Two Welsh pharmacies are to be bought out of administration after “an incredibly difficult period”, their owner has said.
The Health Dispensary Ltd director Ali Sparkes told C+D that “like many independent community pharmacies” the business has “been operating in an increasingly challenging financial environment for some time”.
The company runs two pharmacies, the Health Dispensary and Neath Pharmacy - both located in the Welsh town of Neath - and employs 17 team members, according to administration documents.
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The documents revealed that over £2.22m was owed by the company to 49 creditors, but a pre-packaged sale has now been agreed with local pharmacy group operator Overdrake Limited, who are based in Swansea and operate 11 NHS pharmacies in the local area.
Administrators BTG Begbies Traynor were appointed on July 1 and said The Health Dispensary’s business and assets were sold to Overdrake “immediately” after.
Sparkes said “sustained NHS funding pressures, rising operating costs and significant cash flow challenges have created an exceptionally difficult operating environment across the sector”.
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“Despite every effort to navigate those challenges and secure a different outcome, events ultimately resulted in the company entering administration,” she said.
Sparkes added that it was “not the outcome any of us wanted” but she is “pleased” the pharmacies “have secured a future under new independent ownership, allowing our dedicated teams to continue caring for the communities they have served for many years”.
The sale is set to be completed “no later than September 30”, the administrators said.
“Very distressed state”
The administrator documents noted that The Health Dispensary “began to experience financial difficulties as a consequence of a reduction in working capital”.
It said the pharmacies “fell into arrears with certain suppliers” around mid-to-late 2025, was “unable to maintain the necessary stock levels to continue operating at full capacity” and later accrued “further arrears to trade suppliers and HMRC”.
Documents seen by C+D show that a statutory demand was served by pharmaceutical manufacturer South Wales Specials to The Health Dispensary in April, claiming a total of £45,972 in unpaid debts dating between last November and this March.
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The administrators said they were instructed by The Health Dispensary and creditor HTB Leasing & Finance to conduct an independent business review in April, where “it soon became apparent it was in a very distressed state” and that a disposal of the company’s business and assets “represented the best outcome for creditors”.
They said “multiple” purchase offers were received and the “highest offer” was accepted - but after a “winding up petition” was issued by a creditor against The Health Dispensary, Sparkes decided it was “necessary” to place the company into administration to affect a pre-packaged sale.
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Following this, five purchase offers were received and the highest came from Overdrake, who submitted an offer of £740,000 for the business and assets, as well as £200,000 for the freehold property plus stock-at-value.
Employees will be transferred to the company’s new owner and the administrators understand that Sparkes will be “employed by the purchaser” as part of the transfer.
Sparkes told C+D that she intends to continue working at The Health Dispensary as a prescribing pharmacist.
“Unlikely to be paid”
The administrators said there was “no prospect” of The Health Dispensary “returning to solvency as a result of the issuing of the winding up petition against it” and neither HTB nor Castlebridge RX, another creditor, were in a position “to continue funding the business indefinitely”.
HTB and Castlebridge RX are owed £1.037m and £602,467 respectively, and the administrators estimated that the sale of The Health Dispensary is “expected to achieve a return” to both, but it is “not anticipated that either will be paid in full”.
The administrators said there were unpaid pension contributions estimated at £3,578 but did not confirm to C+D whether these would be paid, while HMRC are owed £176,548 and other lenders and pharmaceutical companies are owed a total of £572,147.
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This includes AAH Pharmaceuticals, Sigma Healthcare, Phoenix Healthcare and Alliance Unichem, who are each owed sums ranging from £27,000 to over £100,000.
The administrators expect that there will be “insufficient funds available” to pay HMRC, the lenders and the pharmaceutical companies.
HTB, Castlebridge and the pharmaceutical companies have been approached for comment.
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It comes after Ali Sparkes won community pharmacist of the year at the C+D awards in 2012, and The Health Dispensary won C+D’s independent pharmacy of the year in 2017.
Sparkes also spoke about NHS pressures, the need for better resources and fighting for the community pharmacy sector in a blog for C+D back in 2023.
