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Kamsons sees 16% sales lift but warns margins under ‘significant pressure’

Kamsons, which runs 85 pharmacies, saw its profits drop to £2.8m in the 2023 financial year despite an uplift in sales revenue, its latest financial documents have revealed.

Kamsons Pharmacy saw its sales revenue rise 16% to £124 million last year thanks to its strategy of “continued expansion”, according to its annual report for 2023 published last week (June 4).

The 45-year-old chain bought “8 new branches” in the year and owned 85 pharmacies and one optician branch as of the end of the financial year on August 31, it said.

It employs 1,137 people after adding over 100 staff during the year, it added.

Read more: Kamsons Pharmacy reveals acquisition of five Lloydspharmacy branches

“The group continues to achieve growth by seeking and acquiring more pharmacies, however no additional pharmacies have been acquired since August 31 2023,” it said.

Kamsons’ annual report also noted the October 2023 purchase of a £4.2m facility in its home town of Uckfield, which was financed by a £5m loan from HSBC.

However, it revealed that Kamsons’ profits before tax dipped by 18% to £2.8m for the year ending on August 31. 

 

Falling margins

 

A spokesperson for Kamsons told C+D last week (June 7) that the drop in profit was due to the government’s cuts to pharmacy funding.

According to its directors’ report, the multiple experienced an “expected” fall in its gross margin - now 32% - owing to the “NHS clawback”.

The report stated that the directors expected these margins to “remain lower” in the year to come due to “NHS retained margin adjustments” and price inflation.

Read more: UPDATED: No new pharmacy contract until ‘after the election’, says CPE

Nevertheless, the Kamsons’ spokesperson highlighted “an impressive 9% growth in prescription numbers”.

They added that the multiple has “one of the highest average prescription volumes per pharmacy of any group” and is “the best performing pharmacy chain for delivery on the new medicines service”.

Read more: What’s on the pharmacy general election wish list?

But the multiple did not distribute dividends in 2023, after issuing £3m in 2022, the report revealed. 

And the directors’ report noted that its earnings before interest, taxes, depreciation, and amortisation (EBITDA) had taken a hit from wage rises, cost of locums, “bonuses paid to directors through wages” and the end of the COVID-19 rate relief.

 

“Fundamentally wrong”

 

Kamsons professional development manager Mark Donaghy told C+D that it is “fundamentally wrong” that its margins are “under such significant pressure”. 

Donaghy said that the company is investing in refitting its pharmacies, managing “high volumes of dispensing” and “delivering all of the NHS services” with “high levels of well-trained staff”.

Read more: CPE to audit ‘huge amount of unpaid work’ triggered by Pharmacy First

Even so, he added that Kamsons is “struggling” to maintain its profitability “like all pharmacies”.

“When a well-run and established chain of pharmacies like Kamsons is expressing such concerns, we fear for the whole of the community pharmacy infrastructure,” he said.

 

“Innovative services”

 

Donaghy highlighted the multiple’s record in delivering “innovative services” - Kamsons is a past winner of C+D’s training and development award in 2019 for “its in-house training programme for trainee pharmacists”.

He added that its pharmacy at The Meads in Eastbourne received an award this month (June 7) for “delivering over 200 NHS health checks in the last year”.

But Donaghy said that the sector requires an “urgent uplift in investment” once a new government is formed after the July 4 general election

Read more: ‘How we achieved pre-reg pass rates of 100% two years running’

He called on prospective MPs to read the recent health and social care committee’s (HSCC) pharmacy inquiry report and to stop “the decimation of the community pharmacy workforce by additional role reimbursement scheme (ARRS) funded GP practice roles”.

And he said that every election candidate should understand community pharmacy’s contribution to public health and “the severe risks of mass closures that the profession faces”.

“It is vital that the profession unites,” he told C+D.

 

Difficult reports

 

In recent months, only the country’s largest multiple Boots has posted positive figures, as it revealed last month that an increase of both pharmacy and retail sales drove pre-tax profits to rise from £4m to £60m over the last financial year.

Also last month, C+D reported that multiple Cohens had suffered a £5.7m loss for the financial year, all the while increasing its total turnover by £21m to £253m in the year.

Read more: 'Strategic acquisitions': Cohens buys seven pharmacies amid nearly £6m loss

In April, C+D reported that Well Pharmacy had posted a post-tax loss of £29m for 2023, with its directors’ report saying that it had “experienced significant challenges due to changes within the flat funding contract”.

And in March, Weldricks posted a £1.4m loss after tax as its operations director David Vanns told C+D that the 64-pharmacy chain can “survive the war of attrition longer than most”.

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