The $1.8 Billion Illusion

A 41 year old man in Los Angeles just built a healthcare company on pace to do $1.8 billion in revenue this year with only two employees.

He doesn’t treat patients.

He doesn’t discover new drugs.

He doesn’t even dispense a single prescription.

Instead, he figured out the most profitable position in American healthcare:

standing smack in the middle of it.

Last week, The New York Times wrote an effusive profile of a shady “telehealth” company called Medvi, positioning it as a massive AI success story. And on paper, admittedly, it’s hard not to be impressed.

The founder, Matthew Gallagher, used AI to write code, generate ads, run customer service, and scale a business faster than most venture-backed startups ever could. In its first full year, the company generated hundreds of millions in revenue and is now projected to hit $1.8 billion.

So, what does Medvi do? Well, they don’t manufacture drugs, employ physicians, or operate pharmacies. Instead, they act as a UX layer on top of all of that, connecting patients to physicians and pharmacies that actually work for other companies while taking fat fees for their trouble.

What Medvi controls is the only part of the system that reliably makes money in American healthcare:

Attention, access, and the checkout page.

Strip away the AI narrative and you’re left with something much simpler.

Medvi is a customer acquisition engine attached to a prescription pipeline.

The founder himself basically says as much. His focus wasn’t on building a better medical product. It was on making the experience frictionless:

Everything else was outsourced.

Medvi subcontracted with a company called CareValidate, which essentially acted as “telehealth-in-a-box” and set them up with a network of prescribers (aka online doctors). Another company called OpenLoop Health handled shipping, compliance, and everything else. This essentially meant that all Medvi had to do was find customers who wanted medication (GLP1 users were the easiest targets), hook ‘em, and the rest would be handled by pros.

This is extremely important to understand, because that’s actually how every telehealth company you hear about operates. That’s not a criticism, it’s the business model.

And it’s nothing new.

Medvi didn’t invent this system. It just removed the last bit of mystique.

Companies like Hims and Ro have been running a version of this playbook for years. Here’s how it works…

You pay roughly $150 a month for a subscription that gives you access to a prescription.
You fill out an online form with your medical history and your goals.
A subcontracted clinician you never meet signs off.
A prescription gets routed to a pharmacy you don’t choose and shipped to your door.

And the cycle repeats.

Nothing actually comes from these companies in the traditional sense. They don’t prescribe the medication. They don’t make or dispense it. They don’t manage your care in any meaningful longitudinal way.

They simply sell that simplified access.

The worst part is that it’s likely access you already have if you have a primary care doctor. But this access is instant gratification without an uncomfortable conversation. It’s a fast, faceless transaction. You don’t have to worry about being judged by a doctor you know when you ask for your GLP. Just fill out a form and voila!

I write often about removing friction in healthcare. This is how it’s monetized.

I want to repeat this clearly one more time because it’s extremely important.

The product here is not the medication.

The product is the prescription.

Whoever controls the prescription controls the revenue stream that flows through the rest of the system. Pharma fights for it. PBMs gatekeep it. Pharmacies depend on it.

Companies like Medvi (and Hims and Ro and Shed, etc…) figured out the cheat code:

You don’t need to actually sell the drug.

You just need to control the moment someone decides they want it.

It works because the underlying system is already broken.

Patients are confused.
Access is fragmented.
Pricing is opaque.
Trust is eroding.

So when a potential customer (patient) is served a clean landing page, a simple promise, and a fast path to medication, they can’t help but click.

None of these telehealth companies actually fixed any of these issues, but they did dress them up beautifully. And they got very, very good at convincing you they are trustworthy and can give you what you want at the speed you want it.

They are taking the “care” out of “healthcare” and charging you for it.

Think about how much value there is to be extracted by leeches like this if one company with two employees can generate almost $2 Billion in a year!

This isn’t the point of today’s piece, but it’s worth noting: since The New York Times article was released, Medvi has been exposed for not exactly playing by the rules.

Medvi received an FDA warning for misleading claims.
It’s facing a class action lawsuit tied to its marketing practices.

Earlier versions of its site used AI-generated before-and-after photos and implied credibility it hadn’t earned.

But that should be no surprise to any of you. It’s just the natural byproduct of a system where growth is driven by conversion, not care.

It’s not a medical relationship.

It’s a recurring billing relationship.

It’s easy to look at this story and focus on one founder.

That’s a mistake.

Matthew Gallagher isn’t the story.
He’s the outcome. 

If Medvi didn’t exist, something else would.

When you build a system where:

We shouldn’t be surprised when someone builds a billion-dollar business by sitting in the middle of it.

In a strange way, this is one of the most efficient healthcare companies ever created.

It just optimizes for the wrong thing (and has the wrong intentions).

The illusion is that this is an AI breakthrough.

But it’s really a breakthrough in the business model.

AI didn’t create Medvi.
It just made being a middleman faster, cheaper, and easier to scale.

The real innovation was realizing that in modern healthcare, the highest-margin position isn’t discovering a drug or treating a patient.

It’s connecting the two—and taking a cut.

The money is flowing to the layer that never touches the patient.

As I always say, in the United States - Healthcare is a business.

But when the highest-margin player is the one doing the least medicine…
it’s worth asking what exactly we’re paying for…

…and who we’re actually paying.

Giddy Up

Alec Wade Ginsberg, PharmD, RPh
4th-Gen Pharmacist | Owner & COO, C.O. Bigelow
Founder, Drugstore Cowboy