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Springfield, MO

Family Pharmacy seeks sale in bankruptcy proceedings

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Family Pharmacy Inc. is seeking permission for a sale after filing for Chapter 11 bankruptcy protection.

Jim MacLaughlin, the pharmacy chain’s hired chief restructuring officer for the case, this morning said Smith Drug Co., a division of J.M. Smith Corp., intends to buy Family Pharmacy from Lynn Morris through the bankruptcy proceedings.

“The company is doing this to preserve itself and maintain its operations and continue to serve its customers,” said MacLaughlin, co-owner of Kansas City-based advisement firm Lloyd & MacLaughlin LLC. “We expect to emerge from this intact operating under new ownership.”

Morris, who’s also a Missouri state representative, could not be reached for comment by deadline. On his personal Facebook page, Morris yesterday indicated he and his wife Janet retired from Family Pharmacy.

In the initial petition filed yesterday, Family Pharmacy listed estimated liabilities of $10 million to $50 million, the same as estimated assets. Court documents show Family Pharmacy posted net losses of $3.5 million in 2017 and $4 million in 2016 following profits of $686,000 in 2015. Gross revenue dipped to $60.3 million in 2017 from $66.8 million in 2016 and $68.3 million in 2015.

In the documents, officials cited a drop in the number of prescriptions filled to 1 million in 2017 from 1.4 million three years earlier.

“This drop in prescriptions was mostly reflected in the reduced retail prescription revenue,” court documents read. “Nationally, the numbers of prescriptions being filled are down year over year.”

Officials also cited increased competition from national pharmacy chains, downward pricing pressure from insurance providers and carriers, cash flow issues, and “the debtors’ failure to adapt and adjust their business model, overhead and expenses quickly enough to remain profitable,” according to court documents.

Smith Drug Co., Family Pharmacy’s primary wholesale pharmaceutical distributor and its largest creditor in the bankruptcy case, plans to make a stalking horse bid for the company’s assets within 90 days of the petition date. Smith Drug is owed $18 million, according to the court documents.

Family Pharmacy’s two other primary secured creditors, Bank of Missouri and Cardinal Health, are owed $11 million and $1 million, respectively, according to the documents.

The documents also point to downsizing at Family Pharmacy. Court documents show 182 employees systemwide, which is down from 365 as of May 2017 for Springfield Business Journal’s list of the area’s largest locally owned retail pharmacies. Family Pharmacy ranked first on the list. MacLaughlin declined to comment when asked about layoffs at the company.

According to the court documents, Family Pharmacy has 20 retail pharmacies and two long-term care pharmacies, among other assets. The company was founded in 1977.

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