Capsule
New York digital pharmacy founded by Eric Kinariwala in 2015 that hit a $1B+ valuation in 2021, then faced a 2022 data breach affecting 27,000 customers — not the fashion trade show of the same name.
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- Location
- New York City, New York, United States
- Country
- United States
- Known for
- New York-based digital pharmacy offering same-day prescription delivery with pharmacist access by text, email or phone
- Founded
- 2015, in New York City, by Eric Kinariwala
- Model
- App-based pharmacy that works directly with doctors, insurers and health systems; delivery was free and same-day (two-hour windows at launch)
- Funding
- More than $570m raised through 2021, including a $300m round in April 2021 that valued the company above $1b
- Investors
- Durable Capital Partners, Baillie Gifford, T Rowe Price, Whale Rock (2021); earlier TCV, Thrive Capital, Glade Brook Capital Partners, Virgin Group, Sound Ventures
- 2022 breach
- Data breach affecting more than 27,000 people, attributed to 'password spraying'; followed by a proposed class action
- Not to confuse with
- Capsule, the fashion-and-lifestyle trade show founded in 2007 and acquired by Reed Exhibitions in 2014 — a separate entity
Overview
Capsule is the New York–based digital pharmacy that tried to rebuild the pharmacy experience around same-day delivery and direct pharmacist access — and became one of the flagship venture-backed bets of the pre-2022 digital-health boom before a data breach and the sector’s funding freeze tested it. Founder and CEO Eric Kinariwala founded the company in 2015, after a frustrating personal experience at a chain pharmacy, with the stated aim of modernizing pharmacy “not just for consumers, who face the familiar frustrations of conventional retail pharmacies, but also for doctors, hospitals, insurers and manufacturers” (Chain Drug Review). This profile covers the pharmacy (capsule.com) — not the unrelated fashion-and-lifestyle trade show also named Capsule, founded in New York in 2007 by the BPMW partners and acquired by Reed Exhibitions in 2014 (MR Magazine).
The model: a holistic, doctor-facing pharmacy
Capsule’s pitch was that the pharmacy — “the largest retail category in America” and the highest-frequency healthcare interaction — had gone unchanged for a century (Chain Drug Review). Patients received prescriptions by text as soon as their doctor called them in (no account needed), then scheduled free same-day delivery within a two-hour window, while Capsule coordinated refills with the doctor and co-pays with the patient’s insurer (Chain Drug Review). The platform also served prescribers directly: its software let doctors set up refill preferences and specify alternate drugs when a patient’s insurance wouldn’t cover the first choice, giving them visibility into patient behavior to improve fill rates (MedCity News). Beyond delivery, Capsule operated a physical storefront pharmacy in New York’s Chelsea neighborhood, and pharmacists were reachable by text, call or chat (MedCity News).
Venture capital and the unicorn round
Capsule’s funding history is a clean record of the digital-health capital cycle. After a $20m Series A in 2017 led by Thrive Capital (with Virgin Group and Sound Ventures) and a $50m Series B in 2018 led by Thrive and Glade Brook Capital Partners, TCV led a $200m round in September 2019 that funded expansion beyond New York City, where the company then reported about 60,000 customers (Global Venturing; MedCity News). In April 2021, Durable Capital Partners led a $300m round joined by Baillie Gifford, T. Rowe Price and Whale Rock, valuing Capsule above $1 billion and bringing total funding past $570 million (Fierce Healthcare). By then the ambition had grown beyond delivery: the company planned a “one-stop-shop” digital-health marketplace — telemedicine and mental-health support curated inside a single app — built on APIs it had already developed for partners including the insurer Oscar and mental-health startup Ginger (Fierce Healthcare; MedCity News).
Competition in a crowded market
Capsule entered the national stage as retail pharmacy was being disrupted from several directions. Chain Drug Review framed the 2018 $50m raise as arriving “on the heels of the Amazon/PillPack deal,” and by 2019 Capsule was competing against Amazon-owned PillPack and NimbleRx (Chain Drug Review; MedCity News). In November 2020 Amazon rolled out its own Amazon Pharmacy service with free two-day delivery for Prime members, while UnitedHealth acquired the startup DivvyDose and Walmart bought medication-management technology from CareZone — alongside independent players such as GoodRx, NowRx, Medly Pharmacy and Alto Pharmacy (Fierce Healthcare). A Penn State healthcare business professor told MedCity News that Capsule could expect to grow but was “unlikely to overtake larger players,” predicting it would more likely become an acquisition target (MedCity News).
The 2022 breach — and the 2022 downturn
In June 2022 Capsule reported a network-server breach affecting more than 27,000 people. The company said the attack was likely an instance of “password spraying” — attackers trying login credentials stolen from other companies’ breaches — and a third-party cybersecurity firm concluded the breach was not a result of weaknesses in Capsule’s security infrastructure, a company spokeswoman told Crain’s New York Business (KFF Health News). A proposed class action followed, alleging the breach — dated in the complaint to April 5, 2022 — had exposed patient names, contact details, medical conditions, prescribed medications, order histories, insurance information and chat messages with Capsule agents, and charging that the company had failed to maintain adequate cybersecurity procedures; the suit also said Capsule’s breach notice omitted how the attackers got in and how long they had access (ClassAction.org). The breach arrived in the same season as the digital-health funding freeze: an industry roundup reported that Capsule released 13% of its more than 900 staff that summer, amid a wave of layoffs across the sector (Telecare Aware).
What this profile does not claim
- This profile does not cover the Capsule fashion trade show — a separate entity founded in 2007 and acquired by Reed Exhibitions in 2014 (MR Magazine).
- It does not assert Capsule’s current (post-2022) funding, valuation or operating status; no citable independent source for that period was found.
- The 2022 layoff figure rests on a single tier3 industry roundup and is stated with that attribution; no tier1/tier2 confirmation was found.
- The outcome of the 2022 breach class action is not stated; no verified ruling was found.
- Financial figures (funding rounds, valuation, total raised) are company-reported numbers carried by independent press, not independent audits.
Timeline
- 2015
- Eric Kinariwala founds Capsule in New York City to modernize the pharmacy experience for consumers, doctors, hospitals, insurers and manufacturers.
- 2017
- Capsule raises a $20m Series A round led by Thrive Capital, with Virgin Group and Sound Ventures participating.
- 2018
- A $50m Series B round led by Thrive Capital and Glade Brook Capital Partners funds the start of a national-expansion plan, just after Amazon's acquisition of PillPack.
- 2019
- A $200m round led by TCV, with Thrive Capital and Glade Brook returning, targets expansion beyond New York City, where Capsule reports about 60,000 customers.
- 2021
- A $300m round led by Durable Capital Partners values Capsule above $1b; total funding passes $570m. The company announces a 'one-stop-shop' digital-health marketplace ambition beyond pharmacy.
- 2022
- Capsule reports a network-server breach affecting more than 27,000 people, attributed to 'password spraying'; a 52-page proposed class action complaint follows. Separately, an industry roundup reports layoffs of 13% of a 900-plus staff.
What we could not verify
These claims came up in research and could not be confirmed. They are recorded here rather than published as fact or quietly dropped. If you hold a source that settles one, please tell us.
- The 2022 layoff figure (13% of more than 900 staff) rests on a tier3 industry roundup; no tier1/tier2 confirmation was found, so it is stated with attribution only.
- Kinariwala's education and pre-Capsule career (reported in podcast bios as Bain Capital/Perry Capital investing and Wharton/Stanford degrees) could not be verified from a citable fetched source and are not stated.
- No independently verified post-2022 operating or funding status was found; the most recent citable milestones date to 2022.
- The outcome of the 2022 breach class action could not be verified from a citable source and is not stated.
Sources
9 sources (7 tier 2, 2 tier 3), each opened and read against the claim it supports. Every source is independent of the subject; no first-party material is cited. See the source policy.
Profile built entirely from independent journalism and trade press; no Capsule-owned pages, press releases or blogs were used. The fashion trade show sharing the name is disambiguated via MR Magazine.
- Supports: $300m round led by Durable Capital Partners (Baillie Gifford, T Rowe Price, Whale Rock); >$1b valuation; founded 2015; >dozen markets; $570m total raised (per Crunchbase); $200m prior round; Ginger tie-up; Amazon Pharmacy rollout Nov 2020; competitors GoodRx/NowRx/Medly/Alto; 'one-stop-shop' ambition Open original source
- Supports: $1b+ valuation per CEO; same-day bike/car delivery; digital-health marketplace plan; HealthPartners partnership; APIs for Oscar and Ginger; Amazon PillPack acquisition (2018) context Open original source
- Supports: $200m from TCV/Thrive/Glade Brook; ~60,000 NYC customers; launch in 2015; Chelsea storefront; two-hour free same-day delivery; doctor software (refill preferences, alternate medications); online 1–1.5% of $350b retail pharmacy sales; Penn State professor on competitive outlook Open original source
- Supports: Full funding history — $20m Series A (2017, Thrive-led, Virgin Group, Sound Ventures); $50m Series B (2018, Thrive and Glade Brook-led); $200m (Sept 2019, TCV-led); $300m round; $570m total Open original source
- Supports: $50m from Glade Brook for national expansion; NYC-only at the time; founding 2015 to serve doctors/hospitals/insurers/manufacturers; two-hour delivery; doctor platform mechanics; 'strongest independent player' positioning; Amazon-PillPack deal context Open original source
- Supports: Breach of >27,000 people reported; attributed to 'password spraying' per company; third-party review said not a fault of Capsule's security infrastructure (per company spokeswoman), citing Crain's New York Business / Modern Healthcare Open original source
- Supports: Disambiguation — Capsule the fashion trade show founded 2007 in New York by BPMW partners Edina Sultanik, Minya Quirk and Deirdre Maloney; acquired by Reed Exhibitions; a separate entity from the pharmacy Open original source
- Supports: Proposed class action over the breach — breach date April 5, 2022; 52-page complaint; categories of data alleged exposed; allegation that the notice omitted details; used as corroboration of the breach's legal fallout, not as the record of the breach itself Open original source
- Supports: Corroboration only — Capsule reportedly released 13% of a 900-plus staff in the summer-2022 digital-health layoff wave; flagged as tier3-only in openItems Open original source
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