The rollout of Rowlands Pharmacy’s hub and spoke initiative MediPac was one factor behind the company’s average staff numbers falling by 14 per cent, its latest annual accounts reveal.

The Companies House filing for the 12 months to January 31 this year – which reveals the company made an after-tax loss of £34.65m, tripling its losses from the previous year – indicates that the company’s average number of employees fell by 14.2 per cent to 3,357. Personnel costs fell 10 per cent to £67m in 2021-22.

As well as “efficiency savings” and unrealised vacancies,” the year-on-year reduction in staff headcount was driven by the rollout of MediPac and pouch-based monitored dosage system NuPac, a reduction in weekend and evening trading hours and the company’s “ongoing portfolio strategy” that saw “a number of stores” marketed for sale in 2021-22 and more “held for sale” by the end of January.

Pharmacy Network News has approached Rowlands for more details on its store divestment programme.

The report reveals that company turnover fell by 8.8 per cent to £403.6m, which “principally reflects the impact of reduced prescription volumes and the consequent reduction in footfall and over the counter sales,” as well as the fall in store numbers.

Gross margin held more or less steady at 30.30 per cent, with the slight 0.02 per cent reduction attributed to the Government providing targeted Covid funding to pharmacies in the previous financial year.

Operating losses of £21m – significantly more than the £113,000 operating loss posted in 2020-21 – included impairment of £17.6m, which the company said was “necessary due to the reduced profitability and the impact on future predicted cash flows arising in the business”.

An “industry-wide challenge by HMRC” on the self-employed status of locums is one of the key risks facing the company, the report says, explaining: “As part of this challenge the company is in direct communication with HMRC over the extent of its liabilities.

“The company believes that locums are self-employed individuals and they are accounted for on this basis, no provision being made for national insurance contributions or income tax.”

Government-led changes to pharmacy remuneration pose another important challenge, said Rowlands. These can include changes to the Category M mechanism or adjustments to dispensing fees and “are often only announced with a short notice period,” it said.