JNBA Financial Advisors makes concerted move into retirement plans
The founder of ApothecaryRX in Golden Valley is trying to combine the best of two worlds as he purchases independent pharmacies throughout the country.
“We believe the service of the independent model combined with the business side of the chain model work well together,” CEO Lew Zeid’ner says. He started two years ago, has 10 employees in Golden Valley, and has bought 18 stores so far, with a goal to purchase 10 each year.
“As you go to midsize towns across the country you?d see these pharmacies closing or selling to big box chains,” he says. “I have an 86-year-old dad, who would miss the pharmacists he knew after they sold, so it’s personal, too.”
Zeidner says the company standardizes in four areas to make the acquisitions work:
“Human resources and payroll. Everyone gets on the same benefit plan. That’s often an upgrade,” becamom-and-pop stores don’t usually have plans. “One of the things that’s important is to keep the staff.”
“The information technology platform. A lot of independents as they get closer to retirement are reticent to invest in technology,” he says.
Purchasing. It allows us to get better pricing.
Accounting. For many independents they don’t track financials on a short-term basis.
Zeidner says 90 percent of the sellers come to his company through word of mouth from others who have sold. He ticks off his criteria for acquiring:
“We’ve used a minimum of $5 million in annual sales. It does typically indicate that there’s enough connection with that community.”
Second, we look at the people. Will people stay? Because we’re buying the relationships.
Three, what’s happening in the community? Is there a decline?
Finally, the softest one is just style. Is it a good match??
He says there are 2,000 independent pharmacies that fit the criteria. Zeidner says many times the pharmacists who are selling are attached to their businesses, and the company tries to be sensitive to that fact.
“We often say the store has been an extension of the owner’s living room. It’s a very emotional time,” he says.
Zeidner was a hospital administrator for years, then became involved with a pharmacy management company in hospitals which he sold in 1998. He helped to start PrairieStone Pharmacy in 2004, then took the opportunity to exit when it changed hands.
To finance the venture, “We found through contacts a person in Oklahoma City in the oil and gas business, Roy Oliver, who signed guarantees and so on,” Zeidner says. “In January we did a reverse merger into a publicly traded shell,? also in Oklahoma City. Our market cap right now is $150 million.”
He says he tried to get financing from Minnesota firms but failed. “We would have loved to keep this completely Minnesota-based. I mean, it?s located here, but our legal services, for example, are in Oklahoma City,” Zeidner says.
