Why the script file is the business
A pharmacy's value lives in its script file: the count, the trend, and who feeds it. A growing file across many prescribers is durable; a file where one retiring physician writes a third of the scripts is a cliff with a countdown. Behind the file sit the reimbursement contracts, because payers, not the pharmacist, set the prices, contract quality and transferability decide the margin the multiple applies to. Change-of-ownership re-credentialing is the transfer risk unique to this industry: the buyer must be in-network on day one or the file leaks immediately.
What buyers check first
- Script count and trend by month. Dispensing-system reports; growing, stable, or eroding is the whole story.
- Prescriber concentration. Scripts by prescriber; one feeder physician near retirement is a discount.
- Payer contracts and assignment terms. What the payers actually pay, and whether the contracts survive the sale.
- Inventory, counted and dated. You buy it at closing; stale stock is not an asset.
The counter is not the business. The script file, and the contracts that price it, are.
Margin layers and the wholesaler
Pure dispensing margins are set by payers and squeezed annually, which is why the revenue multiple sits at a fraction of other industries. Stores that layer clinical services, immunizations, compounding, med-sync programs, own margin the payers do not control, and price toward the top of their band. The primary wholesale agreement is the other economic lever: its terms set inventory cost, and its transferability belongs on the diligence list next to the payer contracts. A 65-plus population in the trade area is the demographic tailwind buyers pay up for.
Buyer's move
Pull scripts by prescriber for 24 months before pricing the file. If the top three prescribers write more than a third of the volume, discount the file for succession risk, and ask each one's age before you close.
Sources
Pharmacy valuation multiples, FAQ
Independent pharmacies trade at 2.25–2.97× SDE, 2.99–4.18× EBITDA, or 0.21–0.34× revenue on Peak Business Valuation averages, plus inventory counted and priced at closing. Script-file quality and payer contracts set where in the band a store lands.
Because payers set the prices: reimbursement contracts, not the pharmacist, decide the margin on most of the revenue. High topline with thin, externally controlled margin prices at 0.21–0.34× revenue where other industries trade at multiples of that.
No, by convention it is bought separately: counted, dated, and priced at closing on top of the business price. Stale or unmanaged stock gets excluded or discounted in the count, which is why the inventory clause deserves as much attention as the price.
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