GoodRx Holdings Inc

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 (the "prescription transactions offering"). 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 consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) and the rules and regulations of the Securities and Exchange Commission. Other than net income or net loss, we do not have any other elements of comprehensive income or loss.

Principles of Consolidation

The consolidated financial statements include the financial statements of GoodRx Holdings, Inc., its wholly-owned subsidiaries and variable interest entities (“VIEs”) for which we are the primary beneficiary. Intercompany balances and transactions have been eliminated in consolidation. The results of operations and financial position of the VIEs are not material to our consolidated financial statements. Results of businesses acquired are included in our consolidated financial statements from their respective dates of acquisition.

Segment Reporting and Geographic Information

Operating segments are defined as components of an enterprise for which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Our chief operating decision maker manages our business on the basis ofone operating segment. During the years ended December 31, 2023, 2022 and 2021, all of our revenue was from customers located in the United States. In addition, at December 31, 2023 and 2022, all of our right-of-use assets and property and equipment were in the United States.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements, including the accompanying notes. We base our estimates on historical factors; current circumstances; macroeconomic events and conditions; 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.

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 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 years ended December 31, 2023 and 2022, one customer accounted for 13% of our revenue. For the year ended December 31, 2021, two customers accounted for 13% and 11% of our revenue. At December 31, 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.

Cash and Cash Equivalents

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 deposits are all in financial institutions in the United States. Cash and cash equivalents consist primarily of U.S. treasury securities money market funds held with an investment bank and cash on deposit.

Cash equivalents, consisting of U.S. treasury securities money market funds, of $605.5 million and $642.5 million at December 31, 2023 and 2022, respectively, were classified as Level 1 of the fair value hierarchy and valued using quoted market prices in active markets.

Accounts Receivable and Allowance for Expected Credit Losses

Accounts receivable are recognized at the amounts due from various customers, net of allowance for expected credit losses. We estimate our expected credit losses based on factors including known facts and circumstances, historical experience, reasonable and supportable forecasts of economic conditions, and the age of the uncollected balances. We write off the asset when it is determined to be uncollectible. As of December 31, 2023 and 2022, the allowance for credit losses was not material.

Property and Equipment

Property and equipment is stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, which arefive years for furniture and fixtures andthree years for computer equipment. Leasehold improvements are depreciated on the straight-line basis over the shorter of the life of the asset or the remaining lease term. Expenditures for repairs and maintenance are charged to general and administrative expenses as incurred.

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 (“ASC”) 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 an impairment loss of $4.0 million on one of our minority equity interest investments during the year ended December 31, 2023 which was presented as other expense on the consolidated statement of operations for the year then ended. We otherwise have not recognized any changes resulting from observable price changes or impairment losses on our minority equity interest investments during the years ended December 31, 2023, 2022 and 2021. Equity investments included in other assets in the consolidated balance sheets as of December 31, 2023 and 2022 were $15.0 million and $19.0 million, respectively.

The results of businesses acquired in a business combination are included in the consolidated financial statements from the date of acquisition. Acquisition accounting results in assets and liabilities of an acquired business being recognized at their estimated fair values on the acquisition date. Any excess consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill.

We perform valuation of assets acquired and liabilities assumed for an acquisition and allocate the purchase price to its respective net tangible and intangible assets. Determining the fair value of assets acquired and liabilities assumed requires management to use significant judgment and estimates including the selection of valuation methodologies, comparable guideline public companies, and Level 3 inputs in the fair value hierarchy such as forecasts of revenue and margins and estimates of royalty and discount rates, as applicable. We may engage the assistance of valuation specialists in concluding on fair value measurements of certain assets acquired or liabilities assumed in a business combination. During the measurement period, which shall not exceed one year from the acquisition date, we may adjust provisional amounts recognized for assets acquired and liabilities assumed to reflect new information subsequently obtained regarding facts and circumstances that existed as of the acquisition date.

Certain acquisitions contain provisions for contingent consideration to be transferred or received based on the post-acquisition results of the acquired businesses. The acquisition date estimated fair value of contingent consideration associated with business combinations is based on the amount of the consideration expected to be transferred or received using significant inputs that are not observable in the market (Level 3 inputs). Contingent consideration is remeasured to its estimated fair value on a recurring basis. Changes in the estimated fair value of contingent consideration, if any, is recognized within general and administrative expenses in the consolidated statements of operations.

Transaction costs associated with business combinations are expensed as incurred and are included in general and administrative expenses in the consolidated statements of operations.

Goodwill

Goodwill represents the excess of the consideration transferred over the fair value of the identifiable assets acquired and liabilities assumed in a business combination. We hadone reporting unit during 2023, 2022 and 2021. We review goodwill for impairment annually in the fourth quarter and whenever events or changes in circumstances indicate the carrying amount of goodwill may not be recoverable. When testing goodwill for impairment, we may first perform an optional qualitative assessment. If we determine it is not more likely than not our reporting unit’s fair value is less than its carrying value, then no further analysis is necessary. If we determine that it is more likely than not that the fair value of our reporting unit is less than its carrying amount, then the quantitative impairment test will be performed. Under the quantitative impairment test, if the carrying amount of our reporting unit exceeds its fair value, we will recognize an impairment loss in an amount equal to that excess but limited to the total amount of goodwill. No impairments were recognized in 2023, 2022 or 2021. Gains and losses on the disposition of a business, which are recognized in general and administrative expenses in the consolidated statements of operations, include the carrying amount of goodwill related to the business disposed. When a portion of a reporting unit that constitutes a business is to be disposed of, the amount of goodwill to be included in that carrying amount is determined based on the relative fair values of the business disposed and the portion of the reporting unit that will be retained.

Intangible Assets

Intangible assets reflect the value of customer relationships, developed technology, trademarks, content library and backlog recognized in connection with our acquisitions. Purchased intangible assets are recognized at their acquisition date fair value, less accumulated amortization. We determine the appropriate useful life of intangible assets by performing an analysis of expected cash flows of the acquired assets. Intangible assets are amortized over their estimated useful lives on a straight-line basis, which approximates the pattern in which the economic benefits of the assets are consumed, which is reassessed whenever applicable facts and circumstances indicate a change in the estimated useful life of such asset has occurred. In such event, we will adjust the estimated useful life and amortize the carrying value prospectively over the adjusted remaining useful life.

Capitalized Software Costs

We account for our internal-use software costs in accordance with ASC 350-40, Internal-Use Software. Capitalization of internal-use costs begins when the preliminary project stage is complete, management with the relevant authority authorizes and commits to funding the project, it is probable that the project will be completed, and the software will be used for the function intended. Capitalization of these costs ceases once the project is substantially complete and the software is ready for its intended purpose. Costs for post-configuration training, maintenance and minor modifications or enhancements are included in product development and technology expenses in the consolidated statements of operations as incurred. Capitalized internal-use costs are amortized on a straight-line basis over their estimated useful life ofthree years, which is reassessed whenever applicable facts and circumstances indicate a change in the estimated useful life of such asset has occurred. In such event, we will adjust the estimated useful life and amortize the carrying value prospectively over the adjusted remaining useful life.

Cloud Computing Arrangements

Costs associated with implementing cloud computing arrangements that are service contracts are capitalized using the same methodology as internal-use software, but are included in other assets on our consolidated balance sheets. Capitalized costs are then amortized on a straight-line basis over the term of the associated hosting arrangement, plus any reasonably certain renewal periods, and are recognized as operating expenses in the consolidated statements of operations. As of December 31, 2023 and 2022, capitalized implementation costs for cloud computing arrangements that were service contracts were not material.

Leases

We account for leases in accordance with ASC 842, Leases. We have elected to account for lease and non-lease components as a single lease component and also elected not to recognize operating lease right-of-use assets and operating lease liabilities for leases with an initial term of twelve months or less. Lease payments for short-term leases are recognized as lease expense on a straight-line basis over the lease term.

We determine if a contract is, or contains, a lease at inception. All of our leases are operating leases. Right-of-use assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments, less any tenant improvement allowance incentives when it is reasonably certain they will be received, over the lease term discounted using our incremental borrowing rate. As none of our leases provide an implicit rate, the incremental borrowing rate used is estimated based on what we would be required to pay for a collateralized loan over a similar term as the lease. Lease payments include fixed payments and variable payments based on an index or rate, if any, and are recognized as lease expense on a straight-line basis over the term of the lease. Variable lease payments not based on a rate or index are expensed as incurred. The lease term includes options to extend or terminate the lease when it is reasonably certain they will be exercised. Certain of our leases contain renewal options for periods of up toten years and early termination options by up to two years, at our election. We have not recognized any renewal or early termination options in our estimate of the lease term as they are not reasonably certain of exercise. Right-of-use assets are evaluated for impairment in accordance with ASC 360, Property, Plant, and Equipment, when events or changes in circumstances indicate that their carrying values may not be recoverable. After a right-of-use asset is impaired, the remaining carrying value of the right-of-use asset is de-linked from the lease liability and amortized on a straight-line basis over the remaining lease term. The lease liability continues to be amortized using the same effective interest method as before the impairment. Thus, after impairment, the operating lease no longer qualifies for the straight-line treatment of total lease expense.

Impairment of Long-Lived Assets

We account for the impairment of long-lived assets in accordance with ASC 360, Property, Plant, and Equipment. In accordance with ASC 360, long-lived assets to be held and used are reviewed for impairment when events or changes in circumstances indicate that their carrying values may not be recoverable. We perform impairment testing at the asset group level that represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. An impairment loss is recognized when estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition are less than its carrying value. If an asset is determined to be impaired, the impairment is measured by the amount that the carrying value of the asset exceeds its fair value. In 2022, we recognized an impairment loss of $11.3 million within general and administrative expenses to reduce the $20.2 million carrying value of an operating lease right-of-use asset we determined to sublease to its estimated fair value as rental rates have declined since the date the lease was executed. The estimated fair value was determined by using a discounted cash flow method which is a non-recurring fair value measurement based on Level 3 inputs. Key inputs used in this estimate included projected sublease income and a discount rate which incorporated the risk of achievement associated with the forecast. Other than the aforementioned, we have not recognized any other material impairment losses of long-lived assets for the years ended December 31, 2023, 2022 and 2021.

Debt Issuance Costs

Costs incurred in connection with the issuance of long-term debt are capitalized and amortized to interest expense over the contractual life of the loan using the effective-interest method. These costs are recognized as a reduction of the related long-term debt balance on the consolidated balance sheets. Costs incurred in connection with the issuance of revolving credit facilities are recognized in other assets on the consolidated balance sheets and are amortized to interest expense in the consolidated statements of operations on a straight-line basis over the term of the revolving credit facility.

Income Taxes

Deferred income tax assets and liabilities are determined based upon the net tax effects of the differences between the consolidated financial statements carrying amounts and the tax basis of assets and liabilities and are measured using the enacted tax rate expected to apply to taxable income in the years in which the differences are expected to be reversed. Deferred tax assets are evaluated for recoverability each reporting period by assessing all available evidence, both positive and negative, to determine whether, based on the weight of that evidence, a valuation allowance for deferred tax assets is needed. A valuation allowance is used to reduce some or all of the deferred tax assets if, based upon the weight of available evidence, it is more likely than not that those deferred tax assets will not be realized. To the extent sufficient positive evidence becomes available, all or a portion of the valuation allowance may be released in one or more future periods. A release of the valuation allowance, if any, would result in the recognition of certain deferred tax assets and an income tax benefit for the period in which such release is recognized.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized. We recognize interest and penalties accrued related to our uncertain tax positions in income tax benefit (expense) in the consolidated statements of operations.

Revenue

We recognize revenue in accordance with ASC 606, Revenue from Contracts with Customers, when control of the promised good or service is transferred to the customer in an amount that reflects the consideration for which we are expected to be entitled to in exchange for those services. We consider PBMs, pharmacies, pharma manufacturers and consumers of our subscription and telehealth services, for which we have direct contractual agreements with, to be our primary customers. Consideration paid or payable to customers are recognized as a reduction of revenue if we do not receive a distinct good or service for which we can reasonably estimate fair value at the later of when the related revenue is recognized or when we pay or promise to pay the consideration to the customers. Given the time between us transferring a promised good or service to the customer and the customer paying for that good or service is one year or less based on the terms of our revenue arrangements, as a practical expedient, we do not adjust the promised amount of consideration for effects of a significant financing component.

For the years ended December 31, 2023, 2022 and 2021, revenue comprised the following:

(1)Pharma manufacturer solutions revenue for the year ended December 31, 2023 included a $10.0 million contract termination payment to a pharma manufacturer solutions client in connection with our restructuring activities, which was recognized as a reduction of revenue. See "Note 17. Restructuring Plan" for additional information.

Prescription Transactions Revenue

Prescription transactions revenue is primarily generated from PBMs, or customers, when a prescription is filled with our code provided through our platform. The nature of our promise in our contracts with customers is to direct prescription volume through our platform, which may include marketing through our mobile apps, websites, and cards. These activities are not distinct from each other and are not separate performance obligations. Our performance obligation is to connect consumers with pharmacies that are contracted with our customers. We have no performance obligation to fill prescriptions.

Contracts with PBMs provide that we are entitled to either a percentage of fees that PBMs charge to the pharmacy or a fixed amount per type of drug prescription, when a consumer uses our code from our platform. Our performance obligation is satisfied upon the completion of pharmacies filling prescriptions. We recognize revenue for our estimated fee due from the customers at a point in time when a prescription is filled.

We receive reporting from the customers of the number of prescriptions and amount of consideration to which we are entitled at a prescription level. Certain arrangements with PBMs provide that the amount of consideration we are entitled to is based on the volume of prescription fills each month. In addition, the amount of consideration for which we are entitled may be adjusted in the event that a fill is determined ineligible, or based upon other adjustments allowed under the contracts with customers. We estimate the amount expected to be entitled to using the expected value method based on historical experience of the number of prescriptions filled, ineligible fills and applicable rates.

Beginning in late 2022, we began to enter into direct contractual agreements with select pharmacies ("partner pharmacies"). The partner pharmacies are our customers in these arrangements. Our contracts with partner pharmacies provide consumers access to discounted prices negotiated directly with the partner pharmacies through our platform. We earn fixed or variable fees per transaction from partner pharmacies when a prescription is filled with our code provided through our platform. We recognize revenue for our estimated fee due from the partner pharmacies at a point in time when a prescription is filled.

We generally receive payment within thirty days of the month end in which the prescriptions were filled from our customers. However, portions of payments may not be received for up to five months to the extent of adjustments for ineligible fills.

We periodically offer incentives to consumers for our prescription transactions offering, principally in the form of discounts to a limited number of consumers on a limited number of prescription drugs for a limited time ("limited marketing promotions") that reduce prices on prescription drugs to acquire, re-engage, or generally increase consumer utilization of our platform. None of our contracts with customers require us to provide discounts to consumers. Consumer discounts on prescription drugs where our customers are the partner pharmacies are recognized as a reduction of revenue. For consumer discounts on prescription drugs where our customers are the PBMs, we evaluate whether such discounts represent payments to a customer, which are recognized as a reduction of revenue if no distinct benefit is received, or, whether the discounts relate to limited marketing promotions, which are recognized as sales and marketing expenses. We consider various factors including whether the discounts are made available for a limited time on a limited number of prescription drugs, consumer eligibility requirements, whether discounts are targeted towards consumer transactions with specific partner pharmacies or PBMs, and whether there is involvement or reasonable expectations of our customers with regards to the discounts. All our consumer incentives are recognized at the time the prescription is filled. Consumer incentives recognized as a reduction of revenue were $8.8 million in 2023 andzero in 2022 and 2021. Consumer incentives recognized as sales and marketing expenses were $27.3 million in 2023, $24.7 million in 2022 and not material in 2021.

Subscription Revenue

Subscription revenue is generated from consumers that are subscribed to either of our subscription offerings ("subscribers"), GoodRx Gold (“Gold”) and Kroger Rx Savings Club powered by GoodRx (“Kroger Savings”). Under Gold, subscribers pay an upfront fee to purchase a monthly or annual subscription that provides access to lower prices for prescriptions and telehealth visits. Subscribers can cancel the Gold subscription at any time. Monthly Gold subscription fees are generally nonrefundable while annual Gold subscription fees are generally nonrefundable to the subscriber after the first two weeks. We recognize revenue for Gold on a straight-line basis over the subscription period. Under Kroger Savings, subscribers pay an annual upfront fee, a portion of which we share with Kroger, for a subscription that provides access to lower prices on prescriptions at Kroger pharmacies. Subscribers were able to enroll in Kroger Savings through July 1, 2023 with the expected sunset of the program in July 2024. Kroger Savings subscription fees are generally nonrefundable to the subscriber after the first thirty days unless we cancel the subscription, in which case the subscriber is entitled to a pro rata refund. We recognize revenue for Kroger Savings on a straight-line basis over the subscription period, net of the fee shared with Kroger.

Pharma Manufacturer Solutions Revenue

Pharma manufacturer solutions revenue consists primarily of advertisements purchased by pharma manufacturers and other customers for a fixed fee that appear on our apps and websites for a specified period of time, and revenue is recognized ratably over the term of the arrangement. Customers may also purchase advertisements where we charge fees on a cost-per-click basis, advertisements placed in our direct mailers, or other content used in advertising. Revenue for these arrangements is recognized at a point in time when the advertisements are clicked, when the direct mailers are shipped or when other content used in advertising is delivered, respectively. Pharma manufacturers can also integrate their affordability solutions, such as co-pay cards, patient assistance programs and other savings options onto our platform for a fixed fee per transaction so that consumers can access their medications, and revenue is recognized at a point in time when the prescription is filled. In addition, pharma manufacturer solutions revenue also included fees generated when pharmacies filled prescriptions for products sold by pharma manufacturers via our pharmacy services solution acquired through our acquisition of vitaCare Prescription Services, Inc. ("vitaCare"). We were entitled to a fixed fee per prescription from the pharma manufacturer for each of their patients assisted by us. Revenue for these arrangements was recognized at a point in time when the prescriptions were processed and filled through our pharmacy services solution. In August 2023, 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 17. Restructuring Plan" for additional information.

We generally invoice customers in advance, in the month end in which services are rendered, or in accordance with other specific contractual provisions. Payments are due generally within thirty to ninety days of invoice but may extend up to twelve months for a limited number of contracts.

Other Revenue

Other revenue consists principally of telehealth revenue. Telehealth revenue consists of revenues generated from consumers who complete a telehealth visit with a member of our network of qualified medical professionals. Consumers pay a fee per telehealth visit and we recognize the fee as revenue at a point in time when the visit is complete.

Cost of Revenue

Cost of revenue consists primarily of costs related to outsourced consumer support; healthcare provider costs; personnel costs, including salaries, benefits, bonuses and stock-based compensation expense, for our consumer support employees; hosting costs; merchant account fees; processing fees; allocated overhead; and as applicable, fulfillment costs for certain solutions provided to customers under our pharma manufacturer solutions offering. Cost of revenue excludes depreciation and amortization of capitalized software development costs, developed technology, and other hosting and data infrastructure equipment used to operate our platform, which are included in depreciation and amortization in the consolidated statements of operations.

Product Development and Technology

Costs related to the development of products are charged to product development and technology expense as incurred. Product development and technology expense consists primarily of personnel costs, including salaries, benefits, bonuses and stock-based compensation expense, for employees involved in product development activities; costs related to third-party services and contractors associated with product development, information technology and software-related costs; and allocated overhead. Product development and technology costs also include, as applicable, losses from the disposal of capitalized development costs related to internal-use software that are not yet ready for their intended use.

Sales and Marketing

Sales and marketing costs consist primarily of advertising, marketing and promotional expenses for consumer acquisition and retention including certain consumer discounts that are expensed as incurred. Production costs are expensed as of the first date the advertisement takes place. Advertising costs were $198.8 million, $226.3 million and $296.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Sales and marketing expenses also include personnel costs, including salaries, benefits, bonuses, stock-based compensation expense and sales commissions, for sales and marketing employees; costs related to third-party services and contractors; and allocated overhead. Sales commissions relate to contracts with a duration of one year or less and are expensed as incurred.

General and Administrative

General and administrative costs are expensed as incurred and primarily include personnel costs, including salaries, benefits, bonuses and stock-based compensation expense, for executive, finance, accounting, legal, and human resources functions; as well as professional fees; occupancy costs; other general overhead costs; and as applicable, change in fair value of contingent consideration, loss on operating lease assets, gain on sale of business, and legal settlement charges, net of insurance recoveries.

Depreciation and Amortization

Our depreciation and amortization expenses include depreciation of property and equipment, and amortization of capitalized internal-use software costs and intangible assets.

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The inputs used to measure fair value are classified into the following hierarchy:

When determining the fair value measurements for assets and liabilities which are required to be measured at fair value, we consider the principal or most advantageous market in which to transact and the market-based risk. Goodwill, intangible assets and other long-lived assets, and equity investments are measured at fair value on a nonrecurring basis, only if impaired. The carrying amounts reported in the consolidated financial statements approximate the fair value for accounts receivable, accounts payable, and accrued liabilities, due to their short-term nature. The estimated fair value of our debt, which is based on inputs categorized as Level 2 in the fair value hierarchy, approximated its carrying value as of December 31, 2023, and was approximately $649.6 million as of December 31, 2022. For contingent consideration, which is remeasured to its estimated fair value on a recurring basis, see “Note 3. Business Combinations and Dispositions."

Stock-Based Compensation

Compensation cost is allocated to cost of revenue, product development and technology, sales and marketing, and general and administrative expenses in the consolidated statements of operations for stock options and restricted stock units (“RSUs”) based on the fair value of these awards at the date of grant. For awards that vest based on continued service, stock-based compensation cost is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the awards. For awards with performance vesting conditions, stock-based compensation cost is recognized on a graded vesting basis over the requisite service period when it is probable the performance condition will be achieved, with a cumulative adjustment for the portion of the service period that occurred for the period prior to the performance condition becoming probable of being achieved. The requisite service period for awards with service and performance conditions is the longer of the service period or the performance period. The grant date fair value of stock options that contain service or performance conditions is estimated using the Black-Scholes option-pricing model and the grant date fair value of RSUs that contain service or performance conditions is estimated based on the fair value of our common stock. Forfeitures are recognized when they occur.

Determining the fair value of stock-based awards requires judgment. The Black-Scholes option-pricing model is used to estimate the fair value of stock options, while the fair value of our common stock at the date of grant is used to measure the fair value of RSUs. The assumptions used in the Black-Scholes option-pricing model requires the input of subjective assumptions and are as follows:

•For periods prior to our initial public offering ("IPO") in September 2020, because there was no public market for our common stock, the fair value of the common stock underlying our stock-based awards was determined by our board of directors (our "Board"), with input from management, by considering several objective and subjective factors, and the results of third-party valuations. Subsequent to our IPO, the fair value of common stock was determined on the grant date using the closing price of our Class A common stock.

•Expected volatility is based on a blended approach that utilizes our historical and implied volatility for periods in which we have sufficient information and the historical and implied volatility of a publicly traded peer group based on daily price observations over a period equivalent to the expected term of the stock option grants.

•The expected term is based on historical and estimates of future exercise behavior. For stock options considered to be “plain vanilla” options, the expected term is based on the simplified method, as our historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term. Substantially all of our stock options granted after our IPO are considered to be "plain vanilla" options.

•The risk-free interest rate is based on the U.S. Treasury yield of treasury bonds with a maturity that approximates the expected term of the options.

•The dividend yield is based on our current expectations of dividend payouts.

The assumptions used in our Black-Scholes option-pricing model represent management’s best estimates. These estimates involve inherent uncertainties and the application of management’s judgment. If factors change and different assumptions are used, our stock-based compensation could be materially different in the future.

Basic and Diluted Loss Per Share

We have two classes of common stock, Class A and Class B. Basic and diluted loss per share attributable to common stockholders of our Class A and Class B common stock are the same because they are entitled to the same liquidation and dividend rights.

We compute earnings or loss per share using the two-class method required for participating securities. The two-class method requires net income to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. In periods where we have net losses, losses are not allocated to participating securities as they are not required to fund the losses.

Basic earnings or loss per share is computed by dividing net income or loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Weighted average number of common shares outstanding includes contingently issuable shares where there is no circumstance under which those shares would not be issued.

We compute diluted earnings or loss per share under a two-class method. For periods when we have net income, net income is reallocated between common stock, potential common stock and participating securities. Stock-based awards that contain vesting provisions contingent on achievement of performance or market conditions are included in the computation of diluted earnings per share, if dilutive, from the beginning of the period or date of issuance if later, if all necessary conditions to vest have been satisfied during the period. If all conditions have not been met by the end of the period, dilutive earnings per share includes the number of shares that would be issuable if the end of the period were the end of the contingency period. Potential common stock principally includes stock options and RSUs computed using the treasury stock method. For periods where we have net losses, diluted loss per share is the same as basic loss per share, because potentially dilutive shares are excluded from the computation of loss per share as their effect is anti-dilutive.

Recent Accounting Pronouncements

Recently Adopted 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.

Recently Issued Accounting Pronouncements - Not Yet Adopted

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. This ASU applies to all public entities and will be effective for fiscal years beginning after December 15, 2024, and for interim periods for fiscal years beginning after December 15, 2025. Early adoption of this ASU is permitted. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements and disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. All disclosure requirements under ASU 2023-07 are also required for public entities with a single reportable segment. This ASU applies to all public entities that are required to report segment information in accordance with ASC 280, and is effective for fiscal years beginning after December 15, 2023 and is effective for interim periods within fiscal years beginning after December 15, 2024. Early adoption of this ASU is permitted. We are currently evaluating the impact of the adoption of this ASU on our consolidated financial statements and disclosures.

3. Business Combinations and Dispositions

vitaCare Prescription Services, Inc.

On April 14, 2022, we acquired all of the equity interests of vitaCare Prescription Services, Inc., a prescription technology and services platform, from TherapeuticsMD, Inc. (the "Seller"), the sole stockholder of vitaCare, 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 incurred a total of $1.6 million of transaction costs associated with this acquisition during 2022 that consisted primarily of professional fees. We acquired vitaCare as we believed it would strengthen and expand our business capabilities with respect to our pharma manufacturer solutions platform.

We accounted for the vitaCare acquisition using the acquisition method of accounting in accordance with ASC 805, Business Combinations, and recognized tangible and intangible assets acquired and liabilities assumed at their estimated fair values as of the acquisition date. The estimated fair values of the acquired intangible assets were determined primarily by using a discounted cash flow method which is a non-recurring fair value measurement based on Level 3 inputs. 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 offive andeleven years, respectively.

We also established a management incentive plan under which certain continuing vitaCare employees were eligible to receive up to $10.0 million of additional cash compensation upon achievement of certain performance milestones through 2023. This management incentive plan was accounted for separately from the business combination and excluded from the purchase consideration. The performance milestones were not probable of being met as of December 31, 2022, and were not met as of December 31, 2023.

The contingent considerations recognized 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.

Contingent consideration payable - The contingent consideration payable of up to $7.0 million in cash was based upon vitaCare's achievement of certain specified revenue results through 2023. The revenue targets were not expected to be achieved as of December 31, 2022. Accordingly, we recognized the change in fair value of the contingent consideration payable of $1.7 million as a reduction of general and administrative expenses during 2022. The specified revenue results were not achieved and the contingency was resolved as of December 31, 2023.

Contingent consideration receivable - vitaCare entered into a commercial agreement with the Seller in connection with the acquisition (the "commercial agreement") to provide certain pharmacy services to the Seller over an initial 5-year term following the acquisition with annual minimum guaranteed payments over the 5-year term totaling $66.3 million. The estimated fair value of the contingent consideration receivable at the acquisition date was based on the present value of the expected future annual minimum guaranteed payments in excess of the estimated fair value of pharmacy services expected to be provided to the Seller for each year over the initial 5-year term and contained significant unobservable inputs (Level 3 inputs). Key inputs used in this estimate included projected revenue and a discount rate which incorporated the risk of achievement associated with the forecasts and the credit risk of the Seller. Significant changes in the projected revenue or discount rate would have resulted in a significantly higher or lower fair value measurement.

In December 2022, we eliminated the annual minimum guaranteed payments associated with the commercial agreement which was assigned to a third-party by the Seller. Concurrently, we amended an existing arrangement with the third-party, which was determined to be at fair value. In connection with these transactions, the fair value of the contingent consideration receivable was effectively zero as the contingency was resolved andno future contingent payments will be received. Accordingly, we recognized the change in fair value of the contingent consideration receivable of $19.7 million within general and administrative expenses during 2022.

The following table reflects the pro forma unaudited consolidated results of operations for the periods presented 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 from as 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.

vitaCare's revenue in the year of acquisition of $5.6 million was included in the consolidated statement of operations for the year then ended. Disclosure of the standalone earnings or loss of vitaCare in the year of acquisition is not practicable as expenses associated with significant back-office, product development and technology and go-to-market processes of vitaCare were substantially integrated into our consolidated operations.

Other Business Combinations

In 2022, we also acquired flipMD, Inc., a marketplace connecting practicing physicians with organizations seeking on-demand medical expertise for $7.0 million in cash.

In 2021, we acquired three different businesses for aggregate cash consideration of $141.8 million. Goodwill associated with these acquisitions primarily related to the expected long-term synergies and other benefits, including the acquired assembled workforce. The aggregate purchase consideration related to these acquisitions was principally allocated to goodwill of $68.6 million and other intangible assets of $70.2 million, principally related to customer relationships of $50.2 million, with estimated useful lives ranging between nine andthirteen years.

Unaudited supplemental pro forma financial information, revenue and earnings in the year of acquisition, and transaction costs for these acquisitions are not material to our consolidated financial statements.

Dispositions

vitaCare Prescription Services, Inc.

In August 2023, 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 17. Restructuring Plan" for additional information.

Certain Assets of GoodRx Care, LLC (FKA HeyDoctor, LLC)

On December 9, 2022, we completed the sale of certain technology assets of GoodRx Care, LLC, our telehealth platform, for $19.5 million in cash. Of this total purchase price, $2.9 million was held in the buyer's escrow account related to the resolution of standard representations and warranties and was included in prepaid and other current assets on the consolidated balance sheet as of December 31, 2022. The amount was subsequently released from the buyer's escrow and we collected the $2.9 million during 2023. The sale represented the sale of a business and, as we haveone reporting unit, goodwill was allocated to the disposal group. The carrying value of the disposal group as of the sale date was approximately $8.1 million, comprised principally of $4.6 million of capitalized software and $3.1 million of allocated goodwill. We recognized a $11.4 million pre-tax gain on the sale which was included as a reduction of general and administrative expenses in the consolidated statement of operations for the year ended December 31, 2022. As we continued to provide consumers access to telehealth services via our GoodRx Care platform after the date of sale, the sale did not represent a strategic shift that has had, or is expected to have, a major effect on our operations and financial results.

4. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consist of the following:

(1)Represents a receivable for the probable recovery related to an incurred loss in connection with certain contingencies. Loss recoveries are recognized when a loss has been incurred and the recovery is probable. This determination is based on our analysis of the underlying insurance policies, historical experience with insurers, and ongoing review of the solvency of insurers, among other factors.

(2)Represents payments we make to third parties on behalf of, and reimbursable from, certain customers.

(3)Other current assets were not material as of December 31, 2023 and 2022.

5. Property and Equipment, Net

Property and equipment, net consists of the following:

For the years ended December 31, 2023, 2022 and 2021, depreciation expense was $4.8 million, $4.6 million and $4.0 million, respectively.

6. Goodwill

The following table presents changes in the carrying amount of goodwill:

7. Intangible Assets, Net

The following tables present details of our intangible assets, net:

For the years ended December 31, 2023, 2022 and 2021, amortization expense was $59.0 million, $23.2 million and $18.3 million, respectively. Amortization of intangible assets acquired in connection with vitaCare was accelerated during the year ended December 31, 2023 as we de-prioritized certain solutions under our pharma manufacturer solutions platform for which these intangible assets supported and were disposed of as of December 31, 2023. See "Note 17. Restructuring Plan."

At December 31, 2023, the expected amortization of intangible assets, net for future periods was as follows:

8. Capitalized Software, Net

The following table presents details of our capitalized software, net as follows:

For the years ended December 31, 2023, 2022 and 2021, amortization expense was $43.9 million, $26.4 million and $12.2 million, respectively. Amortization had not started on $15.8 million of capitalized software costs that were not yet ready for intended use as of December 31, 2023.

At December 31, 2023, the expected amortization of capitalized software, net that has been placed into service for future periods was as follows:

9. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following:

Deferred revenue represents payments received in advance of providing services for certain advertising contracts with customers and subscriptions. Deferred revenue is substantially recognized as revenue within the subsequent twelve months. We expect substantially all of the deferred revenue at December 31, 2023 will be recognized as revenue in 2024.

10. Leases

Our leases consist of office facilities under noncancelable operating lease arrangements that expire at various dates through 2033. Our leases do not contain any material (i) non-lease components, (ii) variable lease costs, (iii) short-term lease expenses, (iv) residual value guarantees or (v) material restrictive covenants.

For the years ended December 31, 2023, 2022 and 2021, lease expense of $8.0 million, $6.2 million and $5.6 million, respectively, was included in costs and operating expenses in the consolidated statements of operations.

For the years ended December 31, 2023, 2022 and 2021, cash paid for amounts affecting the measurement of our operating lease liabilities included in cash flows from operating activities was $7.1 million, $6.4 million and $6.2 million (excluding $1.6 million of cash collected from lease incentive receivable), respectively.

As of December 31, 2023 and 2022, the weighted average remaining lease term was 7.8 years and 8.7 years, respectively, and the weighted average discount rate was 6.8% and 6.9%, respectively.

The following table presents maturities of operating lease liabilities at December 31, 2023:

The estimated operating lease payments included in the table above for 2024 and 2025 have been reduced by lease incentives for leasehold improvements of $3.5 million and $2.7 million, respectively.

11. Income Taxes

The components of our income taxes are as follows:

The following is a reconciliation of the U.S. federal statutory rate of 21.0% to our effective income tax rate:

(1)Includes the state tax effects for (i) excess tax (benefits) related to stock-based compensation of $1.0 million, $0.8 million and ($6.4) million for 2023, 2022 and 2021, respectively, and (ii) a valuation allowance (decrease) increase of ($13.0) million, $4.4 million and $14.6 million for 2023 and 2022, and 2021 respectively.

Deferred taxes, net consist of the following:

We recognized total excess tax benefits of ($7.1) million, ($5.4) million and $50.2 million associated with equity award exercises and vesting in income tax benefit (expense) for the years ended December 31, 2023, 2022 and 2021, respectively.

We consider all available positive and negative evidence in our assessment of the recoverability of our net deferred tax assets each reporting period. In 2021, we had cumulative three-year pre-tax losses adjusted for permanent book to tax adjustments principally from substantial excess tax benefits realized in 2021 and 2020 from the exercise of stock options granted prior to our IPO and thus recognized a full valuation allowance against our net deferred tax assets in excess of amortizable goodwill which we maintained through the end of 2022. During 2023, we determined that a valuation allowance against the majority of our net deferred tax assets was no longer required primarily due to sustained tax profitability (pre-tax earnings or loss adjusted by permanent book to tax differences), which was objective and verifiable evidence, and anticipated future earnings. As a result, we released $54.6 million of our valuation allowance and recognized it as an income tax benefit in the consolidated statement of operations for the year ended December 31, 2023.

As of December 31, 2023, our valuation allowance is attributable to certain standalone tax filings' net deferred tax assets which are not more likely than not to be realized in the future. Our judgment regarding the need for a valuation allowance may reasonably change in future reporting periods due to many factors, including changes in the level of tax profitability that we achieve, changes in tax laws or regulations and price fluctuations of our Class A common stock and its related future tax effects from our outstanding equity awards.

At December 31, 2023, we had U.S. federal net operating loss carryforwards ("NOLs") of $26.1 million available to reduce future federal income taxes. Approximately $5.6 million of these NOLs were generated before January 1, 2018 and will expire in varying amounts starting 2034. The remaining $20.5 million of these NOLs are carried over indefinitely but utilization is subject to an 80% taxable income limitation. At December 31, 2023, we also had state NOLs of $100.9 million available to reduce future state income taxes which will expire in varying amounts beginning 2024. The amount of state NOLs expiring in 2024 would not be material to the consolidated financial statements as a full valuation allowance has been established against certain standalone tax filings' net deferred tax assets due to uncertainty regarding their future realization.

As of December 31, 2023, we had California and other state research tax credits carryforwards of $21.6 million, of which $21.4 million generally may be carried forward indefinitely.

At December 31, 2023, tax years 2020 and forward were subject to examination by the Internal Revenue Service (“IRS”), and tax years 2019 and forward were subject to examination by the various state taxing jurisdictions in which we are subject to tax. At December 31, 2023, we were not subject to any federal or state income tax audits.

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:

As of December 31, 2023, we had gross unrecognized tax benefits of approximately $14.2 million, $12.7 million of which, if recognized, would impact our effective tax rate. We estimate unrecognized tax benefits will decrease by $2.5 million in 2024 due to the expiration of statute of limitations.

At December 31, 2023 and 2022, accrued interest and penalties related to uncertain tax positions were not material.

12. Debt

Our First Lien Credit Agreement (as amended from time to time, the "Credit Agreement") provides for (i) a $700.0 million term loan maturing on October 10, 2025 (“First Lien Term Loan Facility”); and (ii) a revolving credit facility for up to $100.0 million maturing on October 11, 2024 (the “Revolving Credit Facility”). On June 29, 2023 and July 7, 2023, we amended our Revolving Credit Facility and First Lien Term Loan Facility, respectively, to replace London Interbank Offered Rate (“LIBOR”) with Secured Overnight Financing Rate (“SOFR”) as the benchmark interest rate for borrowings under our Revolving Credit Facility and First Lien Term Loan Facility, beginning in July 2023. On February 20, 2024, we further amended our Revolving Credit Facility to extend its maturity date from October 11, 2024 to July 11, 2025. The First Lien Term Loan Facility and Revolving Credit Facility are collateralized by substantially all of our assets and 100% of the equity interest of GoodRx.

First Lien Term Loan Facility

Up to and including June 30, 2023, borrowings under our First Lien Term Loan Facility accrued interest at an adjusted LIBOR plus a variable margin based on our most recently determined First Lien Net Leverage Ratio (as defined in the Credit Agreement), ranging from 2.75% to 3.00%. Beginning in July 2023, borrowings under our First Lien Term Loan Facility bear interest, at our option, at either (i) a term rate based on SOFR (“Term SOFR”) plus an adjustment ranging from 0.10% to 0.25% based on the term of the interest rate period plus a margin ranging from 2.75% to 3.00%; or (ii) an alternate base rate plus a margin ranging from 1.75% to 2.00%, both depending on our First Lien Net Leverage Ratio (as defined in the Credit Agreement). The effective interest rate on the First Lien Term Loan Facility for the years ended December 31, 2023, 2022 and 2021 was 8.46%,5.02% and 3.40%, respectively. The First Lien Term Loan Facility requires quarterly principal payments through September 2025, with any remaining unpaid principal and any accrued and unpaid interest due upon maturity. We may prepay the First Lien Term Loan Facility without penalty.

Revolving Credit Facility

We hadno borrowings against the Revolving Credit Facility as of December 31, 2023 and 2022. Beginning in July 2023, borrowings under our Revolving Credit Facility, if any, bear interest, at our option, at either (i) Term SOFR plus a margin ranging from 2.50% to 3.00%; or (ii) an alternate base rate plus a margin ranging from 1.50% to 2.00%, each with the applicable margin dependent on our First Lien Net Leverage Ratio (as defined in the Credit Agreement). We incur a commitment fee ranging from 0.25% to 0.50% per annum, depending on our First Lien Net Leverage Ratio (as defined in the

Credit Agreement), on any unused commitments. In addition, the Revolving Credit Facility has a fixed fronting fee of 0.125% per annum for aggregate undrawn and disbursed but unreimbursed letters of credit.

We had outstanding letters of credit issued against the Revolving Credit Facility for $9.2 million as of December 31, 2023 and 2022, respectively, which reduces our available borrowings under the Revolving Credit Facility. The outstanding letters of credit principally relate to a facility lease and is eligible to decrease by $0.9 million per year commencing in 2023.

Our debt balance is as follows:

Amortization of debt issuance costs and discounts related to our term loan of approximately $3.0 million was recognized as interest expense in the consolidated statements of operations for the years ended December 31, 2023, 2022 and 2021.

As of December 31, 2023, we were subject to a financial covenant requiring maintenance of a Net Leverage Ratio not to exceed 8.2 to 1.0 only in the event that the amounts outstanding under the Revolving Credit Facility exceed a specified percentage of commitments under the Revolving Credit Facility, and other nonfinancial covenants under the Credit Agreement. Additionally, GoodRx is restricted from making dividend payments, loans or advances to us. At December 31, 2023, we were in compliance with our covenants.

As of December 31, 2023, we expect to pay $8.8 million in principal payments under the First Lien Term Loan Facility in 2024 with the remaining principal balance of $653.0 million to be paid in 2025.

13. Commitments and Contingencies

Refer to “Note 10. Leases” and “Note 12. Debt,” for details of contractual obligations for our noncancelable operating leases and principal payments under our debt agreements, respectively.

Purchase Commitments

As of December 31, 2023, we had aggregate purchase commitments of $14.2 million for cloud hosting services pursuant to which we committed to spend $7.1 million per annum through 2025.

Legal Contingencies

Between February 2, 2023, and March 30, 2023, five individual plaintiffs filed five separate putative class actions lawsuits against Google, Meta, Criteo and us, alleging generally that we have not adequately protected consumer privacy and that we communicated consumer information to third parties, including thethree co-defendants. Four of the plaintiffs allege common law intrusion upon seclusion and unjust enrichment claims, as well as claims under California’s Confidentiality of Medical Information Act, Invasion of Privacy Act, Consumer Legal Remedies Act, and Unfair Competition Law. One of these four plaintiffs additionally brings a claim under the Electronic Communications Privacy Act. The fifth plaintiff brings claims for common-law unjust enrichment and violations of New York’s General Business Law. Four of these cases were originally filed in the United States District Court for the Northern District of California ("NDCA") (Cases No. 3:23-cv-00501; 3:23-cv-00744; 3:23-cv-00940; and 4:23-cv-01293). One case was originally filed in the United States District Court for the Southern District of New York (Case No. 1:23-cv-00943); however, that case was voluntarily dismissed and re-filed in the NDCA (Case No. 3:23-cv-01508). These five matters have been consolidated and assigned to U.S. District Judge Araceli Martínez-Olguín in the NDCA. The court also set a briefing schedule for filing a single consolidated complaint, which the plaintiffs filed on May 21, 2023 (Case No. 3:23-cv-00501-AMO; the "NDCA Class Action Matter"), as well as motions to dismiss and motions to compel arbitration. In addition to the aforementioned claims, the plaintiffs in the now consolidated matter bring claims under the Illinois Consumer Fraud and Deceptive Business Practices Act, common law negligence and negligence per se, in each case, pleaded in the alternative. The plaintiffs are seeking various forms of monetary damages (such as statutory damages, compensatory damages, attorneys’ fees and disgorgement of profits) as well as injunctive relief. Briefing on the motions to dismiss and motions to compel arbitration was completed on August 24, 2023.

On October 27, 2023, six plaintiffs filed a class action complaint (Case No. 1:23-cv-24127-BB; the “SDFL Class Action Matter”) against us in the United States District Court for the Southern District of Florida ("SDFL"). The plaintiffs alleged, on behalf of the same nationwide class as the NDCA Class Action Matter, substantially the same statutory and common law violation claims as alleged in that matter as well as claims based on the federal Electronic Communications Privacy Act, invasion of privacy under California common law and the California constitution, invasion of privacy under New Jersey's Constitution, and violations of Pennsylvania’s Wiretapping and Electronic Surveillance Control Act, Florida’s Security of Communications Act, New York’s Civil Rights Law, and Stop Hack and Improve Electronic Data Security Act. The plaintiffs in the SDFL Class Action Matter seek various forms of monetary damages as well as injunctive and other unspecified equitable relief.

On October 27, 2023, we entered into a proposed settlement agreement with the plaintiffs in the SDFL Class Action Matter, on behalf of a nationwide settlement class that includes the NDCA Class Action Matter, which provides for a payment of $13.0 million by us. On October 30, 2023, the plaintiffs in the SDFL Class Action Matter filed a motion and memorandum in support of preliminary approval of the proposed class action settlement and, on October 31, 2023, the SDFL granted preliminary approval of the proposed settlement. The proposed settlement is subject to final approval of the court. Members of the class have the opportunity to opt-out of the class and commence their own actions.

In response to the proposed settlement in the SDFL Class Action Matter, plaintiffs in the NDCA Class Action Matter filed (i) on November 1, 2023, a motion in the NDCA for an order to require us to cease litigation of, or alternatively file a motion to stay in, the SDFL Class Action Matter and enjoin us from seeking settlement with counsel other than plaintiffs’ counsel in the NDCA Class Action Matter; and (ii) on November 2, 2023, a motion in the SDFL for that court to allow them to intervene and appear in the SDFL action, transfer the SDFL Class Action Matter to the NDCA and reconsider and deny its preliminary approval of the proposed settlement. The SDFL has issued an order requiring the SDFL plaintiffs to, among other things, file a response to the NDCA plaintiffs' motion to intervene. Additionally, U.S. District Judge Araceli Martínez-Olguín in the NDCA issued an order for us to show cause as to why we should not be sanctioned for an alleged failure to provide notification to the NDCA of the pendency of the SDFL Class Action Matter. We filed our written response to this order on November 8, 2023. The NDCA held a hearing on November 14, 2023, and ordered parties to the litigation to participate in mediation. The parties participated in mediation on January 10, 2024, and have agreed to participate in an additional day of mediation scheduled for March 7, 2024.

Based on the proposed settlement agreement, we have determined that a loss is probable and have accrued $13.0 million during the year ended December 31, 2023. In November 2023, we made an initial $0.5 million payment to a third-party qualified settlement fund that we do not own, which will be disbursed to the plaintiffs if required conditions are satisfied. Therefore, $12.5 million of the probable loss was included in accrued expenses and other current liabilities in the accompanying consolidated balance sheet as of December 31, 2023. While this amount represents our best judgment of the probable loss based on the information currently available to us, it is subject to significant judgments and estimates and numerous factors beyond our control, including, without limitation, final approval of the court or the results of mediation. This pending proceeding involves complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources to defend. The results of legal proceedings are inherently uncertain, and upon final resolution of these matters, it is reasonably possible that the actual loss may differ from our estimate.

In addition, during the normal course of business, we may become subject to, and are presently involved in, legal proceedings, claims and litigation. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. We have not accrued for a loss for any other matter as a loss is not probable and a loss, or a range of loss, is not reasonably estimable. Accruals for loss contingencies are recognized when a loss is probable, and the amount of such loss can be reasonably estimated. See "Note 9. Accrued Expenses and Other Current Liabilities." Loss recoveries are recognized when a loss has been incurred and the recovery is probable. See "Note 4. Prepaid Expenses and Other Current Assets."

In February 2023, we initiated arbitration against Famulus Health, LLC (“Famulus”) before the American Arbitration Association in relation to Famulus’ breach of an agreement entered into by Famulus and us in June 2020, as amended (the “Agreement”). GoodRx asserted claims for Famulus' breach of the confidentiality and exclusivity provisions in the Agreement, seeking to recover damages and injunctive relief. On February 15, 2024, an arbitration award was rendered, which included a damages award and a permanent injunction (the "Arbitration Award"). Famulus filed a petition to vacate the Arbitration Award on February 21, 2024 in the United States District Court for the District of South Carolina ("DSC"). GoodRx filed a petition to confirm the Arbitration Award on February 22, 2024 in the DSC. We can not make any assurance as to the outcome of the Arbitration Award and when the Arbitration Award will be collected. Any gain on this matter is considered a gain contingency and will be recognized in the period in which the Arbitration Award is realized or realizable, pursuant to ASC 450, Contingencies.

Indemnifications

Our amended and restated bylaws provide that we will indemnify our directors and officers to the fullest extent permitted by the Delaware General Corporation Law. Certain of our officers and directors are also a party to indemnification agreements. Pursuant to our indemnification agreements and directors’ and officers’ liability insurance, certain of our officers and directors will be indemnified and insured against the cost of defense, settlement or payment of a judgment under certain circumstances. The maximum potential amount of future payments we may be required to make under these indemnification provisions is indeterminable. We have never paid a material claim, nor have we been involved in litigation, with respect to these indemnification arrangements. As of December 31, 2023 and 2022, we did not accrue a liability for these guarantees as the likelihood of incurring a payment obligation, if any, in connection with these guarantees is not probable or reasonably estimable.

14. Stockholders’ Equity

Common Stock

We have two classes of authorized and outstanding common stock: Class A common stock and Class B common stock.

The rights of the holders of the Class A common stock and Class B common stock are identical except for voting and conversion rights. The holders of the Class A common stock are entitled toone vote per share and the holders of the Class B common stock are entitled to 10 votes per share. Each share of Class B common stock is convertible intoone share of Class A common stock at any time at the option of the holder and will automatically convert to Class A common stock upon any transfer, except for certain permitted transfers. All Class B common stock will convert automatically into an equivalent number of Class A common stock upon the earlier of (i) September 25, 2027; or (ii) the first date the aggregate number of shares of Class B common stock cease to represent at least 10% of the aggregate outstanding shares of common stock. During the years ended December 31, 2023, 2022 and 2021,12.0 million,1.8 million and 13.1 million shares of Class B common stock were converted into an equivalent number of shares of Class A common stock, respectively.

Share Repurchases

On February 23, 2022, our Board authorized the repurchase of up to an aggregate of $250.0 million of our Class A common stock through February 23, 2024. As of December 31, 2023, we had $44.3 million available for future repurchases of our Class A common stock under this repurchase program. On February 27, 2024, our Board approved a new stock repurchase program which authorized the repurchase of up to an aggregate of $450.0 million of our Class A common stock. The new stock repurchase program has no expiration date. Repurchases under these repurchase programs may be made in the open market, in privately negotiated transactions or otherwise, with the amount and timing of repurchases to be determined at our discretion, depending on market conditions and corporate needs, or under a trading plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)(1) under the Exchange Act (a "Rule 10b5-1 Plan"). Open market repurchases will be structured to occur in accordance with applicable federal securities laws, including within the pricing and volume requirements of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. We may also, from time to time, enter into Rule 10b5-1 plans to facilitate repurchases of our shares under this authorization. These repurchase programs do not obligate us to acquire any particular amount of Class A common stock and may be modified, suspended or terminated at any time at the discretion of our Board. Repurchased shares are subsequently retired and returned to the status of authorized but unissued.

On November 20, 2023, we entered into a Stock Purchase Agreement with related parties, Spectrum Equity VII, L.P., Spectrum VII Investment Managers' Fund, L.P., and Spectrum VII Co-Investment Fund, L.P. (collectively, the "selling stockholders"), pursuant to which we agreed to repurchase 12.0 million shares of our Class A common stock (after giving effect to the automatic conversion of our Class B common stock to Class A common stock upon such repurchase) from the selling stockholders at a price of $5.47 per share, representing a discount from our closing share price of $5.76 on the date of execution of the Stock Purchase Agreement (the "Spectrum repurchase"). This repurchase was approved by our Board and its Audit Committee as part of the repurchase program approved in February 2022. In connection with the Spectrum repurchase, the selling stockholders, together with its affiliates, have agreed that they will not, without our prior approval, sell, transfer, otherwise dispose of or enter into a hedging transaction involving our securities for 90 days from the closing of the repurchase. Closing of the Spectrum repurchase occurred on November 27, 2023 for an aggregate consideration of $65.9 million, inclusive of direct costs and estimated excise taxes associated with the repurchase.

The following table presents information about our repurchases of our Class A common stock:

15. Stock-Based Compensation

Employee Equity Incentive Plans

Our Board or its compensation committee is authorized to grant stock-based awards under an approved equity incentive plan adopted in 2020 (the “2020 Plan”), which may be issued as awards covering either Class A or Class B common stock. Notwithstanding anything to the contrary in the 2020 Plan, no more than 300.0 million shares of common stock (either Class A or Class B common stock) may be issued pursuant to the exercise of incentive stock options under the 2020 Plan.

The number of shares available for issuance under the 2020 Plan will increase annually on the first day of each calendar year beginning January 1, 2021 and ending on and including January 1, 2030, equal to the lesser of (i)5% of the aggregate number of shares of Class A and Class B common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by our Board.

At December 31, 2023,61.9 million shares were available for issuance under the 2020 Plan.

We also allow our employees to participate in a stockholder-approved employee stock purchase plan ("ESPP"). The shares available for issuance under the ESPP increases by 1% at the beginning of each calendar year based on the aggregate number of shares of Class A and Class B common stock outstanding on the final day of the immediately preceding calendar year and may be reduced as is determined by our Board. In no event will more than 100.0 million shares of Class A common stock be available for issuance under the ESPP. The ESPP allows eligible employees to purchase our common stock, through payroll deductions, at 85% of the lower of the fair market value of Class A common stock on the first trading day of the offering period or on the applicable purchase date, which will be the final trading day of the applicable purchase period. The ESPP is intended to qualify as an employee stock purchase plan under the IRS Code Section 423.

The stock-based compensation cost related to ESPP is not material to our consolidated financial statements. At December 31, 2023,20.6 million shares were available for issuance under the ESPP.

Stock Options

Stock options granted for newly-hired employees generally vest as to 25% of the total award on the first anniversary of the employment start date, and thereafter ratably quarterly over the remaining three-year period. Annual refresh stock option grants for employees generally vest quarterly over afour-year period. In limited circumstances, stock option grants to senior level executives may have shorter vesting terms than the aforementioned. All stock options have aten-year term. Stock options granted do not include any forfeitable or non-forfeitable dividend equivalent rights.

On April 25, 2023, Trevor Bezdek and Douglas Hirsch (our "Co-Founders"), transitioned from being our Co-Chief Executive Officers to Chairman of the Board and Chief Mission Officer, respectively, in addition to continuing as directors of our Board (the “Transition”). In connection with the Transition, our Board appointed Scott Wagner as our Interim Chief Executive Officer (principal executive officer), effective April 25, 2023. In May 2023, pursuant to the terms of his employment agreement, our Board granted Mr. Wagner a stock option award covering 3.0 million shares of our Class A common stock. The grant date fair value of the stock option award was $9.6 million, which vests and becomes exercisable in twelve equal monthly installments through April 2024, subject to Mr. Wagner’s continued employment through the applicable vesting date.

A summary of the stock option activity is as follows:

The weighted average grant date fair value per share of stock options granted for the years ended December 31, 2023, 2022 and 2021 was $3.70, $5.41 and $18.81, respectively. The aggregate intrinsic value of options exercised for the years ended December 31, 2023, 2022 and 2021 was $5.8 million, $18.2 million and $244.4 million, respectively. The fair value of stock options that vested during the years ended December 31, 2023, 2022 and 2021 was $28.8 million, $14.6 million and $15.3 million, respectively.

All stock options outstanding at December 31, 2023 were options to purchase shares of Class A common stock. The fair value of option awards issued with service or performance vesting conditions are estimated on the grant date using the Black-Scholes option pricing model. The following table summarizes the assumptions used:

For the years ended December 31, 2023, 2022 and 2021, the stock-based compensation expense related to stock options was $26.1 million, $12.7 million and $14.3 million, respectively. At December 31, 2023, there was $51.9 million of total unrecognized stock-based compensation cost related to stock options, which is expected to be recognized over a weighted average remaining service period of 2.6 years.

Restricted Stock Awards and Restricted Stock Units

A summary of the Restricted Stock Awards ("RSAs") and Restricted Stock Unit activity is as follows:

For the years ended December 31, 2023, 2022 and 2021, the fair value of RSAs and RSUs that vested was $137.5 million, $121.5 million and $95.8 million, respectively.

Restricted Stock Awards

RSAs were originally granted in April 2019 with a weighted average grant date fair value per share of $3.88. These RSAs vested equally on each anniversary from the grant date through April 2023, subject to continued service.

Restricted Stock Units for Class A Common Stock

RSUs granted for newly-hired employees generally vest as to 25% of the total award on the first anniversary of the employment start date, and thereafter ratably quarterly over the remaining three-year period. Annual refresh RSU granted to employees generally vest quarterly over afour-year period. For the years ended December 31, 2023, 2022 and 2021, total stock-based compensation expense related to RSUs was $57.0 million, $61.2 million and $53.5 million, respectively. At December 31, 2023, there was $173.2 million of total unrecognized stock-based compensation cost related to these RSUs, which is expected to be recognized over a weighted average remaining service period of 2.9 years.

Restricted Stock Units for Class B Common Stock

In September 2020, our Board granted RSUs covering an aggregate of 24.6 million shares of Class B common stock to our Co-Founders (the “Founders Awards”), subject to the completion of our IPO and continued employment through the applicable vesting dates. Each of our Co-Founders received (i)8.2 million RSUs that vest based on the achievement of certain stock price goals, (the “Performance-Vesting Founders Awards”) and (ii)4.1 million RSUs that vest and settle in equal quarterly installments over four years, subject to certain vesting acceleration terms (the “Time-Vesting Founders Awards”). The grant date fair value of these awards totaled $533.3 million. We used a Monte Carlo simulation model to calculate the grant date fair value and derived service period of the Performance-Vesting Founders Awards.

All of the Performance-Vesting Founders Awards vested in 2020 and the issuance of the shares for these awards was deferred by three-years from the applicable vesting date, or earlier, upon a qualifying change in control or to satisfy tax withholding requirements as stipulated under the terms and conditions of the agreements governing the Founders Awards. At the time of vesting, we settled 0.7 million RSUs which were sufficient to satisfy certain tax withholding obligations due in the year of vesting. There were no risks of forfeiture after the Performance-Vesting Founders Awards vested in 2020. In October 2023, we net settled the remaining 15.7 million vested shares of Class B common stock underlying the Performance-Vesting Founders Awards and remitted cash consideration of $44.5 million on behalf of our Co-Founders to the relevant tax authorities to satisfy income tax withholding obligations. We withheld an aggregate of 8.1 million shares of our Class B common stock and delivered an aggregate of 7.6 million shares of our Class B common stock to our Co-Founders to net settle the award. The net 7.6 million shares of Class B common stock were delivered in an equivalent number of shares of Class A common stock on the settlement date.

During the years ended December 31, 2023, 2022 and 2021, we recognized $20.5 million, $44.5 million and $90.9 million of stock-based compensation expense, respectively, related to the Founders Awards. At December 31, 2023, we recognized a cumulative $528.9 million of stock-based compensation expense related to the Founders Awards, of which $209.1 million related to the Time-Vesting Founders Awards and $319.8 million related to the Performance-Vesting Founders Awards. At December 31, 2023, there was $4.4 million of total unrecognized stock-based compensation cost related to the Time-Vesting Founders Awards, all of which is expected to be recognized in 2024.

16. Basic and Diluted Loss Per Share

As we have net losses for the years ended December 31, 2023, 2022 and 2021, diluted loss per share is the same as basic loss per share, because potentially dilutive shares are excluded from the computation of loss per share as their effect is anti-dilutive.

The 15.7 million vested shares of Class B common stock underlying the Performance-Vesting Founders Awards for our Co-Founders were settled in October 2023. At the time of vesting in 2020, these 15.7 million shares were contingently issuable and included in the weighted average number of common shares outstanding for basic loss per share in 2022 and 2021. Upon settlement in 2023, a portion of these vested shares were withheld to cover income taxes on behalf of our Co-Founders, leaving 7.6 million shares ultimately delivered to our Co-Founders and included in the weighted average number of common shares outstanding for basic loss per share in 2023. See “Note 15. Stock-Based Compensation” for additional information.

The following weighted average potentially dilutive shares are excluded from the computation of diluted loss per share for the periods presented because including them would have been anti-dilutive:

17. Restructuring Plan

On August 7, 2023, our Board approved a plan to de-prioritize certain solutions under our pharma manufacturer solutions offering (the “Restructuring Plan”), which included (i) a reduction in force involving employees of our wholly-owned subsidiaries GoodRx and vitaCare; (ii) the entry into retention agreements with certain other employees for the purpose of maintaining business continuity; and (iii) the restructuring or termination of certain solutions and arrangements with our clients to better align with our strategic goals and future scale. The Restructuring Plan is part of our continued strategic focus on scaling and re-balancing our cost structure to drive improved profitability. The Restructuring Plan was substantially completed as of December 31, 2023 and estimated remaining costs to be recognized in 2024 are not material. As of December 31, 2023, the remaining liability associated with the Restructuring Plan was not material.

The following table summarizes restructuring related costs by type incurred for the year ended December 31, 2023:

(1)Non-cash charges principally relate to (i) $46.7 million amortization of acquired intangible assets related to vitaCare and capitalized internal-use software that have been accelerated through December 31, 2023 and presented within depreciation and amortization in the consolidated statement of operations; and (ii) a $7.0 million loss on the disposal of certain capitalized software that were not yet ready for their intended use and presented within product development and technology expenses in the consolidated statement of operations. Non-cash charges also include $1.3 million loss on disposal of allocated goodwill attributable to vitaCare.

(2)Cash expenditures consist of termination charges arising from severance obligations, continuation of salaries and benefits over a 60-day transitional period during which impacted employees remained employed but were not expected to provide active service, and other customary employee benefit payments in connection with a reduction in force as well as retention charges for certain other employees. During the year ended December 31, 2023, $4.5 million of these costs was recognized in cost of revenue, $2.4 million in product development and technology, $2.2 million in sales and marketing with the remainder in general and administrative expenses in the consolidated statement of operations.

(3)Cash payment relating to the termination of certain contracts with a pharma manufacturer solutions client in connection with the Restructuring Plan, which was recognized as a reduction of revenue in the consolidated statement of operations.

18. Condensed Financial Information of Parent Company

GoodRx Holdings, Inc. has no material assets or standalone operations other than its ownership in its consolidated subsidiaries. Under the terms of debt agreements entered into by GoodRx, a wholly-owned subsidiary of GoodRx

Intermediate Holdings, LLC, which itself is a wholly-owned subsidiary of GoodRx Holdings, Inc., GoodRx is restricted from making dividend payments, loans or advances to GoodRx Intermediate Holdings, LLC and GoodRx Holdings, Inc. These restrictions have resulted in the restricted net assets (as defined in Rule 1-02 of Regulation S-X) of GoodRx and its subsidiaries to exceed 25% of the consolidated net assets of GoodRx Holdings, Inc. and its subsidiaries.

The condensed financial information is presented on a “parent-only” basis, and GoodRx Holdings, Inc.’s investment in its subsidiary is stated at cost plus equity in loss of subsidiary less distributions received from subsidiary since the date of acquisition. GoodRx Holdings. Inc.’s share of net loss of its subsidiary is included in net loss using the equity method of accounting.

During 2023, 2022 and 2021, GoodRx Holdings, Inc. receivedno dividends from its subsidiary.

The following table presents the parent-only balance sheets of GoodRx Holdings, Inc.:

The following table presents the parent-only statements of operations of GoodRx Holdings, Inc.:

The following table presents the parent-only statements of cash flows of GoodRx Holdings, Inc.:

19. Subsequent Events

On February 27, 2024, our Board authorized a new stock repurchase program that authorized the repurchase of up to an aggregate of $450.0 million of our Class A common stock. See "Note 14. Stockholders' Equity" for additional information.

On February 20, 2024, we entered into the Fifth Amendment to First Lien Credit Agreement to amend our Revolving Credit Facility under the Credit Agreement to extend its maturity date from October 11, 2024 to July 11, 2025.