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Former owner bags £415m dividend from Lloydspharmacy and LloydsDirect sales

Lloydspharmacy’s former parent company posted a profit of £76.4m for the year ending March 31, its latest financial statements have revealed.

Former owner of Lloydspharmacy Hallo Healthcare Group (HHG) has paid out a £405 million dividend to its shareholders, its annual report published this week (April 8) has revealed.

The report for the year ending March 31 2023 said that between August and December 2023, HHG enacted a “group simplification project” to reduce the “number of non-operational entities”.

This included the sale of its 1,054 community pharmacies in the Lloydspharmacy group and its online pharmacy business LloydsDirect.

Read more: Lloydspharmacy goes into liquidation with £293m owed to creditors

According to the annual report, Diamond DCO Two Limited – formerly known as Lloyds Pharmacy Limited - was “sold out of the group” in August 2023.

The report stated that “after the year end”, HHG received income from “gains on [the] sale” of its “discontinued operations” including £415m in dividend income. 

Its directors then approved the distribution of a £405m dividend to its shareholders, it added.

 

“Bargain purchase”

 

The annual report said that HHG posted a profit of £76.4m for the year compared with a loss of £0.6m in 2022. 

It added that this was “primarily” because it made a “bargain purchase” in its acquisition of the Lloyds group from McKesson in April 2022, where it made a gain of £253m.

The group also made £56m from sales of stores up to the end of March 2023, although it said this was “partially offset by the ongoing operating losses” of its community pharmacies.

Read more: HMRC investigating Lloydspharmacy over possible £33m locum tax bill

According to the report, HHG’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were “breakeven” in 2023.

However, with its community pharmacy business and LloydsDirect sold, it said that it anticipated its adjusted EBITDA for the year ending in March 2024 will be “positive”.

 

Lloyds Online Doctor “behind expectations”

 

HHG offered a mixed view on its remaining businesses - wholesaler AAH Pharmaceuticals, Lloydspharmacy Healthcare Services, Lloydspharmacy Clinical Homecare and Lloydspharmacy Online Doctor.

It said that AAH was “competitive” with a “solid” market position that is “growing modestly”, adding that its focus on “high-margin business” and a “pricing project” meant that its gross profit was improving.

It reported that Lloydspharmacy Clinical Homecare had “continued growth”, while its healthcare services business showed “marginal volume growth”.

Read more: Lloydspharmacy confirms 'successful sale' of all community pharmacies

But HHG was less positive about its online doctor business, which it said was “behind expectations”, although growing. 

And it said that all of these remaining businesses had “further efficiency enhancement programmes” planned for the next financial year.

 

Liquidation latest

 

In March, C+D revealed that HMRC was looking into a potential £33m owed to it by the now-defunct multiple. Lloydspharmacy’s liquidators reported that the tax authority had “raised an enquiry” into the employment status of locums at the former multiple.

In January, Lloydspharmacy went into liquidation with almost £300m owed to creditors

And in November, C+D exclusively revealed that the entire Lloydspharmacy estate had been sold. As recently as March 2023, Lloydspharmacy was the second-largest community pharmacy business in the country.

Read more: UPDATED: Pharmacy2U buys LloydsDirect for undisclosed sum

Meanwhile, the UK’s largest online pharmacy Pharmacy2U announced in October that it had bought LloydsDirect for an undisclosed sum.

McKesson announced that it had sold the Lloydspharmacy group to Aurelius for £477m in November 2021, with the deal completing in April 2022.

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