LTC Pharmacy underwent more disruption and change in just the past few years than the preceding decades. Revenue models morphed, strategies reversed, and service transformed. The M&A landscape is now replete with both private equity-backed and independent operators scooping up quality businesses. At the same time, LTC facility M&A is speeding up after a slow start to the year, putting additional pressure on pharmacies to have preferred contracts with larger chains and/or competitive access to key markets. As interest rates climb, inflation persists, and economic unpredictability lingers, firms seek to divest non-core assets and focus on long-term strategies. For LTC pharmacy that means providing quality service to all patients. Especially marginalized individuals and those not in typical facilities like those at home and/or in behavioral health facilities.
Many years ago, when long-term care pharmacies customarily traded on a “price per bed” basis, skilled beds fetched the highest premium because they serviced a patient population with better margins and improved contracts. During this era, large strategic acquirers outbid most of their smaller competitors due to their large cash reserves that were earmarked for acquisitions, coupled with an innate ability to realize the greatest overnight synergies. However, their large bureaucratic corporate structure often did not align with sellers’ wants and desires in a transaction. Regardless, money talks and sellers looked past many of the suitor’s shortcomings (i.e. staff consequences, service model issues, etc.).
