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 left in the dark

It has been 48 hours and the retail investor community of 6,000+ has not received any communication from the company

NowRx now appears as ‘Permanently Closed’ on Google, and a former employee confirmed that the company has shuttered its operations

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 only sold its patient-files to Alto Pharmacy, which is different from being fully acquired. This makes it seem like they sold the only valuable asset of the company (likely at a firesale price) and closed up shop

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 unreasonable that the company would be unable to raise additional funds to continue operations

• Investors took to Twitter to express frustration that there has 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 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

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