Keeping Independent Pharmacies Independent

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Many major professional and life decisions come with a lot of planning. Rob Barrett didn’t have that kind of time.

While becoming a multi-store franchise was something he had always wanted to accomplish, the opportunity to purchase a second store left him in an unanticipated position.

Barrett, who had owned Seven Lakes Prescription Shoppe in the small community of West End, North Carolina, for about 10 years, came across the opportunity to purchase Whispering Pines Prescription Shoppe about 20 minutes down the road. However, time was of the essence.

“It was kind of like finding out you’re pregnant in the eighth month,” he said. “The pharmacy had to be closed by May 31, 2021, and I found out about this opportunity in late March. We had a little over two months to make the transition happen.”

He needed to act fast, yet acquisitions are rarely quick. That’s when Barrett turned to the Pharmacy Transition Services (PTS)team at Cardinal Health for help.

Chad Sanders, Director of PTS, had never seen anything like it.

“I made a call to one of the banks we work with and asked what was the fastest they’ve ever done a deal,” Sanders recalled. “A pharmacy loan and fast don’t go together. I was able to loop in the bank and let them know that they have to hit the gas pedal in record time.”

Nothing about the transition happened by normal standards.

“First, I had to get a Board of Pharmacy permit before the purchase could go through,” Barrett said. “That can take four to six weeks sometimes. The timing was the biggest thing.”

Then he had to set up insurance, establish a company bank account and create everything that went along with acquiring a new business, including getting new credit cards, Barrett explains.

“There was a lot that needed to be done in that very short timeframe,” he said.

In addition to working with the bank to fast-track Barrett’s financing for the acquisition, the PTS team also helped him evaluate all of his options.

“They were incredibly helpful in setting up many of the details of the acquisition, as well as helping me with the decision of whether this purchase would end with us thriving,” Barrett said. “If it weren’t for the PTS team, I don’t think a deal would have happened because getting

the finance piece of it in the time that we had would have been a little bit of a struggle.”

10+ years of pharmacy transition expertise

For more than a decade, the PTS team at Cardinal Health has focused on helping independent pharmacies remain independent. The team has completed nearly 2,000 pharmacy valuations and more than 700 transitions, helping pharmacies create game plans to ensure a successful transition.

Sanders says that the PTS team works with both buyers and sellers looking to make a change, whether it’s acquiring additional pharmacies or selling them after deciding to retire from the business.

“When someone is looking to sell their pharmacy, it’s often someone who wants to sell a business that they’ve owned for several years,” Sanders said.

Support at every step

The PTS team will begin with an evaluation of the pharmacy.

“One of the things that separates us from others in the industry is that we take a very hands-on approach, going in and doing a forensic analysis of the pharmacy,” he said. “Others may ask for numbers, like the number of scripts that are filled, but we’ll look at the cash flow of the business and set up a call to conduct an in-depth analysis with the pharmacy owner.”

While some sellers have a buyer in mind, others may not.

“What I will do if the seller does not have a buyer in mind is very confidentially reach out to our sales force and see if they have anyone in mind who might own a pharmacy nearby in the territory that they cover,” Sanders said. “If they don’t have anyone in mind, I’ve made a number of contacts in the industry who are always looking for pharmacies to buy.”

The goal of the team, he says, is to preserve the independent legacy.

“Our role is to keep independents as independents,” Sanders said. “We also make sure the owner gets a fair price for the pharmacy, which in many cases they have owned for decades. We then walk with the buyer and seller through the process to make sure it goes smoothly.”

Team members also provide consultation, align buyers and sellers, offer financing options and purchase structures, and provide succession planning and exit strategies.

“I’ll work very closely with the sales force to make sure that the day the owner hands over the keys to the new owner, it’s a seamless process,” Sanders said.