In Business news

Follow this topic

Bookmark

Record learning outcomes

Rowlands Pharmacy lost £28.1m in the year to January 31, 2024, its latest accounts reveal, with modest increases in revenue and gross margin offset by the sector’s chronic funding challenges. 

The losses for the company’s 2023 financial year were 87 per cent smaller than the previous year, when it posted losses of £219m – driven by an impairment charge of £216m due to a drop in the value of the company’s assets. 

Commenting on the smaller impairment charge of £0.4m in its latest accounts, which were published on Companies House this week, Rowlands said: “The impairment exercise is necessary due to the reduced profitability and the impact on future predicted cash flows arising in the business driven by the uncertainty of future pharmacy funding.” 

Turnover rose by one per cent to £410m, which the company said was driven by a rise in NHS commissioned services and OTC sales but offset by “the impact of reduced prescription reimbursement”.

At £359m, prescription dispensing was by far the main source of revenue, with OTC sales accounting for £24.3m and NHS commissioned services accounting for £26.3m.

Gross margin rose by 3.3 per cent, and as of January 31 stood at 25.57 per cent. “The improvement in gross margin year-on-year was driven by an increase in service revenue and improved purchasing strategy offset by the impact of Category M funding cuts within the industry,” said Rowlands. 

The accounts reveal that in addition to divesting “a number of pharmacies,” Rowlands bought 34 ex-LloydsPharmacy stores in 2023 and invested in refurbishments in existing stores. 

P3pharmacy understands that as of today, there are 316 branches of Rowlands Pharmacy – down almost 40 per cent from four years ago, when there were 520. The Companies House filing reveals that 13 branches were sold after the end of January this year. 

Despite exiting these stores, staff numbers rose by 1 per cent in the year to February after a “high recruitment drive,” with 3,245 people currently employed by the chain. 

Commenting on the company’s latest financial results, Rowlands Pharmacy managing director Nigel Swift told P3pharmacy: “Despite improved turnover, improved cost management and increased use of automation generating higher than planned productivity, the English pharmacy contract does not provide pharmacy with a sustainable future.

“The £800m retained margin has been static since 2014 and the pharmacy contract has been frozen for 5 years. This against a back drop of significantly increased costs and in recent years record breaking inflation, has made it impossible for many pharmacies to keep going. 

 “All of this has forced Rowlands to divest and close over 200 pharmacies over the past 5 years to support its longer term strategy. The number of Pharmacies in England has declined by 1,640 since 2016, with the rate of decline increasing sharply and, more closures announced weekly. 

“To maintain safe levels of access to medicines and care in the communities where we all live and work a much improved contract needs to be announced quickly. The recent budget announcements have only served to make an almost impossible situation exponentially worse.”