Second quarter financial results exceed
previously announced guidance
GoodRx Holdings, Inc. (Nasdaq: GDRX) (“GoodRx” or the
“Company”), a leading resource for healthcare savings and
information, has released its financial results for the second
quarter 2023.
Second Quarter 2023
Highlights
- Total revenue of $189.7 million, exceeding previously
announced guidance
- Net income of $58.8 million1; Net income margin of
31.0%
- Adjusted Net Income2 of $28.4 million; Adjusted Net Income
Margin2 of 15.0%
- Adjusted EBITDA2 of $53.5 million; Adjusted EBITDA Margin2
of 28.2%, exceeding previously announced guidance
- Net cash provided by operating activities of $29.9
million
- Over 500,000 prescribers3 engaged with us through Provider
Mode since its launch
- Exited the quarter with over 7 million consumers of
prescription-related offerings4
“I’m encouraged by the progress made during the second quarter,”
said Scott Wagner, Interim Chief Executive Officer. “We exceeded
our Revenue and Adjusted EBITDA expectations with prescription
transactions revenue and volume returning to year-over-year growth.
We expanded the number of direct contracts we have with pharmacies,
announced an exciting new program with CVS Caremark, and continued
to align our teams and people against our biggest opportunities.
Looking ahead, we are focused on rebuilding momentum in the
business financially and operationally with an eye toward
compounding growth in 2024 and beyond.”
1
Q2‘23 net income was impacted by $17.9
million of stock-based compensation expense, $5.7 million of which
related to the non-recurring awards granted to our co-founders in
connection with our IPO, and a $46.7 million tax benefit
principally from the release of our valuation allowance against our
net deferred tax assets.
2
Adjusted 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 reconciliations to the most directly
comparable GAAP measures.
3
As of 6/30/23. Prescribers are defined as
individuals in the medical profession who are allowed to write
orders for medical treatment.
4
Sum of Monthly Active Consumers (MACs) for
Q2'23 and subscribers to our subscription plans as of 6/30/23.
Refer to Key Operating Metrics below for definitions of Monthly
Active Consumers and subscription plans.
Second Quarter 2023 Financial
Overview (all comparisons are made to the same period of
the prior year unless otherwise noted):
Total revenue decreased 1% to $189.7 million compared to $191.8
million. Prescription transactions revenue increased 2% to $136.5
million compared to $134.4 million, primarily driven by a 5%
increase in Monthly Active Consumers, partially offset by an
ongoing shift in the volume of prescription transactions to certain
retailers with lower pricing principally due to the sustained
impact of the grocer issue. Pharma manufacturer solutions revenue
decreased 8% to $24.3 million compared to $26.6 million, primarily
driven by our increased focus on prioritizing service arrangements
with high levels of recurring revenue potential and moderation in
spending across pharma manufacturers, partially offset by revenue
contribution from vitaCare, which we acquired in April 2022.
Subscription revenue decreased 8% to $23.9 million compared to
$26.0 million, primarily driven by a 14% decrease in subscription
plans as of June 30, 2023, largely as a result of the sunset of our
partnership subscription program, Kroger Savings Club, partially
offset by the effects of the pricing increase for Gold subscribers
in the first half of 2022. Other revenue stayed relatively flat
year-over-year.
Cost of revenues decreased 9% to $16.3 million, or 9% of
revenue, compared to $18.0 million, or 9% of revenue, primarily
driven by a decrease in fulfillment costs for certain solutions
provided to customers under our pharma manufacturer solutions
offering. Adjusted cost of revenues2 decreased 10% to $16.1
million, or 9% of revenue, compared to $17.9 million, or 9% of
revenue.
Product development and technology expenses decreased 12% to
$31.3 million, or 16% of revenue, compared to $35.4 million, or 18%
of revenue, primarily driven by a decrease in payroll and related
costs due to lower average headcount and higher capitalization of
certain qualified costs related to software development. Adjusted
product development and technology expenses2 decreased 6% to $23.5
million, or 12% of revenue, compared to $25.0 million, or 13% of
revenue.
Sales and marketing expenses decreased 18% to $77.4 million, or
41% of revenue, compared to $94.3 million, or 49% of revenue,
primarily driven by a decrease in payroll and related costs due to
a reversal of previously recognized stock-based compensation
expense as certain performance milestones were no longer probable
of being met and lower average headcount as well as a net decrease
in advertising and promotional expenses as we proactively managed
our spend to better align with our strategic goals and future
scale. Adjusted sales and marketing expenses2 decreased 7% to $80.4
million, or 42% of revenue, compared to $86.9 million, or 45% of
revenue.
General and administrative expenses decreased 13% to $30.2
million, or 16% of revenue, compared to $34.7 million, or 18% of
revenue, primarily driven by a decrease in stock-based compensation
expense related to our co-founders awards, partially offset by an
increase in payroll and related expenses. Adjusted general and
administrative expenses2 increased 10% to $16.2 million, or 9% of
revenue, compared to $14.7 million, or 8% of revenue.
Net income was $58.8 million compared to a net loss of $1.4
million, primarily driven by an increase in our income tax benefit
of $46.7 million, compared to $8.7 million, due to the discrete
release of $55.9 million of our beginning-of-the-year valuation
allowance against our net deferred tax assets. Net income margin
was 31.0% compared to a net loss margin of 0.7%. Adjusted Net
Income2 was $28.4 million compared to Adjusted Net Income of $27.2
million.
Adjusted EBITDA2 was $53.5 million compared to $47.2 million,
primarily driven by a decrease in sales and marketing spend,
partially offset by the impact of the grocer issue. Adjusted EBITDA
Margin2 was 28.2% compared to 24.6%.
Cash Flow and Capital
Allocation
Net cash provided by operating activities in the second quarter
was $29.9 million compared to $51.0 million in the comparable
period last year, largely driven by a change to net income from net
loss, offset by a decrease in non-cash adjustments and an increase
in cash outflows from working capital changes. The decrease in
non-cash adjustments was primarily driven by an increase in
deferred income tax as a result of the discrete release of
substantially the entirety of the valuation allowance against our
net deferred tax assets in the quarter ended June 30, 2023 and a
year-over-year decrease in stock-based compensation expense related
to our co-founders’ awards. The changes in operating assets and
liabilities were primarily driven by the timing of income tax
payments and refunds, as well as by the timing of payments of
accounts payable and accrued expenses and collections of accounts
receivable. As of June 30, 2023, GoodRx had cash and cash
equivalents of $762.0 million and total outstanding debt of $663.6
million.
GoodRx is focused on a disciplined approach to capital
allocation, centered on furthering the Company’s mission and
creating shareholder value. Our capital allocation priorities are
investing for profitable growth, paying down debt, buying back
shares, and M&A that aligns with our strategic priorities.
These priorities support GoodRx’s long-term growth strategy while
also providing flexibility to navigate near-term challenges.
Share Repurchases
During the second quarter of 2023, we repurchased $8.9 million
in shares of Class A common stock, representing approximately 1.7
million shares. As of June 30, 2023, we had $129.8 million
remaining of our $250.0 million share repurchase authorization
approved by our board of directors during the first quarter
2022.
Guidance
For the third quarter and full year 2023, management is
anticipating the following:
$ in millions
3Q
2023
3Q
2022
YoY
Change
Total Revenue
~$186 - $190
$187.3
~(1%) - 1%
Adjusted EBITDA Margin5
Mid-to-high twenty-percent range
$ in millions
FY
2023
FY
2022
YoY
Change
Total Revenue
~$750 - $760
$766.6
~(2%) - (1%)
Adjusted EBITDA Margin5
Mid-to-high twenty-percent range
“We are guiding to third quarter revenue in the range of $186
million to $190 million and Adjusted EBITDA Margin in the
mid-to-high twenty-percent range,” said Karsten Voermann, Chief
Financial Officer. “In the back half of this year, we’ll continue
to balance business imperatives for 2024 and beyond with immediate
results. For our pharma manufacturer solutions offering
specifically, we are becoming more focused on what we’re selling
and to whom. In connection with that, we have taken certain actions
to see cost savings, for example at vitaCare, that we expect will
translate into incremental Adjusted EBITDA in the
low-to-mid-single-digit millions of dollars range but also some
revenue attenuation relative to our previous perspectives and 2023
guidance as a result. We're also making volume vs. margin
trade-offs in our direct contracting approach with retailers that
may lead to a short-term headwind for prescription transactions
revenue growth. These assumptions are reflected in our
guidance.”
“Our balance sheet and liquidity position remained strong in the
second quarter, while generating healthy cash flow from operations.
We will continue to prioritize cash conversion and disciplined
capital deployment to support our strategic priorities and
accelerate value creation,” concluded Voermann.
5
Adjusted 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 income or loss margin, because we do not
provide guidance for GAAP net income or loss 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 income or loss 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 income or loss
margin.
Investor Conference Call and
Webcast
GoodRx management will host a conference call and webcast today,
August 9, 2023, at 5:00 a.m. Pacific Time (8:00 a.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/BI672af002881f425d9c0fc0a02abe354d
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 materials 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 resource for healthcare savings and
information that makes healthcare affordable and convenient for all
Americans. We offer consumers free access to transparent and lower
prices for brand and generic medications, affordable and convenient
medical provider consultations via telehealth, and comprehensive
healthcare research and information. Since 2011, we have helped
consumers save over $60 billion and are one of the most downloaded
medical apps over the past decade.
GoodRx periodically posts information that may be important to
investors on its investor relations website at
https://investors.goodrx.com. We intend to use our website as a
means of disclosing material non-public information and for
complying with our disclosure obligations under Regulation FD.
Accordingly, investors and potential investors are encouraged to
consult GoodRx’s website regularly for important information, in
addition to following GoodRx’s press releases, filings with the
Securities and Exchange Commission and public conference calls and
webcasts. The information contained on, or that may be accessed
through, GoodRx’s website is not incorporated by reference into,
and is not a part of, this press release.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995. All statements contained in this press release that do not
relate to matters of historical fact should be considered
forward-looking statements, including without limitation statements
regarding our future results of operations and financial position,
industry and business trends, the ongoing impact of a grocery chain
previously not accepting pharmacy benefit managers (“PBMs”) pricing
on our future results of operations, the launch of new offerings,
stock compensation, our stock repurchase program, anticipated
impacts of the de-prioritization of certain solutions under our
pharma manufacturer solutions offering and our cost savings
initiatives, our direct contracting approach with retailers,
realizability of deferred tax assets, business strategy, plans,
market growth and our objectives for future operations. 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 general 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 general 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,
including PBMs, pharmacies, and pharma manufacturers; the
competitive nature of industry; risks related to pandemics,
epidemics or outbreak of infectious disease, including COVID-19;
the accuracy of our estimate of our total addressable market and
other operational metrics; risks related to a decrease in consumer
willingness to receive correspondence or any technical, legal or
any other restrictions to send such correspondence; risks related
to any failure to comply with applicable data protection, privacy
and security, advertising and consumer protection laws, standards,
and other requirements; 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
government regulation of the internet, e-commerce, consumer data
and privacy, information technology and cyber-security; 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, and to successfully transition our
Chief Executive Officer role; 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, including software as-a-service
technologies; systems failures or other disruptions in the
operations of these parties on which we depend; the increasing
focus on environmental sustainability and social initiatives; risks
related to our intellectual property; risks related to climate
change; 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; litigation related risks; 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 restructuring
and cost reduction efforts; as well as the other important factors
discussed in the sections entitled “Risk Factors” of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2022, as
updated by our Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 2023, and in our other filings with the Securities
and Exchange Commission. The forward-looking statements in this
press release are based upon information available to us as of the
date of this press release, and while we believe such information
forms a reasonable basis for such statements, such information may
be limited or incomplete, and our statements should not be read to
indicate that we have conducted an exhaustive inquiry into, or
review of, all potentially available relevant information. These
statements are inherently uncertain and investors are cautioned not
to unduly rely upon these statements. 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.
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.
We exited the second quarter of 2023 with over 7 million
prescription-related consumers that used GoodRx across our
prescription transactions and subscription offerings. Our
prescription-related consumers represent the sum of Monthly Active
Consumers for the three months ended June 30, 2023 and subscribers
to our subscription plans as of June 30, 2023.
Three Months Ended
(in millions)
June 30, 2023
March 31, 2023
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
Monthly Active Consumers
6.1
6.1
5.9
5.8
5.8
6.4
As of
(in thousands)
June 30, 2023
March 31, 2023
December 31,
2022
September 30,
2022
June 30, 2022
March 31, 2022
Subscription plans
969
1,007
1,030
1,060
1,133
1,203
GoodRx Holdings, Inc.
Condensed Consolidated Balance
Sheets (Unaudited)
(in thousands, except par
values)
June 30, 2023
December 31, 2022
Assets
Current assets
Cash and cash equivalents
$
761,988
$
757,165
Accounts receivable, net
123,378
117,141
Prepaid expenses and other current
assets
33,886
45,380
Total current assets
919,252
919,686
Property and equipment, net
17,923
19,820
Goodwill
412,117
412,117
Intangible assets, net
108,657
119,865
Capitalized software, net
93,478
70,072
Operating lease right-of-use assets
33,538
35,906
Deferred tax assets, net
62,686
—
Other assets
44,451
27,165
Total assets
$
1,692,102
$
1,604,631
Liabilities and stockholders'
equity
Current liabilities
Accounts payable
$
6,795
$
17,700
Accrued expenses and other current
liabilities
66,001
47,523
Current portion of debt
7,029
7,029
Operating lease liabilities, current
2,728
4,068
Total current liabilities
82,553
76,320
Debt, net
649,753
651,796
Operating lease liabilities, net of
current portion
54,858
54,131
Other liabilities
9,567
7,557
Total liabilities
796,731
789,804
Stockholders' equity
Preferred stock, $0.0001 par value
—
—
Common stock, $0.0001 par value
40
40
Additional paid-in capital
2,288,370
2,263,322
Accumulated deficit
(1,393,039
)
(1,448,535
)
Total stockholders' equity
895,371
814,827
Total liabilities and stockholders'
equity
$
1,692,102
$
1,604,631
GoodRx Holdings, Inc.
Condensed Consolidated Statements of
Operations (Unaudited)
(in thousands, except per share
amounts)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Revenue
$
189,677
$
191,798
$
373,663
$
395,127
Costs and operating expenses:
Cost of revenue, exclusive of depreciation
and amortization presented separately below
16,339
18,044
33,034
30,324
Product development and technology
31,285
35,404
64,193
70,446
Sales and marketing
77,440
94,338
155,962
187,288
General and administrative
30,208
34,740
59,827
66,663
Depreciation and amortization
16,097
13,319
31,036
24,692
Total costs and operating expenses
171,369
195,845
344,052
379,413
Operating income (loss)
18,308
(4,047
)
29,611
15,714
Other expense, net:
Other expense
—
—
(1,808
)
—
Interest income
7,814
857
15,048
909
Interest expense
(14,054
)
(6,969
)
(27,187
)
(12,838
)
Total other expense, net
(6,240
)
(6,112
)
(13,947
)
(11,929
)
Income (loss) before income taxes
12,068
(10,159
)
15,664
3,785
Income tax benefit
46,718
8,744
39,832
7,093
Net income (loss)
$
58,786
$
(1,415
)
$
55,496
$
10,878
Earnings (loss) per share:
Basic
$
0.14
$
(0.00
)
$
0.13
$
0.03
Diluted
$
0.14
$
(0.00
)
$
0.13
$
0.03
Weighted average shares used in
computing earnings (loss) per share:
Basic
412,221
412,135
412,322
413,405
Diluted
414,335
412,135
414,373
423,077
Stock-based compensation included in
costs and operating expenses:
Cost of revenue
$
180
$
100
$
341
$
54
Product development and technology
7,534
9,820
16,123
17,298
Sales and marketing
(3,020
)
5,839
1,392
11,233
General and administrative
13,203
15,874
25,540
33,197
GoodRx Holdings, Inc.
Condensed Consolidated Statements of
Cash Flows (Unaudited)
(in thousands)
Six Months Ended June
30,
2023
2022
Cash flows from operating
activities
Net income
$
55,496
$
10,878
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
31,036
24,692
Amortization of debt issuance costs
1,695
1,710
Non-cash operating lease expense
2,055
1,509
Stock-based compensation expense
43,396
61,782
Change in fair value of contingent
consideration
—
240
Deferred income taxes
(62,980
)
(336
)
Loss on operating lease assets
374
—
Loss on minority equity interest
investment
1,808
—
Changes in operating assets and
liabilities, net of effects of business acquisitions
Accounts receivable
(6,237
)
(4,362
)
Prepaid expenses and other assets
(13,574
)
(8,439
)
Accounts payable
(10,972
)
(1,860
)
Accrued expenses and other current
liabilities
18,418
(2,089
)
Operating lease liabilities
(665
)
(2,156
)
Other liabilities
2,304
(400
)
Net cash provided by operating
activities
62,154
81,169
Cash flows from investing
activities
Purchase of property and equipment
(440
)
(3,172
)
Acquisitions, net of cash acquired
—
(156,853
)
Capitalized software
(28,807
)
(22,977
)
Investment in minority equity interest
—
(15,007
)
Net cash used in investing activities
(29,247
)
(198,009
)
Cash flows from financing
activities
Payments on long-term debt
(3,515
)
(3,515
)
Repurchases of Class A common stock
(18,437
)
(83,765
)
Proceeds from exercise of stock
options
1,267
7,839
Employee taxes paid related to net share
settlement of equity awards
(8,048
)
(14,288
)
Proceeds from employee stock purchase
plan
649
—
Net cash used in financing activities
(28,084
)
(93,729
)
Net change in cash and cash
equivalents
4,823
(210,569
)
Cash and cash equivalents
Beginning of period
757,165
941,109
End of period
$
761,988
$
730,540
Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Net Income,
Adjusted Net Income Margin and Adjusted Earnings Per Share 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 to arrive at adjusted operating
income. 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, 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. 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
operating lease assets, restructuring related expenses, legal
settlement expenses, charitable stock donation, gain on sale of
business, other expense, and as further adjusted for estimated
income tax on such adjusted items. 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
any subsequent releases of the valuation allowance, 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 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, loss on extinguishment
of debt, financing related expenses, restructuring related
expenses, legal settlement expenses, loss on operating lease
assets, charitable stock donation, other expense, and gain on sale
of business. Adjusted operating income is GAAP revenue less
non-GAAP costs and 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 income
(loss), the most directly comparable financial measure calculated
in accordance with GAAP, to Adjusted EBITDA, and presents net
income (loss) margin, the most directly comparable financial
measure calculated in accordance with GAAP, with Adjusted EBITDA
Margin:
(dollars in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
(dollars in thousands)
2023
2022
2023
2022
Net income (loss)
$
58,786
$
(1,415
)
$
55,496
$
10,878
Adjusted to exclude the following:
Interest income
(7,814
)
(857
)
(15,048
)
(909
)
Interest expense
14,054
6,969
27,187
12,838
Income tax benefit
(46,718
)
(8,744
)
(39,832
)
(7,093
)
Depreciation and amortization
16,097
13,319
31,036
24,692
Other expense (1)
—
—
1,808
—
Financing related expenses (2)
—
5
—
9
Acquisition related expenses (3)
385
3,001
1,441
4,974
Restructuring related expenses (4)
—
45
—
356
Legal settlement expenses (5)
—
2,800
—
2,800
Stock-based compensation expense
17,897
31,633
43,396
61,782
Payroll tax expense related to stock-based
compensation
405
472
845
1,555
Loss on operating lease assets (6)
374
—
374
—
Adjusted EBITDA
$
53,466
$
47,228
$
106,703
$
111,882
Revenue
$
189,677
$
191,798
$
373,663
$
395,127
Net income (loss) margin (7)
31.0
%
(0.7
%)
14.9
%
2.8
%
Adjusted EBITDA Margin
28.2
%
24.6
%
28.6
%
28.3
%
________________________________________________________________
(1)
Other expense represents the impairment
loss on one of our minority equity interest investments.
(2)
Financing related expenses include
third-party fees related to proposed financings.
(3)
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)
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.
(5)
Legal settlement expenses represent the
estimated amount accrued with respect to the Federal Trade
Commission ("FTC") negotiated settlement. The estimated accrual was
adjusted in the fourth quarter of 2022 to reflect the actual
negotiated settlement amount of $1.5 million. See Note 7 to our
condensed consolidated financial statements for additional
information.
(6)
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.
(7)
Net income (loss) margin represents net
income or net loss, as applicable, as a percentage of revenue.
The following tables present a reconciliation of net income
(loss) and calculations of net income (loss) margin and earnings
(loss) 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 June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Net income (loss)
$
58,786
$
(1,415
)
$
55,496
$
10,878
Adjusted to exclude the following:
Amortization of intangibles related to
acquisitions
5,599
6,307
11,208
11,707
Other expense (1)
—
—
1,808
—
Financing related expenses (1)
—
5
—
9
Acquisition related expenses (1)
385
3,001
1,441
4,974
Restructuring related expenses (1)
—
45
—
356
Legal settlement expenses (1)
—
2,800
—
2,800
Stock-based compensation expense
17,897
31,633
43,396
61,782
Payroll tax expense related to stock-based
compensation
405
472
845
1,555
Loss on operating lease assets (1)
374
—
374
—
Income tax benefit on excluded items and
adjusting for valuation allowance and excess tax
benefits/deficiencies on stock-based compensation exercises
(55,059
)
(15,654
)
(56,666
)
(25,541
)
Adjusted Net Income
$
28,387
$
27,194
$
57,902
$
68,520
Revenue
$
189,677
$
191,798
$
373,663
$
395,127
Net income (loss) margin (1)
31.0
%
(0.7
%)
14.9
%
2.8
%
Adjusted Net Income Margin
15.0
%
14.2
%
15.5
%
17.3
%
Weighted average shares used in
computing earnings (loss) per share:
Basic
412,221
412,135
412,322
413,405
Diluted
414,335
412,135
414,373
423,077
Earnings (loss) per share:
Basic
$
0.14
$
(0.00
)
$
0.13
$
0.03
Diluted
$
0.14
$
(0.00
)
$
0.13
$
0.03
Weighted average shares used in
computing Adjusted Earnings Per Share:
Basic
412,221
412,135
412,322
413,405
Diluted
414,335
418,839
414,373
423,077
Adjusted Earnings Per Share:
Basic
$
0.07
$
0.07
$
0.14
$
0.17
Diluted
$
0.07
$
0.06
$
0.14
$
0.16
_______________________________________________________________
(1)
Refer to reconciliation table for Adjusted
EBITDA above for further information regarding these
metrics/adjustments.
.
The following table presents each non-GAAP, or adjusted, cost
and expense measure together with its most directly comparable
financial measure calculated in accordance with GAAP, and each of
these financial measures as a percentage of revenue:
(dollars in thousands)
GAAP
Adjusted
GAAP
Adjusted
Three Months Ended June
30,
Three Months Ended June
30,
Six Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
2023
2022
2023
2022
Cost of revenue
$
16,339
$
18,044
$
16,145
$
17,942
$
33,034
$
30,324
$
32,677
$
30,220
% of Revenue
9
%
9
%
9
%
9
%
9
%
8
%
9
%
8
%
Product development and technology
$
31,285
$
35,404
$
23,470
$
25,015
$
64,193
$
70,446
$
47,380
$
51,476
% of Revenue
16
%
18
%
12
%
13
%
17
%
18
%
13
%
13
%
Sales and marketing
$
77,440
$
94,338
$
80,393
$
86,880
$
155,962
$
187,288
$
154,417
$
173,944
% of Revenue
41
%
49
%
42
%
45
%
42
%
47
%
41
%
44
%
General and administrative (1)
$
30,208
$
34,740
$
16,203
$
14,733
$
59,827
$
66,663
$
32,486
$
27,605
% of Revenue
16
%
18
%
9
%
8
%
16
%
17
%
9
%
7
%
Depreciation and amortization
$
16,097
$
13,319
$
10,498
$
7,012
$
31,036
$
24,692
$
19,828
$
12,985
% of Revenue
8
%
7
%
6
%
4
%
8
%
6
%
5
%
3
%
Operating income (loss) (1)
$
18,308
$
(4,047
)
$
42,968
$
40,216
$
29,611
$
15,714
$
86,875
$
98,897
% of Revenue
10
%
(2
%)
23
%
21
%
8
%
4
%
23
%
25
%
________________________________________________________________
(1)
Our financial results for the first
quarter of 2023 as previously announced in our press release
furnished as an exhibit to our Current Report on Form 8-K dated May
10, 2023 erroneously included an adjustment for “Other expense” of
$1.8 million in “Adjusted general & administrative expenses”
and “Adjusted operating income.” The error has been corrected by
revising the amounts for the affected line items for the six months
ended June 30, 2023 in the table above.
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:
(dollars in thousands)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
2023
2022
Cost of revenue
$
16,339
$
18,044
$
33,034
$
30,324
Restructuring related expenses (1)
—
—
—
(34
)
Stock-based compensation expense
(180
)
(100
)
(341
)
(54
)
Payroll tax expense related to stock-based
compensation
(14
)
(2
)
(16
)
(16
)
Adjusted cost of revenue
$
16,145
$
17,942
$
32,677
$
30,220
Product development and technology
$
31,285
$
35,404
$
64,193
$
70,446
Acquisition related expenses (1)
(79
)
(299
)
(279
)
(591
)
Restructuring related expenses (1)
—
—
—
(240
)
Stock-based compensation expense
(7,534
)
(9,820
)
(16,123
)
(17,298
)
Payroll tax expense related to stock-based
compensation
(202
)
(270
)
(411
)
(841
)
Adjusted product development and
technology
$
23,470
$
25,015
$
47,380
$
51,476
Sales and marketing
$
77,440
$
94,338
$
155,962
$
187,288
Acquisition related expenses (1)
—
(1,469
)
—
(1,755
)
Restructuring related expenses (1)
—
(45
)
—
(82
)
Stock-based compensation expense
3,020
(5,839
)
(1,392
)
(11,233
)
Payroll tax expense related to stock-based
compensation
(67
)
(105
)
(153
)
(274
)
Adjusted sales and marketing
$
80,393
$
86,880
$
154,417
$
173,944
General and administrative
$
30,208
$
34,740
$
59,827
$
66,663
Financing related expenses (1)
—
(5
)
—
(9
)
Acquisition related expenses (1)
(306
)
(1,233
)
(1,162
)
(2,628
)
Legal settlement expenses (1)
—
(2,800
)
—
(2,800
)
Stock-based compensation expense
(13,203
)
(15,874
)
(25,540
)
(33,197
)
Payroll tax expense related to stock-based
compensation
(122
)
(95
)
(265
)
(424
)
Loss on operating lease assets
(374
)
—
(374
)
—
Adjusted general and administrative
(2)
$
16,203
$
14,733
$
32,486
$
27,605
Depreciation and amortization
$
16,097
$
13,319
$
31,036
$
24,692
Amortization of intangibles related to
acquisitions
(5,599
)
(6,307
)
(11,208
)
(11,707
)
Adjusted depreciation and amortization
$
10,498
$
7,012
$
19,828
$
12,985
Operating income (loss)
$
18,308
$
(4,047
)
$
29,611
$
15,714
Amortization of intangibles related to
acquisitions
5,599
6,307
11,208
11,707
Financing related expenses (1)
—
5
—
9
Acquisition related expenses (1)
385
3,001
1,441
4,974
Restructuring related expenses (1)
—
45
—
356
Legal settlement expenses (1)
—
2,800
—
2,800
Stock-based compensation expense
17,897
31,633
43,396
61,782
Payroll tax expense related to stock-based
compensation
405
472
845
1,555
Loss on operating lease assets (1)
374
—
374
—
Adjusted operating income (2)
$
42,968
$
40,216
$
86,875
$
98,897
________________________________________________________________
(1)
Refer to reconciliation table for Adjusted
EBITDA above for further information regarding these
metrics/adjustments.
(2)
Our financial results for the first
quarter of 2023 as previously announced in our press release
furnished as an exhibit to our Current Report on Form 8-K dated May
10, 2023 erroneously included an adjustment for “Other expense” of
$1.8 million in “Adjusted general & administrative expenses”
and “Adjusted operating income.” The error has been corrected by
revising the amounts for the affected line items for the six months
ended June 30, 2023 in the table above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809930430/en/
Investor Contact GoodRx Whitney Notaro ir@goodrx.com
Press Contact GoodRx Lauren Casparis
lcasparis@goodrx.com
GoodRx (NASDAQ:GDRX)
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