A prescription delivery startup led by former CoverMyMeds employees is on track for $3 million revenue in its first full year since launch, helping pharmacies solve the thorny problem of patients who never return to pick up their medication.
ScriptDrop Inc. has already rolled out in nearly half the stores of its first large chain client, Albertsons Companies Inc., which operates under 20 nameplates, such as Safeway, in 35 states. The Columbus startup also is signing up more independent pharmacies and pursuing more big chains.
It hasn’t lost a single competitive bid it’s entered yet, co-founder and CEO Nick Potts said.
ScriptDrop has raised $2 million from investors since 2016, and Potts said he's already turned down offers as high as $75 million to buy the company.
“I didn’t get in this for money,” Potts said. “Our goal as a company is to help a billion patients. If we were acquired now, that would put that destiny in someone else’s hands. I want to have the experience of building a huge company.”
The key is that ScriptDrop software seamlessly links the pharmacist's electronic record to platforms operated by several couriers in a market, for simplicity in ordering a delivery. Potts learned at CoverMyMeds, where he worked in the division ensuring the prior authorization software was accessible directly inside the pharmacist’s main IT interface.
“If you’re forcing them to go to a separate portal, they won’t use it,” he said.
Potts learned of the pain point beyond prior authorization while listening to pharmacy customers. Even if the insurance approval was faster, some patients were so discouraged by any wait, or for other reasons such as embarrassment, that they never picked up the prescriptions. About one-third of patients who don’t get their prescription filled the same day never return.
Delivery can solve that, but the approach was fragmented, Potts said. ScriptDrop offers a standard process for an entire chain, all within the pharmacists’ main software, plus deliveries come with standard outer packaging for patient privacy.
“The driver has no idea what they’re delivering,” Potts said.
To start the new company, he teamed up with Larry Scott, a CoverMyMeds software developer who co-founded ScriptDrop and was its first CTO. Scott has since left the company.
CoverMyMeds is pure software and not getting into the delivery business, Potts said.
“It wasn’t a competing product at all,” he said.
CoverMyMeds supports employees with outside endeavors – there are musicians, artists and sometimes new businesses, spokeswoman Angela Masciarelli said via email.
"We share their entrepreneurial spirit and love to see our staff take on new challenges," she said.
'Prove we were better'
To save money, Potts moved to a camper in his parents’ backyard in Nashville, Tennessee, while building the company. He went through that city’s JumpStart Foundry business development program, which made introductions in the city’s healthcare industry. That’s led to negotiations with large hospital systems interested in starting medication delivery as soon as the doctor writes a prescription, Potts said.
After nine months, he returned to Columbus when Rev1 Ventures led a seed round. The company is based in Rev1, 1275 Kinnear Rd., but ready to move to its own office. The 15 employees could top 100 over the next year, he said.
“They understand the business they are in very well, including their customers’ business requirements, and the flow of information and data in the pharmacy value chain," said a written response from Ryan Helon, Rev1 executive vice president of investment funds. "We are optimistic about ScriptDrop’s growth potential."
Last fall, Potts recruited Amanda Way, a leader in product development at CoverMyMeds, as ScriptDrop's president. She had been with CMM since 2009, when it hadn't yet spun out from health IT company Innova Partners Ltd., managing relationships and later developing products for pharmaceutical manufacturers.
“Nick showed me his progress after a year, and it was amazing,” Way said. “I wanted to do a big exit all over again.”
Diving feet first into tough logistics, ScriptDrop launched its first deliveries last year in New York City, where the Albertsons chain is known as Acme Market. It outpaced competing delivery services in one week.
“I wanted to go into the same city as Zipdrug and prove that we were better,” he said.
Zipdrug had raised nearly $3 million, but put tablets in pharmacies requiring separate entry of delivery details. Because ScriptDrop works from within the patient record, a patient's address and phone number are right there.
By aggregating so much business in one market, ScriptDrop can aggressively negotiate courier rates, keeping its costs down. It integrates with services including Postmates and is soon to add a large ride-sharing company.
In addition to transaction fees from pharmacies, manufacturers also pay the company for the chance at one-to-one marketing with customers, such as ads that pop up on the screen when the courier presents it for a signature acknowledging delivery. The company is trying to work out ways to offer deals like a coupon for a type of food that increases a drug’s efficacy.
“There’s a number of avenues we can go down by having that patient’s eyes,” Potts said.
Unicorn foals
In Potts' three years at CoverMyMeds, it grew from tens of employees to hundreds. He and Scott left in mid-2016 – months before McKesson Corp. acquired CMM for $1.3 billion.
Nonetheless, they were witness to its rocket trajectory, and it's a common phenomenon for employees of high-growth startups to get inspired.
"We think successful exits in our region bode well for future successes," Helon said. "Some employees from successful ventures will go on to build their own startups. ... We think it all adds up to a great outlook for Central Ohio.”
Potts said he learned important lessons from CoverMyMeds: Surround yourself with smart, talented people; focus on execution; be honest with the team about goals and growth; attract talented employees by tackling a large, frustrating problem like healthcare, and treat them well.
ScriptDrop pays 100 percent of benefits and is exploring switching to four-day, 32-hour workweeks sometime next year. Potts thinks lowering stress will increase productivity during those hours, and giving working parents more flexible schedules will increase diversity.
Potts hired a leadership coach for the entire staff and pursues regular conversations with other Central Ohio startup founders on how to manage growth.
“The city is in a really good spot,” he said. “More large VCs are interested in the Midwest and Columbus than I’ve ever seen. ... It’s what the community has done (with successes like CoverMyMeds, Root Insurance and Beam Dental). It’s helping out the collective community in a pretty major way.”