Eagle Rock Retail Pharmacy - 50-Year Independent

$3.2M

Revenue

$527K

SDE

1.6x

Multiple

Subscribe Free

Read the full deal writeup

Get Free Access

Already a member? Sign in

Full Editorial Writeup

This established retail pharmacy has operated continuously since 1974 in the Eagle Rock/Glendale area of Los Angeles, serving a diversified patient base from its 3,200 square foot location near Highway 134. The pharmacy fills 200-250 retail prescriptions daily and maintains contracts with major insurance providers including Medicare Parts B and D, Medicaid, CVS Caremark, Humana, Blue Shield/Cross, and LA Care, with LEADERNET serving as their PSAO.

The business operates five days per week with a lean team of four full-time employees and services four boarding care homes in addition to walk-in retail customers. Located near a busy Comprehensive Community Health Center with 10 physicians and PAs, the pharmacy benefits from proximity to medical practices that drive consistent prescription volume. The seller has invested over $80,000 in recent improvements to the facility and maintains clean regulatory standing with no Board violations.

With annual revenue exceeding $3.2 million and growing year-over-year, the pharmacy generates strong cash flow through a combination of prescription fills and over-the-counter sales. The business uses Digital RX software and maintains relationships with Cardinal as primary wholesaler plus secondary suppliers. A new 5+5 lease will be executed with a qualified buyer, and the current pharmacist-in-charge may remain during transition.

Why we like it

Prescription drugs represent the ultimate recession-proof revenue stream with patients unable to defer or substitute their medications regardless of economic conditions. The business fills 200-250 scripts daily with diversified payer mix including Medicare, Medicaid, and commercial insurance, creating predictable cash flow from essential healthcare spending that grows with an aging population.
Location moat is exceptional with proximity to a 10-physician medical building and four contracted boarding care homes creating captive prescription volume that competitors cannot easily replicate. The 50-year operating history and established relationships with local healthcare providers represent significant switching costs for both referring physicians and patients.
Healthcare spending continues expanding with demographic tailwinds from aging Baby Boomers requiring more prescriptions and chronic disease management. Independent pharmacies benefit from personal service differentiation versus chain competitors, and this pharmacy's clean regulatory record with all major payers positions it well for continued contract renewals.
Financial metrics show strong unit economics with $3.2M revenue generating $527K cash flow on just 4 full-time employees, indicating efficient operations and pricing power. The business model combines high-margin prescription fills with supplementary OTC sales, and the seller's $80K recent facility investment demonstrates commitment to maintaining competitive positioning.

How to improve it

Implement targeted marketing to the surrounding medical offices to capture more prescription referrals, as the seller notes aggressive local marketing could significantly increase customer acquisition. Build relationships with the 10 physicians in the adjacent building through lunch-and-learns, prior authorization support, and clinical consultation services to become their preferred pharmacy partner.
Expand specialized services like medication therapy management, immunizations, and diabetic counseling to increase revenue per patient and differentiate from chain competitors. These clinical services command higher margins and strengthen patient relationships while positioning the pharmacy as a healthcare destination rather than just a dispensary.
Optimize inventory management and purchasing power by analyzing prescription patterns to reduce carrying costs on slow-moving items while ensuring adequate stock of high-volume medications. Negotiate better terms with Cardinal and secondary wholesalers based on volume commitments, and implement automated ordering systems to reduce labor costs.
Develop a comprehensive patient retention program including prescription synchronization, automatic refill reminders, and delivery services to increase customer lifetime value. Focus on capturing patients from the four boarding care homes as long-term, high-value accounts with predictable monthly volume.
Evaluate opportunities to expand operating hours or add weekend service to capture additional market share, particularly for urgent prescription needs when chain competitors may have limited availability. The current 5-day schedule leaves revenue on the table in a market with consistent healthcare demand.
Implement point-of-sale upselling of high-margin OTC products, vitamins, and medical supplies to boost transaction values. Train staff on consultative selling techniques and create attractive product displays near the pharmacy counter where customers wait for prescriptions.
Explore partnerships with local home health agencies, assisted living facilities, and medical equipment suppliers to create additional revenue streams and strengthen referral relationships. These B2B partnerships can provide steady contract revenue beyond traditional retail prescription volume.
Invest in pharmacy management technology upgrades to improve efficiency, reduce errors, and provide better patient communication through automated systems. Modern software can streamline prior authorizations, insurance claims, and patient outreach while reducing labor costs per prescription filled.

Diligence notes

Verify all insurance contracts are transferable and in good standing, with particular focus on Medicare Part D and Medicaid reimbursement rates which represent significant revenue. Request detailed payer mix analysis and any pending contract renegotiations or DIR fee adjustments that could impact profitability going forward.
Conduct thorough regulatory compliance review including DEA registration, state board licenses, and controlled substance inventory procedures given the heavily regulated nature of pharmacy operations. Any compliance issues could result in license suspension or costly remediation that would destroy business value.
Analyze the prescription volume trends by therapeutic category and payer to identify any concerning patterns or concentration risks in specific drug classes. Review any recent formulary changes or generic substitutions that may have impacted margins, and validate the claimed 200-250 daily script volume through POS data.
Evaluate the lease terms carefully including renewal options, rent escalations, and any restrictions on pharmacy operations or competition clauses. The 3,200 square foot space at $4,650 monthly rent appears reasonable, but confirm the landlord will approve pharmacy use for a new tenant and investigate any pending property developments that could impact foot traffic.

Source

Originally listed on BizBuySell. View original listing →