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Where we share our weekly news debriefs and discussions with industry experts. These are lo-fi recordings aimed at giving our readers more opportunities to engage with our analysis and a view into some of the conversations that shape it.
Martin: Photon Health just
closed a $16 million Series A.
It was led by Healthier Capital,
changing the way prescribing's happening.
Let's bring him up.
Otto.
Oh.
What's up, health tech nerds?
Oh.
Otto: How are we?
Martin: Looking great.
What a beautiful day.
Otto: It is a beautiful day here.
I'm, I'm, uh, coming to you live from
the garbage cans in front of Photon
World Headquarters here in Brooklyn.
Martin: Ooh.
Otto: What's going on?
Yeah.
Love it.
Martin: Fancy.
Otto: We recently got
some, uh, lawn chairs.
I don't know if you can see me.
I'm in a lawn chair.
Martin: Yeah.
Otto: Uh, it's a- That's the
Martin: exact lawn chair
... Otto: to take some meetings outside of,
uh, outside of the office this summer.
So-
Martin: Love it
... Otto: uh, here I am.
How are
Martin: you
Otto: guys?
Martin: So we're great.
We're great.
We were just talking about, about
primary care docs, but I wanna
switch gears and talk a little
bit about prescribing, uh- Yeah
an area that you and I both know and love.
Before we get into where Photon
is today, can you give us a little
bit of a, a, a landscape overview
of the e-prescribing- world.
And then also, uh, uh, when you
were starting Photon, what was
your going-in hypothesis on this?
Otto: Yeah.
Great.
Um, so e-prescribing is really just a, uh,
a transmission of a clinical order from
a clinician, uh, someone who's allowed
to write a prescription, uh, which is
an interestingly broad set of folks.
It's hard to define specifically,
but let's call them prescribers.
Um, you can click a button in the
EMR or some prescribing tool, and
then a, literally an XML document
moves through the internet and a, uh,
pharmacist is able to receive that
information, fill a prescription.
There's an enormous amount of state
built on top of prescriptions,
claims, adjudications, you know,
which is really sort of this
process before it becomes a claim.
Uh, prior auth, et cetera,
et cetera, et cetera.
But if you think about just, like, a
third of medical spend now is more or
less related to drugs in some capacity.
It's not all running through
e-prescribing, uh, 'cause you've got
lots of, lots of medical benefit drugs.
But the point is, prescribing
represents sort of the anchor
point of the clinical decision for
quite a lot of costs in healthcare.
So, you know, hearing you guys
talk about, uh, primary care
costs, et cetera, like, we all...
There's so much architecture built around
claims for medical care, but really
we s- sort of see prescribing as an
opportunity, uh, for major modernization
beyond just moving a clinical
prescription between point A to point B.
That feels like as complex as
sending as, an email, really.
Um, oddly, that was a problem that
a lot of the industry fought forward
from, you know, from 2000 to really
2014, I think we started to see
serious density in e-prescribing.
Good work Surescripts.
Um, but yeah, there's a ton of
opportunity, I think, to make that
process much more modern and much
more, uh, you know, sophisticated
in terms of the consumer experience,
which is what we're focused on.
But more, more importantly, it's a
trigger point for a lot of important
clinical spend, to, to tie into
what you were just talking about.
And then you asked, what is-
I- Why, why did I start Photon?
Martin: Yeah, yeah.
I was just like, w- what was
your going-in hypothesis?
Otto: Yeah.
Oh, it was, it was, it was actually a
little bit less of that versus, like,
you know, when you see behind the curtain
of something and you realize that it
is much less sophisticated than you
think it should be, or much less, uh,
you know, in my case it was much less.
Like, there was a missed opportunity,
uh, especially around engaging consumers.
The real hypothesis was that you
could build a modern ecosystem
around prescribing for prescribers,
patients, and pharmacy.
Um, so, you know, it really sort of
started with this, like, platform modern
data network thing and then, you know,
we realized further and further going
in that the consumer experience was the
sort of differentiation aha feature that
is a result of that type of network.
Um, but yeah, the hypothesis was really
just- Dang, this tech is actually not
that much harder to, uh, disrupt or
rebuild around the consumer or build
around a, a notion of transparency.
Um, but yeah, the hypothesis has sort
of been layered on as we've gone because
we've proven a couple of them to be true.
Uh, so it's interesting four and a half
years in here how, how it's changed.
Kevin: Otto, as I was reading the, your
blog post on the funding round, one of
the things that surprised me, not knowing
the e-prescribing market as well as
you guys do, and thinking that, like,
that hypothesis is, has been generally
the same, um, all along and kind of
you've been moving i- in that direction.
You describe the layoff in June 2025.
You describe kind of putting to, to,
to rest the old version of Photon
and, um, driving forward a new version
of Photon growth going forward.
Can you articulate, like, for someone
who doesn't understand the e-prescribing
landscape quite as well, what-
Yeah ... what was the old version?
What died?
What's the new version?
What changed from a business
model perspective underlying that?
Otto: So, I mean, a lot of this has to
do with the market we're selling in.
I think, like, the, the technical
product that I just described,
albeit not that clearly, uh,
really hasn't changed that much.
Um, but the, the observation
we, uh, focused on was that this
consumer enablement was the key
thing we enabled with this network.
So selling to anyone who needed a
network is not that interesting, and
you know, in this time last year really,
there was this huge spike in GLP-1
compounding where customers were using
our network to route from a prescriber
straight to a pharmacy, which is great.
We support that.
Um, the problem is it wasn't really
emphasizing our hero use case,
which was a scenario where a patient
could shop between pharmacies
with a prescription in hand.
So, um, the...
It, it was sort of, sort of a go-to-market
pivot really toward health systems, was
focused on, you know, who are the, where
are the organizations or the consumers
who benefit the most from transparency?
And you know, in retrospect, it's
obvious looking at, uh, health systems.
Health systems benefit enormously
from transparency for a lot of
reasons, primarily 'cause patients
have a lot of trouble navigating
even within the health system.
Uh, but more so, those
patients get the least support.
They have a few minutes with a doctor,
and then it's kind of good luck.
If you're routing prescriptions that
are all the same, the digital health
companies are actually pretty good
at support, uh, especially if most of
these medications are cash paid GLP-1s.
So we actually found that the more
complex and, like, diverse the set of
medications coming out of primary care
or cardio or whatever, um, the more the
opportunity for the marketplace where
the patient receives a text, they can
click a link, shop their prescription,
see, see their insurance pricing.
Um, that actually drives a much higher
value prop for the clinical team.
Martin: I think one of the things
that's interesting about where you're
operating now with the health systems
is, like, SureScripts would, I think,
like to do this, but their hands are...
I mean, I've worked there for six years.
From the outside, it seems like their
hands are tied by their ownership, now
minority ownership, and it's just hard
for them to actually do transparency.
You're spending a lot of time
talking to health systems.
It's an interesting
moment for health systems.
I'm curious what you're hearing as
you talk to them about, um, you know,
on the patient engagement front.
What's interesting them, what's
compelling to them, and why isn't
SureScripts able to, to pull it off?
Otto: Yeah.
I mean, uh, I, I'm not here to
say that they will or won't.
I, I don't think it, it matters what
SureScripts does or doesn't do for
us to succeed, which I think is a,
is an interesting facet of, of our
business because, you know, we, we've
long rhetorically positioned ourselves
as an alternative to SureScripts.
And the reason that is, is when a
health system or a large virtual clinic
goes live with Photon, they're sending
prescriptions through our network.
Um, but I, I kinda wanna think about
this a little differently because I think
there's a lot of companies that have
changed the way that people talk about
a space because, you know, I remember
in the, in, like, the early 2000s or the
mid 2010s really, when people built a
credit card integration on the internet,
they talked about, like, a merchant
account, and you'd go, like, get this
merchant account integration thing, and
they sat on top of Visa and all of it.
And, like, then Stripe came
along, and we stopped talking
about it as a merchant account.
Even though Stripe is technically, you
know, your, your merchant of record or
whatever the hell it is, uh, w- we got
to this place where, like, Stripe was
now a platform where it supported a ton
of different things, and it was oriented
around, like, the checkout experience.
So Stripe was able to sort of reposition
a market where they sort of did the same
underlying thing, like they charged your
credit card, but the product experience
around it was substantially different,
and that was what differentiated them.
We're trying to do the same thing
where, yes, we send e-prescriptions, but
e-prescriptions are a fricking commodity.
Like, if we could, we would make them
free or as cheap as possible to send.
You know, and we're really sort
of lowering our prices to transmit
as we grow, as, as, as economies
of scales make it cheaper for us.
But the l- larger phenomenon is, like,
the value we create is not in sending a
prescription, it's in actually helping the
patient get their medication physically.
And I think that if you think about this
in terms of the value to healthcare,
g- going and solving a much bigger
problem than moving an XML document
on the internet is really our calling.
Um, which I think is sort of the key
thing that's been true across our whole
journey at Photon, is we don't wanna just-
Solve simply the technical integration
problem, but actually the human
problem of did you get your medication?
Uh, which if you think about
that in terms of the value to
a health system is enormous.
Of the value to a payer is enormous.
The value to a pharma
company i- is enormous.
Like, the, uh, market itself is
inefficient between those three parties,
and if you can increase the likelihood
of those, that event occurring, that
transaction, that payment, that clinical
authorization occurring more rapidly, if
you will, uh, the value is pretty huge.
So, you know, that is
kind of an open problem.
It's existed well before Photon,
and I don't know what has kept other
organizations from solving it before
us, uh, other than the fact that
the immediate ROI on solving that
problem is a little complex to unlock.
Kevin: Yeah.
It's
Otto: like a, it's a hard problem.
Kevin: So in many ways it, it, like
it, it feels like you're expanding to
it, like, you know, having sat inside
health system and payers before, like,
there's always this conversation of last
mile engagement, how you actually...
It's one thing to tell a patient to
go take their, you know, Lasix dose
for heart failure, what have you.
It's another thing to actually make
sure that that happens, get the
data on it, understand what's going
on, track outcomes against that.
Am I hearing you right in saying that you,
like, y- you're stepping into that space
over time, and that's where you think
the interesting space is to play of that,
like, last mile engagement nut to crack?
Like, how- Yeah ... how are
you thinking about that?
Yeah.
Otto: Yeah, I mean, I, w- by, by means
of building a product that, uh, you know,
sends a prescription to a patient via
text- Yeah ... the opportunity to take
on a lot more responsibility for- For
Kevin: sure
... Otto: the state changes
related to a prescription.
So the obvious ones being,
is this pharmacy open?
Is this pharmacy nearby?
Uh, does this pharmacy take my insurance?
Is this pharmacy in stock?
Like, just basic fulfillment level stuff.
Kevin: Is the pharmacist on break-
Does this pharmacy- ... and I have
to wait for, like, 35 minutes?
I mean- Because I didn't know
they're on break before I get there.
Yeah, it's cra- sorry.
Otto: Lunch hours are real.
Lunch hours are real.
Um, and then more so we, we realize that
there's like nine other really complicated
transactions that sit behind this.
Prior auth is one we're
starting to think a lot about.
Uh, you know, not to mention the
actual adjudication or cost associated
with that medication varies depending
on a lot of different factors.
So, you know, there's like 12
different ways to pay for a
medication, it feels like these days.
Um, not, not, not including
the different pharmacy options.
So, you know, the, the big goal for
us is to sort of streamline all the
different decisions that g- go from
clinical order all the way through to
physically receiving your prescription,
where e-prescribing is only one
tiny component of that, and arguably
not the most important component.
It's a good gateway to go solve
these other problems, though.
And again, this is, you know, a common
startup company strategy, which is like
go take a sort of antiquated part of
the market, go solve a problem there,
and then go expand into the downstream.
Uh, yeah, I don't think we're
doing anything that crazy.
Our roadmap in some ways is
honestly kind of obvious.
Martin: Last question for you, um,
and then I'll let Kevin hop in.
But how much of the, the problem is
for, for, you know, sort of patient
engagement is price sensitivity
versus some other stuff that I guess
that people would, would not expect?
Otto: So price sensitivity or like
i- in some ways difference between
pharmacies isn't yet the problem,
because most patients don't even know
the price of the first pharmacy, at
least until you get to the counter.
So we think of shopping a little bit
less in the current state around,
you know, this pharmacy versus this
pharmacy, though that is important.
Some pharmacies are in
your network, some are not.
Uh, s- you know, some pharmacies are
just more expensive than others, period.
Um, you have this problem where
just knowing the price at all is
actually the bigger issue in pharmacy.
So, you know, we're focused primarily
on this notion of like a, a cost
basis, because when you go into
Walmart and purchase milk, you
have a cost basis for milk, right?
You, you know what a fair price is
relatively speaking, and you'd know
when to say, "Wow, that's a whole lot
for, you know, half a gallon of milk."
Um, so much so that you can even
disambiguate between different
offers of milk in the same store.
Uh, you know, this is the premium
milk, uh, you know, at, at $4.50.
So, uh, in some ways I think getting to
that level of granularity where consumers
feel like they have a cost basis in
prescribing is really what we think about.
Um, and it's amazing how many people
miss that w- when their own experience
in pharmacy yields, like you have no
idea what something costs, and the amount
that you pay for it actually has very
little to do with how much you're willing
to pay to access the treatment on the
other end of the, of the prescription.
I think that's actually a huge problem
in the way that the market works.
But we're not solving that one yet.
Kevin: Otto, if I'm a primary care doc
or other doc in a system who's listening
to you talk and who's like, "Yeah, I
want Photon for, you know, my patients
to, to get access to," where are you
finding entry points in health systems?
Who should they be sending you
to talk to inside their system?
Like, what's the, what's the sales
process of getting a health system
to say, "Yep, we're on board"?
Otto: So without a doubt, the f- the
health system pharmacy Uh, is the best
place for us to, to work because I think
they see the underlying inefficiency
because in a lot of ways the pharmacy
at a health system sort of holding
the bag operationally for a lot of,
a lot of upstream complexity like
patients, A, not even showing up, not
knowing what their medications costs.
Um, you know, pharmacies are operational
powerhouses and health system
pharmacies have a lot of opportunity to
basically take some of the operational
burden and put it either into the
patient experience or automate it,
which is a lot of what we're doing.
Um, so that's just where
pharmacies are most focused.
It's also where the ROI is,
is creative directly in terms
of pharmacy transparency.
Um, health systems from a clinical
perspective also usually always have
like one, you know, CMIO type who's a
huge champion for clinical experience.
Those folks generally love what we're
doing, but they're not our buyer,
primarily because they don't think about,
uh, the prescribing already exists in
all their workflows, so we're not really
doing anything net new for the clinician.
We're really doing something
net new for the patient.
And I think this is actually an
interesting phenomenon that Blake, uh,
wrote about in the hospitalogy coverage
of Photon, that there isn't really a
structure within health systems from an
executive perspective where someone owns
the patient experience end to end from
an ROI or from a financial perspective.
And, you know, Blake, I think,
has been kind of pushing on this
directive for, for a while, and, and
he's not the only one doing this.
Like, health systems need to think
about patients from an LTV perspective.
And Blake actually made an argument
more clearly than I think I've
made it to a health system, which
is that a patient interacts with
primary care maybe once a year.
W- I think the stats officially are 1.8
across the whole population.
They interact with pharmacy 10
times more often, uh, especially
if they're on multiple medications.
So you get to this point where, okay, the
obvious consumer touch point for a brand
to focus on is the pharmacy touch point.
You could even think of a world where
the health systems operate around the
cadence of pharmacy fulfillment more than
they do around medical claims or labs.
Uh, w- which could start to make
sense, especially if you think about
what actually makes people better.
You know, a doctor can spend as
much time as they want with you,
but it's not gonna make you better.
They need to either cut you open
or put medication inside of you.
Maybe they can give you a medical device.
So there's one that is the most common
treatment pathway, so it does actually
make sense at scale, especially as AI
becomes increasingly able to provide
clinical care directly, that health
systems should operate around pharmacy.
And if you start to look at the books
a little bit closer, health systems
already operate around pharmacy from
a margins perspective, so it's not
too much of a stretch to think about
health systems really as Much more
complex pharmacies in the future.
Um, and, and I think that, you know,
I'm not the first to say that out
loud, but that's, that's why we
spike on, you know, CPOs and VPs
of ambulatory as our core buyers.
Martin: Well, if I am a CPO or a, a
VP of ambulatory and I wanna get in
touch and bring Photon in, what's
the best way for me to reach out?
Otto: Honestly, just, uh, you
know, send, send us a note.
I think, you know, uh, no one likes
going through a sales channel, right?
You know, like signing up on a
website or emailing sales@photon.
But I think, you know, just send
me a note, otto@photon.health.
Um, and, and, you know, let me know
where some of your pain points are.
Like, whether it be, uh, you know, helping
patients understand what, you know, where,
what pharmacies are available to them.
I think one common pain point we
hear among clinical leaders at
health systems are that pharma
rapidly around their locations.
So building infrastructure inside
of the health system experience that
helps patients navigate that, uh, is,
is critical for them meeting outcome
as, outcomes measures or, you know,
let alone just, like, providing care.
Like, these, these
systems care about that.
So yeah, drop us a line.
Um, we've actually this week oddly been
having a lot of health systems sign
up on our website, which is kind of an
amazing thing, um, that, like, health
systems are signing up on our website.
So, uh, yeah, feel free to sign up on
our website and we'll shoot you a note.
But generally speaking, we're trying
to be as responsive as possible,
uh, to folks who, who reach out.
Martin: Otto, appreciate the time.
Best of luck with everything.
Enjoy that beautiful
Brooklyn, Brooklyn afternoon.
Otto: Appreciate you guys.
Thanks for your time.
Thanks, Otto.
Martin: See you.
Otto: Bye.