What does a pharmacy lender look for in a practice being acquired to decide if it’s something they want to finance?

A pharmacy that is growing revenues with a cash flow margin above 6 – 10% before an owner’s salary is usually viewed favorably. If a pharmacy’s revenue has been declining or if the margins have been poor, it requires a more in-depth analysis. Has the current pharmacist been cutting hours, leading to lost revenue? Is the business not generating good margins because the owner has been ill and paying relief pharmacists to staff the operation? What expenses can be added back that will not reoccur in the future? What is the acquiring pharmacist’s experience level? Has he or she practiced in this market before? Lenders’ analyses revolve around whether the business can support the debt service and the owner’s cash requirements going forward.