Irvine-based PrescribeWellness, a provider of software services to more than 10,000 independent pharmacies, plans to continue its fast-growing trajectory under new East Coast ownership, while keeping and expanding its local operations, according to company officials.
The privately held firm, founded by Chief Executive Al Babbington in 2010 with business partner and President Susan Lewis, recently announced its sale to Moorestown, N.J.-based healthcare software firm Tabula Rasa Healthcare Inc. (Nasdaq: THRC) for $150 million.
It’s the latest big-dollar sale of an Orange County technology company this year, coming on the heels of the $1.4 billion sale of Irvine’s cybersecurity firm Cylance Inc. to BlackBerry Inc. that closed in March.
The all-cash deal for PrescribeWellness shouldn’t have too much impact on its local operations, according to Babbington.
The company employs about 150 people in an office along Jeronimo Road in the Spectrum area.
The office is across the street from the headquarters of carmaker Karma Automotive, and down the street from Chapman University’s School of Pharmacy, where Babbington sits on the advisory board.
All employees and key management have been retained, and Babbington expects to “continue to grow and expand the team here,” he said, noting that he and Lewis will continue to stay on board with Tabula Rasa, which has a market value of $1.2 billion.
Fast Grower
The sale is expected to accelerate the growth of the already fast-moving PrescribeWellness, which had 2018 revenue of $29 million, up 23% from 2017, and more than 10 times higher than the $2.7 million it earned in 2015.
Revenues for 2019 are projected to come in around $35 million, with earnings before interest, tax, depreciation and amortization in the $5 million range.
PrescribeWellness’ analytics-driven software is sold using a subscription-based model, with the cost based on a number of workstations and size of an individual pharmacy.
It’s seen nearly 100% revenue retention from its ongoing base of customers, which now totals nearly 15,000 pharmacists at locations like Costco, Kinney Drugs and McKesson, according to a Tabula Rasa presentation last month.
Tabula Rasa executives said they’re projecting growth from PrescribeWellness in the 20% range for each of the next three to five years.
“We’re wildly excited about the opportunity” to work with Tabula Rasa, which has developed its own software to reduce healthcare costs, Babbington said.
Closer to Patient
PrescribeWellness uses its proprietary software to connect pharmacies with patients, and for healthcare providers to improve medication adherence and population health.
Its stated goal is to help change the role of the community pharmacy from a dispensary to a center for preventive healthcare and wellness.
In pharma, “there’s a growing need to get closer to the patient,” Babbington said.
PrescribeWellness’ software—which Tabula Rasa executives noted has nearly 40 million active patients in its database and “ingests data from across the healthcare continuum”—enables that through a variety of ways.
It can help ID patients who are eligible for vaccines, schedule appointments for patients with ongoing prescriptions, help with finding the best plans for Medicare-eligible customers and track new patients through digital marketing.
Coming soon, according to Tabula Rasa: the ability to identify patients who need counseling, because of their use of high-risk medications.
Self-Funded
Babbington, who previously founded several other firms in the tech and health fields, including Irvine Pharmaceutical Services, self-funded the company along with Lewis to create “a nationwide network of pharmacies that are expanding their role to provide preventive healthcare services.”
The network, Babbington said, is within 5 miles of approximately 275 million people, which represents about 85% of the United States population.
The acquisition by the New Jersey firm will give PrescribeWellness “more tools to continue to grow and service our clients,” he said.
In addition, the deal “will accelerate the improvement of health in America and drive significantly reduced costs for government programs, health plans and consumers,” Babbington said.
PrescribeWellness currently takes up 50,000 square feet of office space at 9701 Jeronimo Road, where it signed a five-year lease in 2016.
In October, it opened a pharmacy at Chapman’s School of Pharmacy. The clinic services nearby businesses, and is staffed by pharmacy students.
