The pharmacy chain cut its losses by almost a million pounds year on year, it revealed in its 2023 annual report, published last month (February 23).
Paydens' 2023 loss of £6.4 million is down £872,000 from 2022, when the company finished the year with a £7.3m loss.
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However, its earnings before interest, taxes, depreciation and amortization (EBITDA) have dropped from £3.13m in 2022 to £31,600 in 2023, according to the report.
Speaking to C+D on Friday (March 8), Paydens Pharmacy managing director Alexander Pay said the sudden EBITDA drop shows “the challenging picture of the business”.
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He added that the large decrease has been “directly caused by the flat rate of pharmacy funding alongside significant inflation pressures that would be felt by the whole economy, including wage increases, local rate increases [and] energy price increases”.
But “while trading conditions now are very challenging”, Paydens remains “confident” that it can “deliver on all the opportunities that lie ahead for pharmacy”, he added.
The financial report also said that the business is “focused on meeting the challenges the sector is facing and [is] confident of a strong performance in the future”.
Revised banking facilities
The report, which covers the financial year ending March 31 2023, revealed that Paydens had renewed its banking facilities “following a breach of its banking covenants”.
It said that this was due to “the operating challenge in the sector including the clawback of NHS funding, inflationary pressures and the lack of clarity over future government funding”.
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The report added that when the new pharmacy contract is announced, “the directors will assess the impact on the business, forecasts and financing before continuing negotiations with the bank” to extend the new facilities, which are currently only set to run until January 2025.
HSBC “remains supportive” and is “aware that the challenges affecting Paydens are industry wide”, Mr Pay said.
“They’re very supportive of our plan for the future”, he added.
“Immediate injection of funding” needed
Mr Pay stressed that Paydens supports the Association of Independent Multiple Pharmacies’ (AIMp) call for the government to address an “around £1.2 billion of underfunding to the sector”.
“We're very positive about Pharmacy First, we think it's a great step forward for the industry…but it doesn't address the chronic underfunding of the core services,” he added.
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Mr Pay stressed that “the core contract needs a significant and immediate injection of funding”.
It comes as the pharmacy negotiator last month announced that negotiations for the next one-year pharmacy funding deal have begun but admitted that a new contract may not be in place by April or could be imposed by the government.
And sector leaders last week criticised the lack of “specific relief for community pharmacies” in the newly announced spring budget, which includes £2.5 billion “additional” funding for the NHS.
