GoodRx Holdings, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended December 31, 2022; filed February 28, 2023. This is an annual report, not a standalone fourth-quarter earnings release, and the provided filing text does not give a clear set of Q4-only financial results.
Business context
GoodRx operates a U.S. digital healthcare platform centered on prescription price comparisons and discount codes. It also earns revenue from pharma manufacturer solutions, subscriptions, and telehealth. Prescription transactions remained its largest business, accounting for 72% of FY2022 revenue.
Financial and operating performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $766.6 million | $745.4 million |
| Operating income | $1.7 million | $13.4 million |
| Net loss | $32.8 million | $25.3 million |
| Net loss margin | 4.3% | 3.4% |
| Adjusted EBITDA (non-GAAP) | $213.5 million | $229.6 million |
| Adjusted EBITDA margin (non-GAAP) | 27.8% | 30.8% |
| Cash from operating activities | $146.8 million | $178.8 million |
| Cash and cash equivalents at year-end | $757.2 million | $941.1 million |
Prescription transactions revenue fell 7% to $550.5 million. Pharma manufacturer solutions revenue rose 36% to $99.4 million; subscription revenue grew 60% to $96.2 million; and other revenue increased 9% to $20.4 million. Cost of revenue was 8.5% of revenue versus 6.3% in 2021. Operating margin was approximately 0.2%, down from 1.8%.
Investing activities used $210.5 million, principally for acquisitions and software development; financing activities used $120.2 million, including $101.7 million of share repurchases. The company reported $667.1 million principal outstanding on its term loan ($658.8 million carrying value net of issuance costs) and $90.8 million available on its revolving facility; there were no revolver borrowings. The term loan matures in October 2025. A 100-basis-point rate increase would have added an estimated $6.8 million to 2022 interest expense.
Material changes and unusual items
- Grocer issue: A grocery chain’s actions beginning late in Q1 2022 disrupted acceptance of certain PBM-discounted prices. GoodRx estimated a $110–$120 million adverse effect on 2022 prescription transactions revenue. The issue was addressed in August, but management expected a potentially material continuing effect amid uncertainty about consumer pricing and return rates.
- Acquisitions and disposition: GoodRx acquired vitaCare for approximately $150 million upfront in April and acquired flipMD for $7 million. vitaCare contributed $5.6 million of 2022 revenue and, management said, pressured earnings and margins. GoodRx also sold certain GoodRx Care technology assets for $19.5 million, recognizing an $11.4 million pretax gain, while continuing to offer telehealth access.
- Cost reductions: An August reduction in force affected approximately 140 employees, or 16% of GoodRx, Inc.’s workforce. The company recorded about $5.9 million in pretax charges and expected $23–$25 million in annualized cash savings, excluding replacement hiring or other cost additions.
- Other charges: The company recorded a $12.6 million loss on operating lease assets and related costs, including impairment of space it no longer planned to occupy, and an $18.1 million increase in vitaCare contingent-consideration expense. Adjusted EBITDA is a non-GAAP measure and excludes specified expenses; it should not be treated as a substitute for GAAP results.
- FTC and litigation: GoodRx reached a proposed FTC settlement for $1.5 million, accrued at year-end and approved by a court in February 2023. The order also requires certain changes to privacy practices and compliance. Three putative privacy class actions were filed in February 2023; the company intends to seek dismissal. It said losses in those cases were not then probable and reasonably estimable.
Outlook, risks, and liquidity
The filing provides no formal numeric revenue or earnings guidance. Management said operating cash flow and cash on hand should be adequate for needs over at least the next 12 months. It expects pharma manufacturer solutions to grow as a share of revenue in the near to medium term; it also expects the Kroger Savings subscription program to sunset in July 2024, with no material financial impact anticipated. Management cautioned that the grocer issue may continue to weigh on prescription revenue and Monthly Active Consumers. Monthly Active Consumers were 5.9 million in Q4 2022 versus 6.4 million in Q4 2021; subscription plans were 1.03 million versus 1.21 million.
Key risks include dependence on a limited number of PBMs and pharmacy chains, changing medication pricing and consumer behavior, privacy and regulatory exposure, competition, telehealth provider relationships, and floating-rate debt. The three largest PBM partners generated 31% of 2022 revenue; one customer accounted for approximately 13%. The filing also notes a dual-class share structure and concentrated voting control. The company maintained a $57.1 million valuation allowance against deferred tax assets in excess of amortizable goodwill.
Important facts for investors to verify
- How much of prescription revenue and consumer activity recovers after the grocer issue, and whether the estimated $110–$120 million impact persists.
- Whether growth in pharma manufacturer solutions and subscriptions can offset weakness in the core prescription transactions business while supporting margins.
- Cash generation after acquisition spending, software investment, debt service, repurchases, and expected tax-withholding obligations for founder equity awards.
- Progress on the FTC privacy settlement requirements and the status, potential exposure, and disclosures for the related class actions.
- Debt covenant compliance, refinancing or repayment plans for the 2025 term-loan maturity, and sensitivity to higher interest rates.