Bank On It: Lending a Helping Hand to Independent Community Pharmacies

In the past six years, Live Oak Bank has helped community pharmacists start, build, or expand their businesses with more than 600 loans totaling $650 million. Meanwhile, the industry  evolved, health care  plans  and providers  saw radical  change, and the technology revolution arrived for pharmacies. With challenges facing the transition of legacy pharmacies (such  as predatory chains and reduced reimbursements), Live Oak brought a laser focus to pharmacy lending.  It has  a dedicated a team  of seasoned experts  in the field to help facilitate  the transfer of ownership to a new generation of pharmacists with an entrepreneurial spirit.

This profile of the bank’s early assumptions and objectives  offers a close-up view of how pharmacy business financing has grown, the influence of industry changes, and practical tips for taking advantage of all that Live Oak offers.


With a strong national footprint  in small  business loans  for startups in industries as disparate as dental and veterinary  practices, a few like-minded professionals met in the hallway at an NCPA conference in 2009. The organization  would later officially partner with Live Oak to facilitate the financing of independent community pharmacies. Existing and prospective owners soon  began to apply for the funding required to refinance, expand, or acquire pharmacies.

This new partnership and a growing awareness of the bank’s capabilities created a link to thousands of pharmacy owners  and allowed prospective buyers to flourish. Many would be owners  were often turned away by traditional lending  institutions, which treated community pharmacies much as they would any other small business, either rejecting proposals or offering financial  terms  that were impractical for the industry and prospective owners.  By contrast, the Live Oak team,  experts  in both pharmacy and Small Business Administration (SBA) loans,  understood and recognized the earning potential  of community pharmacies and the value of resalable inventory and prescription files.

Commenting at the time, NCPA CEO B. Douglas  Hoey, Pharmacist, MBA, said, “Independent community pharmacies focus on patient  care and a wide array of services that their competitors  cannot replicate, but it can be difficult for prospective owners to secure financing for these purchases. That’s why this partnership between NCPA and Live Oak Bank is a game changer. NCPA will use the full weight of its assets to alert potential  buyers of this great  lending  resource.”

This partnership between @NCPA and Live Oak Bank is a game changer. #RxNews Click To Tweet

While the size of this explosive market is difficult to determine, doing the simple math  of a generational change in a health  care sector supporting some 22,000 pharmacies means that more than  1,000 such legacy pharmacies change hands each  year. Live Oak’s first customers were often those needing refinancing of current loans, but the bank quickly moved into acquisitions, working capital  for growth, expansion into compounding labs, specialty  pharmacy and LTC facilities, and equipment and file buys.

“No one else has dedicated as many resources to pharmacy as Live Oak with 19 people on our team  to provide the highest level of service,” says Jimmy Neil, Live Oak general manager.

No one else has dedicated as many resources to #pharmacy as Live Oak-Jimmy Neil Click To Tweet


If you want to own a pharmacy and/ or expand  your business, you’ll need good to excellent credit, and be prepared to contribute the most uncomfortable amount of cash you can toward the acquisition (typically 10 percent). You’ll also want to be ready to convince  an expert team  that you have the skills necessary to accomplish your goals.

“We are looking for individuals who have a passion for succeeding,” Neil says, “and have the ability to manage and operate a small business in a very challenging environment.”

“We are looking for individuals who have a passion for succeeding,” Neil says Click To Tweet


While some prospective entrepreneurs have connections to a legacy pharmacy, others have to do their research identifying potential opportunities in desired locations.

While there  are a handful of business brokers  who specialize in pharmacy, most  drug wholesalers have sales forces  that manage specific  territories and have a steady  pulse  on opportunities in a given local market. Wholesalers have a vested  interest in keeping community pharmacies independent. NCPA offers an independent pharmacy matching service devoted  to bringing buyers  and sellers  together. Also, consider attending NCPA’s Ownership Workshop  sponsored by McKesson, a continuing education program designed to help a prospective buyer become a successful independent community pharmacy owner. Networking is essential. Use tools readily available such as local business groups, trade conferences, social media  platforms such as LinkedIn, and community health  care connections. Live Oak has found that the average  age of pharmacy owners is 62, and recommends using  a low- key confidential approach to connect with existing legacy businesses. Many traditional pharmacy owners  are interested in a dedicated new generation of pharmacists who are committed to maintaining an established business with close ties to both employees and patients in a community.

Recent  trends indicate high interest not only in acquisitions, but also in demand for expansion through long-term care facilities, specialty drugs (such as HIV, Hep C, fertility and others), compounding labs, and other high touch, patient-centered care services and automation.

“The winning characteristics we find in those seeking  financing are often similar: those who are knowledgeable in pharmacy combined with a passion for caring  for patients, a people-centered approach to innovation,  a sense of customer service, and reliance on training  staff to reflect their philosophy,” Neil says. “These are people who take the time to know their patients by name and are engaged in the community where they live and work.”


Lower reimbursements from health care  plans, PBM requirements, bottom  line costs and the like are just a few challenges facing community pharmacy. In many cases, a willingness to innovate  can address these issues. New technologies can help reduce staff time required to accomplish routine  tasks,  increase patient adherence to regimes, process claims, and automate communications with patients, providers,  and suppliers. Embracing change has been the leading  trend  in the most successful pharmacies.

In the past,  only 20 percent of disbursements were generics, but now as many as 90 percent of prescriptions are filled via that route. Community pharmacists have found ways to innovate by developing  front-end merchandise offerings, providing medication synchronization and delivery services, offering vaccinations, compounding, and specialty drugs, along with servicing  LTC facilities.

Many of these services require  investment  that can pay dividends for years to come, not only through customer loyalty, but also by expanding the services that attract and maintain new patients and provider referrals.


Live Oak Bank sees a bright future for community pharmacy. A team  of industry experts  in both pharmacy and financing can help bring businesses into the competitive  landscape, rewarding those  dedicated to patient care in ways that chains can never replicate. It has invested  in programs with organizations such as NCPA to bring awareness to owners  that tapping the resources required to meet new challenges is available for those pursuing success. Neil says, “A strong  track record needs no defense. We are confident in the future of pharmacy and are fully committed to helping  both those businesses in transition and those stepping up to meet the challenges and opportunities for tomorrow.”

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Josef Aukee is a writer and marketing communications consultant based in Sausalito, Calif. His work covers a variety of business, events, health care, technology, and travel topics