‘Strategic acquisitions’: Cohens buys seven pharmacies at a loss of almost £6m

Cohens Chemist made a loss of £5.7 million in the financial year, according to Cohens Chemist’s annual report for the year ending August 31, 2023.

The company increased its annual turnover by £21m to £253m, according to a document published last week (May 21) at Companies House.

However, selling costs and “administrative expenses” also increased significantly, leaving the multiple in the red.

Read more: Former owner received £415m dividend from Lloydspharmacy and Lloyds Direct Sales

Nevertheless, Cohens, which according to its website has “over 200 branches in the UK”, has not let the economic downturn discourage it from expanding.

It reported “trading and asset” acquisitions worth £7.5m in the financial year, which included the purchase of Lallian Pharmacy in February 2023.

According to its strategic report, the Bolton-based company “always seeks to realize value in stores through strategic acquisitions and disposals”.

Read more: ‘History of failure’: Weldricks boss criticizes pharma negotiator

In addition to Lallian Pharmacy, Cohens revealed that it had purchased a further six pharmacies for a total of more than £2 million after the reporting period covered by the statement.

The document shows these were two former Lloydspharmacy stores, two Boots pharmacies and two Well pharmacies.

However, it sold one pharmacy during the financial year because it was “outside its usual demographic area” and, after reporting ended, it sold two more for a total of almost £800,000.

“Stable core operation”

Cohens said the gross profit margin of 27% was “satisfactory, reflecting a stable core business.”

It noted that increased selling costs, product shortages, increased demand and inflation “worsened” its earnings before interest, taxes, depreciation and amortization (EBITDA).

“Boards will again seek to improve performance and profitability in the coming year through divestments, restructuring and acquisitions, as appropriate,” the strategic report said.

Wholesale activities

Prinwest Limited, a pharmaceutical wholesaler owned by the same holding company as Cohens, also published its annual report this month for the same period (May 18).

Prinwest’s accounts show it made a profit after tax of £7.4m – up from £6.5m the previous year – and this profit was “transferred to reserves”.

According to its strategic report, the wholesaler saw its turnover increase by £15 million to £127 million.

Read more: Weldricks records £1.4m loss as it finances ‘war of attrition’

It said the “majority of sales” were to “existing customers” and boasted a “very stable customer base”.

As a result of the wholesaler’s success, the Jersey-based holding company, which owns the Cohens and Prinwest brands and whose accounts were included in the pharmacy chain’s accounts, recorded a small loss of just £39,000 – compared with a £2.9m profit in 2022 r.

A lot of problems

The only company that seems to be ahead of the curve in the community pharmacy space lately is the one that just left it behind.

In April, C+D said former parent Lloydspharmacy had made a profit of £76.4m for the year to March 31 and its shareholders received a dividend of £405m.

In March, independent multi-pharmacy company HI Weldrick reported a post-tax loss of £1.4m in its last financial year – down from £893,000 in 2022.

Read more: Paydens ‘focused’ on tackling sector challenges amid £6m loss in 2023

In an interview with C+D, Weldricks chief operating officer David Vanns complained about the sector’s funding state, saying that pharmacy negotiator Community Pharmacy England (CPE) had “negotiated a lot of losses for people this year”.

In February, Paydens Pharmacy’s latest financial filings revealed a sudden drop in earnings “directly caused by the pharmacy’s lump sum funding” – its loss for 2023 was £6.4m.

Read more: Pharmacies in Avicenna “feel the squeeze” due to plans to sell branches

In January, Avicenna Group sales director Brij Valla told C+D that while Avicenna Retail showed seemingly positive numbers in its annual report, the reality was that acquisitions in the previous year meant that these were not comparable results, but fundamental the results were more similar to the rest of the sector’s results.

“Extending the current model” would lead to “significant closures,” Valla warned.

In November, Rowlands published its financial report which showed it had recorded a 500 per cent increase in losses for the financial year, reaching a staggering £219 million.