Collapsed Medipharmacy chain sold to PI-Gen Pharma for £7.1m
A £5.8m loss and “increased creditor and cashflow pressures” caused the 25-strong chain to enter administration.
Medipharmacy, a 25-pharmacy strong chain, has been sold to another pharmacy group after it entered into administration, according to its administrators’ report, published on Companies House on January 30.
According to the report, PI-Gen Pharma Limited beat five other bidders to snap up the chain for a total of £7.1 million, with the transaction completing on January 18.
PI-Gen is owned by Enimed Limited, a chain with 33 pharmacies as of January according to NHS Business Services Authority data published in February.
PI-Gen submitted a cash offer of £5m for Medipharmacy’s “goodwill”, £2.1m for its freehold properties and “a further amount” for its stock.
“Increased creditor and cashflow pressures”
Medipharmacy, which has pharmacies in London, Kent, Surrey and West Sussex, endured a torrid 2023. Despite growing its revenues from £27.9m in 2022 to £69m in 2023, its profitability collapsed. Its earnings before interest, taxes, depreciation, and amortisation (EBITDA) registered a £5.8m loss in 2023, according to its administrators.
According to the administrators, the loss was due to profitability issues in its wholesaling operation, which it “wound down” in August.
In September, the company introduced a new director. The same month saw the “pre-appointment” of FRP “to provide advice” following “increased creditor and cashflow pressures”.
According to the administrator’s report, “creditor arrears” had reached an approximate £19.9m by August 2023.
The chain had also accrued a series of loans from its bank Santander and from RxBridge, a finance company specialising in the pharmacy sector.
According to the report, by December 1, Medipharmacy owed Santander £5.5m and had a revolving credit facility with the bank “drawn £6.5m”, while it had drawn £3.4m from a debt purchasing facility with RxBridge.
FRP were formally appointed as administrators on January 18, according to a notice in the London Gazette.
The sale was decided on after other options were rejected. Voluntary liquidation was deemed to be “value destructive”, since it would result in all of Medipharmacy’s 150 staff being made redundant and the “immediate cessation of trade” which would harm its pharmacies’ goodwill.
PI-Gen’s offer was recommended over others as it was a cash offer, with funding approved, and thus “more likely to complete” quickly.
With the sale, all of Medipharmacy’s employees were transferred under the Transfer of Undertakings (Protection of Employment) regulations (TUPE).
FRP “worked quickly”
PI-Gen director Vikash Patel told C+D that it was “happy to add the Medipharmacy group to its current retail pharmacy portfolio”. He praised its staff for keeping the business running “in exceptionally difficult circumstances”.
Mr Parel also thanked FRP Advisory, Santander and PI-Gen’s existing funders HSBC for their support. He said that PI-Gen was “looking forward to developing and investing in the Medipharmacy branches”
A spokesperson for FRP told C+D that it had “secured a sale” of Medipharmacy “and certain assets” to PI-Gen Pharma Limited.
They said that Tony Wright and Ian Corfield of the firm were appointed as joint administrators on January 18 because Medipharmacy could “no longer” meet its financial obligations.
Mr Wright, a partner at FRP said that the firm “worked quickly” to ensure that there was a “continuation of services”. He added that it was “a turbulent period for the wider pharmacy sector”.