A federal judge in California dismissed a lawsuit against GoodRx from investors who alleged the company deceived potential investors ahead of its August 2020 initial public offering (IPO).
Soon after the IPO by the drug pricing and discount company, Amazon rolled out a drug pricing comparison and discount program of its own, PrimeRX. Investors alleged GoodRx knew of Amazon's competing product because of the companies’ business relationship but didn’t disclose that information to potential investors.
GoodRx’s stock price dropped nearly 30% when the Amazon product was announced in November 2020 and shares fell even lower when the tech giant's comparison pricing service rolled out in May 2021. A GoodRx investor, R. Brian Terenzini, filed the suit soon after Amazon’s rollout on behalf of other investors.
Judge David Carter, of the U.S. District Court, Central District of California, dismissed the lawsuit on June 9, saying no facts show that GoodRx was aware of Amazon’s plans when it launched its IPO. The judge said the fact that Amazon and GoodRx had a business relationship is not evidence that GoodRx knew about the drug pricing comparison and discount program from Amazon.
“Had the plaintiffs provided any direct evidence of GoodRx’s purported knowledge—such as correspondence between GoodRx and Amazon detailing Amazon’s plans, or private reports revealing details about Amazon Pharmacy ahead of its launch—their allegations may have approached the level of specificity needed for a claim to be considered sufficient,” the judge wrote in the ruling.
Despite the suit's dismissal, GoodRx faces other challenges.
Three others, Neesha Patel, Wayne Geist and Alan Pinyavat, each filed a shareholder derivative lawsuit against GoodRX. Their allegeations include a breach of fiduciary duty, unjust enrichment, corporate waste, abuse of control and gross mismanagement. The outcome of those suits was stayed pending the outcome on the one led by Terenzini.
Also, the U.S. Federal Trade Commission has been investigating the company’s data sharing tactics with third-party services providers, such as Google and Facebook. In its most recent earnings statement, GoodRx said FTC staffers notified the company in October 2021 that it intends to recommend that the agency pursue an enforcement action. GoodRx said it was sent a draft complaint in January and plans to defend itself.
The company’s stock is down 84% over the past six months from a high of $47 per share in October 2021 and trades around $6 per share today. In its last earnings call, the company’s co-CEO Trevor Bezdek said a grocery chain stopped accepting discounts for prescription drugs, which would affect GoodRx's full-year earnings guidance. The company recently said it faced headwinds thanks to an unexpected longer impact from COVID on the prescription transactions business.
GoodRx did not immediately return a request for comment.
