In what its CEO calls a “transformational deal,” Ottawa-based tech firm Fullscript has taken a giant step toward its goal of becoming a billion-dollar-revenue company by acquiring a U.S. competitor.
The online provider of nutritional supplements and patient treatment plans finalized the purchase of New Hampshire-based Emerson Ecologics this week. Financial terms were not disclosed, but Fullscript CEO Kyle Braatz said Emerson’s majority owners, Liberty Lane Partners, will gain a “substantial” minority stake in the combined company.
The mammoth acquisition comes about four months after Fullscript secured a US$240-million equity investment from U.S. firms HGGC and Snapdragon Capital Partners. At the time, Braatz said that funding raise – the largest in Ottawa since the dot-com boom of the early 2000s – would help Fullscript penetrate deeper into the lucrative U.S. market as the North American health-care industry shifts its focus from curing illnesses to preventing them.
On Thursday, Braatz described the acquisition of Emerson Ecologics – a 42-year-old firm with a well-entrenched U.S. customer base and broad distribution network – a “once-in-a-lifetime opportunity” for his company.
“There’s just not enough being invested in this industry,” he told Techopia. “If we’re really going to focus on the health-care system evolving to focus on health promotion, we should put our resources together, get aligned and get to where we want to get to faster. That’s ultimately the outcome here.”
"I think ultimately when it comes down to having two companies that have the same mission, the same vision. We have the same north star."
It’s not the first time the two firms have worked together.
From 2013 to 2018, Emerson acted as Fullscript’s U.S. distribution partner. At the time, Fullscript was focused on developing its software platform, while Emerson was immersed in building out its distribution network.
But as Emerson evolved into more of a full-service software platform, Braatz said the companies began to look for ways to deepen their relationship. Once Fullscript landed its historic funding round late last year, acquisition talks heated up.
“I think ultimately when it comes down to having two companies that have the same mission, the same vision,” Braatz explained. “We have the same north star.”
Health-care practitioners across Canada and the U.S. use Fullscript’s software to dispense products such as vitamin supplements as well as track inventory, automatically refill patients’ orders and create treatment plans.
The Ottawa firm targets practitioners of “integrative medicine” – that is, they not only treat symptoms of illness, but also emphasize the role of diet, exercise, lifestyle changes and supplements in maintaining a patient’s well-being.
With this week’s acquisition, Fullscript goes from being a dominant player in the space to an industry behemoth.
Headcount up to 950
Braatz said the deal will raise Fullscript’s annual revenues from $300 million to $600 million while boosting its headcount from about 600 to 950.
Meanwhile, the number of health-care professionals – including medical doctors, osteopaths, nurse practitioners, naturopathic doctors and chiropractors – who subscribe to the platform will jump from more than 30,000 to 70,000, and the number of patients who use its products will now top five million across North America.
“Overnight, the company has basically doubled in size,” Braatz explained.
As the popularity of supplements aimed at warding off serious illness grows, he believes Fullscript is poised to become the “go-to platform” for practitioners of integrative medicine. His “big, audacious goal” is to grow its patient roster from five million to 25 million.
Braatz, who co-founded Fullscript in 2011 with partners Brad Dyment and Chris Wise, said the billion-dollar mark in annual revenues “is a milestone that we think we can attain. But what drives us more is how we help more people get better.”
In addition to dramatically boosting Fullscript’s existing base of practitioners and patients, the deal gives the company instant access to Emerson’s distribution facilities in California, Kansas and Virginia. That kind of geographic reach means many deliveries that now take two or three days to arrive at patients’ doors will get there in 24 hours or less – a huge boost for Fullscript as customers demand faster turnaround times.
“I think from a user perspective, it’s going to add a lot of value for sure,” Braatz said.
The CEO is also bullish on what Emerson’s added offerings can do for his customers’ well-being.
Besides selling supplements, the New Hampshire firm provides services such as lab tests and a platform that tracks personal eating habits – giving practitioners access to new data that will help them prescribe nutrition regimes and supplements that better suit each patient’s individual needs, Braatz said.
“I think that’s a big part of our future here – not only being the tool that delivers the treatment plan, but we want to be the platform that actually helps monitor how that treatment plan is performing and give the practitioner tools to iterate and change that treatment plan,” he said.
This isn’t Fullscript’s first rodeo when it comes to M&A.
The company merged with Arizona-based Natural Partners in 2018, a deal that gave it a foothold south of the border and helped propel its revenues from $40 million to $300 million.
Yet as successful as that transaction was, Braatz said it taught him and his partners valuable lessons about “being really clear who the leadership team is and what the company is” when integrating two corporate teams into one.
To that end, Emerson chief executive Ken Buttermore will become Fullscript’s chief strategy officer, while Emerson CFO Kevin Purcell will take on the newly created role of chief transformation officer, working closely with chief of staff Christy White to ensure the firms mesh into a single well-oiled machine.
Braatz, meanwhile, said he’s keeping his eye on the ball as Fullscript seeks more M&A opportunities and looks to keep evolving its technology.
“It’s so easy to get into this stall when you're trying to do this big integration and bring two companies together,” he said. “I don’t want to lose any momentum. I want this to be a catalyst to moving faster, not to slowing down. I don’t want to lose out on the opportunity to fulfil the mission that we have. I know it’s right here in front of us.”