Case Study
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| PHARMACEUTICAL CARE NETWORK |
Strategy and positioning that led to a 12x EBITA sale.
PCN was a large, regional pharmacy benefit management
provider faced with aggressive competitive price cutting, deteriorating service
levels, customer churn, a depleted sales pipeline and declining employee morale.
The company commissioned RiechesBaird as a strategic partner to help turn around
their situation and build momentum.
First, we worked closely with PCN’s board of directors and senior management team to
identify the critical leverage points—pricing, margin spread and dispensing fees—proactively
targeting key customers to dramatically increase service levels, retain
key employees, and unify the management team and board around a collaborative service
strategy.
Then we initiated both an organic growth and external growth strategy for the company,
zeroing in on industry consolidation as an opportunity for them to build momentum and
improve their valuation at the same time as they were looking for potential partners
or acquirers. We 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.
At the same time, we carefully screened potential buyers, so as not to disrupt the
positive momentum that was building within the company.
In less than 90 days, we assembled a deal team and negotiated
a synergistic 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.”
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