What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-26 compared with 2025-02-27 · 210 added, 316 removed, 203 unchanged (72% of the section changed)

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of various factors, including those set forth under Part I, Item 1A, “Risk Factors” and in other parts of this Annual Report on

A discussion of the year ended December 31, 2023 compared to the year ended December 31, 2022 has been

reported previously in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on

February 29, 2024 , under the heading “Management’s Discussion and Analysis of Financial Condition and Results of

Our mission is to help Americans get the healthcare they need at a price they can afford.

To achieve this, we are

building the leading consumer-focused digital healthcare platform in the United States.

Copays have continued to trend

upward in recent years and we believe as insurance providers continue to shift the cost burden more and more to

consumers, consumers are now more than ever searching for sustainable affordable healthcare solutions which, in turn,

strengthens our value proposition.

We believe our financial results reflect the significant market demand for our offerings and

the value that we provide to the broader healthcare ecosystem .

We have seen rapid changes in the U.S.

retail pharmacy landscape recently with Rite Aid 's store closures in addition to

announcements of store closures and reduction of footprint from various other retail pharmacies, including Walgreens .

Future store closures and reduction of footprint from retail pharmacies are expected to have an immediate adverse impact

on our prescription volume and prescription transactions revenue.

However, we believe this impact to be largely transient as

we expect prescription volume to migrate to other in-network pharmacies in the near term.

As an extension of the changing

retail pharmacy landscape, we have seen and continue to expect heightened renegotiations between pharmacies and PBMs

as a result of the pharmacies' increased focus on rationalizing their spending, which in turn has had and may have an impact

on our prescription transactions revenue.

A discussion of the year ended December 31, 2024 compared to the year ended December 31, 2023 and other

information related to the year ended December 31, 2023 has been reported previously in our Annual Report on Form 10-K

for the year ended December 31, 2024 filed with the SEC on February 27, 2025, under the heading “Management’s

Discussion and Analysis of Financial Condition and Results of Operations.”

Our mission is to help Americans save time and money when filling their medications.

To achieve this, we are building

the leading consumer-focused digital healthcare platform in the United States.

For example, during 2025, we announced the

launch of our first condition-specific subscription program for erectile dysfunction and continued to expand to other

conditions including hair loss and weight loss.

Certain of these condition-specific subscription programs offer consumers a

single solution for comprehensive care by bundling the clinician visit, prescription (if deemed medically appropriate by the

treating healthcare provider), and related delivery for a single total subscription price.

During 2025, we also continued to

grow our consumer direct pricing and announced a collaboration with a pharmaceutical manufacturer to offer eligible

patients nationwide two of the most in-demand GLP-1 medications at a significantly lower cash price through our platform.

With respect to the healthcare landscape, change has become a constant with positive and negative impacts on our

For example, in July 2025, Congress passed a budget bill that cuts federal funding for Medicaid among other

health insurance programs, as well as tightens eligibility requirements and increases the frequency of Medicaid coverage

determinations.

Further, copays on prescription medication have continued to trend upward in recent years and we believe

as insurance providers and government programs continue to shift the cost burden more to consumers, including through

changes to ACA marketplace subsidies, consumers are now more than ever searching for sustainable and affordable

healthcare solutions which we believe strengthens our value proposition.

Separately, certain major drug producers and

manufacturers have negotiated or are in negotiations with the current Presidential administration to receive relief from the

potential imposition of a 100% tariff on any branded or patented pharmaceutical product produced outside of the United

As a result of these negotiations, certain manufacturers have announced their participation in a new government

sponsored direct-to-consumer platform called “TrumpRx.gov” ("TrumpRx"), which was launched in February 2026 and is

designed to offer consumers discounts on their products and some specialty brands.

GoodRx is a key integration partner for

pharma manufacturers offering discounted cash prices on TrumpRx at launch .

Any potential impact on our business,

offerings, or results of operations are unclear at this time but may be significant .

With the introduction of these federal

initiatives, including the renewed focus on Most-Favored-Nation pricing, the market is shifting decisively toward greater

transparency and direct-to-consumer access.

For us, this evolution is both an opportunity and a clear validation of our

Conversely, we have seen rapid changes in the U.S.

retail pharmacy landscape as well, with announcements of store

closures and reduction of footprint from various retail pharmacies, including Rite Aid and Walgreens.

In early May 2025, Rite

Aid announced its plan to pursue a sale of substantially all of its assets through a voluntary bankruptcy process.

Consequently, we saw several PBMs remove Rite Aid from their networks, causing immediate cessation in the associated

claims volume, as well as rapid store closures, which altogether adversely impacted our ability to recapture these claims in

the near term.

As an extension of the changing retail pharmacy landscape, we have seen and continue to expect heightened

renegotiations between pharmacies and PBMs, including changes in retailer reimbursement models, as a result of the

pharmacies' increased focus on rationalizing their spending.

Furthermore, in 2025, we saw a material volume reduction in

one of our integrated savings programs, which integrate our competitive discounts and pricing in a seamless experience at

the pharmacy counter for eligible plan members served by certain PBM partners.

Integrated savings programs are operated

through PBMs who decide how to implement and manage these programs.

These external factors have adversely impacted

our prescription transactions revenue, financial results, and Monthly Active Consumers that we expect will continue in the

near term with the combined total impact to prescription transactions revenue estimated to be $35.

0 million to $40.0 million

While our prescription transactions offering remains foundational, given the evolving dynamics of prescription access

and pharmacy economics, including the growing relevance of self-pay and direct-to-consumer distribution models, we are

continuing to position our pharma direct offering as a key driver of growth.

As we increase investment in our pharma direct

as well as subscription offerings, we expect near-term impact on our prescription transactions unit economics and revenue

Accordingly, while this transition may impact near-term financial performance, we believe it enhances our long-term

growth prospect and ability to create sustainable value.

For the year ended December 31, 2025 as compared to the year ended December 31, 2024 :

• Revenue increased 1% to $796.9 million from $792.3 million ;

• Adjusted Revenue increased 4% to $792.3 million from $760.3 million ;

• Net income and net income margin were $16.4 million and 2.1% , respectively, compared to net loss and net

loss margin of $8.9 million and 1.2% , respectively;

• Net income and net income margin were $30.4 million and 3.8% , respectively, compared to $16.4 million and

2.1% , respectively;

• Adjusted EBITDA and Adjusted EBITDA Margin were $270.5 million and 33.9% , respectively, compared to

$260.2 million and 32.8% , respectively.

Revenue, net income (loss) and net income (loss) margin are financial measures prepared in conformity with

accounting principles generally accepted in the United States ("GAAP").

Adjusted Revenue, Adjusted EBITDA and Adjusted

EBITDA Margin are non-GAAP financial measures.

For a reconciliation and presentation of Adjusted Revenue, Adjusted

EBITDA and Adjusted EBITDA Margin to the most directly comparable GAAP financial measures, information about why we

consider Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA Margin useful and a discussion of the material risks

and limitations of these measures, please see “Key Financial and Operating Metrics—Non-GAAP Financial Measures"

included within this Part II, Item 7 of this Annual Report on Form 10-K.

Revenue, net income , and net income margin are financial measures prepared in conformity with accounting principles

generally accepted in the United States ("GAAP").

Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial

For a reconciliation and presentation of Adjusted EBITDA and Adjusted EBITDA Margin to the most directly

comparable GAAP financial measures, information about why we consider Adjusted EBITDA and Adjusted EBITDA Margin

useful and a discussion of the material risks and limitations of these measures, please see “Key Financial and Operating

Metrics – Non-GAAP Financial Measures" included within this Part II, Item 7 of this Annual Report on Form 10-K.

We typically experience stronger consumer demand during the first and fourth quarters of each year, which coincide

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since more claims are likely to be routed through GoodRx while plan members are in the deductible phase of their health

We may also experience stronger demand for our pharma manufacturer solutions offering during the fourth quarter of

each year, which coincides with pharma manufacturers' annual budgetary spending patterns.

In addition, this seasonality

may impact revenue and sales and marketing expense.

PBM-pharmacy issues, including changes in the retail landscape, as

well as macroeconomic events such as the COVID-19 pandemic may have masked some of these trends in recent periods

and may continue to impact these trends in the future.

Recent Development

On January 13, 2025, we acquired substantially all of the assets and assembled workforce of the prescription savings

business of Vivid Clear Rx, Inc.

for $30.0 million in cash.

See Note 19 in the notes to our audited consolidated financial

statements included elsewhere in this Annual Report on Form 10-K.

We may also experience stronger demand for our GoodRx Pharma Direct (formerly pharma manufacturer solutions

and referred to hereafter as "pharma direct" ) offering during the fourth quarter of each year, which coincides with pharma

manufacturers' annual budgetary spending patterns.

In addition, this seasonality may impact revenue and sales and

marketing expense.

PBM-pharmacy issues, including changes in the retail landscape, as well as macroeconomic events

may have masked some of these trends in recent periods and may continue to impact these trends in the future.

Key Financial and Operating Metrics

We use Monthly Active Consumers, subscription plans, Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA

Margin to assess our performance, make strategic and offering decisions and build our financial projections.

The number of

Monthly Active Consumers and subscription plans are key indicators of the scale of our consumer base and a gauge for our

marketing and engagement efforts.

We believe these operating metrics reflect our scale, growth and engagement with

We exited the fourth quarter of 2024 with over 7 million prescription-related consumers that used GoodRx across our

prescription transactions and subscription offerings.

Our prescription-related consumers represent the sum of Monthly Active

Consumers for the three months ended December 31, 2024 and subscribers to our subscription plans as of December 31,

We use Monthly Active Consumers, subscription plans, Adjusted EBITDA, and Adjusted EBITDA Margin to assess our

performance, make strategic and offering decisions and build our financial projections.

The number of Monthly Active

Consumers and subscription plans are key indicators of the scale of our consumer base and a gauge for our marketing and

engagement efforts.

We believe these operating metrics reflect our scale, growth and engagement with consumers.

business continues to evolve, we are reassessing the Monthly Active Consumers metric as a primary indicator of

performance to ensure it aligns with how we measure growth and profitability.

Monthly Active Consumers

The factors described in the "Overview" section have adversely impacted our Monthly Active Consumers beginning in

the second quarter of 2025.

Three Months Ended

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Subscription Plans

Subscription plans have been impacted by a sequential decline in our subscription plans for Kroger Savings as a result

of reduced marketing spend in relation to that offering, which sunset in July 2024.

Subscription plans through the second quarter of 2024 included subscription plans for Kroger Savings, which sunset in

(in thousands)

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Non-GAAP Financial Measures

Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA Margin are key measures we use to assess our financial

performance and are also used for internal planning and forecasting purposes.

We believe Adjusted Revenue, Adjusted

EBITDA and Adjusted EBITDA Margin are helpful to investors, analysts and other interested parties because they can assist

in providing a more consistent and comparable overview of our operations across our historical financial periods.

these measures are frequently used by analysts, investors and other interested parties to evaluate and assess performance.

We define Adjusted Revenue for a particular period as revenue excluding client contract termination costs associated

with restructuring related activities.

We exclude these costs from revenue because we believe they are not indicative of past

or future underlying performance of the business.

Adjusted EBITDA and Adjusted EBITDA Margin are key measures we use to assess our financial performance and are

also used for internal planning and forecasting purposes.

We believe Adjusted EBITDA and Adjusted EBITDA Margin are

helpful to investors, analysts and other interested parties because they can assist in providing a more consistent and

comparable overview of our operations across our historical financial periods.

In addition, these measures are frequently

used by analysts, investors and other interested parties to evaluate and assess performance.

We define Adjusted EBITDA for a particular period as net income or loss before interest, taxes, depreciation and

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payroll tax expense related to stock-based compensation, loss on extinguishment of debt, financing related expenses, loss

on operating lease assets, restructuring related expenses, legal settlement expenses , gain on sale of business and other

on operating lease asset s , restructuring related expenses, legal settlement expenses , gain on sale of business and other

income or expense, net.

These excluded items are either non-cash charges or such that we believe do not represent our

underlying core operating performance and that their exclusion provides investors with a better understanding of the factors

and trends affecting our business .

Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of Adjusted

Adjusted Revenue, Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial 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 costs that are reflected in our consolidated statements of operations that are necessary to run

our business.

Other companies, including other companies in our industry, may not use these measures or may calculate

these measures differently than as presented in this Annual Report on Form 10-K, limiting their usefulness as comparative

The following table presents a reconciliation of net income (loss) and revenue, the most directly comparable financial

measures calculated in accordance with GAAP, to Adjusted EBITDA and Adjusted Revenue, respectively, and presents net

income (loss) margin, the most directly comparable financial measure calculated in accordance with GAAP, with Adjusted

EBITDA Margin:

These excluded items are either non-cash charges or such that we believe they do not represent

our underlying core operating performance and that their exclusion provides investors with a better understanding of the

factors and trends affecting our business.

Adjusted EBITDA Margin represents Adjusted EBITDA as a percentage of

Adjusted Revenue.

A djusted Revenue is a non-GAAP financial measure defined as revenue excluding client contract

termination costs associated with restructuring related activities.

We exclude these costs from revenue because we believe

they are not indicative of past or future underlying performance of the business.

For 2025 and 2024, revenue equaled

Adjusted Revenue.

Adjusted EBITDA and Adjusted EBITDA Margin are non-GAAP financial 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 costs that

are reflected in our consolidated statements of operations that are necessary to run our business.

Other companies,

including other companies in our industry, may not use these measures or may calculate these measures differently than as

presented in this Annual Report on Form 10-K, limiting their usefulness as comparative measures.

The following table presents a reconciliation of net income , the most directly comparable financial measure calculated in

accordance with GAAP, to Adjusted EBITDA, and presents net income margin, the most directly comparable financial

measure calculated in accordance with GAAP, with Adjusted EBITDA Margin:

Year Ended December 31,

(dollars in thousands)

Net income (loss)

Adjusted to exclude the following:

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Interest expense

Income tax expense (benefit)

Income tax expense

Depreciation and amortization

Other expense

Other (income) expense

Loss on extinguishment of debt

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Payroll tax expense related to stock-based compensation

Loss on operating lease assets (5)

Loss on operating lease asset (5)

Adjusted EBITDA

Adjusted to exclude the following:

Client contract termination costs

Adjusted Revenue

Net income (loss) margin

Net income margin

Adjusted EBITDA Margin

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fees, legal, consulting, and other expenditures, and as applicable, severance costs and retention bonuses to

employees related to acquisitions and change in fair value of contingent consideration.

From time to time,

acquisition related expenses may also include similar transaction related costs for business dispositions.

employees related to acquisitions.

From time to time, acquisition related expenses may also include similar

transaction related costs for business dispositions.

(3) Restructuring related expenses include costs for various workforce optimization and organizational changes to

better align with our strategic goals and future scale including employee severance and other personnel related

costs, contract termination costs, and losses from the disposal of certain technology and certain capitalized

(4) Legal settlement expenses consist of periodic settlement costs for significant and unusual litigation matters.

(5) Loss on operating lease assets include losses incurred relating to the abandonment or sublease of certain leased

office spaces.

costs, and as applicable, contract termination costs and losses from the disposal of certain technology and

capitalized software.

(4) Legal settlement expenses consist of periodic settlement costs for significant or unusual litigation matters.

(5) Loss on operating lease asset represents losses incurred from time to time relating to the impairment or

abandonment of leased office space.

Components of our Results of Operations

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Our revenue is primarily derived from prescription transactions revenue that is generated when pharmacies fill

prescriptions for consumers, and from other revenue streams such as pharma manufacturer solutions, our subscription

offerings, and our telehealth services.

We consider PBMs, pharmacies, pharma manufacturers and consumers of our

prescriptions for consumers, and from other revenue streams such as pharma direct, our subscription offerings, and our

telehealth services.

We consider PBMs, pharmacies, pharma manufacturers, healthcare providers, and consumers of our

subscription and telehealth services, for which we have direct contractual agreements, to be our primary customers.

expect pharma manufacturer solutions to continue to grow as a percentage of total revenue in the near to medium term as

we continue to scale and expand available services, capabilities and platforms of our pharma manufacturer solutions

All of our revenue has been generated in the United States .

Prior to December 2023, we provided consumer incentives 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").

Consumer discounts

on prescription drugs with partner pharmacies as our customers were recognized as a reduction of prescription transactions

For consumer discounts on prescription drugs with PBMs as our customers, we evaluate whether such discounts

represent payments to a customer, which are recognized as a reduction of prescription transactions 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.

In December 2023, we implemented a change in some aspects of our consumer

incentives program whereby the incentives are no longer limited marketing promotions and we believe our customers can

now reasonably expect to benefit from these incentives .

As a result, all consumer discounts subsequent to this change were

and are expected to continue to be recognized as a reduction of prescription transactions revenue.

our revenue has been generated in the United States .

Results of Operations

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Subscription revenue

Pharma manufacturer solutions revenue

Pharma direct revenue

Other revenue

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Total costs and operating expenses

Operating income (loss)

Operating income

Other expense, net:

Other expense

Other income (expense)

Loss on extinguishment of debt

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Total other expense, net

Income (loss) before income taxes

Income tax (expense) benefit

Net income (loss)

Prescription transactions revenue increased $26.8 million , or 5% , year-over-year, primarily as a result of a 7% increase

in the number of our average Monthly Active Consumers from organic growth, including expansion of our integrated savings

program, which integrates our discounts and pricing in a seamless experience over the pharmacy counter for eligible plan

members served by certain PBM partners .

Income before income taxes

Income tax expense

Prescription transactions revenue decreased $33.5 million , or 6% , year-over-year, primarily as a result of a 14%

decrease in Monthly Active Consumers due to the broader changes in the retail pharmacy landscape, including store

closures, and volume reduction in one of our integrated savings programs as discussed above, partially offset principally by

improved unit economics related to contracting with certain of our customers and partners and favorable changes in sales

Revenue contribution from our 2025 acquisitions was approximately 1% of prescription transactions revenue.

Subscription revenue decreased $2.8 million , or 3% , year-over year, primarily driven by a decrease in the number of

subscription plans due to the sunset of Kroger Savings resulting in 684 thousand subscription plans as of December 31,

2024 compared to 884 thousand as of December 31, 2023 .

Kroger Savings contributed $9.0 million of subscription revenue

in 2023 and $1.1 million in 2024 .

Given the subscription fee is higher for Gold relative to Kroger Savings, the sunset of

Kroger Savings resulted in a higher year-over-year decline in subscription plans relative to subscription revenue.

Pharma manufacturer solutions revenue increased $22.2 million , or 26% , year-over year, driven by organic growth as

we continued to expand our market penetration with pharma manufacturers and other customers.

The prior year 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.

vitaCare Pres cription Services, Inc., ("vitaCare"), a solution

impacted by the restructuring, contribut ed ($2.2) milli on of net revenue in 2023 (which is net of the $10.0 million contract

termination payment described above) compared to nil in 2024 .

We expect pharma manufacturer solutions to continue to

grow as a percentage of total revenue in the near to medium term as we continue to scale and expand available services,

capabilities and platforms of our pharma manufacturer solutions offering.

subscription plans with 674 thousand subscription plans as of December 31, 2025 compared to 684 thousand as of

December 31, 2024 .

Pharma direct revenue increased $44.1 million , or 41% , year-over year, driven by organic growth as we continued to

expand our market penetration with pharma manufacturers and other customers.

We expect pharma direct revenue to

continue to grow as a percentage of total revenue in the near to medium term as we continue to scale and expand available

services, capabilities and platforms of our pharma direct offering.

Costs and Operating Expenses

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Our cost of revenue as a percentage of revenue may vary based on the change in mix of our various offerings.

Cost of revenue decreased $18.7 million , or 28% , year-over-year, primarily driven by a $17.0 million decrease i n

outsourced and in-house personnel and other costs related to consumer support and a $5.9 million decrease in allocated

overhead due to lower average headcount, principally as a result of the restructuring of our pharma manufacturer solutions

offering in 2023.

The impact from these drivers was partially offset by a $3.8 million incr ease in processing fees due to

growth in our prescription transactions revenue.

Cost of revenue increased $9.4 million , or 19% , year-over-year, primarily driven by an increase in processing fees .

Product development and technology

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support and develop our various products.

We capitalize c ertain qualified costs related to the development of internal-use

We capitalize certain qualified costs related to the development of internal-use

software, which may cause product development and technology expenses to vary from period to period.

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$8.4 million decrease in payroll and related costs largely due to higher capitalization of such costs related to the

development of internal-use software and a $8.0 million loss recognized in 2023 on the disposal of certain capitalized

software that were not yet ready for their intended use, principally as a result of the restructuring of our pharma

manufacturer solutions offering.

The impact from these drivers was partially offset by a $4.3 million increase in third-party

services and contractors associated with product development and allocated overhead.

development of internal-use software , partially offset principally by an increase in third-party services and contractors

associated with non-capitalizable product development activities.

Sales and marketing

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in consumer acquisition, which is largely variable, as market and business conditions change.

Sales and marketing expenses increased $25.8 million , or 8% , year-over-year primarily driven by a $21.8 million

increase in payroll and related costs, principally due to higher average headcount and higher stock-based compensation

expense , due to a reversal in 2023 of previously recognized stock-based compensation expense as certai n performance

milestones were no longer probable of being met in addition to changes in our employee composition.

The year-over-year

change was also driven by a $12.6 million increase in advertising expenses, $11.0 million increa se in third- party marketing

expenses, and a $5.0 million increase in restructuring related costs .

The impact from these drivers was partially offset by a

$27.1 million decrease in promotional expenses substantially in the form of consumer discounts.

Beginning in December

2023, consumer discounts have been recognized as a reduction of revenue as a result of a change in some aspects of our

consumer incentives program as described above.

Sales and marketing expenses decreased $35.6 million , or 10% , year-over-year primarily driven by a $13.2 million

decrease in stock-based compensation expense largely as a result of changes in our employee composition, $12.4 million

decrease in third-party marketing expenses, and an $8.1 million decrease in advertising expenses.

General and administrative

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General and administrative expenses decreased $3.9 million , or 3% , year-over-year, primarily driven by a $7.5 million

decrease in stock-based compensation expense related to awards granted to our Co-Founders in 2020 and a $3.0 million

decrease in professional fees.

The impact from these drivers was partially offset by a net $12.9 million increase in an

estimated loss with respect to ongoing class action litigations.

decrease in estimated legal settlement expense with respect to an ongoing class action litigation , partially offset principally

by an increase in professional fees .

We recognized a $4.4 million impairment loss related to a leased office space in 2025

which was entirely offset by a $4.4 million decrease in stock-based compensation expense related to awards granted to our

Co-Founders in 2020 that fully vested by the end of 2024.

Depreciation and amortization

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assets, and capitalized software balances and estimates of useful lives.

Depreciation and amortization expenses decreased $38.1 million , or 35% , year-over-year, primarily driven by $46.7

million of amortization recognized in 2023 related to certain intangible assets, which had been accelerated in connection

with the restructuring of our pharma manufacturer solutions offering.

The impact from this driver was partially offset by higher

Depreciation and amortization expenses increased $15.7 million , or 23% , year-over-year, primarily driven by higher

amortization related to capitalized software due to higher capitalization costs for platform improvements and the introduction

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We recognized other expense of $2.7 million in 2024 related to third-party transaction costs as a result of our debt

refinance in July 2024.

For additional information, see Note 12 in the notes to our audited consolidated financial statement

appearing elsewhere in this Annual Report on Form 10-K.

We recognized other expense of $4.0 million in 2023 related to an

impairment loss on one of our minority equity interest investments.

refinancing in July 2024.

Loss on Extinguishment of Debt

We recognized a loss on extinguishment of debt of $2.1 million in 2024 related to the write-off of a portion of existing

unamortized debt issuance costs and discounts as a result of our debt refinance in July 2024.

For additional information, see

Note 12 in the notes to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-

unamortized debt issuance costs and discounts as a result of our debt refinancing in July 2024.

Interest Income

Interest income decreased by $8.9 million , or 28% , year-over-year, primarily due to lower average balance of cash

Interest income decreased $12.3 million , or 53% , year-over-year, primarily due to lower average balance of cash

equivalents held in U.S.

treasury securities money market funds.

treasury securities money market funds and lower interest rates .

Interest Expense

Interest expense decreased by $3.8 million , or 7% , year-over-year, primarily due to lower average debt balances ,

partially offset by higher interest rates.

In 2024, we had an income tax expense of $15.1 million compared to an income tax benefit of $46.7 million in 2023 and

an effective income tax rate of 47.9% and 84.0% , respectively.

The year-over-year change in our income taxes was primarily

due to the tax benefit recognized in 2023 from the release of our valuation allowance against our beginning of the year net

deferred tax assets in excess of tax amortizable goodwill.

This was partially offset by a decrease in excess tax effects from

equity awards, tax effects from nondeductible officers' compensation and an increase in U.S.

federal research and

development tax credits.

For information regarding our valuation allowance analysis, see Part II, Item 7, "Management’s

Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies and Estimates—

Income Taxes—Valuation of Deferred Tax Assets" and Note 11 in the notes to our audited consolidated financial statements

included elsewhere in this Annual Report on Form 10-K.

Interest expense decreased $10.3 million , or 19% , year-over-year, primarily due to lower average debt balances and

lower interest rates .

For the years ended December 31, 2025 and 2024, we had an income tax expense of $26.1 million and $15.1 million ,

respectively, and an effective income tax rate of 46.2% and 47.9% , respectively.

The year-over-year change in income tax

expense was primarily due to higher income before income taxes a nd lower 2025 tax benefits due to the timing of expiration

of statute of limitation of unrecognized tax benefits.

Liquidity and Capital Resources

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issuances, and borrowings under our long-term debt arrangements.

Our principal sources of liquidity are our cash and cash

equivalents and borrowings available under our $100.0 million secured revolving credit facility, of which $12.0 million will

mature on July 11, 2025 and $88.0 million on April 10, 2029 .

As of December 31, 2024 , we had cash and cash equivalents

of $448.3 million and $91.7 million available under our revolving credit facility.

For additional information regarding our

revolving credit facility and our term loan, see Note 12 to our audited consolidated financial statements included elsewhere

in this Annual Report on Form 10-K.

As of December 31, 2025 , our principal sources of

liquidity are our cash and cash equivalents and borrowings available under our $88.0 million secured revolving credit facility

that matures on April 10, 2029 .

As of December 31, 2025 , we had cash and cash equivalents of $261.8 million and $80.2

million available under our revolving credit facility.

For additional information regarding our revolving credit facility and our

term loan, see Note 12 to our audited consolidated financial statements included elsewhere in this Annual Report on Form

Our primary short-term and long-term requirements for liquidity and capital are to finance working capital including our

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In particular, the current economic uncertainty, including rising inflation,

and socio-political events, has resulted in, and may continue to result in, significant disruption of global financial markets,

including rising interest rates, reducing our ability to access capital.

If we are unable to raise additional funds when or on the

terms desired, our business, financial condition and results of operations could be adversely affected.

new or increased tariffs, and socio-political events, has resulted in, and may continue to result in, significant disruption of

global financial markets, including rising interest rates, which could reduce our ability to access capital.

If we are unable to

raise additional funds when needed or on the terms desired, our business, financial condition, and results of operations

could be adversely affected.

Holding Company Status

22 unchanged sentences

Net cash provided by operating activities

Net cash provided by operating activities consists of net income (loss) adjusted for certain non-cash items and changes

in assets and liabilities.

The $45.6 million year-over-year increase in net cash provided by operations was due to an increase

in earnings after adjusting for non-cash adjustments and a decrease of $24.0 million in cash outflow from changes in

operating assets and liabilities.

The changes in operating assets and liabilities were primarily driven by the timing of income

tax payments and refunds, as well as by the timing of payments of accounts payable and collections of accounts receivable.

Net cash provided by operating activities consists of net income adjusted for certain non-cash items and changes in

assets and liabilities.

The $16.0 million year-over-year decrease in net cash provided by operations was due to an increase

of $58.5 million in cash outflow from changes in operating assets and liabilities, partially offset by an increase in earnings

after adjusting for non-cash adjustments.

The changes in operating assets and liabilities were primarily driven by the timing

of payments of accounts payable and prescription reimbursement liabilities, collections of accounts receivable and

prescription reimbursement assets, and the timing of income tax payments and refunds.

Net cash used in investing activities

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expenditures, and may also include cash used for acquisitions and investments that we may make from time to time.

$14.6 million increase in net cash used in investing activities was primarily driven by a $14.4 million increase in capitalization

of certain qualified costs related to the development of internal-use software.

$49.6 million increase in net cash used in investing activities was primarily driven by cash paid for business acquisitions in

Net cash used in financing activities

Net cash used in financing activities primarily consists of payments related to our debt arrangements, repurchases of

our Class A common stock, and net share settlement of equity awards, partially offset by debt borrowings, and proceeds

from exercise of stock options as well as our employee stock purchase plan.

The $170.1 million year-over-year increase in

net cash used in financing activities was primarily driven by an increase of $161.7 million of net repayments on our term loan

as a result of our debt refinance in July 2024 and a $54.9 million increase in payments for repurchases of our Class A

common stock.

The impact from these drivers was partially offset by a $35.7 million decrease in employee taxes paid related

to net share settlement of equity awards and a $13.1 million increase in proceeds from exercise of stock options.

our Class A common stock, and net share settlement of equity awards, partially offset by debt borrowings and proceeds from

exercise of stock options.

The $103.0 million year-over-year decrease in net cash used in financing activities was primarily

driven by a decrease of $162.0 million in net repayments on our term loan as a result of our debt refinance in July 2024 and

a $15.3 million decrease in employee taxes paid related to net share settlement of equity awards.

The impact from these

drivers was partially offset by a $57.5 million increase in payments for repurchases of our Class A common stock and a

$19.0 million decrease in proceeds from exercise of stock options.

Recent Accounting Pronouncements

See Note 2 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for

further information on certain accounting standards adopted in 2024 and recent accounting announcements that have not

yet been required to be implemented and may be applicable to our future operations.

further information on an accounting standard adopted in 2025 and recent accounting announcements that have not yet

been required to be implemented and may be applicable to our future operations.

Critical Accounting Policies and Estimates

27 unchanged sentences

in this Annual Report on Form 10-K.

Business Combinations

We recognize tangible and intangible assets acquired and liabilities assumed in a business combination at fair value at

the acquisition date in accordance with Accounting Standards Codification 805, Business Combinations .

consideration over the fair value of assets acquired and liabilities assumed is recognized as goodwill.

consideration arising from a business combination, if any, is included as part of purchase consideration and recognized at

fair value as of the acquisition date.

Contingent consideration arrangements are remeasured to fair value at each reporting

period subsequent to the acquisition date until the contingency is resolved.

The valuations of intangible assets and contingent consideration use different valuation methods depending on the

asset acquired and underlying nature of the contingency and may include significant estimates and judgments.

During 2022, we acquired vitaCare Prescription Services, Inc.

("vitaCare") and our critical accounting estimates at the

date of acquisition related to assumptions used in the valuation of developed technology and customer relationships

intangible assets and the contingent consideration receivable.

The fair values of the developed technology and customer relationships were estimated using a discounted cash flow

method and the 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 the pharmacy services

expected to be provided to the seller.

These methods included various assumptions and estimates including revenue and margin forecasts, our ability to

renew contracts in a competitive bidding process and the necessary resources and investments to support these contracts,

the seller' s ab ility to continue to order such services given the seller's liquidity position, and discount rates.

rates reflected the perceived risk of each forecast, which required significant judgment.

A change in the estimated risk of the

cash flows would have changed the discount rates applied, which in turn could have significantly affected the valuation of

our acquired developed technology, customer relationships intangible assets, and the contingent consideration receivable.

The contingency associated with the vitaCare contingent consideration receivable was resolved during 2022 which

reduced its fair value to nil.

There were no business acquisitions during 2023 or 2024.

Income Taxes—Valuation of Deferred Tax Assets

Deferred tax assets represent amounts available to reduce income taxes payable on taxable income in future years.

Such assets arise because of temporary differences between the financial reporting and tax basis of assets and liabilities, as

well as from net operating losses and tax credits.

We evaluate the recoverability of deferred tax assets 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 established if it is more likely than not that all or a

portion of deferred tax assets will not be realized.

The determination of whether a valuation allowance should be

established, as well as the amount of such allowance, requires significant judgment and estimates, including estimates of

future earnings.

Accordingly, the valuation of our net deferred tax assets is a critical accounting estimate.

In evaluating the realizability of our net deferred tax assets, we perform an assessment each reporting period of both

positive and negative evidence.

As of December 31, 2022, we maintained a full valuation allowance against our net deferred

tax assets in excess of amortizable goodwill as the objectively verifiable negative evidence outweighed the positive

We determined it was more likely than not that our deferred tax assets would not be realized.

determination changed, as the objectively verifiable positive evidence outweighed the negative evidence.

Positive evidence

reviewed included sustained tax profitability (pre-tax earnings or losses adjusted for permanent book to tax differences),

which was objective and verifiable, and anticipated future earnings.

The sustained trend of tax profitability realized began in

2022 and has continued through the end of 2023.

A dditional positive evidence reviewed included (i) stock options granted

that will expire 10 years from the date of grant if unexercised;

and (ii) an indefinite carryforward period for certain deferred

Although we still have a significant number of outstanding stock options granted prior to our IPO available to be

exercised in future tax periods, which may generate incremental excess tax benefits if they are exercised, the degree of

excess tax benefits that will be realized in the future will depend on many factors outside of our control, including the closing

prices of our Class A common stock in the future and stock option exercises being initiated by employees.

Further, we have

granted additional equity awards to our employees since our IPO at various closing prices of our Class A common stock

which when vested or exercised, could offset, partially offset or supplement the incremental excess tax benefits to be

realized from the exercise of stock options granted prior to our IPO in future tax periods.

The positive evidence described

above continued to hold through the end of 2024.

We apply judgment to consider the relative impact of negative and positive evidence and the weight given to negative

and positive evidence is commensurate with the extent to which such evidence can be objectively verified.

evaluation of all available positive and negative evidence, and by placing greater weight on the sustained tax profitability

achieved since 2022, which was objectively verifiable, and anticipated future earnings, we believed that a valuation

allowance against the majority of our net deferred tax assets was no longer required and released $54.6 million of our

valuation allowance as an income tax benefit during 2023.

As of December 31, 2024 and 2023, we continued to believe that

our net deferred taxes with the exception of certain standalone tax filings' net deferred tax assets would be realized.

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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis