gdrx-20230930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

________________________________

FORM 10-Q

________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______.

Commission File Number: 001-39549

________________________________

GoodRx Holdings, Inc.

(Exact Name of Registrant as Specified in its Charter)

________________________________


Delaware			47-5104396
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

2701 Olympic Boulevard Santa Monica, CA			90404
(Address of principal executive offices)			(Zip Code)

(855) 268-2822

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange on which registered

Class A common stock, $0.0001 par value per share

GDRX

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of October 31, 2023, the registrant had 92,400,328 shares of Class A common stock, $0.0001 par value per share, and 313,731,628 shares of Class B common stock, $0.0001 par value per share, outstanding.

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FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q may be forward-looking statements. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “targets,” “projects,” “contemplates,” “believes,” “estimates,” “forecasts,” “predicts,” “potential” or “continue” or the negative of these terms or other similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to 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 (the "grocer issue") 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, potential outcomes and estimated impacts of certain legal proceedings, business strategy, plans, market growth and our objectives for future operations.

The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. Forward-looking statements 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 (“2022 10-K”) and this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission (“SEC”). The forward-looking statements in this Quarterly Report on Form 10-Q are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, 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.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q, whether as a result of any new information, future events or otherwise.

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We periodically post information that may be important to investors on our 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 our website regularly for important information, in addition to following GoodRx’s press releases, filings with the SEC and public conference calls and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this Quarterly Report on Form 10-Q.

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		Page

PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statements of Stockholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	28

PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	33
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
	Signatures	36

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PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements (Unaudited)

GoodRx Holdings, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)


(in thousands, except par values)	September 30, 2023		December 31, 2022
Assets
Current assets
Cash and cash equivalents	$	794,905	$	757,165
Accounts receivable, net	121,146		117,141
Prepaid expenses and other current assets	53,047		45,380
Total current assets	969,098		919,686
Property and equipment, net	16,879		19,820
Goodwill	412,117		412,117
Intangible assets, net	89,431		119,865
Capitalized software, net	91,979		70,072
Operating lease right-of-use assets	31,501		35,906
Deferred tax assets, net	57,695		—
Other assets	39,272		27,165
Total assets	$	1,707,972	$	1,604,631
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	32,905	$	17,700
Accrued expenses and other current liabilities	74,554		47,523
Current portion of debt	7,029		7,029
Operating lease liabilities, current	3,334		4,068
Total current liabilities	117,822		76,320
Debt, net	648,729		651,796
Operating lease liabilities, net of current portion	52,387		54,131
Other liabilities	7,761		7,557
Total liabilities	826,699		789,804
Commitments and contingencies (Note 8)
Stockholders' equity
Preferred stock, $0.0001 par value; 50,000 shares authorized and zero shares issued and outstanding at September 30, 2023 and December 31, 2022	—		—
Common stock, $0.0001 par value; Class A: 2,000,000 shares authorized, 84,630 and 83,293 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively; and Class B: 1,000,000 shares authorized and 313,732 shares issued and outstanding at September 30, 2023 and December 31, 2022	40		40
Additional paid-in capital	2,312,767		2,263,322
Accumulated deficit	(1,431,534)		(1,448,535)
Total stockholders' equity	881,273		814,827
Total liabilities and stockholders' equity	$	1,707,972	$	1,604,631

See accompanying notes to condensed consolidated financial statements.

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GoodRx Holdings, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2023		2022		2023		2022
Revenue	$	179,958	$	187,318	$	553,621	$	582,445
Costs and operating expenses:
Cost of revenue, exclusive of depreciation and amortization presented separately below	18,721		17,395		51,755		47,719
Product development and technology	39,611		35,921		103,804		106,367
Sales and marketing	91,615		86,215		247,577		273,503
General and administrative	35,317		49,548		95,144		116,211
Depreciation and amortization	33,024		13,952		64,060		38,644
Total costs and operating expenses	218,288		203,031		562,340		582,444
Operating (loss) income	(38,330)		(15,713)		(8,719)		1
Other expense, net:
Other expense	(2,200)		—		(4,008)		—
Interest income	8,649		2,920		23,697		3,829
Interest expense	(14,720)		(9,478)		(41,907)		(22,316)
Total other expense, net	(8,271)		(6,558)		(22,218)		(18,487)
Loss before income taxes	(46,601)		(22,271)		(30,937)		(18,486)
Income tax benefit (expense)	8,106		(19,463)		47,938		(12,370)
Net (loss) income	$	(38,495)	$	(41,734)	$	17,001	$	(30,856)
(Loss) earnings per share:
Basic	$	(0.09)	$	(0.10)	$	0.04	$	(0.07)
Diluted	$	(0.09)	$	(0.10)	$	0.04	$	(0.07)
Weighted average shares used in computing (loss) earnings per share:
Basic	413,437		412,956		412,698		413,254
Diluted	413,437		412,956		416,450		413,254

Stock-based compensation included in costs and operating expenses:
Cost of revenue	$	146	$	136	$	487	$	190
Product development and technology	6,829		8,029		22,952		25,327
Sales and marketing	10,273		4,766		11,665		15,999
General and administrative	15,398		16,107		40,938		49,304

See accompanying notes to condensed consolidated financial statements.

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GoodRx Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Class A and Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
(in thousands)	Shares	Amount
Balance at December 31, 2022	397,025	$	40	$	2,263,322	$	(1,448,535)	$	814,827
Stock options exercised	192	—		895		—		895
Stock-based compensation	—	—		28,263		—		28,263
Vesting and settlement of restricted stock units	1,668	—		—		—		—
Common stock withheld related to net share settlement	(666)	—		(3,710)		—		(3,710)
Repurchases of Class A common stock	(1,570)	—		(9,517)		—		(9,517)
Net loss	—	—		—		(3,290)		(3,290)
Balance at March 31, 2023	396,649	$	40	$	2,279,253	$	(1,451,825)	$	827,468
Stock options exercised	204	—		560		—		560
Stock-based compensation	—	—		21,354		—		21,354
Vesting and settlement of restricted stock units	2,148	—		—		—		—
Common stock withheld related to net share settlement	(827)	—		(4,526)		—		(4,526)
Repurchases of Class A common stock	(1,663)	—		(8,920)		—		(8,920)
Issuance of common stock through employee stock purchase plan	161	—		649		—		649
Net income	—	—		—		58,786		58,786
Balance at June 30, 2023	396,672	$	40	$	2,288,370	$	(1,393,039)	$	895,371
Stock options exercised	1,138	—		3,118		—		3,118
Stock-based compensation	—	—		36,346		—		36,346
Vesting and settlement of restricted stock units	2,749	—		—		—		—
Common stock withheld related to net share settlement	(1,059)	—		(7,355)		—		(7,355)
Repurchases of Class A common stock	(1,138)	—		(7,712)		—		(7,712)
Net loss	—	—		—		(38,495)		(38,495)
Balance at September 30, 2023	398,362	$	40	$	2,312,767	$	(1,431,534)	$	881,273

See accompanying notes to condensed consolidated financial statements.

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GoodRx Holdings, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)


	Class A and Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders' Equity
(in thousands)	Shares	Amount
Balance at December 31, 2021	400,562	$	40	$	2,247,347	$	(1,415,707)	$	831,680
Stock options exercised	749	—		3,699		—		3,699
Stock-based compensation	—	—		32,161		—		32,161
Vesting and settlement of restricted stock units	822	—		—		—		—
Common stock withheld related to net share settlement	(364)	—		(9,561)		—		(9,561)
Repurchases of Class A common stock	(5,637)	—		(83,765)		—		(83,765)
Net income	—	—		—		12,293		12,293
Balance at March 31, 2022	396,132	$	40	$	2,189,881	$	(1,403,414)	$	786,507
Stock options exercised	1,176	—		4,109		—		4,109
Stock-based compensation	—	—		33,466		—		33,466
Vesting and settlement of restricted stock units	1,059	—		—		—		—
Common stock withheld related to net share settlement	(459)	—		(4,727)		—		(4,727)
Net loss	—	—		—		(1,415)		(1,415)
Balance at June 30, 2022	397,908	$	40	$	2,222,729	$	(1,404,829)	$	817,940
Stock options exercised	245	—		1,271		—		1,271
Stock-based compensation	—	—		32,151		—		32,151
Vesting and settlement of restricted stock units	1,256	—		—		—		—
Common stock withheld related to net share settlement	(525)	—		(3,269)		—		(3,269)
Repurchases of Class A common stock	(2,819)	—		(17,956)		—		(17,956)
Net loss	—	—		—		(41,734)		(41,734)
Balance at September 30, 2022	396,065	$	40	$	2,234,926	$	(1,446,563)	$	788,403

See accompanying notes to condensed consolidated financial statements.

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GoodRx Holdings, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended September 30,
(in thousands)	2023		2022
Cash flows from operating activities
Net income (loss)	$	17,001	$	(30,856)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	64,060		38,644
Amortization of debt issuance costs	2,539		2,562
Non-cash operating lease expense	3,022		2,314
Stock-based compensation expense	76,042		90,820
Change in fair value of contingent consideration	—		16,857
Deferred income taxes	(57,989)		(141)
Loss on operating lease assets	374		—
Loss on disposal of capitalized software	7,615		—
Loss on minority equity interest investment	4,008		—
Changes in operating assets and liabilities, net of effects of business acquisitions
Accounts receivable	(4,005)		(2,370)
Prepaid expenses and other assets	(29,867)		(3,137)
Accounts payable	14,515		(8,011)
Accrued expenses and other current liabilities	26,071		9,097
Operating lease liabilities	(1,460)		(3,415)
Other liabilities	498		2,537
Net cash provided by operating activities	122,424		114,901
Cash flows from investing activities
Purchase of property and equipment	(634)		(3,817)
Acquisitions, net of cash acquired	—		(156,853)
Capitalized software	(42,260)		(36,107)
Investment in minority equity interest	—		(15,007)
Net cash used in investing activities	(42,894)		(211,784)
Cash flows from financing activities
Payments on long-term debt	(5,272)		(5,272)
Repurchases of Class A common stock	(26,149)		(101,721)
Proceeds from exercise of stock options	4,385		9,110
Employee taxes paid related to net share settlement of equity awards	(15,403)		(17,557)
Proceeds from employee stock purchase plan	649		—
Net cash used in financing activities	(41,790)		(115,440)
Net change in cash and cash equivalents	37,740		(212,323)
Cash and cash equivalents
Beginning of period	757,165		941,109
End of period	$	794,905	$	728,786
Supplemental disclosure of cash flow information
Non cash investing and financing activities:
Stock-based compensation included in capitalized software	$	9,921	$	6,958
Capitalized software included in accounts payable and accrued expenses and other current liabilities	5,789		4,247
Capitalized software transferred from prepaid assets	5,751		—

See accompanying notes to condensed consolidated financial statements.

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GoodRx Holdings, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Description of Business

GoodRx Holdings, Inc. was incorporated in September 2015 and has no material assets or standalone operations other than its ownership in its consolidated subsidiaries. GoodRx, Inc. (“GoodRx”), a Delaware corporation initially formed in September 2011, is a wholly-owned subsidiary of GoodRx Intermediate Holdings, LLC, which itself is a wholly-owned subsidiary of GoodRx Holdings, Inc.

GoodRx Holdings, Inc. and its subsidiaries (collectively, "we," "us" or "our") offer information and tools to help consumers compare prices and save on their prescription drug purchases. We operate a price comparison platform that provides consumers with curated, geographically relevant prescription pricing, and provides access to negotiated prices through our codes that can be used to save money on prescriptions across the United States. These services are free to consumers and we primarily earn revenue from our core business from pharmacy benefit managers ("PBMs") that manage formularies and prescription transactions including establishing pricing between consumers and pharmacies. We also offer other healthcare products and services, including pharmaceutical ("pharma") manufacturer solutions, subscriptions and telehealth services.

2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial information. Certain information and disclosures normally included in our annual consolidated financial statements prepared in accordance with GAAP have been condensed or omitted. Accordingly, these condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2022 and the related notes, which are included in our Annual Report on Form 10-K filed with the SEC on March 1, 2023 ("2022 10-K"). The December 31, 2022 condensed consolidated balance sheet was derived from our audited consolidated financial statements as of that date. The condensed consolidated financial statements include, in the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair statement of our condensed consolidated financial statements. The operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results expected for the full year ending December 31, 2023.

There have been no material changes in significant accounting policies during the nine months ended September 30, 2023 from those disclosed in “Note 2. Summary of Significant Accounting Policies” in the notes to our consolidated financial statements included in our 2022 10-K.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of GoodRx Holdings, Inc., its wholly owned subsidiaries and variable interest entities for which we are the primary beneficiary. Intercompany balances and transactions have been eliminated in consolidation. Results of businesses acquired are included in our condensed consolidated financial statements from their respective dates of acquisition.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements, including the accompanying notes. We base our estimates on historical factors; current circumstances, including the impact of a grocery chain that previously did not accept discounted pricing for a subset of prescription drugs from our PBMs starting late in the first quarter of 2022 ("grocer issue"); macroeconomic events and conditions, including the consideration of the economic impact of COVID-19; and the experience and judgment of our management. We evaluate our estimates and assumptions on an ongoing basis. Actual results can differ materially from these estimates, and such differences can affect the results of operations reported in future periods. Although the grocer issue was addressed in August 2022 and our discounted pricing has since been consistently welcomed at the point of sale by the grocery chain, the sustained effects of the grocer issue on our business, future results of operations and financial condition continue to be an estimate with several variables that are uncertain, including, among others, consumer response to updated consumer pricing and timing and extent of returning user levels.

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Certain Risks and Concentrations

Financial instruments that potentially subject us to significant concentrations of credit risk consist principally of cash, cash equivalents and accounts receivable.

We maintain cash deposits with multiple financial institutions in the United States which, at times, may exceed federally insured limits. Cash may be withdrawn or redeemed on demand. We believe that the financial institutions that hold our cash are financially sound and, accordingly, minimal credit risk exists with respect to these balances. However, market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash and cash equivalents, there can be no assurance that we will be able to access uninsured funds in a timely manner or at all. We have not experienced any losses in such accounts.

We consider all short-term, highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash equivalents. Cash equivalents, consisting of U.S. treasury securities money market funds, of $642.5 million at September 30, 2023 and December 31, 2022 were classified as Level 1 of the fair value hierarchy and valued using quoted market prices in active markets.

We extend credit to our customers based on an evaluation of their ability to pay amounts due under contractual arrangements and generally do not obtain or require collateral. For the three months ended September 30, 2023, two customers accounted for 13% and 12% of our revenue. For the three months ended September 30, 2022, one customer accounted for 13% of our revenue. For the nine months ended September 30, 2023, two customers accounted for 14% and 11% of our revenue. For the nine months ended September 30, 2022, one customer accounted for 13% of our revenue. At September 30, 2023, no customer accounted for more than 10% of our accounts receivable balance. At December 31, 2022, one customer accounted for 13% of our accounts receivable balance.

Equity Investments

We retain minority equity interests in privately-held companies without readily determinable fair values. Our ownership interests are less than 20% of the voting stock of the investees and we do not have the ability to exercise significant influence over the operating and financial policies of the investees. The equity investments are accounted for under the measurement alternative in accordance with Accounting Standards Codification Topic 321, Investments – Equity Securities, which is cost minus impairment, if any, plus or minus changes resulting from observable price changes. Due to indicators of a decline in the financial condition of one of our investees, we recognized impairment losses on one of our minority equity interest investments of $2.2 million and $4.0 million during the three and nine months ended September 30, 2023, respectively, and presented it as other expense on our accompanying condensed consolidated statements of operations. We otherwise have not recognized any changes resulting from observable price changes or impairment losses on our minority equity interest investments during the three and nine months ended September 30, 2023 and 2022. Equity investments included in other assets on our accompanying condensed consolidated balance sheets as of September 30, 2023 and December 31, 2022 was $15.0 million and $19.0 million, respectively.

Recent Accounting Pronouncement

In June 2022, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions ("Topic 820"), which clarifies the guidance when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. This guidance is effective for annual periods beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption of this ASU is permitted. This ASU should be applied prospectively and recognize in earnings on the adoption date any adjustments made as a result of adoption. We early adopted this guidance effective January 1, 2023, and the adoption did not have an impact to our consolidated financial statements and disclosures.

3. Business Combinations

vitaCare Prescription Services, Inc.

On April 14, 2022, we acquired all of the equity interests of vitaCare Prescription Services, Inc. (“vitaCare”), a prescription technology and services platform, for a total purchase consideration of $131.8 million, inclusive of $149.9 million in cash, offset by contingent considerations with a net estimated acquisition-date fair value of $18.1 million. We acquired vitaCare as we believed it would strengthen and expand our business capabilities with respect to our pharma manufacturer solutions platform. The goodwill recognized in connection with this acquisition primarily related to the expected long-term synergies and other benefits from the acquisition, including the acquired assembled workforce, and is tax deductible. The aggregate purchase consideration was principally allocated to goodwill of $80.6 million and other intangible assets of $52.0 million. Other intangible assets principally related to developed technology of $30.0 million and customer relationships of $21.0 million with estimated useful lives of five and eleven years, respectively.

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The contingent considerations recognized in connection with the vitaCare acquisition consisted of a contingent consideration receivable and a contingent consideration payable with estimated acquisition-date fair values of approximately $19.7 million and $1.7 million, respectively. As of September 30, 2023 and December 31, 2022, the fair value of the contingent consideration receivable was zero as the contingency was resolved in the year of acquisition. The contingent consideration payable of up to $7.0 million in cash is based upon vitaCare's achievement of certain specified revenue results through the end of 2023 as stipulated by the purchase agreement. As of September 30, 2023 and December 31, 2022, no future contingent payments were expected to be made.

The following table reflects the pro forma unaudited consolidated results of operations for the three and nine months ended September 30, 2022 as if the acquisition of vitaCare had occurred on January 1, 2021. The pro forma unaudited consolidated results of operations give effect to certain adjustments including: (i) transaction and severance costs incurred in connection with the acquisition; (ii) amortization expense related to the acquired intangible assets; and (iii) elimination of vitaCare's allocated interest expense related to the seller's financing agreement whereby vitaCare was released as a guarantor upon the consummation of the acquisition. The pro forma unaudited consolidated results of operations are not necessarily indicative of the operating results that would have occurred if the acquisition had been consummated as of the date indicated, nor are they necessarily indicative of future operating results.


(in thousands)	Three Months Ended September 30, 2022		Nine Months Ended September 30, 2022
Pro forma revenue	$	187,318	$	583,016
Pro forma net loss	$	(41,734)	$	(38,929)

In August 2023, our board of directors (our "Board") approved a plan to de-prioritize certain solutions under our pharma manufacturer solutions offering, which, among others, included solutions supported by vitaCare. See "Note 12. Restructuring Plan" for additional information.

flipMD, Inc.

On February 18, 2022, we acquired all of the equity interests of flipMD, Inc., a marketplace connecting practicing physicians with organizations seeking on-demand medical expertise, for $7.0 million in cash.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:


(in thousands)	September 30, 2023		December 31, 2022
Insurance recovery receivable (1)	$	10,000

SEC Form 10-Q filed by GoodRx Holdings Inc.