Neighbourly appears to be well capitalized and retains the financial flexibility to continue to execute upon these acquisition opportunities.Ĭurrently, the stock is selling for below its initial public offering price, so I believe it is considerably undervalued given its potential. Neighbourly maintains an active acquisition funnel, comprised of both multi-store and single store tuck-in acquisitions, which the company believes represent a significant opportunity for future transactions. Neighbourly is focused on capitalizing on demographic and macro tailwinds, including both an aging population and pharmacists growing scope of practice, which allows for the provision of additional services under existing staffing models. The Canadian retail pharmacy industry is stable, economically resilient and possesses a strong outlook over both the near and long term. Elman is a principal of private equity firm Persistence Capital, which controls Neighbourly. The cost of this investment totaled more than $599,000. On June 15, Stuart Elman, the chairman of the board of directors, bought 33,707 shares at a price per share of $17.78. Neighbourly: A Friendly Canadian Pharmacy With Value Potential As a result of this position and a robust acquisition pipeline, the company anticipates continuing to acquire pharmacies at a rate similar to historical levels prior to the CA$439.89 million acquisition of Rubicon last year This approach, combined with alignment of patient-centric values and a deep respect for the pharmacys legacy and role in the community, positions it as an acquirer of choice. Transactions are frequently completed within eight weeks of signing a letter of intent, and pharmacies are fully integrated into the companys point of sale and procurement systems within 24 hours of closing, with minimal disruption to patients and staff. This expertise has facilitated the development of a model that allows it to rapidly source, close and seamlessly integrate acquisitions. The companys management has extensive experience in retail pharmacy, mergers and acquisitions and consumer retail. Neighbourly has capitalized upon this consolidation opportunity by acquiring and integrating 112 locations during fiscal 2023. More than half of the countrys approximately 11,500 pharmacies are independently owned. The Canadian retail pharmacy landscape is highly fragmented. These communities are typically underserved and subject to less intense competition. Approximately two-thirds of its pharmacies are located in communities with a population of less than 100,000 inhabitants. In contrast to major national retail pharmacy chains, Neighbourly operates in a unique segment of the market that is characterized by differences in both geographic profile and sales mix. The company, which has 291 stores across seven Canadian provinces, focuses primarily on serving rural communities, where it offers a wide range of products and services, including prescription drugs, over-the-counter medications, health and beauty products and home health care supplies. Neighbourly Pharmacy is well-positioned to capitalize on the increasing demand for prescription drugs and pharmacy services from the aging Canadian population as well as the trend toward pharmacists providing more clinical services like vaccinations, diagnosis and treatment for minor self-limiting health conditions like urinary tract infections, tick bites, pinkeye, cold sores and dermatitis. Its competitive advantage is based on its service-oriented culture and strong relationships with patients and pharmacy owners. Unlike major retail pharmacy chains, Neighbourly's pharmacies generate most of their revenue from pharmacy services rather than retail sales. The company's pharmacies are trusted sources of care and advice for their patients, who rely on them for prescription medication and clinical services. Warning! GuruFocus has detected 6 Warning Signs with TSX:NBLY. It also benefits from the growing national network and a platform that provides purchasing power and economies of scale. Neighbourly Pharmacy leverages analytics, pricing and merchandising techniques to enhance same-store performance and profitability. The company has a roll-up strategy based on acquiring and integrating pharmacies across the country. (TSX:NBLY) is a retail pharmacy consolidator in Canada, focusing on small towns and rural markets.
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