Ottawa health-care technology firm beat its revenue forecasts by more than 10 per cent in the first three months of 2023 and is on pace to exceed its goal of 20 per cent year-over-year revenue growth.
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Fullscript has hired a senior executive from a leading U.S. specialty pharmacy company to oversee its finances and growth strategy as part of an ongoing restructuring that saw the Ottawa-based health-care technology firm lay off about 100 employees.
Ashley Koch joined Fullscript last week in the dual roles of chief financial and strategy officer.
She replaces Ken Taylor, who left the company last summer, as CFO. Fullscript vice-president of finance Alex Gray filled in as CFO on an interim basis.
In addition to her finance responsibilities, Koch will work closely with chief executive Kyle Braatz to plot Fullscript’s future growth course, including potential acquisitions and “strategic investments that change the business into something more dynamic than it is today,” Braatz told OBJ this week.
The Boston College marketing and management graduate brings more than a decade of senior management experience in the U.S. health-care industry.
Most recently, Koch served as CFO at Boston-based Shields Health Solutions, which provides specialty pharmacy services such as refrigeration and packaging to about 1,000 hospitals in the U.S. via a network of 80 health system partners. Drugstore giant Walgreens Boots Alliance, which already owned a majority stake in the company, acquired Shields outright last year for US$1.37 billion.
Before that, Koch was CFO at Steward Medical Group, the largest private equity-backed integrated health system in the U.S. At Steward, she spearheaded a national expansion strategy that saw the company make multiple acquisitions and triple its revenues in a three-year span.
“We wanted a CFO who could come in and drive enterprise value extremely quickly and really help us make some pretty big bets that would transform our business,” Braatz said of Koch, who will continue to live in Boston.
“I wanted someone who would understand the opportunities in front of us, understand our customers and be able to use that strategic mind to drive value. She’s going to be a really strong partner of mine to take this company from where it is today to where we think we can take it.”
Koch takes over as CFO less than two years after Fullscript brought in Taylor to lead its fundraising efforts.
One of the city’s best-known finance experts from his years as CFO of software firms March Networks and You.i TV as well as a stint in the same role with the Ottawa Senators, Taylor was a driving force behind two of the biggest deals in Fullscript’s history: its US$240-million financing round in late 2021 and its acquisition of U.S.-based competitor Emerson Ecologics early last year.
Braatz had nothing but praise for his former colleague, calling Taylor’s tenure “transformational” for Fullscript.
“Where we are as a company right now and the success we’re having is because of Ken,” he said.
While acknowledging that Koch faces “a steep learning curve to understand our model,” Braatz said she brings “a different perspective” to the company due to her encyclopedic knowledge of the U.S. health-care industry and experience working alongside private equity firms.
“She’s been on the front lines of health-care transformation,” he said. “We saw a lot of people who are really good with amazing resumes who I think could have come in and done a good job, but we were looking for a specific type of person and I think we have found that person.”
Fullscript also announced it is adding marketing executive Aimee Miller to its board of directors.
The California-based tech veteran was most recently chief marketing officer at property management software maker AppFolio, which she helped guide through a successful initial public offering in 2015.
Braatz said Miller has already been advising Fullscript on go-to-market strategies.
“We just saw so much value that it made sense to add her to the board,” he said.
The moves come as Fullscript looks to build on its dominant position in the rapidly expanding field of integrative medicine.
Founded in 2011, the online provider of nutritional supplements and patient treatment plans brought in more than US$600 million in revenues in 2022. Upwards of 70,000 medical practitioners across Canada and the U.S. now use its software to prescribe and dispense vitamins, minerals and other supplements to more than five million patients.
Under Braatz’s guidance, Fullscript has evolved well beyond its roots as an online dispensary. Today, its comprehensive platform provides tools to prevent disease and other health issues by helping medical professionals create personalized plans that emphasize the role of diet, exercise and other lifestyle changes in maintaining a patient’s well-being.
In an interview with OBJ last fall, Braatz made it clear he believes billion-dollar annual revenues are within reach for Fullscript. Still, the firm that led OBJ’s list of fastest-growing companies in 2016 with three-year revenue growth of more than 1,200 per cent has seen that trajectory level off – an inevitable fact of life for most maturing tech enterprises.
But Braatz says Fullscript is on the upswing.
The firm laid off more than 10 per cent of its employees last fall, trimming its headcount to about 800. While Braatz said there was “a lot of overlap” in jobs following the acquisition of Emerson, he said many of the cuts were aimed at eliminating “layers of management that just weren’t effective” as Fullscript tried to reorient its sales efforts toward products such as nutraceuticals rather than services.
“I felt like we weren’t operating quick enough,” Braatz said. “We were running up against each other rather than finding the leaders that would just make the decisions to continue to drive growth.”
The company also made other changes in its executive suite, such as installing chief product officer Jeff MacDonald as interim chief commercial officer to replace Elizabeth Halkos, who joined the firm in 2021 and departed last summer.
Braatz said the result is a leaner, more focused company. Fullscript beat its revenue forecasts by more than 10 per cent in the first three months of 2023 and is on pace to exceed its goal of 20 per cent year-over-year revenue growth.
“The transformation has been incredible,” Braatz said. “The company was always doing well from a growth perspective, but we’ve just started to get that hockey stick curve moving at a more epic pace than I expected in a very short time period.
“Compared to most companies, they wouldn’t look at our growth and say (it was) stale, but for us and what we want, we needed a little bit of a shakeup, I’d say, to keep on the trajectory we’re on.”
But the guy who concedes he’s “never satisfied” still sees room for improvement. Braatz said a key focus now is signing occasional supplement users on to regular prescription plans.
“The biggest opportunity for us is actually our core base of users,” he explained. “How do we get our practitioners to be more productive on the platform and use it with more of their patients?”
OBJ’s 2022 CEO of the Year conceded his company was “a little sluggish at times” during the past couple of years as it figured out how to meld Emerson into its operations and chart a path to continued growth.
Now, Braatz said, Fullscript has found its groove again.
“I’m feeling really good about the leadership team we have in place,” he said. “There’s an energy right now internally that we all feel that’s really exciting.”
