With a fresh infusion of $16 million, Indianapolis-based Wellfount Corp. thinks it can achieve the twofold trick of doubling its revenue and becoming cash-flow neutral—all by the end of this year.
The long-term-care pharmacy company, which puts Redbox-style vending machines in nursing homes, is currently operating in eight states, including Indiana. By year’s end, it hopes to push that number to 11.
Revenue doubled last year, to $20 million, and Wellfount says it’s on pace to double again this year, to $40 million.
Employment also will rise, from 150 now. About 100 of those workers are in Indianapolis, where Wellfount uses software tools to monitor the activity at each of its vending machines and sends out new inventory before each nursing home needs it.
“It’s a very scalable model, but it’s got a fairly significant footprint at the beginning,” said Eric Orme, who became Wellfount’s CEO in early 2013, taking over from founder Paul Leamon. “The last couple of years have been building the footprint here in Indianapolis.”
But now Wellfount is ready to scale. It convinced New York-based Deerfield Management Co. of that, leading Deerfield—a new investor—to pump $15 million into the company in March.
The other $1 million Wellfount raised this year came from its existing investors. The company has raised more than $25 million since its founding in 2006.
“We believe that Wellfount’s unique approach to the delivery of long-term-care pharmacy services enables the company to improve service levels, enhance patient safety and reduce costs in a very differentiated way,” Leslie Henshaw, a partner at Deerfield Management, said in a prepared statement.
There are two major pharmacies serving nursing homes—Pharmerica and Omnicare—as well as lots of mom-and-pop businesses. Their model is to have brick-and-mortar buildings close to nursing homes, from which workers dispense and deliver prescriptions in 30-day bubble packs to the nursing home facilities.
Each patient has his or her own bubble packs. When they start to run low, the nursing home staff must order a refill. If patients don’t use all their medicine—because they end their rehab stay or because physicians change their prescriptions or, in some cases, because patients die—the extra medicines are thrown away.
Wellfount tries to save money on all those fronts. It dispenses drugs from its central location in Indianapolis rather than separate facilities in each state. Its machines dispense medicine packages specifically for each patient at each time of day—so no medicines are wasted. And the nursing home staff doesn’t have to order refills—Wellfount machines can tie in with a nursing home’s electronic medical record system to know exactly what medicines have been taken and which ones will be needed next.
“It saves the nurses time and energy and they can focus on things that are true clinical care,” Orme said.
Wellfount has had no trouble convincing nursing home executives of those savings. Their challenge has been, instead, fighting for executives' attention amid changes coming from health care reform, reimbursement challenges, and rolling out electronic medical record systems.
“Our biggest hurdle is not Wellfount versus another pharmacy. Our biggest hurdle is change management,” Orme said.
But Orme is still confident the company can grow. It will do so by adding services for its existing customers, who combined treat about 3,000 residents. It is also looking to move into additional areas, such as home health and hospice care.
It also will move into new territories. Orme said Colorado, Montana and Tennessee are all on its radar screen. Wellfount currently operates in Indiana, Iowa, Florida, Michigan, Missouri, North Carolina, Ohio and Nebraska.