GoodRx Holdings, Inc. — 2021 Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2021. This is an annual filing, not a standalone fourth-quarter report; quarterly operating metrics are included where disclosed. Financial amounts are in U.S. dollars.
Business context
GoodRx operates a U.S. consumer healthcare platform centered on prescription price comparisons and discount codes. It also offers paid subscriptions, pharmaceutical manufacturer solutions, and telehealth. Prescription transactions remained the core business, accounting for 80% of 2021 revenue, down from 89% in 2020.
Financial and operating metrics
| Metric | FY 2021 | FY 2020 |
|---|---|---|
| Revenue | $745.4 million | $550.7 million |
| Operating income (loss) | $13.4 million | $(275.7) million |
| Net loss | $(25.3) million | $(293.6) million |
| Adjusted EBITDA (non-GAAP) | $229.6 million | $203.4 million |
| Adjusted EBITDA margin (non-GAAP) | 30.8% | 36.9% |
| Net cash provided by operating activities | $178.8 million | $131.3 million |
| Net cash used in investing activities | $(178.7) million | $(91.6) million |
| Cash and cash equivalents at year-end | $941.1 million | $968.7 million |
| Term-loan principal outstanding at year-end | $674.1 million | $681.1 million |
- Revenue by offering: Prescription transactions were $593.4 million, up 22%; subscriptions were $59.9 million, up 104%; and other revenue, primarily manufacturer solutions and telehealth, was $92.1 million, up 179%.
- Fourth-quarter operating measures: Monthly Active Consumers averaged 6.4 million, versus 5.6 million in Q4 2020. Subscription plans stood at 1.21 million at December 31, 2021, versus 801,000 a year earlier. These are company-defined metrics.
- Costs and margins: Cost of revenue, excluding depreciation and amortization, was $46.7 million (6% of revenue). Sales and marketing was $370.2 million (50% of revenue), and product development and technology was $125.9 million (17%). Adjusted EBITDA margin declined despite higher Adjusted EBITDA.
- Liquidity and debt: The company reported $90.8 million available under its $100 million revolving facility at year-end, with no revolver borrowings. The term loan requires quarterly principal payments; $653.0 million of principal was scheduled for 2025. GoodRx reported compliance with debt covenants.
Changes versus the prior year
- Revenue rose 35%, supported by consumer growth and faster expansion in subscriptions and other offerings. Prescription transaction revenue grew more slowly than the newer revenue streams.
- Net loss narrowed substantially, principally because 2020 included much higher stock-based compensation associated with the founders’ awards and a $41.7 million charitable stock donation. FY 2021 still included $160.5 million of stock-based compensation and a $15.1 million income-tax expense.
- Adjusted EBITDA increased 13%, while its margin fell from 36.9% to 30.8%. Management attributed the margin decline to investment in product and technology, higher marketing, public-company infrastructure, and offering mix.
- Operating cash flow increased, while investing cash outflow rose, principally due to acquisitions and investments and higher software development spending. Financing cash flow turned negative after the prior year’s IPO and private-placement proceeds.
Outlook, commentary, risks, and unusual items
- Outlook: The filing provides no specific numerical revenue or earnings guidance. Management expects subscription and other revenue percentage growth to outpace prescription transaction growth. It anticipates continued near-term investment in marketing, product and technology, and public-company infrastructure; margins may fluctuate with investment levels and revenue mix. GoodRx Care has lower margins than its other offerings.
- COVID-19 and seasonality: Management said lower healthcare utilization since the pandemic began continued to weigh on prescription business growth, with future improvement uncertain. Demand typically strengthens in the first and fourth quarters, but pandemic effects have disrupted seasonal patterns.
- FTC privacy matter: After investigating GoodRx’s privacy and data-sharing practices, FTC staff notified the company in October 2021 of an intent to recommend enforcement and sent a draft complaint and consent order in January 2022. GoodRx disputes the allegations and intends to defend itself. The company had not accrued a loss and said it could not estimate a loss or range.
- Other litigation: A securities class action relating to alleged nondisclosure of Amazon’s competing prescription service was dismissed in January 2022; plaintiffs filed an amended complaint in February 2022, with a further motion to dismiss pending at filing. Related derivative suits were stayed. No loss was accrued; the potential loss was not estimable.
- Concentration and business risks: The three largest PBM partners generated 34% of 2021 revenue. The business also depends on pharmacy and PBM pricing, consumer acquisition and retention, privacy and advertising rules, and third-party technology and service providers. Telehealth faces competitive and regulatory uncertainty.
- Stock-based compensation and taxes: Founders’ performance-vesting awards vested in 2020, with 15.7 million related shares not yet settled at year-end and expected settlement in October 2023 or earlier on specified events. The company noted potentially substantial future tax-withholding cash needs. A $52.4 million valuation allowance was recorded against deferred tax assets in 2021.
- Subsequent events: In February 2022, the board authorized up to $250 million of Class A share repurchases through February 2024; repurchases are discretionary. GoodRx also acquired flipMD for $7.0 million in cash.
- Controls and audit: Management reported that previously identified material weaknesses in internal control over financial reporting were remediated and controls were effective as of year-end; the auditor also opined that controls were effective.
Important facts for investors to verify
- Whether prescription transaction growth, consumer activity, and contribution per consumer recover or remain affected by pandemic-related utilization and acquired-business mix.
- How much FTC proceedings may cost, whether proposed privacy or marketing changes affect customer acquisition, and how the securities litigation develops.
- The durability of PBM and pharmacy relationships, including the effect of pricing changes or industry consolidation on GoodRx’s discounts and revenue concentration.
- Whether expanding subscriptions, manufacturer solutions, and telehealth can offset reliance on prescription transactions without further sustained margin pressure.
- Cash requirements for acquisitions, capital spending, debt service, and equity-award tax withholding, alongside the discretionary $250 million repurchase authorization.