GoodRX reports Q3 net loss increases to US$41.7M from US$18.1M a year ago impacted by US$29.0M stock-based compensation expense; revenue down 4% year-over-year to US$187.3M as firm sees double-digit growth in subscriptions, drug-maker solutions platforms

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SANTA MONICA, California , November 9, 2022 (press release) –

Third quarter financial results exceed previously announced guidance

GoodRx Holdings, Inc. (Nasdaq: GDRX), a leading consumer-focused digital platform, has released its financial results for the third quarter of 2022.

Third Quarter 2022 Highlights

  • Total revenue of $187.3 million , exceeding previously announced guidance
  • Net loss of $41.7 1 million; Net loss margin of 22.3%
  • Adjusted Net Income2 of $29.9 million ; Adjusted Net Income Margin2 of 16.0%
  • Adjusted EBITDA2 of $52.0 million ; Adjusted EBITDA Margin2 of 27.8%, exceeding previously announced guidance
  • Net cash provided by operating activities of $33.7 million
  • Over 865,000 prescribers active on GoodRx in the last 16 months3
  • Exited the quarter with over 7 million consumers of prescription-related offerings4

“We are pleased with the progress made in the third quarter despite near-term challenges,” said Doug Hirsch , co-CEO and co-founder of GoodRx . “We achieved better-than-expected results and addressed the grocer issue in August. While we continued to see some impact from the grocer issue as we expected, the third quarter was highlighted by double-digit growth in our subscription and pharma manufacturer solutions platforms. Our retail and PBM partnerships remain resilient, and we expanded and enhanced our overall ecosystem this quarter while engaging more deeply with providers and consumers as we work to improve access to affordable healthcare.”

“Looking ahead, we will continue to prioritize profitability and cash flow, while efficiently expanding our core platform capabilities to scale our business, strengthen our value proposition, and leverage our strong brand to reach more consumers. I am proud of the progress the GoodRx team made this quarter, and I look forward to improving upon it over the quarters to come as we further our mission while creating value for shareholders,” concluded Hirsch.

1Q3 ‘22 net loss was impacted by $29.0 million of stock-based compensation expense, $10.2 million of which related to the non-recurring co-CEOs’ awards made in connection with our IPO.

2Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Net Income Margin, and adjusted costs and operating expenses are non-GAAP financial measures and are presented for supplemental informational purposes only. Refer to the Non-GAAP Financial Measures section below for definitions, additional information, and a reconciliation to the most directly comparable GAAP measures.

3As of 9/30/2022.

4Sum of Monthly Active Consumers (MACs) and members of our subscription plans. Refer to Key Operating Metrics below for definitions of Monthly Active Consumers and subscription plans.

Third Quarter 2022 Financial Overview (all comparisons are made to the same period of the prior year unless otherwise noted):

Total revenue decreased 4% to $187.3 million compared to $195.1 million . Prescription transactions revenue (PTR) decreased 16% to $131.2 million compared to $155.7 million , primarily driven by a 9% decrease in Monthly Active Consumers and an ongoing shift in the volume of prescription transactions to other retailers that impacted pricing principally due to the sustained impact of the grocer issue. The estimated impact of the grocer issue on third quarter PTR was approximately $40 million . Subscription revenue increased 63% to $26.5 million compared to $16.2 million , primarily driven by an increase in monthly subscription fees for GoodRx Gold in the first half of 2022, partially offset by a 6% decrease in subscription plans. Pharma manufacturer solutions revenue5 increased 32% to $24.5 million compared to $18.5 million , driven primarily by deeper market penetration and contribution from vitaCare. Other revenue5 increased 10% to $5.2 million compared to $4.7 million , driven by an increase in the number of telehealth visits on the platform.

Cost of revenues increased to $17.4 million , or 9% of revenue, compared to $11.3 million , or 6% of revenue, driven by an increase in outsourced and in-house personnel related to consumer support and overhead costs due to the vitaCare acquisition in April 2022 . Adjusted cost of revenues2 increased to $17.1 million , or 9% of revenue, compared to $11.1 million , or 6% of revenue.

Product development and technology expenses remained relatively flat at $35.9 million , or 19% of revenue, compared to $35.1 million , or 18% of revenue, driven by higher headcount, and also costs arising from the reduction in force in August 2022 , substantially offset by higher capitalization of costs related to software development due to greater investment in our products and reprioritization of development efforts that better align with our strategic goals and future scale. Adjusted product development and technology expenses2 increased to $24.9 million , or 13% of revenue, compared to $23.2 million , or 12% of revenue.

Sales and marketing expenses decreased to $86.2 million , or 46% of revenue, compared to $95.7 million , or 49% of revenue, driven by a decrease in advertising and promotional expenses, partially offset by an increase in payroll and related expenses due to higher headcount, and also costs arising from the reduction in force in August 2022 . Adjusted sales and marketing expenses2 decreased to $78.7 million , or 42% of revenue, compared to $89.3 million , or 46% of revenue.

General and administrative expenses increased to $49.5 million , or 26% of revenue, compared to $35.9 million , or 18% of revenue, driven by a $16.6 million change in fair value of contingent consideration related to the vitaCare acquisition in April 2022 and an increase in payroll and related expenses due to higher headcount, partially offset by a decrease in stock-based compensation expense. Adjusted general and administrative expenses2 increased to $14.7 million , or 8% of revenue, compared to $9.7 million , or 5% of revenue.

Net loss was $41.7 million compared to a net loss of $18.1 million , due to the grocer issue and an increase in general and administrative expense related to a change in the fair value of contingent consideration related to the vitaCare acquisition, partially offset by a decrease in stock-based compensation expense and sales and marketing expense. Net loss margin was 22.3% compared to a net loss margin of 9.3%. The acquisition of vitaCare also had a negative impact on net loss and net loss margin this quarter. Adjusted Net Income2 was $29.9 million compared to $39.7 million .

Adjusted EBITDA2 was $52.0 million compared to $61.8 million , largely driven by the grocer issue, which materially impacted revenue growth, as well as adjusted costs and operating expenses, as a percentage of revenue. Adjusted EBITDA Margin2 was 27.8% compared to 31.7%. The acquisition of vitaCare also had a negative impact on Adjusted EBITDA2 and Adjusted EBITDA Margin2 this quarter.

5Beginning in Q1 2022, pharma manufacturer solutions revenue is disclosed separately from other revenue, which now primarily consists of revenue generated from GoodRx Care. Prior period amounts have been recast to conform to the current period presentation.

Cash Flow and Capital Allocation

Net cash provided by operating activities was $33.7 million compared to $48.6 million in the comparable period last year, which was comprised of a net loss of $41.7 million , adjusted primarily by stock-based compensation expense of $29.0 million , change in the fair value of contingent consideration related to vitaCare of $16.6 million and depreciation and amortization of $14.0 million , as well as working capital changes related to timing of payments for accounts payable, accrued expenses and other current liabilities and in prepaid expenses and other assets. As of September 30, 2022 , GoodRx had cash and cash equivalents of $728.8 million and total outstanding debt of $668.8 million .

GoodRx is focused on a disciplined approach to capital allocation, centered on furthering the company’s mission and creating shareholder value. Capital allocation priorities are reinvesting in the business, maintaining a strong balance sheet, returning capital to shareholders via share repurchases, and evaluating acquisition opportunities that support the company’s strategy. These priorities support GoodRx’s long-term growth strategy while also providing flexibility to navigate near-term challenges.

Guidance

For the fourth quarter, management is anticipating the following:

$ in millions

4Q 2022

4Q 2021

YoY Change

Total Revenue

~$175-$180

$213.3

~(18%) - (16%)

Adjusted EBITDA Margin6

Low-to-mid-twenty-percent range

“Our focus on Adjusted EBITDA growth, margin improvement, and cash conversion remain our top priorities,” said Karsten Voermann , Chief Financial Officer. “We are guiding to fourth quarter total revenue in the range of $175 million to $180 million , which includes a combined $45 million to $50 million estimated impact to prescription transactions revenue related to the previously disclosed grocer issue and our continued consumer engagement efforts. We expect Adjusted EBITDA Margins in the low-to-mid-twenty-percent range.”

“During the third quarter we’ve taken actions in relation to our costs and expenses, and have reprioritized where and how much we spend across the business, with the objective of greater efficiency today and greater Adjusted EBITDA flow through as we grow. We generated strong cash flow in the quarter, and our balance sheet continues to be strong as we have consistently been in a net cash position. Our business model is resilient and provides us with flexibility across our capital allocation priorities. We believe we are well positioned to navigate near-term challenges while executing on our long-term strategy to drive our mission and create value for shareholders,” concluded Voermann.

6Adjusted EBITDA Margin is a non-GAAP financial measure and is presented for supplemental informational purposes only. We have not reconciled our Adjusted EBITDA Margin guidance to GAAP net loss or income margin, because we do not provide guidance for GAAP net loss or income margin due to the uncertainty and potential variability of stock-based compensation expense, acquired intangible assets and related amortization and income taxes, which are reconciling items between Adjusted EBITDA Margin and GAAP net loss or income margin. Because such items cannot be provided without unreasonable efforts, we are unable to provide a reconciliation of the non-GAAP financial measure guidance to the corresponding GAAP measure. However, such items could have a significant impact on our future GAAP net loss or income margin.

Investor Conference Call and Webcast

GoodRx management will host a conference call and webcast today, November 8, 2022 , at 2:00 p.m. Pacific Time ( 5:00 p.m. Eastern Time ) to discuss the results and the Company’s business outlook.

To access the conference call, please pre-register using the following link:
https://register.vevent.com/register/BIc33151bb134e4eeab6c4cc7d6ef69830
Registrants will receive a confirmation with dial-in details and a unique passcode required to join.

The call will also be webcast live on the Company’s investor relations website at https://investors.goodrx.com, where accompanying slides will be posted prior to the conference call.

Approximately one hour after completion of the live call, an archived version of the webcast will be available on the Company’s investor relations website at https://investors.goodrx.com for at least 30 days.

About GoodRx

GoodRx is a leading consumer-focused digital healthcare platform. Our technology delivers strong savings, trusted information and access to care to make healthcare affordable and convenient for all Americans. Since 2011, we have helped consumers save over $45 billion and are one of the most downloaded medical apps over the past decade.

Forward-Looking Statements

This News Release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this News Release that do not relate to matters of historical fact should be considered forward-looking statements, including without limitation statements regarding our future operations, growth and financial results, the benefits to consumers or GoodRx of our agreements with partners, customers and other entities, underlying trends in our business, the impact of the grocer issue on our future financial results and businesses, our manufacturer solutions businesses, the impact of our recent consumer engagement efforts, the impact of macroeconomic conditions on our future results of operations, the impacts of cost savings initiatives, the benefits of cross-selling products, our relationships with industry participants and partners, the anticipated impact of COVID-19 on our business, post COVID-19 trends, our potential for growth (including from acquisitions), demand for our offerings, our strategic growth priorities, including our 2022 priorities, and future offerings, future financial results, collaborations and partnerships with third parties, and our strategy. These statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements, including, but not limited to, risks related to our limited operating history and early stage of growth; our ability to achieve broad market education and change consumer purchasing habits; our ability to continue to attract, acquire and retain consumers in a cost-effective manner; our reliance on our prescription transactions offering and ability to expand our offerings; changes in medication pricing and pricing structures; our inability to control the categories and types of prescriptions for which we can offer savings or discounted prices; our reliance on a limited number of industry participants; the competitive nature of industry; risks related to pandemics, epidemics or outbreak of infection disease, including the COVID-19 pandemic; the accuracy of our estimate of our total addressable market and other operational metrics; the development of the telehealth market; our ability to maintain and expand a network of skilled telehealth providers; risks related to negative media coverage; our ability to respond to changes in the market for prescription pricing and to maintain and expand the use of GoodRx codes; our ability to maintain positive perception of our platform and brand; risks related to any failure to maintain effective internal control over financial reporting; risks related to use of social media, emails, text messages and other messaging channels as part of our marketing strategy; our ability to accurately forecast revenue and appropriately plan our expenses in the future; risks related to information technology and cybersecurity; compliance with government regulation of the internet, e-commerce and data and other regulations; our ability to utilize our net operating loss carryforwards and certain other tax attributes; our ability to attract, develop, motivate and retain well-qualified employees; risks related to general economic factors, natural disasters or other unexpected events; risks related to our acquisition strategy; risks related to our debt arrangements; interruptions or delays in service on our apps or websites; our reliance on third-party platforms to distribute our platform and offerings; our reliance on software as-a-service technologies from third parties; systems failures or other disruptions in the operations of these parties on which we depend; changes in consumer sentiment or laws, rules or regulations regarding tracking technologies and other privacy matters; the increasing focus on environmental sustainability and social initiatives; risks related to our intellectual property; risks related to operating in the healthcare industry; risks related to our organizational structure; risks related to fluctuations in our tax obligations and effective income tax rate which could materially and adversely affect our results of operations; risks related to the recent healthcare reform legislation and other changes in the healthcare industry and in healthcare spending which may adversely affect our business, financial condition and results of operations; the risk that we may not achieve the intended outcomes of our recent reduction in force; as well as the other important factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2021 , as updated by our Quarterly Report on Form 10-Q for the quarter ended September 30, 2022 , and our other filings with the SEC . These factors could cause actual results to differ materially from those indicated by the forward-looking statements made in this shareholder letter. Any such forward-looking statements represent management’s estimates as of the date of this shareholder letter. While we may elect to update such forward-looking statements at some point in the future, we disclaim any obligation to do so, even if subsequent events cause our views to change.

Key Operating Metrics

Monthly Active Consumers (MACs) refers to the number of unique consumers who have used a GoodRx code to purchase a prescription medication in a given calendar month and have saved money compared to the list price of the medication. A unique consumer who uses a GoodRx code more than once in a calendar month to purchase prescription medications is only counted as one Monthly Active Consumer in that month. A unique consumer who uses a GoodRx code in two or three calendar months within a quarter will be counted as a Monthly Active Consumer in each such month. Monthly Active Consumers do not include subscribers to our subscription offerings, consumers of our pharma manufacturer solutions offering, or consumers who use our telehealth offerings. When presented for a period longer than a month, Monthly Active Consumers are averaged over the number of calendar months in such period. Monthly Active Consumers from acquired companies are only included beginning in the first full quarter following the acquisition. RxSaver Monthly Active Consumers have been included as of the beginning of the third quarter of 2021, and are estimated due to incomplete consumer information.

Subscription plans represent the ending subscription plan balance across both of our subscription offerings, GoodRx Gold and Kroger Savings Club . Each subscription plan may represent more than one subscriber since family subscription plans may include multiple members.

 

 

Three Months Ended

 

 

 

September 30 ,

 

June 30 ,

 

March 31 ,

 

December 31 ,

 

September 30 ,

 

June 30 ,

 

March 31 ,

 

(in millions)

 

2022

 

2022

 

2022

 

2021

 

2021

 

2021

 

2021

 

Monthly Active Consumers

 

 

5.8

 

 

5.8

 

 

6.4

 

 

6.4

 

 

6.4

 

 

6.0

 

 

5.7

 

                                             

 

 

As of

 

 

 

September 30 ,

 

June 30 ,

 

March 31 ,

 

December 31 ,

 

September 30 ,

 

June 30 ,

 

March 31 ,

 

(in thousands)

 

2022

 

2022

 

2022

 

2021

 

2021

 

2021

 

2021

 

Subscription plans

 

 

1,060

 

 

1,133

 

 

1,203

 

 

1,210

 

 

1,129

 

 

1,051

 

 

931

 

                                             

GoodRx Holdings, Inc.

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except par values)

         

 

 

September 30 ,
2022

 

December 31 ,
2021

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

728,786

 

 

$

941,109

 

Accounts receivable, net

 

 

120,886

 

 

 

118,080

 

Prepaid expenses and other current assets

 

 

28,716

 

 

 

29,638

 

Total current assets

 

 

878,388

 

 

 

1,088,827

 

Property and equipment, net

 

 

22,287

 

 

 

21,612

 

Goodwill

 

 

415,256

 

 

 

329,696

 

Intangible assets, net

 

 

125,900

 

 

 

88,791

 

Capitalized software, net

 

 

71,299

 

 

 

44,987

 

Operating lease right-of-use assets

 

 

27,971

 

 

 

27,705

 

Other assets

 

 

25,958

 

 

 

6,007

 

Total assets

 

$

1,567,059

 

 

$

1,607,625

 

Liabilities and stockholders' equity

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

 

$

10,855

 

 

$

17,501

 

Accrued expenses and other current liabilities

 

 

61,025

 

 

 

50,732

 

Current portion of debt

 

 

7,029

 

 

 

7,029

 

Operating lease liabilities, current

 

 

6,057

 

 

 

5,851

 

Total current liabilities

 

 

84,966

 

 

 

81,113

 

Debt, net

 

 

652,814

 

 

 

655,858

 

Operating lease liabilities, net of current portion

 

 

32,551

 

 

 

33,592

 

Deferred tax liabilities, net

 

 

650

 

 

 

244

 

Other liabilities

 

 

7,675

 

 

 

5,138

 

Total liabilities

 

 

778,656

 

 

 

775,945

 

Stockholders' equity

 

 

 

 

Preferred stock, $0.0001 par value

 

 

 

 

 

 

Common stock, $0.0001 par value

 

 

40

 

 

 

40

 

Additional paid-in capital

 

 

2,234,926

 

 

 

2,247,347

 

Accumulated deficit

 

 

(1,446,563

)

 

 

(1,415,707

)

Total stockholders' equity

 

 

788,403

 

 

 

831,680

 

Total liabilities and stockholders' equity

 

$

1,567,059

 

 

$

1,607,625

 

GoodRx Holdings, Inc.

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share amounts)

 

 

 

 

 

 

 

Three Months Ended
September 30 ,

 

Nine Months Ended
September 30 ,

 

 

2022

 

2021

 

2022

 

2021

Revenue

 

$

187,318

 

 

$

195,102

 

 

$

582,445

 

 

$

532,168

 

Costs and operating expenses:

 

 

 

 

 

 

 

 

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

 

 

17,395

 

 

 

11,271

 

 

 

47,719

 

 

 

32,789

 

Product development and technology

 

 

35,921

 

 

 

35,073

 

 

 

106,367

 

 

 

90,800

 

Sales and marketing

 

 

86,215

 

 

 

95,651

 

 

 

273,503

 

 

 

263,726

 

General and administrative

 

 

49,548

 

 

 

35,947

 

 

 

116,211

 

 

 

119,312

 

Depreciation and amortization

 

 

13,952

 

 

 

10,161

 

 

 

38,644

 

 

 

23,891

 

Total costs and operating expenses

 

 

203,031

 

 

 

188,103

 

 

 

582,444

 

 

 

530,518

 

Operating (loss) income

 

 

(15,713

)

 

 

6,999

 

 

 

1

 

 

 

1,650

 

Other expense, net:

 

 

 

 

 

 

 

 

Interest income

 

 

(2,920

)

 

 

(13

)

 

 

(3,829

)

 

 

(42

)

Interest expense

 

 

9,478

 

 

 

5,928

 

 

 

22,316

 

 

 

17,739

 

Total other expense, net

 

 

6,558

 

 

 

5,915

 

 

 

18,487

 

 

 

17,697

 

(Loss) income before income taxes

 

 

(22,271

)

 

 

1,084

 

 

 

(18,486

)

 

 

(16,047

)

Income tax (expense) benefit

 

 

(19,463

)

 

 

(19,153

)

 

 

(12,370

)

 

 

30,707

 

Net (loss) income

 

$

(41,734

)

 

$

(18,069

)

 

$

(30,856

)

 

$

14,660

 

(Loss) earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.10

)

 

$

(0.04

)

 

$

(0.07

)

 

$

0.04

 

Diluted

 

$

(0.10

)

 

$

(0.04

)

 

$

(0.07

)

 

$

0.03

 

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

 

 

 

 

 

 

 

 

Basic

 

 

412,956

 

 

 

411,223

 

 

 

413,254

 

 

 

408,604

 

Diluted

 

 

412,956

 

 

 

411,223

 

 

 

413,254

 

 

 

429,695

 

 

 

 

 

 

 

 

 

 

Stock-based compensation included in costs and operating expenses:

 

 

 

 

 

 

 

 

Cost of revenue

 

$

136

 

 

$

238

 

 

$

190

 

 

$

540

 

Product development and technology

 

 

8,029

 

 

 

10,333

 

 

 

25,327

 

 

 

26,656

 

Sales and marketing

 

 

4,766

 

 

 

5,638

 

 

 

15,999

 

 

 

16,158

 

General and administrative

 

 

16,107

 

 

 

23,771

 

 

 

49,304

 

 

 

83,828

 

GoodRx Holdings, Inc.

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

 

 

Nine Months Ended
September 30 ,

 

 

2022

 

2021

Cash flows from operating activities

 

 

 

 

Net (loss) income

 

$

(30,856

)

 

$

14,660

 

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

 

 

 

 

Depreciation and amortization

 

 

38,644

 

 

 

23,891

 

Amortization of debt issuance costs

 

 

2,562

 

 

 

2,586

 

Non-cash operating lease expense

 

 

2,314

 

 

 

2,451

 

Stock-based compensation expense

 

 

90,820

 

 

 

127,182

 

Change in fair value of contingent consideration

 

 

16,857

 

 

 

 

Deferred income taxes

 

 

(141

)

 

 

(33,217

)

Loss on abandonment of operating lease assets

 

 

 

 

 

1,430

 

Changes in operating assets and liabilities, net of effects of business acquisitions

 

 

 

 

Accounts receivable

 

 

(2,370

)

 

 

(24,380

)

Prepaid expenses and other assets

 

 

(3,137

)

 

 

5,696

 

Accounts payable

 

 

(8,011

)

 

 

4,322

 

Accrued expenses and other current liabilities

 

 

9,097

 

 

 

5,311

 

Operating lease liabilities

 

 

(3,415

)

 

 

(1,501

)

Other liabilities

 

 

2,537

 

 

 

538

 

Net cash provided by operating activities

 

 

114,901

 

 

 

128,969

 

Cash flows from investing activities

 

 

 

 

Purchase of property and equipment

 

 

(3,817

)

 

 

(3,764

)

Acquisitions, net of cash acquired

 

 

(156,853

)

 

 

(140,268

)

Capitalized software

 

 

(36,107

)

 

 

(21,434

)

Investment in minority equity interest

 

 

(15,007

)

 

 

(4,008

)

Net cash used in investing activities

 

 

(211,784

)

 

 

(169,474

)

Cash flows from financing activities

 

 

 

 

Payments on long-term debt

 

 

(5,272

)

 

 

(5,272

)

Payment for contingent consideration

 

 

 

 

 

(832

)

Repurchases of Class A common stock

 

 

(101,721

)

 

 

 

Proceeds from exercise of stock options

 

 

9,110

 

 

 

29,715

 

Employee taxes paid related to net share settlement of equity awards

 

 

(17,557

)

 

 

(42,674

)

Net cash used in financing activities

 

 

(115,440

)

 

 

(19,063

)

Net change in cash, cash equivalents and restricted cash

 

 

(212,323

)

 

 

(59,568

)

Cash, cash equivalents and restricted cash

 

 

 

 

Beginning of period

 

 

941,109

 

 

 

971,591

 

End of period

 

$

728,786

   

$

912,023

 

Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income, Adjusted Net Income Margin, Adjusted Earnings Per Share and Adjusted Operating Income are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. We also present each cost and operating expense on our condensed consolidated statements of operations on an adjusted basis. Collectively, we refer to these non-GAAP financial measures as our “Non-GAAP Measures.”

We define Adjusted EBITDA for a particular period as net income or loss before interest, taxes, depreciation and amortization, and as further adjusted for, as applicable for the periods presented, acquisition related expenses, cash bonuses to vested option holders, stock-based compensation expense, payroll tax expense related to stock-based compensation, loss on extinguishment of debt, financing related expenses, loss on abandonment and impairment of operating lease assets, restructuring related expenses, legal settlement expenses, charitable stock donation and other income or expense, net. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenue.

We define Adjusted Net Income for a particular period as net income or loss adjusted for, as applicable for the periods presented, amortization of intangibles related to acquisitions, 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 abandonment and impairment of operating lease assets, restructuring related expenses, legal settlement expenses, charitable stock donation, and as further adjusted for estimated income tax on such adjusted items. Adjusted income taxes in interim periods is determined by applying an adjusted estimated annual effective income tax rate to interim non-GAAP adjusted income before income taxes and including the tax effect of certain discrete items recognized during the period. Our adjusted estimated annual effective income tax rate is based on our full-year estimate of non-GAAP adjusted income before income taxes. Our adjusted taxes also excludes (i) the valuation allowance recorded against certain of our net deferred tax assets that was recognized in accordance with GAAP, and (ii) all tax benefits/expenses resulting from excess tax benefits/deficiencies in connection with stock-based compensation. Adjusted Net Income Margin represents Adjusted Net Income as a percentage of revenue.

Adjusted Earnings Per Share (Adjusted EPS) is Adjusted Net Income attributable to common stockholders divided by weighted average number of shares. The weighted average shares we use in computing Adjusted Earnings Per Share – basic is equal to our GAAP weighted average shares – basic and the weighted average shares we use in computing Adjusted Earnings Per Share – diluted is equal to either GAAP weighted average shares – basic or GAAP weighted average shares – diluted, depending on whether we have adjusted net loss or adjusted net income, respectively.

We also assess our performance by evaluating each cost and operating expense on our condensed consolidated statements of operations on a non-GAAP, or adjusted, basis to arrive at Adjusted Operating Income. The adjustments to these cost and operating expense items include, as applicable for the periods presented, acquisition related expenses, amortization of intangibles related to acquisitions, stock-based compensation expense, payroll tax expense related to stock-based compensation, financing related expenses, loss on extinguishment of debt, restructuring related expenses, legal settlement expenses, loss on abandonment and impairment of operating lease assets and charitable stock donation. Adjusted Operating Income is GAAP revenue less non-GAAP operating expenses.

We believe our Non-GAAP Measures are helpful to investors, analysts and other interested parties because they assist in providing a more consistent and comparable overview of our operations across our historical financial periods. Adjusted EBITDA and Adjusted EBITDA Margin are also key measures we use to assess our financial performance and are also used for internal planning and forecasting purposes. In addition, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income and Adjusted Earnings Per Share are frequently used by analysts, investors and other interested parties to evaluate and assess performance.

The Non-GAAP Measures are presented for supplemental informational purposes only and should not be considered as alternatives or substitutes to financial information presented in accordance with GAAP. These measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our condensed consolidated statements of operations that are necessary to run our business. Other companies, including other companies in our industry, may not use these measures or may calculate these measures differently than as presented herein, limiting their usefulness as comparative measures.

The following table presents a reconciliation of net (loss) income, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA, and presents net (loss) income margin, the most directly comparable financial measure calculated in accordance with GAAP, with Adjusted EBITDA Margin:

(dollars in thousands)

       

 

Three Months Ended
September 30 ,

 

Nine Months Ended
September 30 ,

 

2022

 

2021

 

2022

 

2021

Net (loss) income

$

(41,734

)

 

$

(18,069

)

 

$

(30,856

)

 

$

14,660

 

Adjusted to exclude the following:

 

 

 

 

 

 

 

Interest income

 

(2,920

)

 

 

(13

)

 

 

(3,829

)

 

 

(42

)

Interest expense

 

9,478

 

 

 

5,928

 

 

 

22,316

 

 

 

17,739

 

Income tax expense (benefit)

 

19,463

 

 

 

19,153

 

 

 

12,370

 

 

 

(30,707

)

Depreciation and amortization

 

13,952

 

 

 

10,161

 

 

 

38,644

 

 

 

23,891

 

Financing related expenses (1)

 

5

 

 

 

134

 

 

 

14

 

 

 

449

 

Acquisition related expenses (2)

 

18,656

 

 

 

1,714

 

 

 

23,630

 

 

 

7,784

 

Restructuring related expenses (3)

 

5,880

 

 

 

 

 

 

6,236

 

 

 

 

Legal settlement expenses (4)

 

 

 

 

 

 

 

2,800

 

 

 

 

Stock-based compensation expense

 

29,038

 

 

 

39,980

 

 

 

90,820

 

 

 

127,182

 

Payroll tax expense related to stock-based compensation

 

184

 

 

 

2,150

 

 

 

1,739

 

 

 

4,994

 

Loss on abandonment of operating lease assets (5)

 

 

 

 

650

 

 

 

 

 

 

1,430

 

Adjusted EBITDA

$

52,002

 

 

$

61,788

 

 

$

163,884

 

 

$

167,380

 

Revenue

$

187,318

 

 

$

195,102

 

 

$

582,445

 

 

$

532,168

 

Net (loss) income margin (6)

 

(22.3

%)

 

 

(9.3

%)

 

 

(5.3

%)

 

 

2.8

%

Adjusted EBITDA Margin

 

27.8

%

 

 

31.7

%

 

 

28.1

%

 

 

31.5

%

____________________

(1)

Financing related expenses include third party fees related to proposed financings.

(2)

Acquisition related expenses include third party fees for actual or planned acquisitions, including related 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.

(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, including 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.

(4)

Legal settlement expenses represent the estimated accrual of the probable loss with respect to the ongoing Federal Trade Commission investigation. See Note 8 to our condensed consolidated financial statements for additional information.

(5)

Non-cash loss with respect to certain leased office space that was abandoned.

(6)

Net (loss) income margin represents net loss or net income as a percentage of revenue.

The following tables present a reconciliation of net (loss) income and calculations of net (loss) income margin and (loss) earnings per share, the most directly comparable financial measures calculated in accordance with GAAP, to Adjusted Net Income, Adjusted Net Income Margin, and Adjusted Earnings Per Share, respectively:

(dollars in thousands, except per share amounts)

         

 

 

Three Months Ended
September 30 ,

 

Nine Months Ended
September 30 ,

 

 

2022

 

2021

 

2022

 

2021

Net (loss) income

 

$

(41,734

)

 

$

(18,069

)

 

$

(30,856

)

 

$

14,660

 

Adjusted to exclude the following:

 

 

 

 

 

 

 

 

Amortization of intangibles related to acquisitions

 

 

5,819

 

 

 

5,703

 

 

 

17,526

 

 

 

13,047

 

Financing related expenses (1)

 

 

5

 

 

 

134

 

 

 

14

 

 

 

449

 

Acquisition related expenses (1)

 

 

18,656

 

 

 

1,714

 

 

 

23,630

 

 

 

7,784

 

Restructuring related expenses (1)

 

 

5,880

 

 

 

 

 

 

6,236

 

 

 

 

Legal settlement expenses (1)

 

 

 

 

 

 

 

 

2,800

 

 

 

 

Stock-based compensation expense

 

 

29,038

 

 

 

39,980

 

 

 

90,820

 

 

 

127,182

 

Payroll tax expense related to stock-based compensation

 

 

184

 

 

 

2,150

 

 

 

1,739

 

 

 

4,994

 

Loss on abandonment of operating lease assets (1)

 

 

 

 

 

650

 

 

 

 

 

 

1,430

 

Income tax expense (benefit) on excluded items and adjusting for valuation allowance and excess tax benefits/deficiencies on stock-based compensation exercises

 

 

12,081

 

 

 

7,388

 

 

 

(13,460

)

 

 

(62,983

)

Adjusted Net Income

 

$

29,929

 

 

$

39,650

 

 

$

98,449

 

 

$

106,563

 

Revenue

 

$

187,318

 

 

$

195,102

 

 

$

582,445

 

 

$

532,168

 

Net (loss) income margin (1)

 

 

(22.3

%)

 

 

(9.3

%)

 

 

(5.3

%)

 

 

2.8

%

Adjusted Net Income Margin

 

 

16.0

%

 

 

20.3

%

 

 

16.9

%

 

 

20.0

%

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

 

 

 

 

 

 

 

 

Basic

 

 

412,956

 

 

 

411,223

 

 

 

413,254

 

 

 

408,604

 

Diluted

 

 

412,956

 

 

 

411,223

 

 

 

413,254

 

 

 

429,695

 

(Loss) earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

(0.10

)

 

$

(0.04

)

 

$

(0.07

)

 

$

0.04

 

Diluted

 

$

(0.10

)

 

$

(0.04

)

 

$

(0.07

)

 

$

0.03

 

Weighted average shares used in computing adjusted earnings per share:

 

 

 

 

 

 

 

 

Basic

 

 

412,956

 

 

 

411,223

 

 

 

413,254

 

 

 

408,604

 

Diluted

 

 

414,940

 

 

 

429,720

 

 

 

420,363

 

 

 

429,695

 

Adjusted earnings per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.07

 

 

$

0.10

 

 

$

0.24

 

 

$

0.26

 

Diluted

 

$

0.07

 

 

$

0.09

 

 

$

0.23

 

 

$

0.25

 

____________________

(1)

Refer to reconciliation table for Adjusted EBITDA above for further information regarding these metrics/adjustments.

Each cost and operating expense is adjusted for, as applicable for the periods presented, acquisition related expenses, amortization of intangibles related to acquisitions, stock-based compensation expense, payroll tax expense related to stock-based compensation, financing related expenses, loss on extinguishment of debt, restructuring related expenses, legal settlement expenses, loss on abandonment and impairment of operating lease assets and charitable stock donation.

(dollars in thousands)

                 

 

 

GAAP

 

Adjusted

 

GAAP

 

Adjusted

 

 

Three Months Ended

 

Three Months Ended

 

Nine Months Ended

 

Nine Months Ended

 

 

September 30 ,

 

September 30 ,

 

September 30 ,

 

September 30 ,

 

 

2022

 

2021

 

2022

 

2021

 

2022

 

2021

 

2022

 

2021

Cost of revenue

 

$

17,395

 

 

$

11,271

 

 

$

17,055

 

 

$

11,138

 

 

$

47,719

 

 

$

32,789

 

 

$

47,275

 

 

$

32,213

 

% of Revenue

 

 

9

%

 

 

6

%

 

 

9

%

 

 

6

%

 

 

8

%

 

 

6

%

 

 

8

%

 

 

6

%

Product development and technology

 

$

35,921

 

 

$

35,073

 

 

$

24,895

 

 

$

23,156

 

 

$

106,367

 

 

$

90,800

 

 

$

76,371

 

 

$

60,179

 

% of Revenue

 

 

19

%

 

 

18

%

 

 

13

%

 

 

12

%

 

 

18

%

 

 

17

%

 

 

13

%

 

 

11

%

Sales and marketing

 

$

86,215

 

 

$

95,651

 

 

$

78,700

 

 

$

89,286

 

 

$

273,503

 

 

$

263,726

 

 

$

252,644

 

 

$

245,918

 

% of Revenue

 

 

46

%

 

 

49

%

 

 

42

%

 

 

46

%

 

 

47

%

 

 

50

%

 

 

43

%

 

 

46

%

General and administrative

 

$

49,548

 

 

$

35,947

 

 

$

14,666

 

 

$

9,734

 

 

$

116,211

 

 

$

119,312

 

 

$

42,271

 

 

$

26,478

 

% of Revenue

 

 

26

%

 

 

18

%

 

 

8

%

 

 

5

%

 

 

20

%

 

 

22

%

 

 

7

%

 

 

5

%

Depreciation and amortization

 

$

13,952

 

 

$

10,161

 

 

$

8,133

 

 

$

4,458

 

 

$

38,644

 

 

$

23,891

 

 

$

21,118

 

 

$

10,844

 

% of Revenue

 

 

7

%

 

 

5

%

 

 

4

%

 

 

2

%

 

 

7

%

 

 

4

%

 

 

4

%

 

 

2

%

Operating (loss) income

 

$

(15,713

)

 

$

6,999

 

 

$

43,869

 

 

$

57,330

 

 

$

1

 

 

$

1,650

 

 

$

142,766

 

 

$

156,536

 

% of Revenue

 

 

(8

%)

 

 

4

%

 

 

23

%

 

 

29

%

 

 

0

%

 

 

0

%

 

 

25

%

 

 

29

%

The following table presents a reconciliation of each non-GAAP, or adjusted, cost and expense measure to its most directly comparable financial measure calculated in accordance with GAAP:

(in thousands)

         

 

 

Three Months Ended

 

Nine Months Ended

 

 

September 30 ,

 

September 30 ,

 

 

2022

 

2021

 

2022

 

2021

Cost of revenue

 

$

17,395

 

 

$

11,271

 

 

$

47,719

 

 

$

32,789

 

Acquisition related expenses

 

 

 

 

 

123

 

 

 

 

 

 

46

 

Restructuring related expenses

 

 

(203

)

 

 

 

 

 

(237

)

 

 

 

Stock-based compensation expense

 

 

(136

)

 

 

(238

)

 

 

(190

)

 

 

(540

)

Payroll tax expense related to stock-based compensation

 

 

(1

)

 

 

(18

)

 

 

(17

)

 

 

(82

)

Adjusted cost of revenue

 

$

17,055

 

 

$

11,138

 

 

$

47,275

 

 

$

32,213

 

 

 

 

 

 

 

 

 

 

Product development and technology

 

$

35,921

 

 

$

35,073

 

 

$

106,367

 

 

$

90,800

 

Acquisition related expenses

 

 

(285

)

 

 

(560

)

 

 

(876

)

 

 

(1,506

)

Restructuring related expenses

 

 

(2,626

)

 

 

 

 

 

(2,866

)

 

 

 

Stock-based compensation expense

 

 

(8,029

)

 

 

(10,333

)

 

 

(25,327

)

 

 

(26,656

)

Payroll tax expense related to stock-based compensation

 

 

(86

)

 

 

(1,024

)

 

 

(927

)

 

 

(2,459

)

Adjusted product development and technology

 

$

24,895

 

 

$

23,156

 

 

$

76,371

 

 

$

60,179

 

 

 

 

 

 

 

 

 

 

Sales and marketing

 

$

86,215

 

 

$

95,651

 

 

$

273,503

 

 

$

263,726

 

Acquisition related expenses

 

 

(124

)

 

 

(292

)

 

 

(1,879

)

 

 

(773

)

Restructuring related expenses

 

 

(2,597

)

 

 

 

 

 

(2,679

)

 

 

 

Stock-based compensation expense

 

 

(4,766

)

 

 

(5,638

)

 

 

(15,999

)

 

 

(16,158

)

Payroll tax expense related to stock-based compensation

 

 

(28

)

 

 

(435

)

 

 

(302

)

 

 

(877

)

Adjusted sales and marketing

 

$

78,700

 

 

$

89,286

 

 

$

252,644

 

 

$

245,918

 

 

 

 

 

 

 

 

 

 

General and administrative

 

$

49,548

 

 

$

35,947

 

 

$

116,211

 

 

$

119,312

 

Financing related expenses

 

 

(5

)

 

 

(134

)

 

 

(14

)

 

 

(449

)

Acquisition related expenses

 

 

(18,247

)

 

 

(985

)

 

 

(20,875

)

 

 

(5,551

)

Restructuring related expenses

 

 

(454

)

 

 

 

 

 

(454

)

 

 

 

Legal settlement expenses

 

 

 

 

 

 

 

 

(2,800

)

 

 

 

Stock-based compensation expense

 

 

(16,107

)

 

 

(23,771

)

 

 

(49,304

)

 

 

(83,828

)

Payroll tax expense related to stock-based compensation

 

 

(69

)

 

 

(673

)

 

 

(493

)

 

 

(1,576

)

Loss on abandonment of operating lease assets

 

 

 

 

 

(650

)

 

 

 

 

 

(1,430

)

Adjusted general and administrative

 

$

14,666

 

 

$

9,734

 

 

$

42,271

 

 

$

26,478

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

$

13,952

 

 

$

10,161

 

 

$

38,644

 

 

$

23,891

 

Amortization of intangibles related to acquisitions

 

 

(5,819

)

 

 

(5,703

)

 

 

(17,526

)

 

 

(13,047

)

Adjusted depreciation and amortization

 

$

8,133

 

 

$

4,458

 

 

$

21,118

 

 

$

10,844

 

 

 

 

 

 

 

 

 

 

Operating (loss) income

 

$

(15,713

)

 

$

6,999

 

 

$

1

 

 

$

1,650

 

Amortization of intangibles related to acquisitions

 

 

5,819

 

 

 

5,703

 

 

 

17,526

 

 

 

13,047

 

Financing related expenses

 

 

5

 

 

 

134

 

 

 

14

 

 

 

449

 

Acquisition related expenses

 

 

18,656

 

 

 

1,714

 

 

 

23,630

 

 

 

7,784

 

Restructuring related expenses

 

 

5,880

 

 

 

 

 

 

6,236

 

 

 

 

Legal settlement expenses

 

 

 

 

 

 

 

 

2,800

 

 

 

 

Stock-based compensation expense

 

 

29,038

 

 

 

39,980

 

 

 

90,820

 

 

 

127,182

 

Payroll tax expense related to stock-based compensation

 

 

184

 

 

 

2,150

 

 

 

1,739

 

 

 

4,994

 

Loss on abandonment of operating lease assets

 

 

 

 

 

650

 

 

 

 

 

 

1,430

 

Adjusted operating income

 

$

43,869

 

 

$

57,330

 

 

$

142,766

 

 

$

156,536

 

 

Investor Contact
GoodRx
Whitney Notaro
ir@goodrx.com

Press Contact
GoodRx
Lauren Casparis
lcasparis@goodrx.com

Source: GoodRx Holdings, Inc.

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