Apothecary Rx, LLC formed by Lew Zeidner and Jim Cox in Minnesota acquires independent pharmacies lcoated in or near health clinic or health system
The 10-month-old Golden Valley, Minn.-based company offers independent pharmacy owners the opportunity to work fewer hours or transition to retirement while maintaining their pharmacy name, staff, and way of doing business.
ApothecaryRx has acquired eight pharmacies-three in Oklahoma, two in Minnesota, one in Missouri, and an additional two in St. Cloud (Minn.) Medical Clinic. The company plans to acquire eight additional pharmacies by the end of 2007 in Minnesota, Wisconsin, and the Midwest.
Noting that most of the pharmacies that have been acquired have been operating continuously for 30 to 100 years, Zeidner said that "the average store we are looking at has $8 million in top-line sales and 85% to 90% of their sales are from Rxs." He said pharmacies are paid roughly three times their net earnings.
Zeidner went on to say that many pharmacy owners who are nearing retirement want to be relieved of some of the responsibilities of day-to-day ownership. "Our model allows them to work as much or as little, for as long or little a time, as they want to once the transition is completed."
Jim Cox, R.Ph., VP of operations, chimed in, "We're trying to offer the independent owners an option that preserves their legacy. They spend a good portion of their life putting together this environment and building their business. This gives them the opportunity to gracefully take a step away, and keep that intact rather than dissolving it. It also allows them to take care of all their employees and maintain the same level of customer service."
Pointing out that some pharmacy owners are also anxious about independent pharmacy's future because of cuts in reimbursement, Zeidner said, "They want to manage their risk factors by cashing out so they can diversify their personal assets and reduce some of that risk."
ApothecaryRx invests in store remodeling, marketing, and enhancing employee benefits.
Cox added, "Independent pharmacy owners are challenged by having to work the bench, manage staff, third party, and human resources. We take all of the noise of the distraction of the back end of the pharmacy off their plates in this process. We keep the front end of their operation the same. We work in supporting these transitions and really taking care of the needs of the employees."
Shortly after being acquired, the stores are converted from their distributor to Cardinal. They are also converted to ComputerRx, an IT vendor. "Many independents have not upgraded their IT system-in some cases, for 15 years. ComputerRx is extremely pharmacist- and technician-friendly and also has robust reporting capabilities," said Zeidner.
Zeidner conceded that there are regional groups and chains that are continuing to grow by buying independents. He believes his firm's model is unique, however, and he predicts the company can grow to 40 stores in the next five years. "We are not looking to convert the pharmacies into our chain model. We are going to run each of them independently. It's vital that community-based pharmacy survive and prosper in the heartland of our country. What we've built is a business model that has the community-service levels of the independent with the business strength of the chains."
For more information, visit http://www.apothecaryrxllc.com/.