(main source of information included in this text was taken from PSNC website)
On 20th October 2016, as part of the two-year final funding packing imposed upon community pharmacies in England, the Department of Health confirmed the introduction of a Pharmacy Access Scheme (PhAS), with the stated aim of ensuring that a baseline level of patient access to NHS community pharmacy services is protected. The Department of Health states that the PhAS will protect access in areas where there are fewer pharmacies with higher health needs, so that no area need be left without access to NHS community pharmaceutical services.
Qualifying pharmacies will receive £11,600 in 2016/17 and £17,600 in 2017/18 meaning those pharmacies will not feel the full effect of the reduction in funding from December 2016. At this point, the payments are guaranteed for 2 years but after 31st March 2018, it is not clear yet what will happen with this scheme.
Eligibility for the PhAS
Pharmacies do not need to apply to the scheme to be eligible; eligibility has been calculated nationally by the Department of Health, based on data relating to how many prescription items a pharmacy dispensed in 2015/16, to assess their size and data relating to the distances between pharmacies. Continue reading →
Is it time to sell and is selling the right thing to do? Ultimately, only you can answer these questions. Here are a few points to consider:
Factors such as interest rates, the availability of credit and the tax regime are outside your control. However, interest rates and availability of credit are two key factors for pharmacy buyers. With banks keen to lend to buyers and interest rates at historically low levels, acquiring a pharmacy is currently an attractive proposition.
Tax rates – on a business sale are favourable. For most pharmacy sellers the situation is straightforward: providing you qualify for Entrepreneur’s Relief – which most pharmacy owners do – you should only pay 10% capital gains tax on the sale of your business.
Government cuts – The squeeze on government spending has inevitably had an effect on pharmacy services. Despite an ageing population and a year-on-year increase in prescription items, pharmacy turnover has been fairly static in recent years. Pharmacy goodwill values though, have been holding up. What does the future hold for goodwill value? Continue reading →
It sounds obvious, but to achieve the best price for your business you must make sure it is prepared for sale. If you are planning to sell now the best thing you can do is ensure that your financial accounts are up-to-date. If buyers have to wait for such information any offers you receive will be low, based on the lack of knowledge.
One of the first things a buyer will look at is gross profit. Have you any idea of whether this is high or low for your business compared with other pharmacies? If the pharmacy is underperforming by industry standards this will inevitably affect the price you get when you sell.
Are you carrying too much stock? Buyers will sometimes put a cap on how much stock they are prepared to take. An experienced buyer will know what the stock levels should be for your type and size of pharmacy. Do you? Continue reading →
If you are selling a pharmacy, the value of your business will be based on its profitability. The banks will value your business, and the buyer will make an offer, based on the latest set of accounts and up-to-date trading figures, so ensure you have these available.
A key figure from the accounts is Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA). When calculating a value for the business lenders will typically take a multiple of the EBITDA ranging from around 5 to 7 times.
Profitability apart, there are other factors that impact on the value of a business. Location is obviously important. A pharmacy in a health centre or next door to a GP surgery would generally expect to command a higher price, for example.
Is it time to sell your pharmacy – and is selling the right thing to do? Ultimately only you can answer these questions. If you do decide to sell, the time to do so is when your pharmacy is likely to attract a number of good offers. In recent years, with 100-hour contracts and the drift of doctors into health centres, there has been some uncertainty in the market place. Now the threat of 100-hour contracts has been removed there has been renewed confidence and buyers in abundance.
Factors such as interest rates, the availability of credit and the tax regime are outside your control. However, interest rates and availability of credit are two key factors for pharmacy buyers. With banks keen to lend to pharmacy buyers and interest rates at historically low levels, acquiring a pharmacy is currently an attractive proposition. Continue reading →