by In eight months, a startup called NextMed has emerged as a growing service among many trying to capitalize on the craze for drugs like Ozempic, Wegovy and Mounjaro that are commonly prescribed for weight loss.
Run by a founder who graduated from college 14 months ago, the service has web traffic that has surpassed companies like Calibrate Health Inc. and Found Health Inc. that have been advertising weight-loss recipes longer. NextMed, whose parent company is Helio Logistics Inc., operates with far fewer employees than its competitors. Calibrate has hundreds of employees, and Found has around 200.
As with many telehealth startups, NextMed’s growth has come primarily from advertising, including ads that healthcare professionals have said are inappropriate. Company ads reviewed by The Wall Street Journal do not include information about drug risks, and NextMed has promoted one drug — Ozempic — for a use not approved by the US Food and Drug Administration.
The company used before-and-after photos that showed significant weight loss by people who were not its customers. A leading customer review site questioned whether some of the company’s reviews were fake. NextMed has also faced complaints from patients who say they paid for services they never received.
NextMed said most of its customers are satisfied with the service. “We continue to update our policies and procedures to serve our customers’ needs, which is reflected on our current website,” a spokesperson wrote in a statement.
After questions from the Journal, NextMed pulled an ad that ran on Instagram, stopped running TV ads and changed or removed elements on its website.
NextMed’s practice is the latest example of a tech startup using aggressive advertising to boost business by facilitating online prescriptions. Lawmakers have called for more oversight of telehealth advertising after a journal analysis found that many published ads promoting drugs for off-label uses that described the drug’s benefits without mentioning risks.
A lawyer for NextMed, Adam Greene, said the company has raised $7 million to date and that it would generate less than $10 million in revenue by 2022.
A January NextMed fundraising presentation reviewed by the Journal says the company’s revenue jumped to an average annual rate of $55 million at the start of this year, up from $1.5 million in July. A journal analysis of these revenue rates would imply approximately $9 million in 2022 sales.
The presentation was prepared by an investor and circulated as part of an effort to raise about $30 million for the startup to fund further growth initiatives.
NextMed said it did not distribute the presentation and that the numbers the Journal asked about were incorrect.
Visits to NextMed’s website increased to 776,000 in January from 64,000 in July, according to Similarweb, a research firm that measures web traffic.
NextMed’s website included fake testimonials from ‘Laura’ and ‘Rick,’ which the company removed after the Journal asked about them.
Photos of Tammy Ratcliffe’s weight loss from an article about her gastric bypass surgery, which she received through Hartford HealthCare. Pictures of Jack Boyce’s weight loss first appeared on the website of AFS Premier, the diet and fitness consultant he worked with.
A key way NextMed differentiates itself from rivals, according to the presentation, is with software designed to quickly process insurance approvals for the drug. Without insurance coverage, the popular new medications prescribed for weight loss can cost more than $1,000 a month. Ozempic and Mounjaro are approved to treat diabetes, but are often prescribed “off-label” for weight loss. Wegovy has the same active ingredient as Ozempic and is approved for weight loss in obese patients.
According to the presentation, the company manages with fewer employees partly through outsourcing. External companies provide telehealth clinicians, and workers in the Philippines handle other customer-related issues, the presentation said.
NextMed’s founder, Robert Epstein, graduated from the University of Pennsylvania in December 2021 with an undergraduate degree in economics and computer science. The presentation calls him “brilliant,” citing his perfect SAT scores and internships in private equity and high-frequency trading.
Epstein started NextMed as a Covid-testing business in 2020 and switched to weight loss drugs last July, the presentation says.
Developed to treat type 2 diabetes, drugs such as Ozempic and Mounjaro have shot up in popularity after celebrities were said to have used them to lose weight. Elon Musk tweeted last November that “Ozempic/Wegovy” helped him lose 30 kilos.
Health professionals criticized some of the company’s social media ads, along with those of some rivals, because they featured non-obese actors. Promoting weight loss drugs to people who don’t need to lose weight can lead to problems like body dysmorphia or eating disorders, health professionals said.
NextMed said it is working to comply with all applicable advertising requirements.
One of the company’s first TV ads promoted Ozempic as a weight loss drug, although the FDA has not approved it for that purpose. Like some other NextMed ads, it did not include safety or risk information as the FDA requires of drug manufacturer ads. NextMed is not a drug manufacturer and, like other telehealth companies that have promoted prescription drugs, exists in a regulatory gray area.
The ad, which began running in December, was viewed 99 million times on networks including Fox News, ESPN and MSNBC, according to TV measurement firm iSpot.tv Inc.
The ad asks, “Are you trying to lose weight?” before showing boxes of Ozempic and Wegovy stamped with NextMed’s logo. The two medicines are made by Novo Nordisk A/S. Three smiling people have photos of themselves looking heavier while the ad shows how much weight they lost with NextMed.
It is not clear if the photos are real. The ad says that the people used the medicine, but also that they were paid. Subsequent ads with the same people say they are actors.
NextMed stopped running national TV ads on Feb. 7, iSpot data shows, a few days after the Journal asked about them.
Like other telehealth companies, NextMed connects clients with doctors who can write prescriptions for them and then charges ongoing monthly fees for refills. It requires patients to perform blood tests to see if they are eligible for weight loss drugs. It said on its website that the waiting time for a “consultation and prescription” is one day, but it is not clear how that is possible when clients have to give blood and doctors have to review the data. The company did not respond to a Journal inquiry about the one-day claim, but it was removed from its website shortly after.
The Journal spoke with six NextMed clients who paid for the service but said they didn’t get the easy access to prescriptions they expected after seeing NextMed’s ads. Four of them said the company did not respond to refund requests or customer service emails before posting negative reviews on sites such as Trustpilot.
An image from a NextMed TV ad for the weight loss service shows Ozempic, a diabetes drug that is not approved for weight loss, although doctors often prescribe it for that purpose.
Ximena Balbuena, a systems analyst from Virginia, said she signed up after seeing an ad and had a blood test, but decided to cancel when it appeared her insurance wouldn’t cover a prescription. When she asked for a refund in November, the company said it would and asked her to remove a YouTube video she made complaining about her experience. She has not received a refund, she said.
Michelle Festi, of Florida, said a NextMed representative offered an Amazon gift card if she removed the negative review or made it positive. She refused.
The company did not respond to questions about the experiences of Ms. Balbuena and Festi.
In a Journal test of the sign-up process, NextMed charged $99 for its first month of service and locked customers into a one-year contract, which wasn’t disclosed until checkout, all before they asked health-related or eligibility questions.
The company said in a statement that users are charged an initial fee for the intake process. NextMed did not respond to questions asking why the yearlong commitment was not disclosed in advance. Following the journal’s inquiry, the company added a link to the membership agreement on the payment page.
The Journal identified two before-and-after statements on NextMed’s website that previously appeared on other, unrelated websites. One claimed that “Rick” lost 98 pounds with NextMed. Identical photos of Jack Boyce appear on a website for AFS Premier, a fitness and nutrition program in Dallas. Mr. Boyce, who is his real name, said in an interview with the Journal that he lost 120 pounds with a punishing diet and exercise regimen from AFS.
“You can’t take diet pills and get the results I got,” said Mr. Boyce, who added that the photos were taken in 2020, two years before NextMed launched its weight-loss service.
Another set of photos showing “Laura” were identical to photos of Tammy Ratcliffe before and after her gastric bypass surgery in 2007. She said she was disappointed that photos of her were being misused.
NextMed removed the “Rick” and “Laura” photos minutes after the Journal asked about them. Mr. Greene, NextMed’s lawyer, said it was “misled by the people who shared the photos.”
Trustpilot said it warned NextMed of “suspected fake reviews” for NextMed on Trustpilot’s website and said a widget on NextMed’s website that mimicked Trustpilot’s logo displayed potentially misleading information. The widget claimed a higher rating and more reviews than was the case on Trustpilot.
Mr Greene said a dispute between NextMed and Trustpilot had been resolved. NextMed replaced the widget after the Journal asked about it.
Write to Rolfe Winkler at Rolfe.Winkler@wsj.com
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