What the F*%! Happened to NowRx??
Based out of San Francisco, NowRx offered free, same-day delivery of prescription medication, as well as Telehealth services
The company’s proprietary ‘QuickFill’ system automated prescription distribution while minimizing common pharmacy errors
NowRx quickly grew to 8 DEA-licensed micro-fulfillment pharmacies spread across California & Arizona. Earlier this week, they were valued at $275M.
Today, that figure may be close to zero.
NowRx was an equity crowdfunding darling, garnering over $27M in investment from retail investors during two investment rounds held on SeedInvest
NowRx was soaring along with its revenue, yearly sales were on track to surpass $32M and its valuation ballooned to $275M in its last funding round
That all came crashing down on Wednesday, when NowRx customers were informed that their services would be shifted to Alto Pharmacy, who had acquired NowRx’s California patient files
6,000+ retail investors await their fate
The retail investor community of 6,000+ had to wait 48 hours+ to receive any sort of update from the company
NowRx now appears as ‘Permanently Closed’ on Google, and a former employee confirmed that the company has shuttered its operations
The company has since sent investors an email confirming that the company is shutting down and attempting to sell any remaining assets it has
"Unfortunately, the current economic climate (war in Ukraine, high inflation, continued supply chain issues, Fed rate hikes, substantial loss of value in NASDAQ, etc) significantly impacted NowRx’s performance and ability to raise additional capital to support its business, ultimately requiring NowRx to take steps to ensure that the needs of its customers would continue to be served without disruption." - Cary Breese, CEO of NowRx
Sorry, but how does the war in Ukraine affect NowRx's business of delivering prescription medicine in Southern California??
What went wrong? Here’s what we know
Please note that this is a developing story and new details could emerge. This is what we know with the latest available information
In its latest SEC filing NowRx claimed to have nearly $9M in cash just 6 months ago
In that same filing, NowRx figures showed that the company was burning through cash at the rate of $2.4M per month
That burn rate would have caused them to run out of cash right about….now
NowRx sold its patient-files to Alto Pharmacy and its Phoenix patient files to Capsule, which is different from being fully acquired.
They are looking to sell any remaining assets, like its QuickFill technology and office furniture.
Questions remain for NowRx, as the future remains unclear
That SEC filing is right on the heels of raising $23M from retail investors…what happened to this funding?
NowRx was growing rapidly, generating millions in revenue, and could clearly tap into demand from retail investors - it seems odd that the company would be unable to raise additional funds to continue operations
Investors took to Twitter to express frustration that there had been no communication to the retail investor base of NowRx, which stands to lose $27M in the event of bankruptcy
Closing thoughts
I feel investors’ pain, I took part in NowRx’s previous funding round when the valuation was $65M
The hope for investors is that the sale of the patient files to Alto Pharmacy + Capsule generated enough revenue to return some capital back (this seems unlikely)
With the current details I have available - I am not mad. Investing in startups is highly risky, and I decided to take part with my eyes wide open
While I believe operational mistakes were made in managing cash burn, I do not suspect fraud at this time
I’ve expected half of my startup portfolio to go to zero, with a few winners outweighing the losers
Managing risk involves allocating funds across a multitude of startups and not placing concentrated bets into isolated opportunities - this is a grave reminder to employ this strategy