GoodRx Holdings, Inc.
Lead Plaintiff Deadline: 02/16/2021
SUMMARY OF CASE:
A securities class action has been filed against GoodRx Holdings, Inc. (GDRX) on behalf of all purchasers of GoodRx Class A common stock between September 23, 2020 through November 16, 2020. This case has been filed in the USDC – CDCA.
The Complaint alleges that nearly a decade ago, defendant Hirsch, a former Facebook Inc. executive, and defendant Bezdek created what has now become a popular and fastgrowing digital U.S. prescription drug shopping platform designed to aid people in finding the lowest prescription drug prices in their local areas. In October 2015, GoodRx acquired 100% of the outstanding shares of GoodRx, Inc., the entity that owns and operates the digital shopping platform created by defendants Hirsch and Bezdek.
GoodRx represents that it provides consumers with free information and tools that allow them to compare prices and save on their prescription drug purchases. The Company provides its users with these services via apps and websites that display prices and discounts at local and mail-order pharmacies for both insured and uninsured Americans.
GoodRx primarily earns its revenue from prescription transaction fees paid by Pharmacy Benefit Managers (“PBMs”) that manage formularies and prescription transactions. The Company also generates revenue from subscription, advertising and telehealth services.
Generally, PBMs are obligated to pay the Company prescription transaction fees when a prescription is filled with a GoodRx code provided through its platform that allows the consumer to purchase the prescribed drug at a price that is less than a pharmacy’s list price. The agreements between GoodRx and PBMs generally provide that when a consumer uses a GoodRx code presented on its platform, the Company is entitled to either a percentage of fees the PBM charges the pharmacy or a fixed amount per type of medication prescription. GoodRx recognizes revenue for the estimated fee due from the PBM when the pharmacy fills the prescribed medication.
On August 28, 2020, GoodRx filed with the SEC a Form S-1 Registration Statement (the “Registration Statement”) for its IPO signed by the Individual Defendants. The Registration Statement, as amended, was declared effective by the SEC on September 22, 2020.
On September 24, 2020, GoodRx filed with the SEC a prospectus, which forms part of the Registration Statement (the “Prospectus”), for the IPO offering to sell to the public over 23.4 million common shares by the Company (excluding the underwriters’ option to purchase an additional 5.2 million common shares) and 11.2 million common shares by certain selling stockholders.
On September 25, 2020, GoodRx closed its IPO. In the offering, the Company and certain existing stockholders sold over 39.8 million common shares for $33 per share, including the full exercise of the underwriters’ option, generating over $1.3 billion in gross offering proceeds.
At the time of the IPO, unbeknownst to investors, Amazon.com, Inc. (“Amazon”) was developing and would soon introduce its own online and mobile prescription medication ordering and fulfillment service that would directly compete with GoodRx. Defendants timed the IPO so that it was priced before Amazon announced its online pharmaceutical business to facilitate the IPO and create artificial demand for the common shares sold therein, as well to maximize the amount of money the Company and the selling stockholders could raise in the IPO. Given defendants’ knowledge of Amazon’s intention to enter the online pharmaceutical business, and their misleading statements about GoodRx’s competitive position made contemporaneously with that knowledge, defendants’ materially false and/or misleading statements alleged herein were made willfully and caused GoodRx common stock to trade at artificially inflated prices during the Class Period.