Spokane-based H-Source Holdings Ltd., which owns young online medical marketplace H-Source Inc., went public on the Canadian Securities Exchange earlier this month. 

The company, which is trading under the symbol HSI, released 50 million shares, with a 3 million share holdback.  Through the initial public auction, H-Source raised $3 million Canadian, which as of earlier this week equated to about $2.3 million U.S.

As of Oct. 20, H-Source stock was trading at 14 cents per share. It had peaked at 18 cents a share shortly after the IPO. 

John Kupice, CEO of H-Source Inc., says the public offering provides liquidity for the company’s  shareholders and the ability to raise additional capital.  

“This, in and of itself, is a major benefit for investors and us alike,” he says.

Murray Walden, the company’s founder and president, says now that H-Source’s software platform is robust and capable of handling transactions, as well as providing back-end support for hospital staff, the company can focus on increasing its client base.  

“We are looking forward to hitting the ground running and introducing our current and new clients to the 2.5 version of our software,” says Murray. 

Kupice says that if the expansion goes well, H-Source will be adding up to 15 new employees, with more than half of them in its Spokane headquarters, located in the McKinstry Innovation Center, at 850 E. Spokane Falls Blvd.  

The company currently has 12 employees, with six of them working out of that location.

H-Source is a wholly owned subsidiary of H-Source Holdings Ltd., based in Spokane. The company has an office in Vancouver, British Columbia, that handles corporate accounting and regulatory function, but its daily operations are run from the Spokane offices.  Those operations include software management, accounting, sales, customer support, staffing, and board of directors meetings, Kupice says.

After a two year start-up, fundraising campaign, platform development, and due-diligence vetting process, Kupice says he feels confident that H-Source can bring sustainability, cost cutting, and communication to the medical community through its online marketplace. 

There, at h-source.com, hospitals and surgery centers are able to buy and sell medical products and equipment with each other.

Walden worked as a medical device sales representative for 15 years and noticed a significant amount of waste when it came to medical devices, pharmaceuticals, and equipment.  

One of the main factors was that there was no network in existence for hospitals to interact and purchase surplus supplies from one another. 

The solution to this issue percolated for years in the back of his mind. It wasn’t until 2012 that Walden says he finally put pen to paper and started the process of finding a solution and whether a viable business idea existed within the confines of that solution.

Walden says he put together a bare-bones software platform and—with early support from a few hospitals—started H-Source. 

Providence Sacred Heart Medical Center was an early supporter, specifically Tony Hill and John Gilliland who provided products for listing on the site and also offered valuable feedback. 

After a year of pounding the pavement, knocking on doors and running H-Source on his own, a turning point was reached.

It became apparent to Walden that certain back-end supply chain technology requirements were needed to make the software system more compatible with hospitals. The software needed to be reworked, and Walden says he needed capital to make that happen. 

“Basically, I had a working website, some foundation clients, a great idea, alpha and beta testing completed. I had learned a lot of lessons and knew what not to do, and had a large laundry list of items that needed to be re-worked. That takes time and money and I was running out of both,” Walden says.

If he couldn’t find the capital, he had to consider going back to working as a sales representative. He put the word out that he needed a CEO with background in startup capitalization, current technology platforms, and a working knowledge of the medical industry.  

“This was a tall order, with a very specific skillset. I wasn’t sure I would find someone, period, much less right here in Spokane.  Some networking at the McKinstry Innovation Center led me to an introduction to John Kupice,” Walden says.

Kupice gained most of his experience at the big multinational Ernst & Young professional services firm, working for 15 years as a consultant providing enterprise resource planning and implementation for software company Infor Lawson.That work included continuous process improvement, business migration services, and mergers and acquisitions.

“When John came aboard, we worked hard on preparing a business plan, projections, and a prospectus so that we could seek investment dollars. We had to drill down and define a business model that was scalable. Our work styles and background complemented each other well,” says Murray.  

The process of seeking capital started by contacting friends and family.  

“We let them know that Murray and I were all in and that we needed the capital to take our software platform to the next level,” Kupice says. “Once that was complete, we would have a working business model that was really exciting.”

He adds, “As we started making phone calls and networking, things began to fall into place, and we were presenting our business plan to investment groups. Certainly our prospectus was a selling point, but often it was the in-person meetings that provided solid opportunities.”  

Kupice asserts that Walden’s passion, medical-device background, and contacts, coupled with his own ability to manage data, accounting, talent, and other resources, gave the startup company a well-seasoned and experienced executive management team.  

Initially, Kupice says that he and Walden didn’t plan to go public. It was a stipulation of their investors, however, and after discussing it at length, they decided to move forward. 

“It was a huge undertaking, but it showed that we are serious, that we are willing to work through the required due diligence, that our accounting is transparent, that we managed our funds reputably and conservatively,” he says. 

Kupice adds, “Ultimately, this process lends credibility to your business, and that is never a bad thing.”

The leadership at H-Source continues to look into new possibilities for the company’s platform, and is excited about providing a solid way to decrease medical waste, help hospitals reduce their environmental footprints, and repurpose their overstock. 

Walden says H-source also has a corporate social responsibility plan in place. Currently, the H-Source platform is built for hospitals to allocate products to the “Donation/Mission” section, through which it provides an access point for qualified nonprofits to acquire needed items from one location. 

Additionally, in the future, H-Source would like to form a foundation for charitable giving, the executives say.