New York-based Capital Rx, a full-service pharmacy benefit manager and pharmacy benefit administrator, has closed on a strategic investment round worth over $50 million from Boston-based Transformation Capital and several health systems.
Participating investors include Virginia’s Inova Health System, Atlantic Health System, Banner Health, Hawai’i Pacific Health, Lehigh Valley Health Network, Memorial Hermann Health System, Nebraska Medicine, Novant Health, Ochsner Health, and WellSpan Health.
With $253 million in funding, Capital Rx — a Certified B Corp — is backed by 17 investors, including Princeton, N.J.-based Edison Partners, whose general partner Lenard Marcus has a seat on the startup’s board.
Collaboration Hailed
Capital Rx co-founder and CEO A.J. Loiacono said his company represents an opportunity for the industry to lower prices. He thanked the industry group, Health Management Academy, for connecting leaders of multiple health systems, helping to “ignite a collaboration that will continue to accelerate the pace of innovation to reduce pharmacy costs, improve patient access, and deliver better outcomes for millions of Americans.”
“Legacy infrastructure lacks operational efficiency to reduce costs or enable the delivery of a best-in-class experience for members,” said Loiacono, a serial entrepreneur with over 20 years of experience in pharmacy benefits, finance, and software development. Loiacono previously founded Truveris, a health technology company enhancing the pharmacy value chain; Victrix, a pharmaceutical supply chain consultancy he sold to Chrysalis Solutions in 2007; and SMS Partners, a joint venture with Realogy.
Potential of Cloud Platform
Transformation Capital’s managing partner Jared Kesselheim cited Capital Rx’s “unparalleled efficiency and customization across commercial, Medicare, and Medicaid plans.” He cited in particular the potential of JUDI, Capital Rx’s cloud-native backend claims processing platform.
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Capital Rx uses JUDI alongside a so-called Single-Ledger Model to drive savings for plan sponsors, while creating low prices for patients. It believes the “offering represents a unique opportunity for the health systems, which are combining their resources and expertise to address the opacity and price volatility that has plagued the pharmaceutical supply chain” for over a decade.
Edison Partners
Edison Partners, founded in 1986 by John Martinson, currently has over 40 portfolio companies, and $1.7 billion in assets under management. Overall, it has made over 250 portfolio investments and exited over 200.
With a degree in industrial engineering from Stanford University and an MBA from Columbia Business School, Lenard Marcus joined the Princeton, N.J.-based firm in 2004. One of five general partners, Marcus focuses on the firm’s investments in the mid-Atlantic area. He co-leads healthcare IT investments, and heads security practice. Prior to joining Edison Partners, Marcus worked as a financial analyst at IBM Global Services.
