Rx Delivered Now (RxDN) is raising via a SAFE at a valuation cap of $6.5 million with a 20% discount rate. The price is reasonable for an early-stage company. RxDN claims on its raise page to have $15,000 in monthly recurring revenue, which comes out to $180,000 in yearly revenue. A revenue-to-valuation multiple of 3- times is somewhat high, though not outrageous. This high multiple can be accounted for by recent inflation of software companies’ value. Therefore, RxDN earns a moderately good rating in the price category.

While pharmacies are a massive and growing industry — especially in the US — Rx Delivered Now’s (RxDN) hybrid automation/delivery service is a decidedly smaller space. The North American pharmaceutical automation market was valued at $2.5 billion in 2019 and is expected to reach $4.5 billion by 2027. It’s a small market, but it’s growing steadily at 7.8% each year. For such a niche market, pharmaceutical automation is becoming increasingly competitive. In addition to many pharmacies automating their own processes, non-traditional pharmacies like Amazon-run Pillpack are also stepping into this space. For these reasons, RxDN’s market rating is quite low.

Rx Delivered Now (RxDN) co-founder and CEO Dr. Anthony Do received his bachelor’s degree from UC Berkeley and received his Doctor of Pharmacy degree from Western University of Health Sciences. Dr. Do worked as a pharmacist with CVS for more than three years, then spent the following eight working for Kaiser Permanente. He spent most of his time with Kaiser as a clinical data pharmacist, eventually becoming an application analyst. Early in his time there, Dr. Do moved toward entrepreneurship with a certification course at Stanford. He founded Medicyne, a telemedicine startup app that is no longer active. Remaining in the medical technology startup game, he co-founded Hustlebee, which was designed to connect healthcare workers to available work (the domain is now for sale). Following that venture, he co-founded and worked as a software developer for TreatSTI.com, an anonymous testing service (also no longer functioning). While his previous startups have not led to exits or great successes, they have given him considerable experience in application design. In addition, Dr. Do left his position with Kaiser earlier this year to take the lead at RxDN, so he is fully committed.

Co-founder and COO Michael Nguyen received his bachelor’s degree in computer science from UC San Diego and is Scrum certified. Nguyen started as an IT support analyst with Websense where he stayed for almost two years. He then worked with Sony Electronics as a software engineer. His start in medical technology came at MedImpact, where he worked as a business systems analyst. In his three and a half years there, he worked in pharmacy benefits management, setting himself up for his role at RxDN. He moved across various product management roles at LPL Financial, Seagate Technology, Bitnami, and Wonolo. Nguyen’s extensive experience in both technology and management will undoubtedly prove beneficial to the company.

The rest of the team represents sales, pharmaceutical, and fleet operations expertise. While there is a slight lack of engineering skills, the co-founders’ relevant experience results in a strong team score for RxDN.

Rx Delivered Now (RxDN) seeks to lead in both pharmaceutical automation and rapid delivery,  somewhat setting itself apart by taking a general approach. A logistics hub that also manages home delivery could be more effective and efficient than using one competing offering for each. Other offerings, like NowRx, tend to specialize either in delivery or in logistics. 

Apart from this difference, RxDN doesn’t have much to differentiate itself from the many competitors entering the pharmacy automation and delivery space. It doesn’t use its own fleet for deliveries. It connects existing delivery providers to pharmacy systems. It holds no patents. The software is not particularly defensible. As RxDN works to develop its logistical management end, it remains to be seen whether the multi-angled approach will pay off. By not specializing either in delivery or in automation, RxDN could struggle to surpass more specialized offerings. For these reasons, RxDN’s differentiators rating is poor.

Rx Delivered Now (RxDN) is in a pre-profit stage but has begun taking in revenue. At the start of the offering period in June, it had reached $15,000 in monthly recurring revenue. Since then, it lost a client, reducing that number to $13,000. It isn’t unusual for startups to experience some churn, though this isn’t quite the upward trajectory that would be ideal at such an early stage. 

The business has gone from zero to 14 subscribing pharmacies (now 13) in half a year’s time. So far, all of these locations are based in California, though RxDN plans to expand into Texas and Florida in the near future. RxDN’s business-to-business strategy is solid and appears to be working well so far, but it hasn’t seen exceptional growth. Leadership aims to expand to 45 pharmacy locations on a quarterly basis moving forward. In all, RxDN earns a moderate performance rating.

Overall risk associated with an investment in Rx Delivered Now is relatively low. The product is operational and launched in several locations. One of the founders appears to be fully dedicated, and the valuation is reasonable for the stage despite a somewhat high revenue multiple. Though there are no ongoing lawsuits and legal risk is relatively low, the company does exist in a highly regulated space which poses some risk. Market approval is a necessity for a product like this to be adopted on a widespread scale, and consumer concerns over privacy could make adoption difficult. 

Though the US contains a sprawling network of pharmacies, Rx Delivered Now’s (RxDN) target market remains limited as existing ways of operation are already very ingrained. The startup can’t wait for the industry to grow and modernize to begin securing its niche. Even now, competitors are moving in to claim what little business does exist. This could represent a winner-take-all-situation, and RxDN doesn’t appear to be the dominant offering at present. The product needs further development, and for that, it needs engineers beyond the founder.

In addition to talent, the business will also require funds to make it through the lean years of working toward profitability in this difficult market space. Without significant fundraising in the near future, the startup will likely struggle to assemble the required talent and remain afloat long enough to become profitable.

Though Rx Delivered Now (RxDN) has limited time and resources, it could have better luck engaging clients as it moves beyond the crowded California market. Moving to a different region isn’t as simple as changing a few terms on a software offering, so competitors may not be as quick to move on potential customers. This could create a larger defensibility moat. As RxDN is already planning to move into Texas and California, expanding its services offered across multiple states could be a strong differentiator. Management has lofty plans of adding 45 pharmacies per quarter moving forward which, if brought to fruition, could lead to massive amounts of revenue.

In addition, promising software companies are often tempting targets for acquisition. Should RxDN expand enough, it might appeal to a company seeking to compete with Amazon’s Pillpack and other existing pharmacies in this space. 

Rx Delivered Now (RxDN) is an all-in-one pharmaceutical logistics and delivery platform. Its solution connects pharmacies to existing delivery services and enables users to order their medications for same-day, two hour delivery. In six months, RxDN has secured 13 pharmacies.

As of now, RxDN is solely providing delivery services. It plans to expand to logistics management as part of its next phase, upon completing this raise. To reach that goal, RxDN will need to expand its leadership team to include engineers and garner sufficient funds for the development process. Pharmaceutical logistics and delivery are extremely limited spaces, and competitors are increasingly common. Also, the platform has low defensibility, and it doesn’t differentiate itself from competition except by spreading its resources across multiple spaces. That strategy could lead to a more cost-effective solution than other offerings, or it could mean being weaker in both areas than specialized competition. 

That said, its diverse leadership team does hold experience in pharmaceuticals and application development. The asking price is reasonable, and the startup’s growth has been steady.  Therefore, Rx Delivered Now is a Neutral Deal.

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Analysis written by Benjamin Potts.