Background

Pharmaceutical Care Network (PCN) is a large, regional pharmacy benefits management company specializing in mid-tier services. Their business and brand value proposition, based on superior customer service, had prospered for years.

Issue

However, due to significant industry changes, competitive price-cutting and organizational challenges, PCN was experiencing dramatic customer churn, a depleted sales pipeline, declining employee morale, and, most importantly, a change in customers’ perceptions of their ability to deliver on their brand proposition. The company commissioned RiechesBaird as a strategic partner to help turn around the situation and build momentum.

Strategic Insight

RiechesBaird began by working closely with PCN’s board of directors and senior management team to identify the critical leverage points—pricing, margin spread and dispensing fees. We then proactively targeted key customers to dramatically increase service levels, retain key employees, and unify the management team and board around one goal—recapturing the brand value proposition that had historically differentiated the company.
Next, we initiated an organic and external growth strategy for the company. We focused on industry consolidation as an opportunity for PCN to build momentum and improve their valuation, while also looking for potential partners or acquirers. RiechesBaird built a “synergies-based” business case for the company’s targeted buyers: improved revenue growth, higher margins, more efficient capital utilization, a regional foothold in the western United States and a unique technology platform. All the while, we carefully screened potential buyers to avoid disrupting the positive momentum building within the company.

Result

In less than 90 days, RiechesBaird assembled a deal team and negotiated the sale of the company at a multiple of more than 12 times EBITA—greatly outperforming comparables with similar prospects for ROIC and growth. The board and shareholders approved the deal overwhelmingly, describing the work we did for them as “truly extraordinary.”