Fragmented landscape 48% of pharmacies are independently owned Breakdown of Pharmacy Owners hip by Group Size Corporate and Supermarket Pharmacy Count 3, 192 B oots 2, 350 Lloyds 1, 799 W ell 756 2, 024 R owlands 527 Tesco 379 1, 347 Asda 255 799 Day Lewis 226 667 C ohens 217 282 188 92 26 23 11 S uperdrug 206 Independent 2 to 5 6 to 10 11 to 15 16 to 20 21 to 300 Morrisons 119 P harmacies O wners Source: GPhC, Christie & Co Analytics christie.com
Who’s buying now? Independent operator/ Multiple operator Corporate operator Private Equity first time buyer We have a database Multiple operators are flexible Whilst corporate operators are Private equity investment in the of 5,619 first time and and invariably being well- well-funded they fall behind pharmacy sector has been independent buyers funded, are able to react independent and multiple relatively light in recent years. looking for pharmacies. decisively in making operators in the speed at which However, there is a number acquisitions. Approximately 587 they react to opportunities. At currently eyeing up the sector. of our applicant database, fall present none have aggressive within this category. acquisition strategies. christie.com
Cuts, claw backs and shortages . . . Increasing concern from contractors over cash flow issues following DoH funding cuts, Cat M claw back and Drug Supply Not impacting values or appetite yet? Bank funding still strong although more discerning Cash flow challenges leading some operators to accelerate their exit/retirement plans – GP Margins reducing in some cases significantly Continued competitive appetite despite increased stock in the market christie.com
Still no change? 2016 2017 2018 − Average of 7 offers per − 93 pharmacies SOLD − Strong start to year pharmacy sold in 2017 − Forecast an increase in Average sale prices 110% of − Average of 6 offers per − number of pharmacies initial guide prices pharmacy sold coming to market − 12.5% increase in − £933K Average sale price − To date deal activity and registered applicants enquiry levels remain − Average price 106% of quoted strong asking prices − 50% increase in instructions Additional 18% increase in − PYTD registered applicants − 40 sales already agreed in excess £56 million − Increase applicant activity christie.com
Key trading performance benchmarks (FY16-17) A snapshot of average trading metrics for individual pharmacies across the UK 12.8% 33.2% EB ITD A margin G ross profit margin 7,987 14.6% Average Monthly Items Dis pens ed Staff cos ts margin These benchmarks are based on actual historic account information gathered for our valuation reports and transactional projects over the last two years christie.com
KPIs GP Margin by Pharmacy Type EBITDA Margin by Pharmacy Type 37.4% 15.9% 34.7% 30.6% 11.6% 8.6% Integrated Community Health Centre Adjacent Health Centre Adjacent Integrated Community EBITDA Margin by Pharmacy Contract Type 15.1% 13.6% 100 Hours Standard christie.com
Pharmacy EBITDA multiples (FY16-17) christie.com
Pharmacy EBITDA multiples 2017 - 2018 Range of multiples by pharmacy type 10 9 8.5 7.5 6.5 5 Minimum E BITDAx Maximum E BITDAx Integrated Pharmacies C ommunity and High S treet Pharmacies 100 Hours (8,000+ items) christie.com
No holding back 2010 - 2017 2018 - Onwards SALE Expand Invest Invest Expand Hold Sale christie.com
Thank you Chris Vowles Head of Valuation – Medical T: 0121 452 3703 M: 07791 183 966 E: christopher.vowles@christie.com Tony Evans Director - Head of Pharmacy T: 020 7 227 0729 M: 07721 884 386 E: tony.evans@christie.com christie.com
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