December 18, 2020 - An investor in shares of GoodRx Holdings, Inc. (NASDAQ: GDRX) filed a lawsuit in the U.S. District Court for the Central District of California over alleged violations of Federal Securities Laws by GoodRx Holdings, Inc. in connection with certain allegedly false and misleading statements made between September 23, 2020 and November 16, 2020.
Santa Monica, CA based GoodRx Holdings, Inc. is a holding company, that through its subsidiaries, owns and operates a prescription drug price comparison platform using data from local and mail-order pharmacies in the United States. GoodRx Holdings, Inc. reported that its annual Total Revenue rose from $249.52 million in 2018 to $388.22 million in 2019, and that its EBIT increased from $74.54 million in 2018 to $132.54 million in 2019.
On August 28, 2020, GoodRx Holdings, Inc. filed with the Secruities and Exchange Commission (“SEC”) a Form S-1 Registration Statement (the “Registration Statement”) for its initial public offering (“IPO”), which was declared effective by the SEC on September 22, 2020.
On September 24, 2020, GoodRx Holdings, Inc. filed with the SEC its Prospectus for the IPO offering to sell to the public over 23.4 million Class A 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 Holdings, Inc. 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.
Then on November 17, 2020, just weeks after GoodRx Holdings, Inc. completed its IPO, Amazon announced two new pharmacy offerings, a Prime Rx plan and a discount card program, which, among other things, would compete directly with GoodRx’s platform by making it “simple for customers to compare prices and purchase medications for home delivery, all in one place.” In response to this news, the price of GoodRx Class A common stock declined 23%, from $46.72 per share to $36.21 per share by market close on November 17, 2020.
Shares of GoodRx Holdings, Inc. (NASDAQ: GDRX) declined to as low as $33.51 per share on November 18, 2020.
According to the complaint the plaintiff alleges on behalf of purchasers of GoodRx Holdings, Inc. (NASDAQ: GDRX) common shares between September 23, 2020 and November 16, 2020, that the defendants violated Federal Securities Laws. More specifically, the plaintiff claims that, 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, their statements in the Registration Statement and during the Class Period about GoodRx’s competitive position were materially false and/or misleading when made and caused GoodRx Class A common stock to trade at artificially inflated prices of more than $64 per share between September 23, 2020 and November 16, 2020.