# Pharmapacks (Packable) (2010 – 2022)

- URL: https://girisimcikafasi.com/en/startup-graveyard/pharmapacks/
- Sector: E-commerce
- Country: United States
- Total funding: unknown
- Unicorn: yes, peak valuation $1.1 billion
- Cause of closure: Ran out of cash

## What did it do?

Pharmapacks began as a single pharmacy and became an e-commerce company selling health, personal care and beauty products on Amazon, Walmart and Target. It was based in Hauppauge, New York. Marketplace Pulse said it had been Amazon's top seller on 1,730 of the previous 1,825 days and was also the largest seller on Walmart's marketplace. It also offered e-commerce and fulfilment services to brands.

## Why did it shut down?

Carlyle invested more than USD 250 million in November 2020, at an enterprise value of about USD 1.1 billion. In September 2021 a USD 1.55 billion SPAC merger with Highland Transcend Partners I was announced. Marketplace Pulse estimated a loss of USD 112 million on sales of USD 452 million in 2021, with profitability pushed out to 2024. On 24 March 2022 the parties terminated the merger, citing unfavourable market conditions. The company told staff its search for financing had been unsuccessful and dismissed most of its workforce. Packable Holdings filed for Chapter 11 in Delaware on 28 August 2022 and began selling its assets in pieces.

## The story

Pharmapacks began with a single pharmacy. Years later it had become perhaps the strongest third-party seller on Amazon. Marketplace Pulse said it had been number one on 1,730 of the previous 1,825 days. Annual sales passed USD 500 million.

In November 2020 Carlyle's investment of more than USD 250 million put the company's enterprise value at about USD 1.1 billion. The next step was to go public under the name Packable. In September 2021 a USD 1.55 billion SPAC merger with Highland Transcend Partners I was announced.

But the company was losing money. Marketplace Pulse estimated the 2021 loss at USD 112 million, and profitability had been pushed out to 2024. As the SPAC market shut in early 2022, the parties terminated the merger on 24 March 2022. The company looked for financing and did not find it. A notice saying its efforts had been "ultimately unsuccessful" was followed by the dismissal of most staff. The Chapter 11 petition of 28 August 2022 was not a rescue but a way to sell the company in pieces.

## Lessons

- Volume does not replace profit. Being first on Amazon for 1,730 days does not keep a company alive if it cannot cover high operating costs.
- If your rescue depends on a SPAC merger, keep a separate cash plan for the day it is cancelled. Here only five months passed between termination and bankruptcy.
- On a marketplace, your margin rests on someone else's fee table. If a 45% gross margin turns into a loss after operating costs, fix your unit economics first and grow afterwards.

## Sources

- [Top Amazon Seller Pharmapacks Files for Bankruptcy](https://www.marketplacepulse.com/articles/top-amazon-seller-pharmapacks-files-for-bankruptcy)
- [Carlyle-Backed Amazon Seller to Liquidate After SPAC Collapse](https://news.bloomberglaw.com/bankruptcy-law/carlyle-backed-amazon-seller-to-liquidate-after-spac-collapse)
- [Carlyle makes growth investment in Pharmapacks](https://www.carlyle.com/ja/node/33021)
- [Highland Transcend Partners I Corp. Form 8-K on termination of merger agreement](https://www.sec.gov/Archives/edgar/data/1828817/000110465922038085/tm2210489d1_8k.htm)
- [Highland Transcend Partners I Corp. (HTPA) Terminates Packable Deal](https://www.spacinsider.com/news/mhaddad/highland-transcend-partners-i-terminates-packable-deal)