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Let me start this piece by saying three very important things:
First, I’d like to introduce you to NowRx, an on-demand e-pharmacy which — much like Amazon (NASDAQ:AMZN) leveraged technology and same-day shipping to disrupt the multi-trillion dollar retail market — is leveraging technology and a same-day prescription delivery service to disrupt the several hundred billion dollar U.S. legacy pharmacy industry.
In this sense, I like to think of NowRx as the “Amazon of Pharmacy.”
Second, NowRx is not a public company. You can’t buy and sell shares of NowRx like you can buy and sell shares of Amazon. Bummer.
Third, thanks to some major advancements in crowdfunding technology and legislation, you can now invest in next-generation startups like NowRx for the long haul.
Simply go to SeedInvest.com. Create an account (it only takes a few minutes). Search for NowRx, and click the button that says “Invest in NowRx.”
It’s that simple.
And it could be extremely rewarding.
According to my analysis, an investment in NowRx today should return 400% or more over the next several years, and could return more than 1,000%.
Sure, the company could also go belly-up (unlikely, but possible). That’s the nature of startup investing. But, 1,000%-plus upside potential is huge. It’s the sort of the upside potential that retail investors previously didn’t have access to…
With that in mind, let’s take a deeper look at why NowRx could be a big winner.
The Amazon of Pharmacy
From where I sit, I see NowRx as revolutionizing the pharmacy industry over the next decade, the same way that Amazon revolutionized the retail industry over the past decade.
First, let’s take a step back.
NowRx is an on-demand e-pharmacy. That is, they’ve leveraged technology to construct a pharmacy ecosystem wherein consumers don’t have to leave their homes to get their prescriptions filled.
The process simple.
- Consumer visits doctor.
- Doctor prescribes medicine.
- Consumer goes home, logs into NowRx app, and confirms a good delivery time.
- From one of its small, automated packing facilities, NowRx’s robots assemble the prescription, a NowRx driver picks up the prescription and delivers it to the consumer.
Sound way easier, faster, and more convenient than driving to the local physical pharmacy, waiting in line, getting the prescription and driving back home?
It is — in the exact same way that shopping on Amazon.com and having things delivered straight to your doorstep, is easier than shopping at Nordstrom (NYSE:JWN).
Consequently, this on-demand virtual delivery process is the future of the pharmacy industry.
And NowRx — with its market-leading automation technology (they actually have robots that assemble the prescriptions in record fast time) and data-driven software advantages (the company has created a uniquely awesome centralized online platform where customers can manage their prescriptions) — is positioned to be a very important player in this rapid growth market for many years to come.
Big Growth Ahead
NowRx has come a long ways in a short time.
From 2016 to 2018/19, NowRx has grown revenues by 600% and customer count by 1,060%. This momentum is only accelerating. In the first quarter of 2020, thanks partly to the novel coronavirus pandemic, NowRx reported record-high revenues and customers, including 84% customer growth over the past three months alone.
Still, the company only operates in the Bay Area of California, and total prescriptions filled numbered less than 42,000 in 2018, versus about 3.8 billion retail prescriptions across the U.S.
Clearly, there’s tons of room for growth here.
Into 2023, NowRx plans to use a decent chunk of investor capital to expand into new markets, including Los Angeles, Phoenix, and Seattle. Thereafter, the company will expand nationwide, aiming for 5 to 10 packaging locations per major metropolitan area.
Such geographic expansion will spark big prescription volume and revenue growth. That’s because consumers love on-demand services — see Uber (NYSE:UBER), Postmates, Airbnb, and more. They especially love NowRx’s on-demand service: 86% of customers say they are likely to use the service again.
Consequently, over the next several years, NowRx will rapidly expand its share of the 3.8 billion U.S. retail prescription market.
Yes, there will be tons of competition (see what Amazon is doing with PillPack). But, there is ample room for multiple players to succeed at scale. Ridesharing, for example, has both Uber and Lyft (NASDAQ:LYFT).
Huge Potential Upside
Broadly, here are my projections for where NowRx could go over the next decade:
- From 42,000 prescriptions in 2018, to 4+ million prescriptions by 2030, still amounting to roughly just 0.1% of total U.S. prescriptions.
- Revenues of $400+ million in 2030, based on a historically normal ~$100 in revenue per prescription.
- Gross margins of 20% by 2030, up from ~13% today, as increased scale drives increased access to bigger wholesale pricing volume discounts.
- A normalized operating expense rate of ~15% by 2030, roughly in-line with current pharmacy-sector expense rates. This is to account for lower per location operating costs (NowRx’s small fulfillment centers operate at a fraction of the cost of big retail pharmacy locations) and smaller scale (NowRx won’t be a multi-billion dollar revenue company like CVS (NYSE:CVS)).
- Operating margins of 5% by 2030, which should lead to somewhere in the ball-park of $20 million in net profits.
Based on a market-average 16-times profit multiple, $20 million in 2030 profits could translate into a $320 million valuation for NowRx.
NowRx’s current financing round — a $20 million series B round — has a pre-money valuation of $65 million. Thus, from today’s round into 2030, my modeling suggests almost 400% upside potential… and that’s conservative.
There are viable pathways here — assuming NowRx nabs more than 0.1% U.S. retail prescription market share — for the company to hit $1 billion-plus valuation levels… implying 1,400%+ upside potential.
Bottom Line on NowRx
No longer is the investment landscape for retail investors limited to the stock and bond markets. Now, thanks to advancements in equity crowdfunding, retail investors can invest in high-quality startups.
For those interested in the space, one high-quality start-up which I recommend looking at now is NowRx.
It certainly feels like this on-demand pharmacy is in the first inning of a decade-long growth narrative, the likes of which will turn this company from a $65 million, small-time player today, to a potential $1 billion-plus, big-time player by 2030.
Luke Lango is a Markets Analyst for InvestorPlace. He has been professionally analyzing stocks for several years, previously working at various hedge funds and currently running his own investment fund in San Diego. A Caltech graduate, Luke has consistently been rated one of the world’s top stock pickers by various other analysts and platforms, and has developed a reputation for leveraging his technology background to identify growth stocks that deliver outstanding returns. Luke is also the founder of Fantastic, a social discovery company backed by an LA-based internet venture firm. As of this writing, he did not hold a position in any of the aforementioned securities.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.