Item 5. Market for Registrant’s Common Equity
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
On September 23, 2020, our Class A common stock began trading on the Nasdaq Global Select Market under the symbol “GDRX.” Prior to that time, there was no public market for our common stock. There is no established public trading market for our Class B common stock.
Holders
As of March 5, 2021, there were 174 holders of record of our Class A common stock and 13 holders of record of our Class B common stock.
Dividend Policy
We are a holding company that does not conduct any business operations of our own. We will only be able to pay dividends from our available cash on hand and cash distributions and other transfers received from our subsidiaries, including GoodRx, Inc. and GoodRx Intermediate Holdings, LLC, whose ability to make any payments to us will depend upon many factors, including their operating results and cash flows. Additionally, the First Lien Credit Agreement contains covenants restricting payments of dividends by our subsidiaries, including GoodRx, Inc., unless certain conditions are met. We have paid cash dividends on our capital stock in the past but cannot guarantee that we will continue to do so in the future. Any determination to pay dividends in the future will be at the discretion of our board of directors and will depend upon results of operations, financial condition, capital requirements, business prospects, restrictions imposed by applicable law and other factors our board of directors deems relevant.
Recent Sales of Unregistered Securities; Purchases of Equity Securities by the Issuer or Affiliated Purchaser
Other than as disclosed in the Company’s Current Report on Form 8-K filed with the SEC on December 21, 2020 and the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, the Company did not sell any equity securities during the year ended December 31, 2020 that were not registered under the Securities Act.
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Performance Graph
The following performance graph and related information shall not be deemed “soliciting material” or to be “filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, or otherwise subject to the liabilities under the Securities Act or Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.
The following graph depicts the total cumulative stockholder return on our Class A common stock from September 23, 2020, the first day of trading of our Class A common stock on the Nasdaq Global Select Market, through December 31, 2020, relative to the performance of the NASDAQ Composite Index and the two industries we intersect, namely, the DJ Internet Services Index and S&P 500 Healthcare Index. The graph assumes an initial investment of $100.00 at the close of trading on September 23, 2020 and that all dividends paid by companies included in these indices have been reinvested. The performance shown in the graph below is not intended to forecast or be indicative of future stock price performance.
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Use of Proceeds
On September 25, 2020, we completed our IPO, in which we issued and sold 28,615,034 shares of our common stock, including 5,192,307 shares sold in connection with the exercise of the underwriters’ option to purchase additional shares, at a price to the public of $33.00 per share. We raised net proceeds to us of $886.9 million, after deducting the underwriting discount of $52.5 million and offering expenses of $4.9 million. Additionally, certain existing stockholders sold an aggregate of 11,192,657 shares at the same price, resulting in net proceeds to the selling stockholders of $348.8 million. All shares sold were registered pursuant to a registration statement on Form S-1 (File No. 333-248465), as amended (the “Registration Statement”), declared effective by the SEC on September 22, 2020. Morgan Stanley & Co, LLC, Goldman & Co, LLC, J.P. Morgan Securities LLC and Barclays Capital Inc. acted as representatives of the underwriters for the offering. The offering terminated after the sale of all securities registered pursuant to the Registration Statement. No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities or (iii) any of our affiliates.
The net proceeds from our IPO have been invested in investment grade, interest-bearing instruments. There has been no material change in the expected use of the net proceeds from our initial public offering as described in our Registration Statement.
Item 6. Selected Financial Data.
The following tables present our selected financial data for the periods and as of the dates indicated. We derived our selected consolidated statement of operations data for the years ended December 31, 2020, 2019 and 2018 and our selected consolidated balance sheet data as of December 31, 2020 and 2019 from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. We derived our selected consolidated balance sheet data as of December 31, 2018 from our audited consolidated financial statements that are not included in this Annual Report on Form 10-K. We derived our selected consolidated statement of operations data for the years ended December 31, 2017 and 2016 and our selected consolidated balance sheet data as of December 31, 2017 and 2016 from our unaudited consolidated financial statements that are not included in this Annual Report on Form 10-K. In our opinion, the unaudited consolidated financial statements have been prepared on a basis consistent with our audited consolidated financial statements and contain all adjustments, consisting only of normal and recurring adjustments, necessary for a fair statement of such financial statements. Our historical results are not necessarily indicative of the results to be expected in the future. You should read the following information in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K.
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Consolidated Statement of Operations Data
Year Ended December 31,
2020
2019
2018
2017
2016
(dollars in thousands, except per share data)
Revenue
$
550,700
$
388,224
$
249,522
$
157,240
$
99,377
Costs and operating expenses:
Cost of revenue, exclusive of depreciation
and amortization presented separately
below (1) (2)
29,587
14,016
6,035
3,075
1,230
Product development and technology (1) (2)
61,816
29,300
43,894
11,501
5,742
Sales and marketing (1) (2)
255,135
176,967
104,177
78,278
60,503
General and administrative (1) (2)
461,451
14,692
8,359
4,982
4,038
Depreciation and amortization
18,430
13,573
9,806
9,099
9,089
Total costs and operating expenses
826,419
248,548
172,271
106,935
80,602
Operating (loss) income
(275,719
)
139,676
77,251
50,305
18,775
Other (income) expense:
Other (income) expense, net
(22
)
2,967
7
(5
)
154
Loss on extinguishment of debt
—
4,877
2,857
3,661
—
Interest income
(160
)
(715
)
(154
)
(24
)
(21
)
Interest expense
27,913
49,569
22,193
6,970
3,541
Total other expense, net
27,731
56,698
24,903
10,602
3,674
(Loss) income before income taxes
(303,450
)
82,978
52,348
39,703
15,101
Income tax benefit (expense)
9,827
(16,930
)
(8,555
)
(10,931
)
(6,188
)
Net (loss) income
$
(293,623
)
$
66,048
$
43,793
$
28,772
$
8,913
Net (loss) income attributable to common
stockholders (3)
Basic
$
(293,623
)
$
42,441
$
13,795
$
8,843
$
(7,774
)
Diluted
$
(293,623
)
$
42,745
$
14,226
$
8,980
$
(7,774
)
(Loss) earnings per share (3)
Basic
$
(1.07
)
$
0.19
$
0.12
$
0.11
$
(0.11
)
Diluted
$
(1.07
)
$
0.18
$
0.12
$
0.11
$
(0.11
)
Weighted-average shares used in computing
(loss) earnings per share (3)
Basic
274,696
226,607
111,842
77,109
73,151
Diluted
274,696
231,209
118,344
81,747
73,151
(1)
Includes stock-based compensation expense as follows:
Year Ended December 31,
2020
2019
2018
2017
2016
(dollars in thousands)
Cost of revenue
$
184
$
28
$
—
$
—
$
—
Product development and technology
10,937
1,775
1,048
1,278
1,150
Sales and marketing
8,789
1,268
544
665
598
General and administrative
377,375
676
170
207
254
Total stock-based compensation expense
$
397,285
$
3,747
$
1,762
$
2,150
$
2,002
76
(2)
Includes expense for cash bonuses to vested option holders as follows:
Year Ended December 31,
2020
2019
2018
2017
2016
(dollars in thousands)
Cost of revenue
$
—
$
—
$
—
$
36
$
—
Product development and technology
—
—
29,189
760
—
Sales and marketing
—
—
6,878
214
—
General and administrative
—
—
2,733
390
—
Total vested option holder bonuses
$
—
$
—
$
38,800
$
1,400
$
—
(3)
See Notes 2 and 16 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for an explanation of the calculations of our (loss) earnings per share, basic and diluted, for the years ended December 31, 2020, 2019 and 2018.
Consolidated Balance Sheet Data
December 31,
2020
2019
2018 (1)
2017 (1)
2016 (1)
(dollars in thousands)
Cash and cash equivalents
$
968,691
$
26,050
$
34,600
$
17,539
$
23,613
Working capital
1,026,817
53,209
56,451
26,110
32,240
Total assets
1,470,114
386,796
314,791
286,869
295,649
Total debt (including current portion of
long-term debt)
666,917
670,922
722,236
136,007
46,079
Total liabilities
758,755
737,369
740,209
151,845
68,836
Redeemable convertible preferred stock (3)
—
737,009
737,009
166,777
166,777
(Accumulated deficit) retained earnings (2)
(1,390,453
)
(1,096,830
)
(1,162,878
)
(86,191
)
8,109
Total stockholders' equity (deficit) (2)
711,359
(1,087,582
)
(1,162,427
)
(31,753
)
60,036
(1)
On January 1, 2019, we adopted Accounting Standards Codification, or ASC, 842, Leases, on a modified retrospective basis. Accordingly, periods prior to 2019 reflect lease accounting under the accounting standards in effect for those periods. See Notes 2 and 10 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
(2)
In October 2018, we paid a special dividend to our stockholders in an aggregate amount of $1,167.1 million, and paid accrued dividends to the holders of our convertible preferred stock of $6.4 million. See Note 14 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for an explanation of the special dividends paid in October 2018.
(3)
In connection with our IPO in September 2020, all of our redeemable convertible preferred stock converted to common stock. See Note 14 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Non-GAAP Financial Measures
Year Ended December 31,
2020
2019
2018
2017
2016
(dollars in thousands)
Adjusted EBITDA
$
203,449
$
159,802
$
127,695
$
62,956
$
30,008
Adjusted EBITDA Margin
36.9
%
41.2
%
51.2
%
40.0
%
30.2
%
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Adjusted EBITDA and Adjusted EBITDA Margin are supplemental measures of our performance that are not required by, or presented in accordance with, U.S. GAAP. We define Adjusted EBITDA for a particular period as net (loss) income before interest, taxes, depreciation and amortization, and as further adjusted for acquisition related expenses, cash bonuses to vested option holders, stock-based compensation expense, payroll tax expense related to stock-based compensation, loss on extinguishment of debt, financing related expenses, loss on abandonment and impairment of operating lease assets, charitable stock donation and other (income) expense, net. Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of revenue.
Adjusted EBITDA is a key measure we use to assess our financial performance and is also used for internal planning and forecasting purposes. We believe Adjusted EBITDA is helpful to investors, analysts and other interested parties because it can assist in providing a more consistent and comparable overview of our operations across our historical financial periods. In addition, this measure is frequently used by analysts, investors and other interested parties to evaluate and assess performance.
Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP measures and are presented for supplemental informational purposes only and should not be considered as alternatives or substitutes to financial information presented in accordance with GAAP. These measures have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statement of operations that are necessary to run our business. Other companies, including other companies in our industry, may not use these measures or may calculate these measures differently than as presented in this Annual Report on Form 10-K, limiting their usefulness as comparative measures.
The following table presents a reconciliation of net (loss) income, the most directly comparable financial measure calculated in accordance with GAAP, to Adjusted EBITDA:
Year Ended December 31,
2020
2019
2018
2017
2016
(dollars in thousands)
Net (loss) income
$
(293,623
)
$
66,048
$
43,793
$
28,772
$
8,913
Adjusted to exclude the following:
Interest income
(160
)
(715
)
(154
)
(24
)
(21
)
Interest expense
27,913
49,569
22,193
6,970
3,541
Income tax (benefit) expense
(9,827
)
16,930
8,555
10,931
6,188
Depreciation and amortization
18,430
13,573
9,806
9,099
9,089
Other (income) expense, net
(22
)
2,967
7
(5
)
154
Loss on extinguishment of debt
—
4,877
2,857
3,661
—
Cash bonuses to vested option holders (1)
—
—
38,800
1,400
—
Financing related expenses (2)
1,319
463
—
—
—
Acquisition related expenses (3)
7,366
2,170
15
2
142
Stock-based compensation expense (4)
397,285
3,747
1,762
2,150
2,002
Charitable stock donation (5)
41,721
—
—
—
—
Payroll tax expense related to stock-based compensation
12,086
173
61
—
—
Loss on abandonment and impairment
of operating lease assets (6)
961
—
—
—
—
Adjusted EBITDA
$
203,449
$
159,802
$
127,695
$
62,956
$
30,008
Adjusted EBITDA Margin
36.9
%
41.2
%
51.2
%
40.0
%
30.2
%
(1)
See detail of cash bonuses to vested option holders above.
(2)
Financing related expenses include third party fees related to proposed financings.
(3)
Acquisition related expenses include third party fees for actual or planned acquisitions, including related legal, consulting and other expenditures, retention bonuses to employees related to acquisitions, and change in fair value of contingent consideration.
(4)
Non-cash expenses related to equity-based compensation programs, which vary from period to period depending on various factors including the timing, number and the valuation of awards. See detail in table above.
(5)
Non-cash expense related to a donation of 1,075,000 shares of our Class A common stock that was made to a charitable foundation in the fourth quarter of 2020.
(6)
Non-cash loss on the abandonment and impairment of operating lease assets related to certain office space that was abandoned or subleased.
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