After seven years of exponential growth, Ottawa’s Fullscript says a merger with a U.S.-based competitor is just what the doctor ordered to ensure its future success.
The local health technology firm – which topped OBJ’s list of fastest-growing companies in 2016 and 2017 – announced this month it is combining operations with Arizona-based competitor Natural Partners. The transaction is expected to be finalized in mid- to late June.
Founded in 2011, Fullscript is an online dispensary for natural health products such as vitamin supplements. CEO Kyle Braatz said joining forces with Natural Partners, which has been in business for 23 years and sells more than 16,000 different products from hundreds of manufacturers, will allow both companies to speed up growth and provide a wider range of products and services to customers.
“This industry needs to evolve and mature, and we need to grow the pie and be a big pioneer in that,” Braatz told OBJ on Tuesday. “When we looked at the two (companies) together, it accelerated both of our plans almost two years. It was really one of those ones where one plus one equals four. It became a no-brainer to bring these two together.”
Though it’s a young company, Fullscript’s astronomical ascent – it posted three-year revenue growth of more than 3,000 per cent from 2015-17 – has garnered plenty of headlines. The firm that was originally backed by a “few million” dollars in angel funding now employs about 100 people at its downtown headquarters near Elgin Street.
Most of its customers are located south of the border, where Braatz says health-care organizations are increasingly looking to rein in costs by encouraging patients to engage in healthier lifestyles, including using natural supplements when warranted, in an effort to keep them out of the hospital.
In the past couple of years, Fullscript has stepped up its efforts to recruit practitioners of what Braatz calls “integrative medicine” – the 250,000 health-care professionals in North America who not only treat symptoms but put special emphasis on the role of diet, exercise, lifestyle changes and supplements in maintaining a patient’s well-being.
He says partnering with a well-known brand such as Natural Partners, which has 110 employees and operates major distribution centres in Scottsdale, Ariz., and Lancaster, Penn., will help it do that.
Although combining the two organizations will likely lead to cost savings in areas such as travel and marketing, Braatz said that wasn’t what prompted the deal.
“This really is a growth-oriented merger,” he said. “It’s not about finding ways to cut costs. There’s not going to be layoffs. We’re continuing to grow both (offices) in order to build that leader in integrative health care.”
Natural Partners chief marketing officer Ellen Hahn said her company saw Fullscript as a “shining example” of how to develop a user-friendly customer platform.
“Their ability in software engineering development and our abilities in terms of the supply chain and logistics and the very complementary nature of our customer bases – there’s not a ton of overlap – is just kind of a really perfect marriage,” she said. “We just think it really poises both of the merged companies for growth in the future.”
The newly merged company, which will be known as Natural Partners Fullscript, will be based in Scottsdale, while Fullscript’s operations will become its Canadian headquarters. Natural Partners CEO Fran Towey will head the firm, with Braatz assuming the role of president.
Braatz said the new position will allow him to focus on his strengths – namely product development, marketing and sales.
“Having that role really helps me,” he said.
Other key Fullscript executives are expected to see few changes in their roles. Chief product officer Brad Dyment and chief technical officer Chris Wise will retain their positions, while the company’s chief financial officer, Taylor Fantin, will become the combined firm’s new vice-president of operations.
Braatz said the transaction is a good-news story for the growing enterprise.
“This really was a merger of two equals coming together,” he said. “We kind of get the best of both worlds.”