Digital pharmacy start-up Medly Health Inc., which launched in 2017, has voluntarily filed for a Chapter 11 bankruptcy in Delaware, following two large layoffs in August. The company reported more than $110 million in secured debt.
The company gained popularity during the COVID-19 pandemic as an alternative option to pharmacies, offering free same-day prescription delivery, and was purported to be the fastest-growing digital pharmacy.
The brand secured $100 million in Series B funding in July 2020 with plans to continue scaling the business.
In June 2021, Medly acquired Pharmaca, a primarily online wellness store that sells an array of brands like Jane Iredale, Juice Beauty, Vital Proteins and Olly. When this acquisition was revealed, it was said that Pharmaca had 28 brick-and-mortar stores, and Medly planned to expand the brand to nearly 30 markets.
The bankruptcy declaration, signed by Medly chief executive officer Richard Willis, cites a “loss of anticipated financing and the discovery of certain accounting irregularities,” as sources for the company’s financial struggles. Medly was set to receive a $100 million loan in August 2022, but the deal was not completed. Without the loan, the company was unable to purchase drugs and fulfill prescriptions and was reportedly forced to close more than 20 stores.
The company reported a net income of negative $9 million to negative $11 million between Jan. 1, 2022 and Sept. 30, 2022 and negative $15 million in cash operations as of Sept. 30, 2022.
With the bankruptcy filing, the medical company intends to close Medly’s four full-service digital pharmacies upon approval of sale, selling the prescription lists so that patients may transfer to another pharmacy, as well as sell the 22 Pharmaca pharmacies.