Situation

A healthcare focused private equity firm had purchased a specialty pharmacy company with operations in several states. It quickly became clear that the company had severe systemic operating issues that were not disclosed during due diligence. The private equity firm terminated their relationship with existing management and brought in their own Executive-in-Residence as CEO.

Solution

An experienced executive, now a NextLevel team member, was recruited as acting CFO to partner with the new CEO and lead a turnaround of the company. With a new sense of urgency, the back-office functions were staffed with competent and dedicated personnel, and a thorough business analysis was performed that successfully detailed the problem operating issues, allowing for development of a comprehensive turnaround plan. This plan included the shutdown of one operating unit, consolidation of all banking functions from the disparate businesses to improve cash flow management, renegotiation and/or cancellation of unfavorable contracts, and implementation of timely financial and performance monitoring processes. In addition, a single-platform integrated pharmacy system was implemented across the organization, allowing for the implementation of a hub/spoke business model and realization of significant savings through consolidation of pharmaceutical purchases and improved operating synergies.

Results

Over the acting CFO’s one-year period of engagement, more than $2.0 million of annual cash flow savings were realized, reversing cash burn from approximately $200K per month to break even.

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