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Everything You Need to Know About The Pill Club

By Zhiyuan Sun – Jul 17, 2020 at 11:46AM

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Here's why a telemedicine company that offers birth control pill deliveries is rapidly gaining traction.

In many rural areas of the U.S., people lack easy access to reproductive healthcare providers. The cost of a doctor's consultation can range anywhere between $35 to $250, and that's not accounting for travel costs to reach a clinic. Hence, there is a considerable need for a readily accessible healthcare service that can deliver contraception right to a patient's doorstep at an affordable price. Enter The Pill Club.

Based in California and founded by Nicholas Chang (a doctor from Duke University) and Kevin Chung in 2014, The Pill Club provides a convenient, accessible, and personalized solution for patients who take birth control pills. To date, The Pill Club has received nearly $62 million in venture capital funding and has more than 100 employees. Could it eventually IPO or be acquired?

Woman holding contraceptive pills.

Image source: Getty Images.

How does The Pill Club work?

First, prospective clients seeking birth control complete a 10-minute online health profile on the company's telemedicine app. Their responses are forwarded to The Pill Club's medical team for review. Then, treatment options are selected from a list of more than 120 branded birth control methods approved by the U.S. Food and Drug Administration (FDA). Once the patient agrees to the prescription plan, the pills will be shipped directly to their door, along with a basket of goodies such as chocolate and gift items. The patient can receive regular refills, removing the burden of having to remember to fill prescriptions every month.

For all the services it provides, The Pill Club is surprisingly affordable. For most patients with insurance, the cost of using The Pill Club is $0 (although some plans may still have a 20% copay). For patients without insurance, it costs $9 per pack to purchase a yearly plan, and $25 per pack to buy a monthly plan. There is also an online consultation fee for just $15 per year.

Regardless of whether patients have insurance, all packages come with free shipping and a gift basket. The Pill Club's pills also come from licensed pharmacies, and it has a team of licensed doctors and registered nurses available for consultation.

Are there any drawbacks?

The Pill Club does have a few disadvantages. First, only 38 out of 50 states allow birth control pills to be prescribed online. In addition, it takes approximately one week to obtain a prescription and another week to have the prescription delivered. Hence, the service may be significantly less efficient than walk-in clinics, depending on where a patient lives.

However, if there are no alternatives, then The Pill Club is probably the best bet for those seeking birth control pills. Unlike other telemedicine birth control platforms, most major insurance companies cover The Pill Club.

Will the company go public soon?

It is no wonder that the company has experienced solid growth. Currently, The Pill Club boasts having delivered more than 5 million prescriptions since inception. Additionally, The Pill Club is ranked 4.5 out of 5 in nearly 3,400 Google Reviews.

The Pill Club is only at its series B round of venture capital funding, which means that if it does decide to go public, it won't be until a few years down the road (as companies tend to go public after raising cash in series C or D). Meanwhile, the demand for telemedicine is growing rapidly, and investors should check out other options in the sector. 

Could The Pill Club be acquired?

Moreover, an acquisition could be on the table for The Pill Club as the company is rapidly disrupting traditional pharmacies that dispense birth control pills, such as Walgreens Boots Alliance (WBA -1.47%). Don't be fooled by its valuation of just $250 million. When the $85 billion pharmacy chain CVS Health (CVS -1.48%) raised its fees for online pharmacies such as The Pill Club last year, it sparked an outrage on social media. Many women rallied to the support of The Pill Club, and accused CVS of obstructing access to contraception. 

The Pill Club would also be a great addition to existing telemedicine and e-commerce giants out there, such as Teledoc Health (TDOC -3.54%) and Amazon (AMZN -3.01%). The latter company just closed its acquisition of online pharmacy PillPack in a deal worth $1 billion. With big corporate players on the lookout for healthcare start-ups that provide delivery for prescription drugs nationwide, the next deal could involve The Pill Club. 

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Zhiyuan Sun has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon and Teladoc Health. The Motley Fool recommends CVS Health and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool has a disclosure policy.

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Stocks Mentioned

CVS Health Corporation Stock Quote
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$98.35 (-1.48%) $-1.48, Inc. Stock Quote, Inc.
$113.78 (-3.01%) $-3.53
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Walgreens Boots Alliance, Inc.
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Teladoc Health, Inc.
$26.97 (-3.54%) $0.99

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