(Bloomberg) — Online pharmacy Capsule Corp. raised $300 million in a round that Chief Executive Officer Eric Kinariwala said values the six-year-old startup company at more than $1 billion for the first time.
Capsule plans to use the funds to expand to new markets and invest in its technology, Kinariwala said in an interview. The company has expanded beyond prescriptions through an app that connects people with more health offerings, such as telemedicine and mental-health services.
“We’re just incredibly excited about the next 10 years for the business, both continuing to innovate for the consumer and making her life easy and seamless but also to help a partner across the health-care system,” Kinariwala said.
Capsule has grown from its New York City base to more than a dozen markets, including Chicago, Los Angeles and Minneapolis. The company will use some of the proceeds of the fund-raising to expand to new areas. Kinariwala declined to specify future locations, saying the goal is to reach 100 million people by the end of 2021.
Capsule has raised $570 million since it was founded in 2015. The round values the company at more than $1 billion, Kinariwala said, declining to specify the exact amount. Its previous fund raising in 2019 put Capsule at $400 million, according to PitchBook.
The pharmacy industry is increasingly a crowded space. U.S. prescription drug dispensing revenue reached a record $465 billion last year, according to the Drug Channels Institute, attracting attention from startups and larger companies.
Buzzy newcomers like Capsule are targeting younger customers who don’t want to visit a pharmacy in person. Stalwarts like CVS Health Corp. and Walgreens Boots Alliance Inc. are introducing perks, such as free delivery, to keep up with consumers. E-commerce behemoth Amazon Inc. is building an online health-care business expected to disrupt pharmacies like it has so many other areas.
“It’s an enormous industry,” said Jared Weinstein, a partner at Thrive Capital, which has invested in all of Capsule’s rounds. “It’s a really important category to offer a better solution to consumers. We’re confident Capsule is at the leading edge of doing that.”
Kinariwala says Capsule wants to create a single place where consumers can access all of their health-care needs, even if those come from other companies. He compares Capsule’s model to an iPhone that hosts apps that aren’t made by Apple. For example, mental health company Ginger partners with Capsule to fill patients’ prescriptions.
“The long-term ambition of Capsule is that it is the single place where consumers can access all of the needs that they have in their health care in a single, simple, holistic place, and we’re doing that in a way that brings everybody else that’s building different parts of health care together versus trying to own all of those things ourselves,” Kinariwala said.
Durable Capital Partners LP led the round, Kinariwala said. Other investors include Baillie Gifford & Co., T Rowe Price Group Inc. and Whale Rock Capital Management LLC.