or to bring matters before an annual meeting of stockholders.
For example, our PBM contracts, including our contracts with MedImpact, Navitus, and Express Scripts, contain provisions that limit PBM use of our intellectual property related to our brand and platform and require PBMs to maintain the confidentiality of our data.
For example, our PBM contracts, including our contracts with Navitus and Express Scripts, contain provisions that limit PBM use of our intellectual property related to our brand and platform and require PBMs to maintain the confidentiality of our data.
The emergence of alternative platforms such as smartphones and tablets and the 29 emergence of niche competitors who may be able to optimize offerings, services or strategies for such platforms will require new investment in technology.
The emergence of alternative platforms such as smartphones and tablets and the emergence of niche competitors who may be able to optimize offerings, services or strategies for such platforms will require new investment in technology.
Further, if PBMs or pharmacy chains elect to directly distribute pricing information through their own digital channels, or if new or existing competitors are faster or better at addressing consumer demand and preferences for digital channels, or are able to offer more accessible discounted prices to consumers, our ability and success in presenting discounted prices on our platform may be impeded and our business, financial condition and results of operations would be adversely affected.
Further, if PBMs or pharmacy operators elect to directly distribute pricing information through their own digital channels, or if new or existing competitors are faster or better at addressing consumer demand and preferences for digital channels, or are able to offer more accessible discounted prices to consumers, our ability and success in presenting discounted prices on our platform may be impeded and our business, financial condition and results of operations would be adversely affected.
Continued growth could strain our ability to develop and improve our operational, financial and management controls, enhance our reporting systems and procedures, recruit, train and retain highly skilled personnel and maintain consumer satisfaction.
Growth could strain our ability to develop and improve our operational, financial and management controls, enhance our reporting systems and procedures, recruit, train and retain highly skilled personnel and maintain consumer satisfaction.
The majority of our PBM contracts, including our contracts with MedImpact and Navitus, are percentage of fee contracts, and a minority of our contracts, including our PBM contract with Express Scripts, provide for fixed fee per transaction arrangements.
The majority of our PBM contracts, including our contract with Navitus, are percentage of fee contracts, and a minority of our contracts, including our PBM contract with Express Scripts, provide for fixed fee per transaction arrangements.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, if and when we require it, including as a result of the disruption to the capital and debt markets caused by the COVID-19 pandemic or a similar pandemic, our ability to grow or support our business and to respond to business challenges could be significantly limited.
If we are unable to obtain adequate financing or financing on terms satisfactory to us, if and when we require it, including as a result of the disruption to the capital and debt markets caused by COVID-19 or a pandemic of a similar infectious disease, our ability to grow or support our business and to respond to business challenges could be significantly limited.
Due in part to existing pricing structures, we generate a small portion of our revenue through contracts with pharma manufacturers and other intermediaries. Changes in the roles of industry participants and in general pricing structures, as well as price competition among industry participants, could have an adverse impact on our business.
Due in part to existing pricing structures, we generate a smaller portion of our revenue through contracts with pharma manufacturers and other intermediaries. Changes in the roles of industry participants and in general pricing structures, as well as price competition among industry participants, could have an adverse impact on our business.
In addition, to the extent we, through vitaCare, or our other contractors or agents receive or obtain individually identifiable health information from patients, healthcare professionals, pharmacies, or other individuals or entities, we could be subject to criminal penalties if we mishandle individually identifiable health information in a manner that is not authorized or permitted by HIPAA.
In addition, to the extent we or our other contractors or agents receive or obtain individually identifiable health information from patients, healthcare professionals, pharmacies, or other individuals or entities, we could be subject to criminal penalties if we mishandle individually identifiable health information in a manner that is not authorized or permitted by HIPAA.
Item 1A. Ris k Factors. Our business involves significant risks, some of which are described below. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K. The risks and uncertainties described below are not the only ones we face.
Item 1A. Risk Factors. Our business involves significant risks, some of which are described below. You should carefully consider the risks and uncertainties described below, together with all of the other information in this Annual Report on Form 10-K. The risks and uncertainties described below are not the only ones we face.
We operate in a highly competitive environment and in an industry that is subject to significant market pressures brought about by consumer demands, a limited number of major PBMs, fluctuations in medication pricing, legislative and regulatory activity, significant changes in demand and interest in telehealth and other market factors.
We operate in a highly competitive environment and in an industry that is subject to significant market pressures brought about by consumer demands, a limited number of major PBMs and pharmacy operators, fluctuations in medication pricing, legislative and regulatory activity, significant changes in demand and interest in telehealth and other market factors.
If there is a decline in revenue generated from any of the PBMs we contract with, as a result of consolidation of PBMs or pharmacy chains, pricing competition among industry participants or otherwise, if we are unable to maintain or grow our relationships with PBMs or if we lose one or more of the PBMs we contract with and cannot replace the PBM in a timely manner or at all, there would be an adverse effect on our business, financial condition and results of operations.
If there is a decline in revenue generated from any of the PBMs or pharmacies we contract with, as a result of consolidation of PBMs or pharmacy chains, pricing competition among industry participants or otherwise, if we are unable to maintain or grow our relationships with PBMs and pharmacies or if we lose one or more of the PBMs or partner pharmacies we contract with and cannot replace such PBM or partner pharmacy in a timely manner or at all, there would be an adverse effect on our business, financial condition and results of operations.
If existing or new companies develop or market an offering similar to ours, develop an entirely new solution for access to affordable healthcare, acquire one of our existing competitors or form a strategic alliance with one of our competitors or other industry participants, our ability to compete effectively could be significantly impacted, which would have a material adverse effect on our business, results of operations and financial condition.
If existing or new companies develop or market an offering similar to ours, develop an entirely new solution for access to affordable healthcare, acquire one of our 23 Table of Contents existing competitors or form a strategic alliance with one of our competitors or other industry participants, our ability to compete effectively could be significantly impacted, which would have a material adverse effect on our business, results of operations and financial condition.
Because email, mail and other messaging channels are important to our business, if we are unable to successfully deliver messages to consumers through these channels, if there are legal restrictions on delivering such messages to consumers, if consumers do not or cannot open or otherwise utilize our messages or if consumers reject the receipt of communications referencing particular prescriptions or conditions, our revenues and profitability would be adversely affected.
Because email, mail and other messaging channels are important to our business, if we are unable to successfully deliver messages to consumers through these channels, if there are legal restrictions on delivering such messages to consumers, if consumers do not or 29 Table of Contents cannot open or otherwise utilize our messages or if consumers reject the receipt of communications referencing particular prescriptions or conditions, our revenues and profitability would be adversely affected.
Any of these factors could cause our revenue growth to decline and may adversely affect our margins and profitability. Failure to continue our revenue growth or improve margins would have a material adverse effect on our business, financial condition and results of operations.
Any of these factors could cause our revenue growth to decline and may adversely affect our margins and profitability. Failure to grow our revenue or improve margins would have a material adverse effect on our business, financial condition and results of operations.
For example, HIPAA imposes privacy, security and breach reporting obligations with respect to individually identifiable health information upon “covered entities” (health plans, health care clearinghouses and certain health care providers), such as vitaCare, and their respective business associates, individuals or entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity.
For example, HIPAA imposes privacy, security and breach reporting obligations with respect to individually identifiable health information upon “covered entities” (health plans, health care clearinghouses and certain health care providers) and their respective business associates, individuals or entities that create, receive, maintain or transmit protected health information in connection with providing a service for or on behalf of a covered entity.
In addition, if the breadth or strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future offering candidates. We utilize open source software, which may pose particular risks to our proprietary software and solutions.
In addition, if the breadth or 41 Table of Contents strength of protection provided by our patents and patent applications is threatened, regardless of the outcome, it could dissuade companies from collaborating with us to license, develop or commercialize current or future offering candidates. We utilize open source software, which may pose particular risks to our proprietary software and solutions.
Although the consumers who use our offerings do so outside of any medication or other health benefits covered under their health insurance, including any commercial or government healthcare program, we may nonetheless be subject to healthcare fraud and abuse regulation and enforcement by both the U.S. federal government and the states in which we conduct our business.
Although the consumers who use our offerings do so outside of any medication or other health benefits covered under their health insurance, including any commercial or government healthcare program, we may nonetheless be subject to 42 Table of Contents healthcare fraud and abuse regulation and enforcement by both the U.S. federal government and the states in which we conduct our business.
The reduction in workforce could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities or initiatives.
Any reduction in workforce could also make it difficult for us to pursue, or prevent us from pursuing, new opportunities and initiatives due to insufficient personnel, or require us to incur additional and unanticipated costs to hire new personnel to pursue such opportunities or initiatives.
As of December 31, 2021, we completed a study to assess whether an ownership change under Section 382 of the Code had occurred, or whether there had been multiple ownership changes since our formation.
As of December 31, 2022, we completed a study to assess whether an ownership change under Section 382 of the Code had occurred, or whether there had been multiple ownership changes since our formation.
If any such expansion does not enhance our ability to maintain or grow revenue or recover any associated development costs, our business, financial condition and results of operations could be adversely affected. Our business is subject to changes in medication pricing and is significantly impacted by pricing structures negotiated by industry participants.
If any such 20 Table of Contents expansion does not enhance our ability to maintain or grow revenue or recover any associated development costs, our business, financial condition and results of operations could be adversely affected. Our business is subject to changes in medication pricing and is significantly impacted by pricing structures negotiated by industry participants.
Such negative publicity also could have an adverse effect on our ability to attract and retain consumers, partners, or employees, and result in decreased revenue, which would materially adversely affect our business, financial condition and results of operations. 27 We may be unable to successfully respond to changes in the market for prescription pricing, and may fail to maintain and expand the use of GoodRx codes through our apps and websites.
Such negative publicity also could have an adverse effect on our ability to attract and retain consumers, partners, or employees, and result in decreased revenue, which would materially adversely affect our business, financial condition and results of operations. 25 Table of Contents We may be unable to successfully respond to changes in the market for prescription pricing, and may fail to maintain and expand the use of GoodRx codes through our apps and websites.
Our ability to manage our growth effectively and to integrate new employees, technologies and acquisitions into our existing business will require us to continue to expand our operational and financial infrastructure and to continue to retain, attract, train, motivate and manage employees. Management of growth is particularly difficult when employees work from home as a result of our hybrid/remote workplace.
Our ability to manage our future growth effectively and to integrate new employees, technologies and acquisitions into our existing business may require us to expand our operational and financial infrastructure and to continue to retain, attract, train, motivate and manage employees. Management of growth is particularly difficult when employees work from home as a result of our hybrid/remote workplace.
A determination of non-compliance, or the termination of or failure to successfully restructure these relationships could result in disciplinary action, penalties, damages, fines, and/or a loss of revenue, any of which could have a material and adverse effect on our business, financial condition and results of operations.
A determination of non-compliance, or the 44 Table of Contents termination of or failure to successfully restructure these relationships could result in disciplinary action, penalties, damages, fines, and/or a loss of revenue, any of which could have a material and adverse effect on our business, financial condition and results of operations.
In addition, we have agreed to nominate to our board of directors individuals designated by Silver Lake, Francisco Partners, Spectrum and Idea Men, LLC in accordance with our stockholders agreement.
In addition, we have agreed to nominate to our Board individuals designated by Silver Lake, Francisco Partners, Spectrum and Idea Men, LLC in accordance with our stockholders agreement.
In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. Even if such licenses are available, we may be required to pay the licensor substantial royalties based on sales of our solutions and services.
In addition, companies that perceive 51 Table of Contents us to be a competitor may be unwilling to assign or license rights to us. Even if such licenses are available, we may be required to pay the licensor substantial royalties based on sales of our solutions and services.
We are, and may become in the future, subject to various legal proceedings and claims that arise in or outside the ordinary course of business, which may require significant management time and attention, result in significant 50 legal expenses and may result in unfavorable outcomes, which may have a material adverse effect on our business, operating results and financial condition, and negatively affect the price of our Class A common stock.
We are, and may become in the future, subject to various legal proceedings and claims that arise in or outside the ordinary course of business, which may require significant management time and attention, result in significant 46 Table of Contents legal expenses and may result in unfavorable outcomes, which may have a material adverse effect on our business, operating results and financial condition, and negatively affect the price of our Class A common stock.
Our PBM contracts generally renew automatically, including our contracts with MedImpact and Navitus. In addition, our PBM contracts generally provide for continuing payments to us after such contracts are terminated, including our contracts with MedImpact, Navitus and Express Scripts.
Our PBM contracts generally renew automatically, including our contract with Navitus. In addition, our PBM contracts generally provide for continuing payments to us after such contracts are terminated, including our contracts with Navitus and Express Scripts.
We may have experienced additional ownership changes since December 31, 2021, and we may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership.
We may have experienced additional ownership changes since December 31, 2022, and we may also experience ownership changes in the future as a result of subsequent shifts in our stock ownership.
For more information, see our risk factor titled “The increasing focus on environmental sustainability and social initiatives could increase our costs, harm our reputation and adversely impact our financial results.” Changing market dynamics, global and domestic policy developments, and the increasing frequency and impact of meteorological phenomena have the potential to disrupt our business, the business of our suppliers and/or customers, or otherwise adversely impact our business, financial condition, or results of operations.
For more information, see our risk factor titled “The increasing focus on ESG initiatives could increase our costs, harm our reputation and adversely impact our financial results.” Changing market dynamics, global and domestic policy developments, and the increasing frequency and impact of meteorological phenomena have the potential to disrupt our business, the business of our suppliers and/or customers, or otherwise adversely impact our business, financial condition, or results of operations.
We cannot assure that offering such incentives will be successful in attracting new and recurring consumers and to maintain competitive discounted prices in the future. If we are unable to successfully manage these incentives, our financial performance may be adversely impacted.
We cannot assure that offering such incentives will be successful in attracting new and recurring consumers or that we will be able to maintain competitive discounted prices in the future to retain such consumers. If we are unable to successfully manage these incentives, our financial performance may be adversely impacted.
As we have agreements with PBMs to market their negotiated rates through our platform, our ability to present discounted prices is dependent upon the arrangements that PBMs have negotiated with pharmacies and upon the resulting availability and allocation of discounts for medications subject to these arrangements.
As we have agreements with PBMs to market their negotiated rates through our platform, our ability to present discounted prices is in part dependent upon the arrangements that such PBMs have negotiated with pharmacies and upon the resulting availability and allocation of discounts for medications subject to these arrangements.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could impact the amounts that federal and state governments and other third-party payors will pay for healthcare products and services or require us to restructure our existing arrangements with PBMs and pharma manufacturers, any of which could adversely affect our business, financial condition and results of operations. 48 Risks Related to Our Organizational Structure, including Agreements and Relationships with Significant Stockholders The dual class structure of our common stock may adversely affect the trading market for our Class A common stock.
We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could impact the amounts that federal and state governments and other third-party payors will pay for healthcare products and services or require us to restructure our existing arrangements with PBMs and pharma manufacturers, any of which could adversely affect our business, financial condition and results of operations. 45 Table of Contents Risks Related to Our Organizational Structure, including Agreements and Relationships with Significant Stockholders Our capital structure may adversely affect the trading market for our Class A common stock.
For example, our contracts include provisions that, among others, restrict the ability of PBMs to compete with us and solicit our consumers.
For example, our contracts include provisions that, among others, restrict the ability of PBMs and our partner pharmacies to compete with us and solicit our consumers.
For example, a grocery chain took actions late in the first quarter of 2022 that impacted acceptance of discounted pricing for a subset of prescription drugs from PBMs, who are our customers, and whose pricing we promote on our platform.
For example, a grocery chain took actions late in the first quarter of 2022 that impacted acceptance of discounted pricing for a subset of prescription drugs from PBMs and whose pricing we promote on our platform.
For example, a grocery chain took actions late in the first quarter of 2022 that impacted acceptance of discounted pricing for a subset of prescription drugs from PBMs, who are our customers, and whose pricing we promote on our platform.
For example, a grocery chain took actions late in the first quarter of 2022 that impacted acceptance of discounted pricing for a subset of prescription drugs from PBMs and whose pricing we promote on our platform.
The increasing focus on environmental, social and governance initiatives could increase our costs, harm our reputation and adversely impact our financial results. There has been increasing public focus by various stakeholders, including but not limited to investors, environmental activists, the media and governmental and nongovernmental organizations, on a variety of environmental, social and governance (“ESG”) and other sustainability matters.
The increasing focus on ESG initiatives could increase our costs, harm our reputation and adversely impact our financial results. There has been increasing public focus by various stakeholders, including but not limited to investors, environmental activists, the media and governmental and nongovernmental organizations, on a variety of ESG and other sustainability matters.
Regulatory authorities, state medical boards of medicine, state attorneys general and other parties, including our affiliated healthcare professionals, may assert that, despite the management service agreement and other arrangements through which we operate, we are engaged in the prohibited corporate practice of medicine, and/or that our arrangements with our affiliated professional entities constitute unlawful fee-splitting.
Regulatory authorities, state licensing boards, state attorneys general and other parties, including our affiliated professional entities, may assert that, despite the management service agreement and other arrangements through which we operate, we are engaged in the prohibited corporate practice of medicine, and/or that our arrangements with our affiliated professional entities constitute unlawful fee-splitting.
It is possible that governmental authorities may conclude that our business practices, including, without limitation, our revenue sharing arrangements with our partners, arrangements with entities that provide us with rebate administrative services, and other sales and marketing practices, do not comply with applicable fraud and abuse or other healthcare laws and regulations or guidance.
It is possible that governmental authorities may conclude that our business practices, including, without limitation, our revenue sharing arrangements with our partners, arrangements with entities that provide us with rebate administrative services, and other 43 Table of Contents sales and marketing practices, do not comply with applicable fraud and abuse or other healthcare laws and regulations or guidance.
While the potential economic impact brought by and the duration of any pandemic, epidemic or outbreak of an infectious disease, including COVID-19, may be difficult to assess or predict, the widespread COVID-19 pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.
While the potential economic impact brought by and the duration of any pandemic, epidemic or outbreak of an infectious disease, including COVID-19, may be difficult to assess or predict, the widespread COVID-19 pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital or to do so on favorable terms, which could in the future negatively affect our liquidity.
Some of our vendor agreements may be unilaterally terminated by the licensor for convenience, including with respect to Amazon Web Services, and if such agreements are terminated, we may not be able to enter into similar relationships in the future on reasonable terms or at all.
Some of our vendor agreements may be unilaterally terminated by the licensor for convenience, including with respect to services provided by Google, and if such agreements are terminated, we may not be able to enter into similar relationships in the future on reasonable terms or at all.
The holders of our Class B common stock, including the parties to our stockholders agreement, who also hold a significant portion of our Class B common stock, own approximately 97.4% of the combined voting power of our Class A and Class B common stock, with each share of Class A common stock entitling the holder to one vote and each share of Class B common stock entitling the holder to 10 votes, until the earlier of, (i) the first date on which the aggregate number of outstanding shares of our Class B common stock ceases to represent at least 10% of the aggregate number of our outstanding shares of common stock and (ii) September 25, 2027, on all matters submitted to a vote of our stockholders.
As of December 31, 2023, the holders of our Class B common stock, including the parties to our stockholders agreement, who also hold a significant portion of our Class B common stock, own approximately 97.0% of the combined voting power of our Class A and Class B common stock, with each share of Class A common stock entitling the holder to one vote and each share of Class B common stock entitling the holder to 10 votes, until the earlier of, (i) the first date on which the aggregate number of outstanding shares of our Class B common stock ceases to represent at least 10% of the aggregate number of our outstanding shares of common stock and (ii) September 25, 2027, on all matters submitted to a vote of our stockholders.
To effectively market our platform, we must educate consumers about the various purchase options and the benefits of using GoodRx codes when purchasing prescription medications and other healthcare products and services.
To effectively market our 18 Table of Contents platform, we must educate consumers about the various purchase options and the benefits of using GoodRx codes when purchasing prescription medications and other healthcare products and services.

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Item 2. Properties

Properties — owned and leased real estate

2 edited+1 added−0 removed0 unchanged
Biggest changeLouis, Missouri, New Albany, Ohio, Boca Raton, Florida and New York, New York. We believe that these facilities are sufficient for our current needs and that additional facilities will be available to accommodate the expansion of our business should they be needed.
Biggest changeWe believe that these facilities are sufficient for our current needs and that additional facilities will be available to accommodate the expansion of our business should they be needed. Item 3. Legal Proceedings.
Item 2. Pro perties. Our corporate headquarters is located in Santa Monica, California, where we lease approximately 74,000 square feet of space under a lease expiring in 2031. We also maintain smaller satellite offices across the United States, including in San Francisco, California, Charleston, South Carolina, Asheville, North Carolina, St.
Item 2. Properties. Our corporate headquarters is located in Santa Monica, California, where we lease approximately 74,000 square feet of space under a lease expiring in 2031. We also maintain smaller satellite offices across the United States, including in San Francisco, California, Charleston, South Carolina, Asheville, North Carolina, St. Louis, Missouri, New Albany, Ohio and New York, New York.
Added
The information required under this Item 3 is set forth in Note 13 within “Notes to Consolidated Financial Statements” included in Part IV, Item 15 of this report and is incorporated herein by this reference. Item 4. Mine Safety Disclosures. Not applicable. 54 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+3 added−5 removed5 unchanged
Biggest changeThe following graph depicts the total cumulative stockholder return on our Class A common stock from September 23, 2020, the first day of trading of our Class A common stock on the Nasdaq Global Select Market, through December 31, 2022, relative to the performance of the Nasdaq Composite Index and the two industries we intersect, namely, the Dow Jones Internet Services Index and S&P 500 Healthcare Index.
Biggest changePerformance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, or otherwise subject to the liabilities under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing. 55 Table of Contents The following graph depicts the total cumulative stockholder return on our Class A common stock from September 23, 2020, the first day of trading of our Class A common stock on the Nasdaq Global Select Market, through December 31, 2023, relative to the performance of the Nasdaq Composite Index and the two industries we intersect, namely, the Dow Jones Internet Services Index and S&P 500 Healthcare Index.
Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon results of operations, financial condition, capital requirements, business prospects, restrictions imposed by applicable law and other factors our board of directors deems relevant.
Any determination to pay dividends in the future will be at the discretion of our Board and will depend upon results of operations, financial condition, capital requirements, business prospects, restrictions imposed by applicable law and other factors our Board deems relevant.
Item 5. Market for Registrant’s Common Equity, Related Stock holder Matters and Issuer Purchases of Equity Securities. Market Information On September 23, 2020, our Class A common stock began trading on the Nasdaq Global Select Market under the symbol “GDRX.” Prior to that time, there was no public market for our common stock.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. Market Information On September 23, 2020, our Class A common stock began trading on the Nasdaq Global Select Market under the symbol “GDRX.” Prior to that time, there was no public market for our common stock.
There is no established public trading market for our Class B common stock. Holders As of February 21, 2023, there were 7 holders of record of our Class A common stock and 10 holders of record of our Class B common stock. Dividend Policy We are a holding company that does not conduct any business operations of our own.
There is no established public trading market for our Class B common stock. Holders As of February 20, 2024, there were 7 holders of record of our Class A common stock and 10 holders of record of our Class B common stock. Dividend Policy We are a holding company that does not conduct any business operations of our own.
As of December 31, 2022, we estimated we had used approximately $244.4 million of the net proceeds from our IPO: (i) $164.4 million for the acquisition of businesses that complement our business and (ii) $80.0 million for the repurchases of our Class A common stock.
As of December 31, 2023, we estimated we had used approximately $281.4 million of the net proceeds from our IPO: (i) $164.4 million for the acquisition of businesses that complement our business and (ii) $117.0 million for the repurchases of our Class A common stock.
As of December 31, 2022, we had $642.5 million of remaining net proceeds from our IPO which have been invested in investment grade, interest-bearing instruments. Item 6. [Reserved.] 60
As of December 31, 2023, we had $605.5 million of remaining net proceeds from our IPO which have been invested in investment grade, interest-bearing instruments. Item 6. [Reserved.] 56 Table of Contents
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser We did not sell any equity securities during the year ended December 31, 2022 that were not registered under the Securities Act.
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser We did not sell any equity securities during the year ended December 31, 2023 that were not registered under the Securities Act. The following table presents information with respect to our repurchases of Class A common stock during the three months ended December 31, 2023.
Removed
On February 23, 2022, our board of directors authorized the repurchase of up to an aggregate of $250.0 million of our Class A common stock through February 23, 2024.
Added
Period Total Number of Shares Repurchased (1) Average Price Paid per Share (2) Total Number of Shares Repurchased as Part of Publicly Announced Program (1) Approximate Dollar Value of Shares that May Yet Be Repurchased Under the Program (in thousands) October 1 -31 — $ — — $ — November 1 - 30 13,058,343 $ 5.50 13,058,343 $ 50,309 December 1 - 31 1,003,953 $ 5.98 1,003,953 $ 44,305 Total 14,062,296 14,062,296 _____________________________________________________ (1) The repurchases are being executed from time to time, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, which may include repurchases through Rule 10b5-1 plans.
Removed
Repurchases may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing to be determined at our discretion, depending on market conditions and corporate needs or under a Rule 10b5-1 trading plan.
Added
See Note 14 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information related to our old stock repurchase program, which was approved by our Board on February 23, 2022 and announced on February 28, 2022, in addition to our new stock repurchase program effective subsequent to December 31, 2023, which was approved by our Board on February 27, 2024 and announced on February 29, 2024.
Removed
Any repurchases are expected to be funded with our existing cash and cash equivalents, working capital, cash flows from operations, or funds available through various borrowing arrangements. There were no repurchases of our Class A common stock during the three months ended December 31, 2022.
Added
(2) Average price paid per share includes direct costs and estimated excise taxes associated with the repurchases.
Removed
During the year ended December 31, 2022, we repurchased and retired 8.5 million shares of our Class A common stock for an aggregate purchase price of $101.7 million. As of December 31, 2022, we had $148.3 million available for future repurchases of our Class A common stock under the repurchase program.
Removed
For additional information, refer to Note 14 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 59 Performance Graph The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, or otherwise subject to the liabilities under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

78 edited+41 added−27 removed28 unchanged
Biggest changeResults of Operations The following table sets forth our results of operations for the periods presented: (dollars in thousands) Year Ended December 31, 2022 % of Total Revenue Year Ended December 31, 2021 % of Total Revenue Change ($) Change (%) Revenue: Prescription transactions revenue $ 550,536 72% $ 593,359 80% $ (42,823 ) (7%) Pharma manufacturer solutions revenue 99,425 13% 73,348 10% 26,077 36% Subscription revenue 96,167 13% 59,925 8% 36,242 60% Other revenue 20,426 3% 18,792 3% 1,634 9% Total revenue 766,554 745,424 Costs and operating expenses: Cost of revenue, exclusive of depreciation and amortization presented separately below 65,079 8% 46,716 6% 18,363 39% Product development and technology 143,137 19% 125,860 17% 17,277 14% Sales and marketing 357,631 47% 370,217 50% (12,586 ) (3%) General and administrative 144,792 19% 154,686 21% (9,894 ) (6%) Depreciation and amortization 54,177 7% 34,539 5% 19,638 57% Total costs and operating expenses 764,816 732,018 Operating income 1,738 13,406 Other expense, net: Interest income 9,274 1% 59 0% 9,215 15,619% Interest expense (34,243 ) 4% (23,642 ) 3% (10,601 ) 45% Total other expense, net (24,969 ) (23,583 ) Loss before income taxes (23,231 ) (10,177 ) Income tax expense (9,597 ) 1% (15,077 ) 2% 5,480 (36%) Net loss $ (32,828 ) $ (25,254 ) Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Revenue Prescription transactions revenue decreased $42.8 million, or 7%, year-over-year driven primarily by a 2% decrease in the number of our average Monthly Active Consumers principally due to the grocer issue as described above.
Biggest changeAs a result, all consumer discounts subsequent to this change are expected to be recognized as a reduction of prescription transactions revenue. 60 Table of Contents Results of Operations The following table sets forth our results of operations for the years ended December 31, 2023 and 2022: (dollars in thousands) Year Ended December 31, 2023 % of Total Revenue Year Ended December 31, 2022 % of Total Revenue Change ($) Change (%) Revenue: Prescription transactions revenue $ 550,738 73% $ 550,536 72% $ 202 0% Subscription revenue 94,410 13% 96,167 13% (1,757) (2%) Pharma manufacturer solutions revenue (1) 85,065 11% 99,425 13% (14,360) (14%) Other revenue 20,052 3% 20,426 3% (374) (2%) Total revenue 750,265 766,554 Costs and operating expenses: Cost of revenue, exclusive of depreciation and amortization presented separately below 66,925 9% 65,079 8% 1,846 3% Product development and technology 135,836 18% 143,137 19% (7,301) (5%) Sales and marketing 341,328 45% 357,631 47% (16,303) (5%) General and administrative 125,515 17% 144,792 19% (19,277) (13%) Depreciation and amortization 107,668 14% 54,177 7% 53,491 99% Total costs and operating expenses 777,272 764,816 Operating (loss) income (27,007) 1,738 Other expense, net: Other expense (4,008) 1% — 0% (4,008) n/m Interest income 32,171 4% 9,274 1% 22,897 247% Interest expense (56,728) 8% (34,243) 4% (22,485) 66% Total other expense, net (28,565) (24,969) Loss before income taxes (55,572) (23,231) Income tax benefit (expense) 46,704 6% (9,597) 1% 56,301 (587%) Net loss $ (8,868) $ (32,828) _____________________________________________________ (1) Pharma manufacturer solutions revenue for the year ended December 31, 2023 included a $10.0 million contract termination payment to a pharma manufacturer solutions client in connection with our Restructuring Plan, which was recognized as a reduction of revenue.
Revenue, net loss and net loss margin are financial measures prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures.
Revenue, net loss and net loss margin are financial measures prepared in conformity with accounting principles generally accepted in the United States ("GAAP"). Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial measures.
Monthly Active Consumers beginning with the second quarter of 2022 were impacted by the grocer issue.
Monthly Active Consumers Monthly Active Consumers beginning with the second quarter of 2022 were impacted by the grocer issue.
Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of 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.
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.
Sales and marketing expenses are primarily driven by investments to grow and retain our consumer base and may fluctuate based on the timing of our investments in consumer acquisition and retention.
Sales and marketing Sales and marketing expenses are primarily driven by investments to grow and retain our consumer base and may fluctuate based on the timing of our investments in consumer acquisition and retention.
Our primary short-term and long-term requirements for liquidity and capital are to finance working capital including our noncancelable operating lease obligations, interest and principal payments related to our outstanding debt arrangements, share repurchases, capital expenditures, business acquisitions and investments we may make from time to time, and general corporate purposes.
Our primary short-term and long-term requirements for liquidity and capital are to finance working capital including our noncancelable operating lease obligations, interest and principal payments related to our outstanding debt arrangements, share repurchases, capital expenditures, general corporate purposes, and business acquisitions and investments we may make from time to time.
For contingent consideration receivable at the acquisition date, our revenue forecasts include assumptions relating to the fair value of services expected to be provided to the seller which includes specific assumptions about the seller’s ability to continue to order such services given the seller’s liquidity position, among other macroeconomic and industry factors.
For the contingent consideration receivable at the acquisition date, our revenue forecasts include assumptions relating to the fair value of services expected to be provided to the seller which includes specific assumptions about the seller’s ability to continue to order such services given the seller’s liquidity position, among other macroeconomic and industry factors.
Although we have a significant number of outstanding stock options granted prior to our IPO available to be exercised in future tax periods, which may generate incremental excess tax benefits if they are exercised, the degree of excess tax benefits that will be realized in the future will depend on many factors outside of our control, including the closing prices of our Class A common stock in the future and stock option exercises being initiated by employees.
Although we still have a significant number of outstanding stock options granted prior to our IPO available to be exercised in future tax periods, which may generate incremental excess tax benefits if they are exercised, the degree of excess tax benefits that will be realized in the future will depend on many factors outside of our control, including the closing prices of our Class A common stock in the future and stock option exercises being initiated by employees.
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 62 sale of business and other income or expense, net.
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.
For further information of the below critical accounting policies and estimates and our other significant accounting policies, see 68 Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Revenue Recognition Revenue recognition represents an important accounting policy to the understanding of our financial condition and results of operations.
For further information of the below critical accounting policies and estimates and our other significant accounting policies, see Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Revenue Recognition Revenue recognition represents an important accounting policy to the understanding of our financial condition and results of operations.
A valuation allowance is established if it is more likely than not that all or a portion of 69 deferred tax assets will not be realized. The determination of whether a valuation allowance should be established, as well as the amount of such allowance, requires significant judgment and estimates, including estimates of future earnings.
A valuation allowance is established if it is more likely than not that all or a portion of deferred tax assets will not be realized. The determination of whether a valuation allowance should be established, as well as the amount of such allowance, requires significant judgment and estimates, including estimates of future earnings.
In addition, we may experience stronger demand for our pharma manufacturer solutions offering during the fourth quarter of each year, which coincides with pharma manufacturers' annual budgetary spending patterns. This seasonality may impact revenue and sales and marketing expense.
We may also experience stronger demand for our pharma manufacturer solutions offering during the fourth quarter of each year, which coincides with pharma manufacturers' annual budgetary spending patterns. In addition, this seasonality may impact revenue and sales and marketing expense.
For additional information, please see Part I, Item 1A, “Risk Factors – We rely on a limited number of industry participants.” In addition to the above, but to a lesser extent, the acquisition of vitaCare Prescription Services, Inc.
For additional information, please see Part I, Item 1A, “Risk Factors – We rely on a limited number of industry participants.” In addition, but to a lesser extent, the acquisition of vitaCare Prescription Services, Inc.
A discussion of the year ended December 31, 2021 compared to the year ended December 31, 2020 has been reported previously in our Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on March 1, 2022, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Overview Our mission is to help Americans get the healthcare they need at a price they can afford.
A discussion of the year ended December 31, 2022 compared to the year ended December 31, 2021 has been reported previously in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on March 1, 2023, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Overview Our mission is to help Americans get the healthcare they need at a price they can afford.
Recent Accounting Pronouncements See Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information on certain accounting standards adopted in 2022 and recent accounting announcements that have not yet been required to be implemented and may be applicable to our future operations.
Recent Accounting Pronouncements See Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information on certain accounting standards adopted in 2023 and recent accounting announcements that have not yet been required to be implemented and may be applicable to our future operations.
(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.
(4) 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.
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 December 31, 2022.
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 December 31, 2023.
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.
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. 63 Table of Contents Holding Company Status GoodRx Holdings, Inc. is a holding company that does not conduct any business operations of its own.
These measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statements of operations that are necessary to run our business.
These measures have certain limitations in that they do not include the impact of certain costs that are reflected in our consolidated statements of operations that are necessary to run our business.
Such assets arise because of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as from net operating loss and tax credits.
Such assets arise because of temporary differences between the financial reporting and tax basis of assets and liabilities, as well as from net operating losses and tax credits.
An accounting policy is deemed critical if it is both important to the portrayal of our financial condition and results and requires us to make difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.
Actual results could differ significantly from our estimates. An accounting policy is deemed critical if it is both important to the portrayal of our financial condition and results and requires us to make difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.
For developed technology and customer relationships intangible assets, our revenue and margin forecasts include assumptions about future industry conditions, macroeconomic events such as the COVID-19 pandemic, our ability to renew contracts in a competitive bidding process including the necessary resources and investments to support these contracts, among other factors.
For developed technology and customer relationships intangible assets, our revenue and margin forecasts include assumptions about future industry conditions, macroeconomic events, our ability to renew contracts in a competitive bidding process including the necessary resources and investments to support these contracts, among other factors.
Late in the first quarter of 2022, a grocery chain took actions that impacted acceptance of discounted pricing for a subset of prescription drugs from PBMs, who are our customers, and whose pricing we promote on our platform ("grocer issue").
Late in the first quarter of 2022, a grocery chain took actions that impacted acceptance of discounted pricing for a subset of prescription drugs from PBMs, whose pricing we promote on our platform ("grocer issue").
Acquisition related expenses in 2022 also included similar transaction related costs for our sale of certain technology assets of GoodRx Care and a $18.1 million change in fair value of contingent consideration related to our vitaCare acquisition.
Acquisition related expenses in 2022 also included similar transaction related costs for our sale of certain technology assets of 59 Table of Contents GoodRx Care and a $18.1 million net change in fair value of contingent consideration related to our vitaCare acquisition.
Our future capital requirements will depend on many factors, including our revenue results, the timing and extent of investments, sales and marketing activities, and many other factors as described in Part I, Item 1A, “Risk Factors.” For further details regarding our cash requirements from noncancelable operating lease obligations, terms and commitments under our debt arrangements including our revolving credit facility, and other commitments and contingencies, see Note 10, Note 12 and Note 13 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, respectively.
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.” For additional information regarding our cash requirements from noncancelable operating lease obligations, terms and commitments under our debt arrangements including our term loan and revolving credit facility, and other commitments and contingencies, see Note 10, Note 12 and Note 13 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, respectively.
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 expected to be our cash and cash equivalents and borrowings available under our $100.0 million secured asset-based revolving credit facility which expires in October 2024.
Liquidity and Capital Resources Since our inception, we have financed our operations primarily through net cash provided by operating activities, equity issuances, and borrowings under our long-term debt arrangements. Our principal sources of liquidity are our cash and cash equivalents and borrowings available under our $100.0 million secured revolving credit facility which expires on October 11, 2024.
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.
Net cash used in financing activities Net cash used in financing activities primarily consists 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 employees' exercise of stock options and from our employee stock purchase plan.
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.
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. All of our revenue has been generated in the United States.
As a result, the remeasurement of the contingent consideration receivable to fair value at December 31, 2022 is not a critical accounting estimate. Income Taxes—Valuation of Deferred Tax Assets Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years.
As a result, the remeasurement of the contingent consideration receivable to fair value at December 31, 2022 was no longer a critical accounting estimate. 65 Table of Contents Income Taxes—Valuation of Deferred Tax Assets Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years.
We believe our financial results reflect the significant market demand for our offerings and the value that we provide to the broader healthcare ecosystem; however, our financial results for the year ended December 31, 2022 have been materially impacted by certain events that occurred during the year.
We believe our financial results reflect the significant market demand for our offerings and the value that we provide to the broader healthcare ecosystem; however, our financial results for the year ended December 31, 2023 have been materially impacted by certain restructuring related activities undertaken by us during 2023 and the sustained effects of certain events that occurred during 2022.
As of December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, (in thousands) 2022 2022 2022 2022 2021 2021 2021 2021 Subscription plans 1,030 1,060 1,133 1,203 1,210 1,129 1,051 931 Non-GAAP Financial Measures 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.
As of (in thousands) December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Subscription plans 884 930 969 1,007 1,030 1,060 1,133 1,203 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.
Although the grocer issue was addressed in August 2022 and our discounted pricing has since been consistently welcomed at the point of sale by the grocery chain, it has and is expected to continue to have a sustained adverse impact on our prescription transactions revenue and Monthly Active Consumers in the future that may continue to be material due to uncertainty around consumer response to updated consumer pricing and the timing and extent of returning user levels.
Although the grocer issue was addressed in August 2022 and our discounted pricing has since been consistently welcomed at the point of sale by the grocery chain, beginning in the second quarter of 2022, it has had and will continue to have a sustained adverse impact on our prescription transactions revenue and Monthly Active Consumers due to consumer response to updated consumer pricing and the timing and extent of returning user levels.
We believe 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 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.
The $32.0 million decrease in net cash provided by operations in 2022 compared to 2021 was due to $7.6 million higher net loss, a decrease of $15.9 million in non-cash adjustments, and an increase of $8.5 million in cash outflow from changes in operating assets and liabilities.
The $8.5 million decrease in net cash provided by operations in 2023 compared to 2022 was due to $24.0 million decrease in net loss, offset by a decrease of $30.8 million in non-cash adjustments and an increase of $1.6 million in cash outflow from changes in operating assets and liabilities.
Refer to "Critical Accounting Policies and Estimates—Income Taxes—Valuation of Deferred Tax Assets" of this Part II, Item 7, and Note 11 in the notes to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details.
For information regarding our valuation allowance analysis, see Part II, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates— Income Taxes—Valuation of Deferred Tax Assets" and Note 11 in the notes to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The $31.8 million increase in net cash used in investing activities in 2022 compared to 2021 was primarily related to a $27.6 million increase in cash paid for acquisition of businesses and minority equity interest investments in privately-held companies, and a $21.4 million increase in software development costs, partially offset by $16.6 million in proceeds from the sale of certain technology assets of GoodRx Care in 2022.
The $154.7 million decrease in net cash used in investing activities in 2023 compared to 2022 was primarily related to a $171.9 million decrease in cash paid for acquisition of businesses and minority equity interest investments in privately-held companies, partially offset by a $16.6 million decrease in proceeds from the sale of certain technology assets of GoodRx Care.
("vitaCare") in April 2022 also had a negative impact on our net loss, net loss margin, Adjusted EBITDA and Adjusted EBITDA Margin for the year ended December 31, 2022. vitaCare has a higher cost of revenue due to the operational nature of the business and has historically generated net losses and negative Adjusted EBITDA, which we expect will continue in the near to medium term.
("vitaCare") in April 2022 also had a negative impact on our net loss, net loss margin, Adjusted EBITDA and Adjusted EBITDA Margin for the year ended December 31, 2023. vitaCare had a higher cost of revenue due to the operational nature of the solutions it supported and had historically generated net losses and negative Adjusted EBITDA.
Three Months Ended December 31, September 30, June 30, March 31, December 31, September 30, June 30, March 31, (in millions) 2022 2022 2022 2022 2021 2021 2021 2021 Monthly Active Consumers 5.9 5.8 5.8 6.4 6.4 6.4 6.0 5.7 Subscription Plans Subscription plans in 2022 were impacted by a pricing increase for Gold subscribers that went into effect in the first half of 2022 and a sequential decline in our subscription plans for Kroger Savings as a result of reduced marketing spend in relation to that offering.
Three Months Ended (in millions) December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 December 31, 2022 September 30, 2022 June 30, 2022 March 31, 2022 Monthly Active Consumers 6.4 6.1 6.1 6.1 5.9 5.8 5.8 6.4 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.
Interest Income Interest income increased $9.2 million year-over-year primarily due to higher interest rates earned on cash equivalents held in U.S. treasury securities money market funds.
Interest Income Interest income increased by $22.9 million year-over-year primarily due to higher interest rates earned on cash equivalents held in U.S. treasury securities money market funds. Interest Expense Interest expense increased by $22.5 million, or 66%, year-over-year, primarily due to higher interest rates partially offset by lower average debt balances.
As of December 31, 2022, positive evidence reviewed included (i) our forecast of future earnings; (ii) stock options granted prior to our IPO are definite-lived and will expire 10 years from the date of grant if unexercised; and (iii) an indefinite carryforward period for certain deferred tax assets.
Additional positive evidence reviewed included (i) stock options granted that will expire 10 years from the date of grant if unexercised; and (ii) an indefinite carryforward period for certain deferred tax assets.
The estimated impact of the grocer issue on our prescription transactions revenue in 2022 was approximately $110.0 million to $120.0 million. We have not experienced, and are not aware, of PBM-pharmacy issues at any other large volume pharmacies, with the exception of the grocery chain described above, and we believe our pharmacy and PBM relationships remain strong.
We have not experienced, and are not aware of, PBM-pharmacy issues at any other large volume pharmacies, with the exception of the grocery chain described above, and we believe our pharmacy and PBM relationships remain strong.
Key Financial and Operating Metrics We use Monthly Active Consumers, subscription plans, 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.
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.
We expect our subscription plans for Kroger Savings to continue to sequentially decline through July 2024, the expected sunset of the program.
We expect our subscription plans for Kroger Savings to continue to sequentially decline through July 2024, the expected sunset of the program. Gold subscription plans increased year-over-year and accounted for 694 thousand as of December 31, 2023.
As described in Note 3 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, in December 2022, we entered into an arrangement that eliminated the contingent consideration receivable which reduced its fair value to zero.
As described in Note 3 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, the contingency associated with the vitaCare contingent consideration receivable was resolved in the year of acquisition which reduced its fair value to zero.
Critical Accounting Policies and Estimates Our audited consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures.
Critical Accounting Policies and Estimates Our audited consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP.
Components of our Results of Operations Revenue Our revenue is primarily derived from prescription transactions revenue that is generated when pharmacies fill prescriptions for consumers, and from other revenue streams such as pharma manufacturer solutions, our subscription 63 offerings, and our telehealth offering.
Our revenue is primarily derived from prescription transactions revenue that is generated when pharmacies fill prescriptions for consumers, and from other revenue streams such as pharma manufacturer solutions, our subscription offerings, and our telehealth services. We consider PBMs, pharma manufacturers and consumers of our subscription and telehealth services, for which we have direct contractual agreements, to be our primary customers.
Subscription revenue increased $36.2 million, or 60%, year-over year driven primarily by a pricing increase for Gold subscribers during 2022, partially offset by a 15% decrease in the number of subscription plans to 1,030 thousand as of December 31, 2022, compared to 1,210 thousand as of December 31, 2021.
Subscription revenue decreased $1.8 million, or 2%, year-over year, primarily driven by a decrease in the number of subscription plans due to the anticipated sunset of Kroger Savings, resulting in 884 thousand subscription plans as of December 31, 2023, compared to 1,030 thousand as of December 31, 2022, substantially offset by the effects of the pricing increase for Gold subscribers in the first half of 2022.
Accordingly, the weight of the negative evidence related to substantial excess tax benefits to be realized from the exercise of stock options granted prior to our IPO decreased in 2022 relative to 2021.
The tax losses in 2021 and 2020 were attributable to substantial excess tax benefits realized from the exercise of stock options granted prior to our IPO.
Sales and marketing Sales and marketing expenses decreased $12.6 million, or 3%, year-over-year primarily driven by a $69.9 million decrease in advertising expenses, offset by an increase in promotional expenses, substantially in the form of consumer discounts of $24.7 million, as we proactively managed our spend to better align with our strategic goals and future scale.
Sales and marketing expenses decreased $16.3 million, or 5%, year-over-year primarily driven by a $27.5 million decrease in advertising expenses as we proactively managed our spend to better align with our strategic goals, partially offset by a $10.7 million increase in third-party marketing and related support services.
For a reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to the most directly comparable GAAP financial measures, information about why we consider 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" included within this Part II, Item 7 of this Annual Report on Form 10-K. 61 Impact of COVID-19 We believe COVID-19 continues to have an adverse impact on our prescription transactions offering due to the cumulative impact of lower healthcare utilization for almost three years since the pandemic began and continued improvement in future periods remains uncertain.
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 57 Table of Contents these measures, please see “Key Financial and Operating Metrics—Non-GAAP Financial Measures" included within this Part II, Item 7 of this Annual Report on Form 10-K.
The following table presents a reconciliation of net loss, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA, and presents net loss margin, the most directly comparable financial measure calculated in accordance with GAAP, with Adjusted EBITDA Margin: Year Ended December 31, (dollars in thousands) 2022 2021 Net loss $ (32,828 ) $ (25,254 ) Adjusted to exclude the following: Interest income (9,274 ) (59 ) Interest expense 34,243 23,642 Income tax expense 9,597 15,077 Depreciation and amortization 54,177 34,539 Financing related expenses (1) 20 666 Acquisition related expenses (2) 26,486 12,868 Restructuring related expenses (3) 6,273 — Legal settlement expenses (4) 1,500 — Stock-based compensation expense 120,234 160,462 Payroll tax expense related to stock-based compensation 1,882 6,260 Loss on operating lease assets (5) 12,569 1,430 Gain on sale of business (6) (11,404 ) — Adjusted EBITDA $ 213,475 $ 229,631 Revenue $ 766,554 $ 745,424 Net loss margin (7) (4.3 %) (3.4 %) Adjusted EBITDA Margin 27.8 % 30.8 % (1) Financing related expenses include third party fees related to proposed financings.
The following table presents a reconciliation of net loss and revenue, the most directly comparable financial measures calculated in accordance with GAAP, to Adjusted EBITDA and Adjusted Revenue, respectively, and presents net loss margin, the most directly comparable financial measure calculated in accordance with GAAP, with Adjusted EBITDA Margin: Year Ended December 31, (dollars in thousands) 2023 2022 Net loss $ (8,868) $ (32,828) Adjusted to exclude the following: Interest income (32,171) (9,274) Interest expense 56,728 34,243 Income tax (benefit) expense (46,704) 9,597 Depreciation and amortization (1) 107,668 54,177 Other expense (2) 4,008 — Financing related expenses (3) — 20 Acquisition related expenses (4) 1,777 26,486 Restructuring related expenses (5) 27,023 6,273 Legal settlement expenses (6) 100 1,500 Stock-based compensation expense 104,820 120,234 Payroll tax expense related to stock-based compensation 1,693 1,882 Loss on operating lease assets (7) 1,353 12,569 Gain on sale of business (8) — (11,404) Adjusted EBITDA $ 217,427 $ 213,475 Revenue $ 750,265 $ 766,554 Adjusted to exclude the following: Client contract termination costs (9) 10,000 — Adjusted Revenue $ 760,265 $ 766,554 Net loss margin (10) (1.2 %) (4.3 %) Adjusted EBITDA Margin (11) 28.6 % 27.8 % _____________________________________________________ (1) Depreciation and amortization for the year ended December 31, 2023 included $46.7 million of amortization related to certain intangible assets in connection with the Restructuring Plan, which were accelerated through December 31, 2023, the date the Restructuring Plan was substantially complete.
Cost of revenue is largely driven by the growth of our visitor, subscriber and active consumer base, as well as our offering mix.
Costs and Operating Expenses Cost of revenue, exclusive of depreciation and amortization Cost of revenue is largely driven by the growth of our visitor, subscriber and active consumer base, as well as our offering mix. Our cost of revenue as a percentage of revenue may vary based on the change in mix of our various offerings.
Net cash used in investing activities Net cash used in investing activities primarily consist of cash used for acquisitions and investments, software development costs, and capital expenditures, partially offset by proceeds from sale of capitalized assets.
Net cash used in investing activities Net cash used in investing activities primarily consists of cash used for software development costs, capital expenditures, and acquisitions and investments that we may make from time to time.
In 2022, the excess tax benefits realized substantially decreased relative to 2021 and 2020 due to a decline in the closing prices of our Class A common stock, which resulted in the exercise prices of the stock options granted prior to our IPO to approximate the closing stock prices of our Class A common stock.
In 2022 and 2023, the excess tax benefits realized substantially decreased relative to 2021 and 2020 due to a decline in the closing prices of our Class A common stock. Accordingly, relative to 2021, the weight of the negative evidence related to substantial excess tax benefits to be realized in future tax periods declined in recent periods.
As of December 31, 2022, negative evidence primarily included the existence of three-year cumulative pre-tax losses adjusted for permanent book to tax differences principally generated from 2021 and 2020. The losses in 2021 and 2020 were principally due to substantial excess tax benefits realized from the exercise of stock options granted prior to our IPO.
Objectively verifiable negative evidence at the time primarily included (i) the existence of fiscal and trailing three-year cumulative tax losses (pre-tax earnings or losses adjusted for permanent book to tax differences) principally generated in 2021 and 2020; and (ii) the existence of substantial stock options granted prior to our initial public offering ("IPO") that remain outstanding.
(4) Legal settlement expenses represent the estimated accrual of the probable loss with respect to the Federal Trade Commission ("FTC") negotiated settlement. See Note 13 to our consolidated financial statements for additional information. (5) Loss on operating lease assets represents losses incurred relating to the abandonment or sublease of certain leased office spaces and disposal of related capitalized costs.
For the year ended December 31, 2022, legal settlement expenses represent a negotiated settlement with the Federal Trade Commission. (7) Loss on operating lease assets include, as applicable for the periods presented, losses incurred relating to the abandonment or sublease of certain leased office spaces and disposal of related capitalized costs.
Product development and technology expenses are primarily driven by changes in headcount and investments to support and develop our various products.
Product development and technology Product development and technology expenses are primarily driven by changes in headcount and investments to support and develop our various products. We capitalize certain qualified costs related to the development of internal-use software, which may cause product development and technology expenses to vary from period to period.
The grocer issue and the ongoing impact of the COVID-19 pandemic may have masked these trends in recent periods and may continue to impact these trends in the future.
The grocer issue and the ongoing impact of COVID-19 may have masked some of these trends in recent periods and may continue to impact these trends in the future. Recent Developments On February 27, 2024, our Board authorized a new $450.0 million stock repurchase program.
The $89.7 million increase in net cash used in financing activities in 2022 compared to 2021 was primarily related to $101.7 million for repurchases of our Class A common stock in 2022 and a $25.9 million decrease in proceeds from exercises of stock options, partially offset by a $37.1 million decrease in payments related to net share settlement of equity awards.
The $47.2 million increase in net cash used in financing activities in 2023 compared to 2022 was primarily related to an increase of $44.8 million for payments related to net share settlement of equity awards, of which $44.5 million related to the Founders Awards, and a decrease of $3.2 million of proceeds from the exercise of stock options.
Product development and technology Product development and technology expenses increased $17.3 million, or 14%, year-over-year due primarily to increases in payroll and related costs due to higher average headcount in 2022.
Product development and technology expenses decreased $7.3 million, or 5%, year-over-year, primarily driven by a $14.7 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.
Since the restricted net assets of GoodRx, Inc. and its subsidiaries exceed 25% of our consolidated net assets, in accordance with Regulation S-X, refer to Note 17 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for condensed parent company financial information of GoodRx Holdings, Inc. 67 Cash Flows Year Ended December 31, (in thousands) 2022 2021 Net cash provided by operating activities $ 146,780 $ 178,779 Net cash used in investing activities (210,498 ) (178,733 ) Net cash used in financing activities (120,226 ) (30,528 ) Net change in cash, cash equivalents and restricted cash $ (183,944 ) $ (30,482 ) Net cash provided by operating activities Net cash provided by operating activities consist of net loss adjusted for certain non-cash items and changes in assets and liabilities.
Since the restricted net assets of GoodRx, Inc. and its subsidiaries exceed 25% of our consolidated net assets, in accordance with Regulation S-X, refer to Note 18 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for condensed parent company financial information of GoodRx Holdings, Inc.
Based on our evaluation of all available positive and negative evidence, and by placing greater weight on the objective negative evidence associated with our three-year cumulative pre-tax loss adjusted for permanent book to tax differences, we determined, as of December 31, 2022, that it was more likely than not that our net deferred tax assets in excess of amortizable goodwill would not be realized.
As of December 31, 2022 and 2021, we maintained a full valuation allowance against our net deferred tax assets in excess of amortizable goodwill as the objectively verifiable negative evidence outweighed the positive evidence. We determined it was more likely than not that our deferred tax assets would not be realized.
The net decrease in non-cash adjustments was primarily driven by a decrease in stock-based compensation expense due principally to the Founders Awards, deferred income taxes, and a pre-tax gain on the sale of certain technology assets of GoodRx Care, partially offset by an increase in the change in fair value of contingent consideration, depreciation and amortization, and a loss on operating lease assets.
The net decrease in non-cash adjustments was primarily driven by changes in deferred income tax year-over-year as a result of the release of our valuation allowance in 2023, a year-over-year decrease in stock-based compensation expense due to the Founders Awards and a decrease in the change in fair value of contingent consideration that was recognized in 2022.
For the year ended December 31, 2022 as compared to the year ended December 31, 2021: • Revenue grew 3% to $766.6 million from $745.4 million; • Net loss and net loss margin were $32.8 million and 4.3%, respectively, compared to net loss and net loss margin of $25.3 million and 3.4%, respectively; and • Adjusted EBITDA and Adjusted EBITDA Margin were $213.5 million and 27.8%, respectively, compared to $229.6 million and 30.8%, respectively.
For the year ended December 31, 2023 as compared to the year ended December 31, 2022: • Revenue decreased 2% to $750.3 million (which was impacted by $10.0 million of client contract termination costs incurred in connection with the Restructuring Plan) from $766.6 million; • Adjusted Revenue decreased 1% to $760.3 million (which represents revenue excluding the $10.0 million of client termination costs incurred in connection with the Restructuring Plan, which was recognized as a reduction of revenue) from $766.6 million; • Net loss and net loss margin were $8.9 million and 1.2%, respectively, compared to net loss and net loss margin of $32.8 million and 4.3%, respectively; and • Adjusted EBITDA and Adjusted EBITDA Margin were $217.4 million and 28.6%, respectively, compared to $213.5 million and 27.8%, respectively.
This decrease was primarily driven by a $46.4 million decrease in stock-based compensation expense related to the Founders Awards and a $11.4 million pre-tax gain from the sale of certain technology assets of GoodRx Care, LLC, our telehealth platform business, in 2022.
General and administrative expenses decreased $19.3 million, or 13%, year-over-year, primarily driven by a $24.0 million decrease in stock-based compensation expense related to the equity granted to our Co-Founders in 2020 (the "Founders Awards") and costs incurred in 2022 that did not recur in 2023, including a $18.1 million loss from the change in fair value of contingent consideration and a $11.3 million loss related to the impairment of an operating lease asset, partially offset by a $11.4 million pre-tax gain from the sale of certain technology assets of GoodRx Care, LLC, our telehealth platform business.
Depreciation and amortization Depreciation and amortization expenses increased $19.6 million, or 57%, year-over-year primarily driven by a $14.1 million increase in capitalized software amortization due to higher capitalized costs for platform improvements and the introduction of new products and features and a $4.9 million increase in amortization related to acquired intangible assets.
The year-over-year 62 Table of Contents change in depreciation and amortization was further driven by higher amortization related to capitalized software due to higher capitalized costs for platform improvements and the introduction of new products and features. Other Expense Other expense increased by $4.0 million year-over-year, due to an impairment loss on one of our minority equity interest investments.
Our effective income tax rate differs from the U.S. federal statutory rate of 21.0% primarily due to effects of non-deductible officers’ stock-based compensation expense, state income taxes, research and development tax credits, tax effects from our equity awards and changes in the valuation allowance against our net deferred tax assets.
The year-over-year change in our income taxes was primarily due to the tax benefit from the release of our valuation allowance against our beginning of the year net deferred tax assets in excess of tax amortizable goodwill, partially offset by a decrease in our U.S. federal and state research and development tax credits.
For further information regarding the Founders Awards, the sale of certain technology assets of GoodRx Care and contingent consideration related to the vitaCare acquisition, and loss on operating lease assets, see Note 15, Note 3 and Note 10 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K, respectively.
For additional information, see Note 17 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
(3) Restructuring related expenses include employee severance and other personnel related costs in connection with workforce optimization and organizational changes to better align with our strategic goals and future scale, substantially all of which related to a reduction in force approved by our board of directors in August 2022 involving approximately 140 employees of our indirect wholly-owned subsidiary GoodRx, Inc., representing approximately 16% of its workforce primarily in its technology-focused and marketing groups.
(5) Restructuring related expenses include employee severance and other personnel related costs in connection with various workforce optimization and organizational changes to better align with our strategic goals and future scale.
Costs and Operating Expenses Cost of revenue, exclusive of depreciation and amortization Cost of revenue increased $18.4 million, or 39%, year-over-year primarily driven by a $10.0 million increase in outsourced and in-house personnel related to consumer support, and a $3.1 million increase in allocated overhead, both principally as a result of the acquisition of vitaCare in April 2022, as well as a $2.8 million increase in fulfillment costs for certain solutions provided to customers under our pharma manufacturer solutions offering.
The impact from these drivers was partially offset by a $3.1 million decrease in outsourced and in-house personnel and other costs related to consumer support and a $2.0 million decrease in fulfillment costs for certain solutions provided to customers under our pharma manufacturer solutions offering.
In addition, the year-over-year change in prescription transactions revenue was also impacted by an ongoing shift in the volume of prescription transactions to other retailers, which generally provide lower pricing relative to prescription transactions processed through the grocer.
Revenue Prescription transactions revenue stayed relatively flat year-over-year, primarily as a result of a 3% increase in the number of our average Monthly Active Consumers, substantially offset by the pricing effects of the grocer issue due to an ongoing shift in the volume of prescription transactions to other retailers, which generally provide lower pricing relative to prescription transactions processed through the grocer involved, and an increase in consumer discounts pertaining to transactions processed through partner pharmacies, which were recognized as a reduction of revenue.
We believe these operating metrics reflect our scale, growth and engagement with consumers. Monthly Active Consumers Our Monthly Active Consumers include consumers we acquired through the acquisition of RxSaver, Inc. ("RxSaver"), acquired in April 2021, beginning in the third quarter of 2021. RxSaver Monthly Active Consumers are estimated due to incomplete consumer information.
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 base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results could differ significantly from our estimates.
The preparation of consolidated financial statements also requires us to 64 Table of Contents make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.
Our depreciation and amortization changes primarily based on changes in our property and equipment, intangible assets, and capitalized software balances. 64 Other Expense, Net Our other expense, net consists of the following: • Interest income : Consists primarily of interest income earned on excess cash held in interest-bearing accounts. • Interest expense : Consists primarily of interest expense associated with our debt arrangements, including amortization of debt issuance costs and discounts.
Depreciation and amortization Our depreciation and amortization changes primarily based on changes in our property and equipment, intangible assets, and capitalized software balances and estimates of useful lives.
See Note 10 to our consolidated financial statements for additional information. (6) Gain on sale of business represents the pre-tax gain recognized on the sale of certain technology assets of GoodRx Care, LLC, our telehealth platform. See Note 3 to our consolidated financial statements for additional information. (7) Net loss margin represents net loss as a percentage of revenue.
(8) Gain on sale of business represents the pre-tax gain recognized on the sale of certain technology assets of GoodRx Care, LLC, our telehealth platform. (9) Client contract termination costs represent a payment to a pharma manufacturer solutions client to terminate certain contracts in connection with the Restructuring Plan, which was recognized as a reduction of revenue.
As of December 31, 2022, we had cash and cash equivalents of $757.2 million and $90.8 million available under our revolving credit facility.
As of December 31, 2023, we had cash and cash equivalents of $672.3 million and $90.8 million available under our revolving credit facility. For additional information regarding our revolving credit facility and our term loan, see Note 12 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We continuously evaluate the impact of sales and marketing activities on our business and actively manage our sales and marketing spend, including investment in consumer acquisition, which is largely variable, as market and business conditions change. • General and administrative: Consists primarily of personnel costs including salaries, benefits, bonuses and stock-based compensation expense for our executive, finance, accounting, legal, and human resources functions, as well as professional fees, occupancy costs, other general overhead costs, and as applicable, change in fair value of contingent consideration, loss on operating lease assets, gain on sale of business and charitable donations. • Depreciation and amortization: Consists of depreciation of property and equipment and amortization of capitalized internal-use software costs and intangible assets.
We continuously evaluate the impact of sales and marketing activities on our business and actively manage our sales and marketing spend, including investment in consumer acquisition, which is largely variable, as market and business conditions change.
Interest Expense Interest expense increased $10.6 million, or 45%, year-over-year primarily due to higher interest rates partially offset by lower average debt balances. 66 Income Taxes For the year ended December 31, 2022, we had an income tax expense of $9.6 million compared to an income tax expense of $15.1 million for the year ended December 31, 2021 and an effective income tax rate of (41.3%) and (148.1%), respectively.
Income Taxes In 2023, we had an income tax benefit of $46.7 million compared to an income tax expense of $9.6 million in 2022 and an effective income tax rate of 84.0% and (41.3%), respectively.
Removed
Any decrease in the number of consumers seeking to fill prescriptions could negatively impact demand for and use of certain of our offerings, particularly our prescription and subscription offerings, which would have an adverse effect on our business, financial condition and results of operations.
Added
Copays have continued to trend upward in recent years and we believe as insurance providers continue to shift the cost burden more and more to consumers, consumers are now more than ever searching for sustainable affordable healthcare solutions which, in turn, strengthens our value proposition.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+1 added−0 removed1 unchanged
Biggest changeNonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, financial condition and results of operations.
Biggest changeNonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs. Our inability or failure to do so could harm our business, financial condition and results of operations. Item 8. Financial Statements and Supplementary Data.
Item 7A. Quantitative and Qualitativ e Disclosures About Market Risk. We only have operations within the United States and therefore do not have any foreign currency exposure. We are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. We only have operations within the United States and therefore do not have any foreign currency exposure. We are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes.
A hypothetical 100 basis point increase in interest rates would have increased our interest expense by $6.8 million for the year ended December 31, 2022. Impact of Inflation We do not believe that inflation has had a material effect on our business, results of operations or financial condition.
A hypothetical 100 basis point increase in interest rates would have increased our interest expense by $6.7 million for the year ended December 31, 2023. Impact of Inflation We do not believe that inflation has had a material effect on our business, results of operations or financial condition.
Added
The financial statements required to be filed pursuant to this Item 8 are appended to this report. An index of those financial statements is found in Item 15 of Part IV of this Annual Report on Form 10-K. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.

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