Cabinet Health is raising via Crowd SAFE with a $75 million valuation cap and no discount. The company claims it was able to generate an amazing $10.3 million in revenue in 2021. With that revenue, the company’s valuation revenue multiple is 7.3x, which is slightly higher than the industry average. But given the company’s tremendous growth since its inception in 2018, the current valuation still looks attractive for investors. The company has validated its valuation by growing rapidly in every aspect — product development, traction, and team. The company is scaling fast, like a startup should. 

The global over-the-counter drug market was worth $157 billion in 2021 and is growing at a 5.8% rate. The market is mature, meaning there are many established competitors with significant market share. Cabinet Health’s obtainable market is going to be much smaller, but it is still very sizable regardless. 

Because of the strict regulations around healthcare packaging, the industry has historically lagged behind in developing innovative new products. But that’s changing. There is a strong upward trend for creating sustainable packaging in healthcare. Pharmaceutical companies are getting more invested in sustainability. There are also other sustainability trends that are working in Cabinet Health’s favor, such as more direct-to-consumer supplement brands utilizing sustainable packaging, sustainable packaging methods and machinery, and hospitals seeking ways to recycle plastic waste. There is a chance that Cabinet Health will face slow market adoption. Consumers may prefer legacy packaging and drug companies over newer, unfamiliar options. But all in all, the market is large enough for Cabinet Health to grab significant market share, and it’s growing at a decent rate. The increase in sustainability awareness from all industry stakeholders is driving these market trends and creating huge market potential.

Cabinet Health is led by two co-founders: CEO Achal Patel and President Russell Gong. Patel graduated from the University of Virginia with a bachelor’s degree in foreign affairs, history, and pre-health. He then worked at Deloitte Consulting as a business analyst, consultant, and senior consultant. One of his projects in Deloitte was RePurpose, which provides financing to innovators addressing plastic pollution. He also co-led a movement designed to drive social impact through businesses called Circle of Young Intrapreneurs. 

Gong got his bachelor’s degree in political science and Latin American and Iberian studies from the University of Richmond. In his early career, Gong worked as the director of analytics and innovation at The Global Good Fund, which invests in high-potential leaders addressing social challenges. Prior to founding Cabinet Health, he spent most of his career in Deloitte Consulting as a program director and in the US Army as an infantry officer. 

Both founders have decent experience in the social impact sector. They have also proven their ability to lead Cabinet Health to success through the company’s impressive track record so far. However, the company has an ambitious goal to achieve $22.4 million in revenue by the end of 2022, which is a big jump from its 2021 revenue of $10.3 million. This seems like a lofty goal, considering that neither founder has any prior experience in the pharmaceutical industry. This makes it crucial for Cabinet Health to build its network in order to ease its way into the infamously difficult-to-penetrate pharmaceutical market.

Although the company has 11 team members, it seems that the team lacks people with pharmaceutical backgrounds. Joanna Tam, Cabinet Health’s sole pharmacist, might have one of the most crucial roles in the company. However, she is a recent graduate and does not have a ton of experience in the industry. Another key member and the only one that has experience in the industry is the company’s vice president of retail and business development, Nalini Boodoosingh. She has worked as a director and was in charge of the Harry’s, Inc. drug distribution channel. Her network could add a huge benefit to the company in terms of market adoption. Beyond these team members, Cabinet Health might need to hire more key people with deep pharmaceutical backgrounds who could offer their networks and knowledge about the industry and assist the company in reaching its goals.

Cabinet Health competes with direct-to-consumer (D2C) and over-the-counter (OTC) drug delivery companies and sustainable packaging companies. Although it is easy to find D2C and OTC drug delivery companies and sustainable packaging providers, it is very difficult to find a company that combines pharmaceuticals and sustainability like Cabinet Health. The heavily regulated market has high barriers to entry for competitors, so Cabinet Health has a clear advantage in its established presence in the market. It has successfully created packaging that adheres to strict market regulations. The company also has a sustainable supply chain. 

Adding to Cabinet Health’s competitive advantage, the company’s packaging applies to FDA-regulated products. All of Cabinet Health’s medicines are independently tested by Valisure, a quality assurance company. Cabinet Health’s active ingredients are FDA-certified. And as a cherry on top, the company offers customers  around-the-clock support from pharmacists. 

Furthermore, the company utilizes three business models: e-commerce, retail, and private label. These models act as different revenue streams for Cabinet Health, creating huge profit potential for the company. Not only could this three-pronged approach boost the company’s speed in generating revenue, but it could also significantly accelerate brand awareness. The company also has a clear product road map, which could carry tremendous potential when it reaches the market. Its product road map includes women’s and men’s daily multivitamins, prescription drugs, sustainable packaging that will support larger pill orders and refills, and telehealth services on its digital health platform. With these products underway, the company could become the one-stop pharmaceutical company for sustainability-focused customers.

Cabinet Health has a stellar track record. The company has generated revenue of $27.7 million in just three years of operation. Since 2018, the company has been steadily growing, except for the revenue decrease the company experienced from 2020 to 2021. Between 2019 and 2020, the company experienced a 318% increase in revenue from more than $3.1 million to more than $13 million. Then in 2021, according to the raise page, there was a 22% decrease in revenue to $10.3 million. The company claims that its revenue in 2020 outperformed its revenue projections due to an unexpected increase in demand from COVID-19. The company has also raised more than $6 million in its prior investment round. On top of that, the company is backed by Techstars, Gaingels, Sogal, and Global Impact Fund. Despite its impressive revenue and funding, Cabinet Health still has notable short- and long-term debts of around $2 million each. If the company is unable to address its debts, it could be at financial risk in the future.

The company has a clear product pipeline in 2022 that might justify its steep $22.4 million revenue projection. Cabinet Health has acquired three additional enterprise contracts (two retail and one sustainable private label) that will launch in 2022. These enterprise sales could generate $1.9 million in just the first and second quarters of 2022, as the company is launching multiple blue-chip distribution partnerships. Additionally, the company plans to launch its product portfolio expansion sometime in 2022 for its e-commerce channel, which has been doing impressively well. This product expansion would attract a massive new customer base and generate even more revenue. 

Cabinet Health bears little to no risk overall as an investment opportunity, but the company might carry quite a bit of market risk. The pharmaceutical industry is notorious for strict regulations for both drugs and their packaging. For its drugs, Cabinet Health mitigates its risk by working with an independent, third-party quality tester called Valisure. However, the company still needs to be sure its packaging adheres to strict regulations. Because of the heavily regulated market, the industry has not changed for a long time. So Cabinet Health might see smaller market adoption, as the market stakeholders are not used to adapting to change. The company has low financial risk because while it has high short- and long-term debts at a little less than $2 million each, it also has a decent amount of assets and has performed well since its inception. 

Cabinet Health operates in the pharmaceutical industry, which is heavily regulated and fairly difficult to navigate. So the company needs to ensure that every one of its products adheres to those strict regulations. Market stakeholders could be slow to adopt Cabinet Health’s products because the industry has been stuck with legacy products and companies for such a long time. Cabinet Health might need time to gain awareness and attention from the major stakeholders, so it might experience long sales cycles while the company tries to engage more enterprises. To that end, it is crucial for the company to have a team that has a deep background in the pharmaceutical industry. Its current team lacks that background. So it might need to recruit more employees who have both the network and the knowledge to accelerate the company’s market adoption. 

Cabinet Health is heavily differentiated, as it is bringing sustainable packaging to the pharmaceutical industry — which is rare given the strict regulations of the industry — as well as high-quality drugs. It is very difficult to find a company that directly competes with Cabinet Health. Its many service features also boost the company’s competitive advantage. The company’s obtainable market is sizable and has massive potential because of a growing sustainability trend. 

The team has shown that it is able to bring the company to success. The company has an impressive track record despite only operating for three years. Cabinet Health has stellar revenue performance, is experiencing rapid and steady growth, has raised a significant amount of funding, and is also backed by venture capitalists. Furthermore, the company’s potential can easily expand. It could grab significant market share, even when the market is saturated already, because it utilizes three business models that target e-commerce, retail, and private label channels. This way, the company can maximize its revenue stream as it targets most major stakeholders in the industry. Cabinet Health is also able to convince investors that generating revenue from these business models is realistic, as it has a clear customer pipeline. Additionally, the company has a clear plan to expand its product portfolio, which would further boost its potential to become a market winner. 

As another plus, the company is on a mission to solve a pressing environmental issue. The healthcare industry has generated a massive amount of waste and has caused serious harm to the planet. Supporting Cabinet Health means investing in the planet for the long term.