When Fullscript was founded in 2012, CEO Kyle Braatz saw two options: be ultra-focused and do one thing really well, or create the ultra-broad whole-person care platform he envisioned from the start.
Held to the constraints of bootstrapped capital, Braatz opted to take it slow, building each segment of his wellness tech business like they were each their own startup. Bolstered by the acquisition of Rupa Health in October, Fullscript is now putting the finishing touches on its latest in-house startup—which offers lab tests—and developing the company’s next phase.
Fullscript says its platform has helped over 100,000 providers prescribe treatment plans to more than 10 million patients to date.
Braatz’s slow and steady method has paid off, even if it happened much later than he planned. After years of steady growth, Fullscript told BetaKit that it has achieved $1 billion USD in revenue over the past 12 months.
Braatz spoke on his company’s growth in a fireside chat with The Globe and Mail’s Sean Silcoff at AccerlateOTT, an annual summit held during Ottawa Innovation Week, on Thursday.
“You don’t have much time for those ‘pinch-me’ moments,” Braatz told BetaKit ahead of the event when asked about his company’s rapid revenue growth.
The anchor milestone follows a secondary deal earlier this year, which saw existing Fullscript investors HGGC and Snapdragon Capital Partners, backed by United States (US)-based Leonard Green & Partners, reportedly snap up $300 million USD ($408 million CAD) in shares at a $2.5-billion USD ($3.4-billion CAD) valuation, according to The Globe and Mail.
BetaKit sat down with Braatz following the acquisition of Rupa Health in November, back when the company confidently reported $900 million USD in annual recurring revenue (ARR) and looked forward to hitting the $1-billion milestone this year. Braatz described his novel approach to building Fullscript, and expressed how he’s just excited to build the company’s next “moonshot” from scratch again.
“If we have this thing we want to invest in, don’t go right to the end state immediately,” Braatz told BetaKit. “It sounds like common sense, but let’s just start and go through the process of getting there.”
Fullscript plays in the wellness space, which mostly includes complementary and alternative medicine, although conventional medical providers do use its platform. According to the Global Wellness Institute, wellness is the active pursuit of activities, choices, and lifestyles that lead to a state of holistic health. Wellness is a massive, continuously growing industry that was worth $6.3 trillion globally in 2023 after increasing in value by 25 percent over four years, according to Bloomberg.
Fullscript fits in by helping wellness practitioners provide end-to-end “whole person care.” Its e-commerce solution includes a platform for selling wellness supplements, while also providing access to lab testing and tools that connect clients to their wellness practitioners. Fullscript says its platform has helped over 100,000 providers prescribe treatment plans to more than 10 million patients to date.
Braatz has deep ties to the Ottawa community, which he credits as critical to his company’s success. Originally hailing from Newfoundland, he came to the city from for school and never left, growing up knowing key figures at fellow Ottawa-based e-commerce giant Shopify, like current president Harley Finkelstein and CEO Tobi Lütke, who “always had a lot of time” for him when he was starting out.
“Every single individual that’s building in Ottawa, we’re building because we want to make an impact; building because we’re passionate about building,” Braatz said at AccelerateOTT. “I think what that builds is actually a community of people that want to help each other.”
Braatz is also a minority owner of the Ottawa Senators, and was centre-stage alongside his wife Rachel when they donated $2 million to the Senators Community Foundation, which works with the Children’s Hospital of Eastern Ontario (CHEO), as part of the hockey team’s annual gala earlier this year.
“Entrepreneurs get so focused on their one thing in their life, entrepreneurship,” Braatz said on stage while speaking about the Ottawa tech community. “Guess what? You need time to refresh. You need time to get away from what you’re doing every single day, and there’s such an opportunity to just get joy out of helping other people.”
Figuring it out
In the company’s early days, Braatz told BetaKit that he wrote a “super secret plan.” While it’s five years behind schedule, it outlined each of the “adjacencies” Braatz was intent on delivering through Fullscript, with step one set to help practitioners with carrying inventory and managing their prescription workflow, and encouraging patient adherence. The company started to expand its focus beyond dispensing supplements and more into practitioner workflow, first through electronic health record integrations and then into clinical decision support. Its platform can now help practitioners streamline a patient’s supplement prescriptions to more manageable pill counts.
“Maybe [a practitioner] has just written a protocol with 12 bottles, or 12 pills, but we have the same ingredient profile in three products with six pills,” Braatz explained.
Fullscript didn’t need much external financial support along the way. The company hit profitability when it achieved $40 million ARR in 2018, bootstrapping nearly the entire way except for $2 million in angel funding, before it secured a $25-million Series B round in 2019 that went straight to its balance sheet. Fullscript’s early approach parallels other Canadian healthtech companies that have scaled through revenue without much equity financing, such as Vancouver-based practice management software developer Jane.
At the time, Fullscript focused on the software and customer support while relying on a partner to deliver the physical products, but started to realize the importance of owning the end-to-end experience when it experienced troubles with an early distribution partner, Emerson Ecologics. This led to Fullscript acquiring Natural Partners, Emerson’s biggest competitor, in 2018.
“From a physical perspective, you start relying on a partner to ship products, and they’re screwing things up, and the unboxing isn’t good enough, like it just didn’t represent the Fullscript brand,” Braatz told BetaKit. “From a margin profile perspective, [as] a capital efficient business, we needed to improve our [profit and loss] statement.”
The merger doubled Fullscript to an $80-million revenue business, a number that reliably grew each year until it hit $300 million in 2021. That’s when HGGC and Snapdragon Capital Partners bought in through a $300-million CAD ($240 million USD) investment in Fullscript. While the round was largely secondary, Braatz said it also supported Fullscript’s acquisition of its originally troublesome distribution partner, Emerson Ecologics, which once again doubled the company’s revenue to $600 million.
While Fullscript’s first acquisition was about owning the customer experience, the company’s second was about establishing its market leadership.
“No startup just goes out and spends $100 million on something; they raise $2 million and spend $30,000 a month figuring it out.”
Kyle Braatz
The acquisition thesis “was more along the lines of continuing our focus on market leadership and then leverage that scale in the market, and earn the right to now enter those adjacencies, like labs, or innovate more on the supplement side,” Braatz said.
Fullscript then launched an in-house startup to build out its labs offering, complete with a founding team that had its own CEO, head of engineering, and others responsible for specific segments. They operated on their own incentives based on a budget, as Braatz believes that “efficiencies and constraints drive the outcomes” they want.
“I think a lot of companies rush to invest before they’ve built out the learning, because they forget that every [new] feature and functionality is still a startup,” Braatz said. “No startup just goes out and spends $100 million on something; they raise $2 million and spend $30,000 a month figuring it out.”
Once the labs segment was validated and began to be absorbed into the broader business, Fullscript nabbed Rupa Labs for an undisclosed sum so it could bring the whole suite of services together at once. The completed labs segment allows providers using Fullscript to offer patients end-to-end diagnostic labs and specialty testing, with a single place to recommend, manage, and review lab results.
Braatz said the Rupa acquisition was “fairly immaterial” considering the overall size of the business, but “very material” in terms of its value to providers and patients.
Having achieved a major revenue milestone, Fullscript will be investing most of its capital on core optimizations and its innovation bucket, such as clinical decision support tools and lab optimizations. Of course, there’s a little set aside for its next aspirational moonshot, which Braatz called “preventive journeys,” though that’s going to be gated by success it sees, just like any other startup.
“It feels like a startup again,” Braatz said. “You go through these different M&A deals, and I love doing it … but it’s really nice to be back to this mindset of building and creating, and doing so at a rapid pace.”
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Despite being startup-minded, Braatz sees an initial public offering (IPO) as the way forward. Much like many of its Canadian tech peers over the past year, Fullscript has avoided the IPO market in favour of keeping liquid cash flowing through secondary rounds. Braatz said there’s lots of factors the company wants to “prove out” before doing so, and doesn’t have any specific timeline or milestone that would trigger the process.
“We have the potential to be a household name when it comes to the company we build,” Braatz told BetaKit. “We have profitability, we have a strong team, we have all of the attributes that a good public company has, it’s just a matter of when.”
On stage, Silcoff asked Braatz to speak more about his company’s potential future as a public company, and whether Braatz thought he was the right person to lead it at that stage. While Braatz said he would love Fullscript to stay private as long as possible, at a certain point investors expect liquidity.
“We likely will get to a point where maybe we’re too big to stay private,” Braatz said. “We’re just learning what this company should look like in order to set it up for success, and if I’ll be there [post-IPO]? We’ll see.”
Feature image courtesy Invest Ottawa/Lindsey Gibeau Photography.