Business Combinations and Disposition

12 Months Ended

Dec. 31, 2023

Business Combination and Asset Acquisition [Abstract]

Business Combinations and Dispositions

Business Combinations

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 of five and eleven 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 and no 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.


(in thousands)	Year Ended December 31,
	2022		2021
Pro forma revenue	$	767,125	$	746,299
Pro forma net loss	$	(40,901)	$	(59,400)

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 and thirteen 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 have one 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.