Case 2:20-cv-11444-DOC-MAR Document 100 Filed 02/07/22 Page 1 of 49 Page ID #:1349
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`
`ROBBINS GELLER RUDMAN
` & DOWD LLP
`LAURIE L. LARGENT (153493)
`DANIELLE S. MYERS (259916)
`JENNIFER N. CARINGAL (286197)
`SEAN C. McGUIRE (319521)
`655 West Broadway, Suite 1900
`San Diego, CA 92101
`Telephone: 619/231-1058
`619/231-7423 (fax)
`llargent@rgrdlaw.com
`dmyers@rgrdlaw.com
`jcaringal@rgrdlaw.com
`smcguire@rgrdlaw.com
`Lead Counsel for Lead Plaintiff
`Janice L. Kasbaum
`POMERANTZ LLP
`JENNIFER PAFITI (282790)
`CARA DAVID (admitted pro hac vice)
`600 Third Avenue
`New York, NY 10016
`Telephone: 212/661-1100
`212/661-8665 (fax)
`jpafiti@pomlaw.com
`cdavid@pomlaw.com
`Lead Counsel for Lead Plaintiffs
`Betty Kalmanson, Lawrence Kalmanson,
`and Shawn Kalmanson
`[Additional counsel appear on signature page.]
`
`
`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`WESTERN DIVISION
`)
`Master File No. 2:20-cv-11444-DOC-
`In re GOODRX HOLDINGS, INC.
`)
`MARx
`SECURITIES LITIGATION
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`CLASS ACTION
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`FIRST AMENDED CONSOLIDATED
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`COMPLAINT FOR VIOLATIONS OF
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`THE FEDERAL SECURITIES LAWS
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`DEMAND FOR JURY TRIAL
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`This Document Relates To:
`ALL ACTIONS.
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`Case 2:20-cv-11444-DOC-MAR Document 100 Filed 02/07/22 Page 2 of 49 Page ID #:1350
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`Lead Plaintiffs, Betty Kalmanson, Lawrence Kalmanson and Shawn Kalmanson
`(collectively the “Kalmanson Family”) and Janice L. Kasbaum (“Kasbaum” and
`together with the Kalmanson Family, “plaintiffs”), individually and on behalf of all
`others similarly situated, allege the following based upon information and belief as to
`the investigation conducted by plaintiffs’ counsel, which included, among other
`things, a review of U.S. Securities and Exchange Commission (“SEC”) filings by
`GoodRx Holdings, Inc. (“GoodRx” or the “Company”) and securities analyst reports,
`press releases, and other public statements issued by, or about, the Company.
`Plaintiffs believe that substantial additional evidentiary support will exist for the
`allegations set forth herein after a reasonable opportunity for discovery.
`NATURE AND SUMMARY OF THE CLAIMS
`1.
`This is a federal securities class action brought on behalf of all purchasers
`of GoodRx Class A common stock (the “Class”) between September 23, 2020 and
`May 10, 2021, inclusive (the “Class Period”), including those who purchased in, or
`traceable to, the Company’s September 2020 initial public offering. Plaintiffs are
`seeking to pursue remedies under §§11 and 15 of the Securities Act of 1933 (15
`U.S.C. §§77k and 77o) (the “Securities Act”), and §§10(b) and 20(a) of the Securities
`Exchange Act of 1934 (15 U.S.C. §§78j(b) and 78t(a)) (the “Exchange Act”) and Rule
`10b-5 promulgated thereunder (17 C.F.R. §240.10b-5).
`2.
`Based in Santa Monica, California, GoodRx’s core business is a
`healthcare technology platform (“digital platform”) that provides consumers with a
`free prescription discount card to get discounted pricing on prescription drugs. The
`prescription drug discounts consumers can access through GoodRx’s prescription
`discount card come from Pharmacy Benefit Managers (“PBMs”), with whom GoodRx
`contracts. PBMs are companies that manage prescription drug benefits on behalf of
`health insurers, large employers and other payers and use their buying power to
`negotiate lower drug prices for these entities. Typically, PBMs establish a network of
`pharmacies that allows consumers with prescription drug insurance to readily fill their
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`Case 2:20-cv-11444-DOC-MAR Document 100 Filed 02/07/22 Page 3 of 49 Page ID #:1351
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`prescriptions. In addition, for non-insured or cash paying consumers, PBMs typically
`require pharmacies to accept discount cards, like GoodRx’s core product, to remain in
`the PBMs pharmacy network. Through discount card providers like GoodRx, PBMs
`are able to expand their prescription volume by having access to a cash paying market.
`3.
`Because GoodRx’s prescription discount card is free to consumers, the
`Company’s revenues from its prescription discount card business come from the fees
`paid to it by the PBMs, who furnish GoodRx with the prescription drug discount
`pricing.
`4.
`GoodRx has been in business since 2011. On August 28, 2020, the
`Company issued a press release announcing that it was launching an initial public
`offering (“IPO”). Defendants completed GoodRx’s IPO on September 23, 2020,
`raising more than $1 billion in total gross proceeds from public investors.
`5.
`Unbeknownst to investors, however, the IPO was effectuated by means
`of a materially misleading Registration Statement (defined herein) and prospectus.
`Specially, the Registration Statement and prospectus issued in connection with the
`IPO repeatedly touted GoodRx’s competitive advantage, portraying the Company as a
`“market leader with significant scale and brand advantage over our competitors” and
`boasted about the Company’s partnerships across the healthcare industry, its “deep
`competitive moat” and the “highly competitive prices” it offered. The Registration
`Statement also assured investors that GoodRx had contract provisions in place that
`“prevent[ed] PBMs from circumventing our platform, redirecting volumes outside of
`our platform and other protective measures” and that for many of its PBM partners
`GoodRx was their only “significant direct-to-consumer channel.”
`6.
`But contrary to these self-described competitive advantages and
`assurances that GoodRx had the market locked up with its PBM partners, defendants
`knew but failed to disclose that tech giant Amazon.com, Inc. (“Amazon”) was
`preparing to enter the market with its own competing product that would also give
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`Case 2:20-cv-11444-DOC-MAR Document 100 Filed 02/07/22 Page 4 of 49 Page ID #:1352
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`consumers the same access to prescription discounts at thousands of pharmacies
`nationwide, including major chains.
`7.
`At the time of the IPO GoodRx knew of Amazon’s plans to enter the
`prescription drug discount market because of close and longstanding business
`relationships GoodRx had with both Amazon and the company Amazon was
`partnering with to supply the discounted prescription prices PrimeRx was offering
`Amazon’s Prime members. In fact, at the time of the IPO, GoodRx had been a
`longstanding partner with Express Scripts/Inside Rx and Inside Rx used GoodRx’s
`digital platform to offer prescription discounts to cash paying consumers. Moreover,
`GoodRx had long partnered with Amazon’s subsidiary PillPack to provide
`prescription discounts to PillPack users. These relationships gave defendants access
`to inside information about Amazon’s plans before investors were made aware of
`them. Indeed, after the news about Amazon’s intentions were initially announced,
`defendants admitted to GoodRx’s long-standing partnership with Inside Rx and that
`they regularly communicated with Amazon, the Company’s soon to be competitor.
`8.
`Armed with this inside information about Amazon’s plans, defendants
`pushed to complete the IPO before Amazon introduced its competing product. The
`IPO made more than $1 billion from public investors. Defendants and GoodRx
`insiders also personally profited from the IPO. Through a limited liability company
`called Idea Men, LLC, defendants Douglas Hirsch (“Hirsch”) and Trevor Bezdek
`(“Bezdek”) were able to unload 3.77 million shares of GoodRx stock in the IPO for
`proceeds of over $124.5 million. Other insiders, including Andrew Slutsky
`(“Slutsky”), the Company’s Consumer President, and Spectrum Equity VII, L.P.
`(“Spectrum”), an entity whose managing directors included defendant Stephen
`LeSieur (“LeSieur”), likewise piggy-backed on GoodRx’s IPO and were able to sell
`over 7 million shares of GoodRx stock for proceeds of almost $232 million. In fact,
`the GoodRx stock sold by defendants Hirsch and Bezdek and insiders Slutsky and
`Spectrum, represented over 30% of the stock sold in GoodRx’s IPO. In total,
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`Case 2:20-cv-11444-DOC-MAR Document 100 Filed 02/07/22 Page 5 of 49 Page ID #:1353
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`defendants Hirsch and Bezdek, Slutsky and Spectrum collectively reaped proceeds of
`more than $356 million from the sale of GoodRx common stock in the IPO.
`9. Within just weeks of the IPO, investors began learning the truth about the
`direct competition GoodRx was facing from Amazon, a company that exceeded
`GoodRx in both scale and marketing dollars. On November 17, 2020 Amazon
`publicly announced Amazon Pharmacy and the offering of a new prescription drug
`savings program, PrimeRx, which was identical to GoodRx’s core business. Amazon
`announced that through PrimeRx its millions of Amazon Prime members could access
`prescription drug savings of up to 80% at thousands of pharmacies nationwide, almost
`identical to GoodRx’s discount model. In response to Amazon’s announcement,
`GoodRx’s stock price plummeted 23% on the highest trading volume day since the
`Company went public just weeks earlier.
`10. Following Amazon’s announcement, defendants immediately sought to
`downplay the threat the tech giant’s entry into the market posed to GoodRx.
`Defendants continued to make materially misleading statements in conference calls
`with investors by failing to disclose that Amazon was continuing to expand its
`PrimeRx product and would soon introduce a drug price comparison tool identical to
`GoodRx’s and add thousands of additional participating pharmacies to its network.
`11. The truth about Amazon’s continued expansion in the prescription drug
`discount market came out on May 11, 2021, when Amazon announced an upgrade to
`PrimeRx whereby, like GoodRx, consumers could compare prescription drug prices
`online and that PrimeRx was adding an additional 10,000 participating pharmacies to
`its discount program. In response to the news that Amazon’s competitive efforts were
`becoming more aggressive, GoodRx’s stock price dropped almost 8% over the next
`two trading days, to a price below the $33 per share IPO price, showing that
`GoodRx’s IPO price did not accurately represent its actual value.
`12. During the period March 22, 2021 to May 10, 2021, while in possession
`of material non-public information concerning Amazon’s continued expansion of its
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`Case 2:20-cv-11444-DOC-MAR Document 100 Filed 02/07/22 Page 6 of 49 Page ID #:1354
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`PrimeRx product, defendants Hirsch, Bezdek and Karsten Voermann (“Voermann”)
`collectively sold 424,632 shares of GoodRx stock reaping over $15.8 million in
`proceeds and through Idea Men, LLC, Hirsch and Bezdek also sold over 2.22 million
`shares, reaping over $80 million in proceeds.
`13. Combined, the November 17, 2020 and May 11, 2021 revelations about
`the true competitive risk GoodRx was facing from Amazon at the time of the IPO
`erased over $600 million of the Company’s market capitalization, while defendants
`Hirsch and Bezdek (both individually and through Idea Men, LLC) and Voermann
`collectively receiving $95.8 million in proceeds from sales of their GoodRx common
`stock.
`
`JURISDICTION AND VENUE
`14. The claims asserted herein arise under §§10(b) and 20(a) of the Exchange
`Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder (17
`C.F.R. §240.10b-5), and §§11 and 15 of the Securities Act (15 U.S.C. §§77k and 77o).
`This Court has jurisdiction over the subject matter of this action under §27 of the
`Exchange Act (15 U.S.C. §78aa), §22 of the Securities Act (15 U.S.C. §77v) and 28
`U.S.C. §1331 because this is a civil action arising under the laws of the United States
`of America.
`15. Venue is proper in this District under §27 of the Exchange Act, §22 of
`the Securities Act and 28 U.S.C. §1391(b)-(d). The Company maintains its principal
`executive offices in this District, and many of the acts charged herein, including the
`dissemination of materially false and misleading information, occurred in substantial
`part in this District.
`16.
`In connection with the acts alleged in this complaint, defendants directly
`or indirectly, used the means and instrumentalities of interstate commerce, including,
`without limitation, the U.S. mail, interstate telephone and other electronic
`communications and the facilities of the NASDAQ Global Select Market
`(“NASDAQ”), a national securities exchange.
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`Case 2:20-cv-11444-DOC-MAR Document 100 Filed 02/07/22 Page 7 of 49 Page ID #:1355
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`CLASS ACTION ALLEGATIONS
`17. Plaintiffs bring this action as a class action pursuant to Federal Rules of
`Civil Procedure 23(a) and (b)(3) on behalf of a Class consisting of purchasers of
`GoodRx Class A common stock during the Class Period. Excluded from the Class are
`defendants and their immediate families, the officers and directors of the Company, at
`all relevant times, members of their immediate families and their legal representatives,
`heirs, successors or assigns and any entity in which defendants have or had a
`controlling interest.
`18. The members of the Class are so numerous that joinder of all members is
`impracticable. Throughout the Class Period, GoodRx shares were actively traded on
`the NASDAQ. While the exact number of Class members is unknown to plaintiffs at
`this time and can only be ascertained through appropriate discovery, plaintiffs believe
`that there are thousands of members in the proposed Class, if not more. As of March
`31, 2021, the Company reported 69,555,726 shares of Class A common stock
`outstanding. Record owners and other members of the Class may be identified from
`records maintained by GoodRx, its transfer agent or securities’ brokers, and may be
`notified of the pendency of this action electronically or by mail, using the form of
`notice similar to that customarily used in securities class actions.
`19. Plaintiffs’ claims are typical of the claims of the members of the Class as
`all members of the Class are similarly affected by defendants’ wrongful conduct in
`violation of federal law complained of herein.
`20. Plaintiffs will fairly and adequately protect the interests of the members
`of the Class and have retained counsel competent and experienced in class action and
`securities litigation.
`21. Common questions of law and fact exist as to all members of the Class
`and predominate over any questions solely affecting individual members of the Class.
`Among the questions of law and fact common to the Class are:
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`(a) whether the federal securities laws were violated by defendants’
`acts as alleged herein;
`(b) whether statements made by defendants to the investing public
`during the Class Period misrepresented material facts about the business and
`operations of GoodRx;
`(c) whether the price of GoodRx common stock was artificially
`inflated during the Class Period; and
`(d)
`to what extent the members of the Class have sustained damages
`and the proper measure of damages.
`22. A class action is superior to all other available methods for the fair and
`efficient adjudication of this controversy since joinder of all members is
`impracticable. Furthermore, as the damages suffered by individual Class members
`may be relatively small, the expense and burden of individual litigation makes it
`impossible for members of the Class to individually redress the wrongs done to them.
`There will be no difficulty in the management of this action as a class action.
`SECURITIES ACT CLAIMS
`The Securities Act Parties
`23. Plaintiff the Kalmanson Family was appointed Lead Plaintiff on April 8,
`2021. The Kalmanson Family purchased shares of GoodRx common stock pursuant
`or traceable to the Registration Statement, as set forth in its certification previously
`filed with the Court, and has been damaged thereby. ECF No. 76.
`24. Defendant GoodRx is a holding company that owns and operates a U.S.
`consumer-focused digital healthcare platform that offers consumers a free prescription
`discount card to use at pharmacies. The Company maintains its principal executive
`offices in Santa Monica, California and its common stock is listed and trades on the
`NASDAQ under the ticker symbol GDRX.
`25. Defendant Hirsch is, and was at all relevant times, Co-Chief Executive
`Officer and a director of GoodRx.
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`26. Defendant Bezdek is, and was at all relevant times, Co-Chief Executive
`Officer and a director of GoodRx.
`27. Defendant Voermann is, and was at all relevant times, Chief Financial
`Officer of GoodRx.
`28. Defendants Hirsch, Bezdek and Voermann are collectively referred to
`hereinafter as the “Individual Defendants.”
`29. Defendant Christopher Adams was a director of the Company at all
`relevant times. Adams signed the false and misleading Registration Statement.
`30. Defendant Julie Bradley was a director of the Company at all relevant
`times. Bradley signed the false and misleading Registration Statement.
`31. Defendant Dipanjan Deb was a director of the Company at all relevant
`times. Deb signed the false and misleading Registration Statement.
`32. Defendant Adam Karol was a director of the Company at all relevant
`times. Karol signed the false and misleading Registration Statement.
`33. Defendant Jacqueline Kosecoff was a director of the Company at all
`relevant times. Kosecoff signed the false and misleading Registration Statement.
`34. Defendant LeSieur was a director of the Company at all relevant times.
`LeSieur signed the false and misleading Registration Statement.
`35. Defendant Gregory Mondre was a director of the Company at all relevant
`times. Mondre signed the false and misleading Registration Statement.
`36. Defendant Agnes Rey-Giraud was a director of the Company at all
`relevant times. Rey-Giraud signed the false and misleading Registration Statement.
`37. The defendants referenced above in ¶¶29-36 are collectively referred to
`herein as the “Director Defendants.”
`38. Defendants Morgan Stanley & Co. LLC, Goldman Sachs & Co. LLC,
`J.P. Morgan Securities LLC, Barclays Capital Inc., BofA Securities Inc., Citigroup
`Global Markets Inc., Credit Suisse Securities (USA) LLC, RBC Capital Markets,
`LLC, UBS Securities LLC, Cowen and Company, LLC, Deutsche Bank Securities
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`Inc., Evercore Group L.L.C., Citizens Capital Markets, Inc., KKR Capital Markets
`LLC, LionTree Advisors LLC, Raymond James & Associates, Inc., SVB Leerink
`LLC, Academy Securities, Inc., Loop Capital Markets LLC, R. Seelaus & Co., LLC
`and Samuel A. Ramirez & Company, Inc. (collectively the “Underwriter Defendants”)
`served as underwriters of the Company’s IPO, and participated in the preparation and
`dissemination of GoodRx’s false and misleading Registration Statement.
`39. The Underwriter Defendants served as the underwriters of GoodRx’s IPO
`and had access to confidential information concerning GoodRx’s business, including
`its competitors and competitive pressures, during their due diligence investigation,
`participated in the preparation and dissemination of GoodRx’s false and misleading
`Registration Statement and caused the Registration Statement containing the false and
`misleading statements to be filed with the SEC and declared effective.
`B.
`Background Allegations
`1.
`GoodRx’s Business
`40. GoodRx’s core business is a prescription discount card that provides
`consumers free access to discounted prescription drug prices. According to the
`Company’s website, consumers can use GoodRx’s discount card to save up to 80% on
`most prescription drugs at over 70,000 U.S. pharmacies. Through GoodRx’s
`prescription discount card consumers can compare drug prices and find the lowest cost
`pharmacy for their prescriptions. The Company provides consumers with these
`services via a mobile app and website that display prices and discounts at local and
`mail-order pharmacies for both insured and uninsured Americans. While the
`Company also generates revenue from subscription, advertising and telehealth
`services, at the time of the IPO, GoodRx generated over 90% of its revenues from its
`prescription discount card.
`2.
`GoodRx’s Relationship with Its PBMs and Inside Rx
`41. Because GoodRx’s prescription discount card is free to consumers, the
`revenue the Company earns from its core business is primarily paid by PBMs who
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`maintain non-insurance cash networks with pharmacies. The categories and brands of
`medication, as well as the pricing that GoodRx publishes for consumers, are
`determined by the Company’s contracted PBMs; essentially GoodRx’s PBMs
`contracts allow the Company to market the PBMs’ negotiated rates through the
`Company’s prescription discount card. GoodRx aggregates the discounted drug prices
`negotiated by the PBMs and shows the lowest available price for each pharmacy/drug
`combination on its website and mobile app. GoodRx’s digital platform generates a
`“GoodRx code” that allows consumers free access to the discounted drug prices when
`the code is presented at the chosen pharmacy. The PBMs’ GoodRx contracts will
`either pay GoodRx on a percentage of the fee arrangement or a fixed fee per
`transaction arrangement. Under the percentage of the fee arrangement, when a
`consumer uses the GoodRx code to fill a prescription, the pharmacy pays the PBM
`whose pricing is used, with a majority of that fee shared with GoodRx. Under both
`arrangements, the more volume that goes through the GoodRx platform, the more
`revenue the Company generates.
`42. At the time of the IPO, because there was a significant concentration of
`PBMs in the U.S. healthcare industry, a limited number of PBMs generated a
`significant portion of GoodRx’s revenue and the discount prices GoodRx published on
`its platform. For example, in the Registration Statement, GoodRx reported that the
`Company’s three largest PBM partners accounted for 48% of the Company’s revenue
`in the first half of 2020 and that PBMs Navitus, MedImpact and Express Scripts each
`accounted for more than 10% of revenue in the same period.
`43.
`In addition to Express Scripts being one of GoodRx’s largest PBM
`partners, in May 2017 GoodRx partnered with Express Scripts, and other cross-
`industry partners, to launch Inside Rx. Inside Rx was designed to financially benefit
`both Express Scripts and GoodRx, with Express Scripts having access through
`GoodRx to cash paying consumers for prescription drugs and GoodRx receiving a fee
`for usage of its digital platform. Since Inside Rx is focused on a cash pay market, the
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`partnership allowed Express Scripts to generate revenue from prescriptions that it
`would otherwise not process and GoodRx generates fees from the volume. After
`Amazon disclosed its entry into the prescription drug discount market, defendants
`repeatedly touted GoodRx’s existing partnership with Inside Rx and the fact that it
`was one of the partners of Inside Rx. For example, on November 18, 2020, the day
`after Amazon made its announcement, during an investor conference call defendants
`admitted that GoodRx was a “founding partner of Inside Rx. In fact, we’ve worked
`with them for quite some time.”
`3.
`Amazon’s Entry Into the Prescription Drug Market
`44.
`In the few years leading up to GoodRx’s IPO, Amazon’s entry into the
`multi-billion dollar pharmaceutical industry was increasingly evident. As early as
`2017, Tim Wentworth (“Wentworth”), then-CEO of Express Scripts, hinted that
`Amazon might want to partner with Express Scripts in order to offer customers access
`to cash pay discounts on prescription medications: “‘We think we’re doing a great job
`through our Inside Rx initiative, but we certainly see that as something where if
`[Amazon] wanted to move into a space, we could be a very natural collaborator.’”
`Market watcher drugchannels.net instantly saw that an Amazon partnership with
`Express Scripts would make sense, and that “Amazon could become a new, high
`growth channel for the program.”
`45. Sure enough, Cigna purchased Express Scripts in 2018 and immediately
`formally established a relationship with Amazon. One of the first Cigna-Amazon
`joint initiatives was to make Amazon’s Alexa personal assistant compatible with
`Express Scripts, so that, according to an April 2019 press release, customers could
`“use voice technology to manage pharmacy prescriptions, engage in health
`improvement programs and track wellness incentives.” And the Cigna-Amazon
`partnership only deepened from there: Cigna made Wentworth the CEO of its new
`subsidiary Evernorth in mid-2020 and signed up Amazon Prime as one of Evernorth’s
`very first partners. On a conference call in November 2020, Wentworth described
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`Case 2:20-cv-11444-DOC-MAR Document 100 Filed 02/07/22 Page 13 of 49 Page ID
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`how Amazon had “obviously been looking at how to expand their relationship in
`pharmacy,” and given that reality, he “would much rather be working with them than
`not,” and described Evernorth’s role as Amazon Prime’s “specialty pharmacy
`preferred provider” and said that Cigna had “been talking with Amazon for quite some
`time.”
`46. Amazon was also courting powerful partners beyond Cigna during this
`period. Amazon announced on January 30, 2018, that it had partnered with Berkshire
`Hathaway and JPMorgan Chase to create a new healthcare startup called Haven, with
`the goal of reducing the costs of healthcare for the three companies’ employees. And
`on June 28 of that year, Amazon announced that it had acquired PillPack for an
`undisclosed amount, later revealed to be $753 million. Analysts were quick to view
`this as an attempt to break into prescription drugs, with an analyst at Evercore
`pointing out that, while PillPack “is mostly focused on the narrower market of seniors
`managing multiple medications,” the acquisition should really be viewed as “Amazon
`buying the expertise needed to deliver pharmaceuticals to customers at a much wider
`scale.” And an analyst at Argus wrote in July of 2018 that “Amazon could use
`PillPack as a beachhead into the drug distribution space, effectively cutting out PBMs
`and other middlemen.”
`47. The combination of these actions throughout the 2017-2020 period left
`analysts and investors with the impression that Amazon may attempt to market
`directly to customers and cut out PBMs altogether. By the beginning of September
`2020, market analysts were predicting a deeper partnership between Amazon and
`Express Scripts (Cigna).
`48. Because of these earlier moves, analysts were not surprised when
`Amazon announced the creation of Amazon Pharmacy and Amazon’s own drug
`discount card for Prime members in 2020. Morningstar wrote: “The announcement of
`Amazon Pharmacy . . . and the Amazon prescription savings benefit to Prime
`members should not come as a surprise, as they represent the logical next step in
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`wide-moat Amazon’s broader healthcare category.” In fact, Morningstar specifically
`pointed to the creation of Haven and purchase of PillPack as specific harbingers of
`this development:
`The move follows the 2018 acquisition of PillPack (which will remain a
`stand-alone service for customers managing multiple daily medications),
`Haven Healthcare (the employee healthcare partnership between
`Amazon, Berkshire Hathaway, and JPMorgan Chase), and Amazon Halo
`(a healthcare monitoring system) and should make Amazon a more
`significant healthcare player over time.
`49. Nor was Morningstar alone: Cowen wrote that the launch of Amazon
`Pharmacy and its associated discount card (“similar to services such as GoodRx”) was
`the “culmination of a multi-year investment following AMZN’s acquisition of
`PillPack,” and reminded readers of the 2018 acquisition of PillPack, which “gave
`AMZN licenses to deliver prescriptions in all 50 states, overcoming what was viewed
`as a significant barrier to entering the market.” Credit Suisse wrote that “the Amazon
`Prime Rx savings benefit has the potential to have an adverse impact on GoodRx,”
`and that Amazon’s program “seems to be mirroring the GoodRx Gold offering.”
`Evercore wrote that the launch signaled trouble for GoodRx, and characterized
`Amazon Pharmacy as GoodRx’s “most meaningful competition to date.”
`4.
`Defendants Conduct GoodRx’s IPO
`50. On August 28, 2020, GoodRx filed with the SEC a Form S-1 Registration
`Statement (the “Registration Statement”), which, following amendments, was
`declared effective by the SEC on September 22, 2020.
`51. On September 22, 2020, GoodRx announced the pricing of its IPO of
`34.6 million shares of its Class A common stock at an initial public offering price of
`$33 per share. The Company announced that of the shares offered, 23.4 million were
`being offered by the Company and 11.2 million shares were being offered by certain
`of GoodRx’s insiders and selling shareholders. In addition, GoodRx agreed to give
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`the Underwriter Defendants a 30-day option to purchase an additional 5.2 million
`shares of Class A common stock from GoodRx at the initial offering price, which the
`Underwriter Defendants exercised.
`52. On September 23, 2020, GoodRx and the Underwriter Defendants
`conducted the IPO and sold 39.8 million shares of GoodRx’s Class A common stock
`to the investing public. These shares were sold pursuant to a final prospectus filed
`September 24, 2020, with the SEC, which forms part of the Registration Statement.
`53. On September 25, 2020, GoodRx closed its IPO, which was one of the 20
`largest IPOs in 2020. GoodRx’s IPO was also a rarity among start-ups filing to go
`public because, unlike many other digital health companies that had gone public
`before it, GoodRx had been consistently profitable since 2016.
`54.
`In sum, the IPO allowed the Company, GoodRx insiders and certain
`existing stockholders to sell over 39.8 million Class A common shares for $33 per
`share, including the full exercise of the Underwriter Defendants’ option, generating
`over $1.3 billion in gross offering proceeds.
`5.
`At the Time of the IPO, Defendants Knew that Amazon Was
`Preparing to Enter the Prescription Drug Discount Market with
`Inside Rx
`55. Unbeknownst to investors, the Registration Statement failed to disclose
`that GoodRx’s core business was facing material risk of competition from tech giant
`Amazon. At the time of the IPO, Amazon was in the process of working with Express
`Scripts and Inside Rx to launch a prescription drug savings program for its millions of
`Amazon Prime members that mirrored GoodRx’s own prescription drug discount
`program. Through Amazon’s partnership with Inside Rx, Amazon was preparing to
`compete directly with GoodRx by offering its Amazon Prime members the identical
`savings benefit as Good