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Independent pharmacy chain Paydens Limited saw its losses rise more than double in the year to April 2024 as a plan agreed with its bank has seen it offload a number of branches.

Despite these challenges – which auditors Crowe UK described as casting "significant doubt" on the chain's future – company directors said the accounts reflect "historic" performance, adding that they are “very confident” their “turnaround plan” will see the business return to profitability during the 2025-26 financial year.

The company’s latest financial statement, which was approved by its board on March 26 and published on the Companies House website over the weekend, reveals that it made a loss of £12,998,938 in 2023-24, 103.8 per cent higher than the £6.4m loss it made the year before.

Turnover fell by 3.9 per cent to £142.2m compared to £148.1m the year before, while the company’s gross profit percentage fell from 29.05 to 27.02 per cent. Meanwhile, the amount of cash at bank and in hand decreased by 44 per cent to £3.54m. 

The community pharmacy chain, which sits within Paydens Group Holdings and operates throughout the South East region of England, is “reliant upon a group financing facility” with HSBC which has been “revised” since April 2024 and extended to January 31, 2026. This new agreement comprises a £6.5m term facility and a £15m revolving credit facility, reducing to £10m by June 30 this year.

The report states that despite Paydens having breached its banking covenants, HSBC has “remained supportive” and “reset the covenants” in its latest agreement. 

‘Strategic disposals’ part of agreed bank plan

The company’s strategy for improving business performance includes “strategic disposals of certain pharmacy assets,” a move that was enacted after the 2023-24 accounting period and is described as being “in line with the agreed plan with the bank” for reducing the group’s debt. 

 While the report does not reveal how many stores have been sold, there are 99 branches currently listed on the company’s website – 29 fewer than the 128 stores referenced in a press released issued in February concerning its alcohol awareness campaign. 

The directors said that since April 2024 “the company has disposed of a number of pharmacies for combined net proceeds of £11,077,425… the disposals generated a combined net profit on disposal of £5,326,169”.

These sales have “contributed to debt reduction and improved our overall financial flexibility,” they added. 

'We are positioned for growth'

Speaking to P3pharmacy, Paydens managing director Alexander Pay said the 2023-24 accounts reflect the "severe and unsustainable pressures" placed on the sector by a decade of funding cuts. 

He added: "However, it is crucial to understand that these figures are historic, representing a period ending over a year ago, and do not accurately depict Paydens' current financial strength and prospects."

He said that a "significant portion" of the losses relate to a "strategic corporate restructuring" that saw all branches consolidated into Paydens Ltd. 

Mr Pay said that since 2023-24 the company has "taken decisive and highly effective action to transform our financial standing," including slashing debt and recapitalising the business through pharmacy sales, "enabling us to focus on a leaner, more agile and geogrpahically concentrated portfolio". 

Mr Pay said the company is "now in a strong position" and that "our accounts for the year ending March 2025 will show improvements across all areas of our profit and loss account". 

The company's turnaround strategy has focused on reducing operational and financial costs as well as boosting revenue from pharmacy services and developing "new opportunities in our wholesale business," he commented.