Monday Business Briefing: PharMerica aims to double acquisitions; Louisville Cream gets $10K Kiva loan; farmers market in the works; and more
Welcome to the Feb. 27 Monday Business Briefing, your private business intelligence digest from Insider Louisville.
PharMerica shares fall as rising costs drag down earnings
Louisville-based PharMerica Corp. predicts that its revenue will rise about 16 percent this year, boosted in part by doubling its acquisition activity.
However, the company’s fourth-quarter results — net income fell 62 percent despite higher revenue — were dragged down by rising expenses and higher income taxes.
Shares on Friday fell 5.4 percent, closing at $25.30. Broader markets posted slight gains.
PharMerica’s fourth-quarter revenue, at $534.4 million, rose 2.7 percent, but the cost of goods sold, at $450.7 million, rose 3.9 percent, the company said in its fourth-quarter report.
That meant gross profit fell to $83.7 million, down 3.5 percent.
Operating income, at $11 million, was down nearly 41 percent, and net income, at $7.7 million, fell nearly 62 percent. The company paid $3.1 million in income taxes in the fourth quarter of 2016, compared to a getting a tax benefit of $1.3 million a year earlier.
PharMerica provides drugs and drug management services to hospitals, skilled nursing and long-term care facilities and others. The company fills about 40 million prescriptions annually.
Nearly half of its revenue comes from Medicare Part D, a federally funded program that subsidizes prescription drug insurance premiums for the elderly.
For the year, PharMerica reported revenue of nearly $2.1 billion, up 3.1 percent from 2015. However, the cost of goods sold rose 4.2 percent, to nearly $1.8 billion. While revenue was at its highest in at least five years, gross profit, at $326 million, fell to a four-year low.
Net income for 2016, at $21.6 million, fell 38 percent from a year earlier.
CEO Greg Weishar said he expected the company’s 2017 results to benefit from positive developments including higher Medicare Part D reimbursement rates and lower cost of goods sold “due to successful drug purchasing and cost management efforts in late 2016.”
Weishar also said that PharMerica this year also planned to acquire competitors with combined annual revenue of $200 million, or about double its typical acquisition target from the last few years.
Since its formation in 2006, the company has identified acquisitions as one of its pillars of growth.
“We believe that there are growth opportunities in several other markets,” the company said in its annual report filed with the Securities and Exchange Commission. “There are numerous businesses in our markets, mostly small or regional companies that lack the scale that we believe will be necessary to ultimately compete in a market that is national in scope.” —Boris Ladwig
Louisville Cream gets $10,000 Kiva loan funded in under 24 hours
Last week, 178 lenders helped fund Louisville Cream’s Kiva Loan in under 24 hours. It’s a small-batch, gourmet ice cream maker.
The company is opening a brick and mortar store in NuLu and needs the funds for a new ice cream maker and a new large capacity batch freezer, which is about $11,000 and will more than double the output of ice cream.
What’s the secret to the quick loan?
“No secret, I think it’s mostly the funders from our first Kiva loan, who once they heard about it had no hesitation,” said co-founder Lynette Ruby in an email. “Our first one took a few days longer to fund and get the word out. We’ve also grown by leaps and bounds on social media, so we spread the word there – but, honestly by the time the social media buzz was at its zenith we were over with funding. We couldn’t be more thrilled with the support of Louisville!”
Louisville Cream was founded by Ruby, Zach Hardin and Darryle Goodner. They’ve been doing events, catering and selling pints wholesale and in select markets. They’ve been open for around two years.
This no-interest 36-month loan is Louisville Cream’s second on Kiva.
This spring they will open at 632 E Market St, next to Muth’s Candies. They will serve pints, scoops, floats, pie a la mode and other treats. —Melissa Chipman
(Editor’s note: The writer participates in the Kiva lending program.)
Theater company partners with civic groups to bring acting skills to West Louisville kids
Commonwealth Theatre Center, Louisville Central Community Centers and Louisville Urban League have partnered to introduce a 13-week hands-on initiative aimed at engaging at-risk youth ages 8-18. It’s called Building Character and Staging Success and the pilot hopes to work with around 40 children.
Commonwealth Theatre Center formed from the merger of Walden Theatre and Blue Apple Players.
CTC Teaching Artists will lead an improv class for novices and a studio class for experienced youth. Classes will take place at Louisville Central Community Centers.
“Half of the youth that participate in our after-school arts program live in the Russell or surrounding neighborhoods,” said Erica Bledsaw, coordinator of fine arts with Louisville Central Community Centers. “The quality of classes we offer in the performing arts have changed the course of many of their lives. A mother of one of my young people told me that for the first time in her child’s 17 years of life, he was proud of himself. That is a true testament of how much being in our Youth Troupe has altered the trajectory of this young man’s life.”
Financial support for the program comes from the crowdfunding site ArtsMatch hosted by Louisville’s Fund for the Arts as well as other sources. The Jennifer Lawrence Arts Fund at the Fund for the Arts is matching all donations to the project on ArtsMatch dollar for dollar.
Business owner organizing farmers market in Schnitzelburg
Last fall, Andrea Estes Riegling took a break from her catering company Rock That Plate.
She started thinking about the future of food access in the Schnitzelburg neighborhood in light of the news that the Kroger in Old Louisville was closing, said Riegling, who has lived in the neighborhood for 18 years.
“I thought ‘What if we started taking back some of that decision-making as a community? How can I influence what’s going on in my area?’ ” she said.
When posing those questions to herself, Riegling landed on an answer: a Schnitzelburg farmers market.
During the last couple of months, Riegling has worked with like-minded residents and the Schnitzelburg Community Council to find vendors and a place to host the market.
Multiple community members have come together to help and the market’s Facebook page has received 436 likes since the page when live this month.
“I really think there is a strong connection with trying to do a community effort like this,” she said.
Riegling is still waiting on a permit from the state agriculture department that gives farmers markets permission to operate. However, she said, she is hopeful that the Schnitzelburg Community Farmers Market will officially open on April 1.
Farm machinery show attendance exceeds 300,000
This year, the National Farm Machinery Show brought more than 300,000 attendees, exhibitors and agribusiness professionals to the Kentucky Exposition Center, according to the Kentucky State Fair Board. The event was Feb. 15-18.
The show spanned 1.2 million square feet and featured 880 booths related to agriculture. Between hotels, food and other expenses, it has an estimated economic impact of $17 million, the fair board stated.
The Championship Tractor Pull, which is held in conjunction with the farm show, sold more than 65,000 tickets alone.
The National Farm Machinery Show has consistently ranked among the top 10 largest trade shows in the United States, according to the state fair board. —Caitlin Bowling
Southern Indiana business celebrates opening of second location
Restaurant owners Sam Jones and Ben Jones cut the ribbon on their second Urban Bread Co. location last week.
The restaurant opened a new storefront at 145 E. Main St. in New Albany roughly two years after the opening of its inaugural location at 716 E. 1oth St. in Jeffersonville. Between the two locations, the business now employs 15 people.
Urban Bread Co. is known for its thin flatbread called roti, which is are filled with a wide variety of ingredients. It also serves up coffee drinks and dessert. IL’s Kevin Gibson reviewed the original restaurant, formerly called The Hub, last year.
The brothers explained the name change on their website: “We are only changing our name to better label ourselves. Nothing on the menu will change, no change in vision.”
UofL researcher gets $2.6M federal grant to study malaria microbes
A University of Louisville researcher has received $2.6 federal grant to continue research into how microbes in the gut of mice can reduce the severity of malaria.
Nathan Schmidt, assistant professor in the university’s Department of Microbiology and Immunology, said in a press release that he hopes that the findings would reduce the impact and deaths from the illness.
Malaria is a mosquito-borne disease caused by a parasite that kills 400,000 people annually, with about 90 percent of the deaths occurring in sub-Saharan Africa. More than 200 million people get the disease every year.
While the disease was eradicated in the U.S. in the 1950s, still about 1,750 cases occur domestically every year, mostly from recent travelers, according to the Centers for Disease Control and Prevention.
Many people who are infected with the malaria parasite do not get ill, according of UofL. “Schmidt’s research aims to learn more about why some people become seriously ill while others do not,” the university said.
Negat Egilmez, the department chair, said the Schmidt is doing research in an area that is understudied and offers many opportunities.
He described it as a “cutting-edge area of research amounting to a new paradigm in medicine.”
Schmidt was awarded the five-year grant from the National Institute of Allergy and Infectious Diseases, one of the National Institutes of Health. —Boris Ladwig
Brown-Forman introduces nutrition info website
Louisville distiller Brown-Forman has started a website with nutritional information, continuing a trend in the alcoholic beverage industry.
Brown-Forman said in a press release that it had previously provided nutritional information on its products, which include Jack Daniel’s, Finlandia and Jimador, on request, but that the website would “make the process easier.”
The site will provide standard nutritional labeling information including calories, sodium and carbohydrates, but also will provide stats on alcohol content per standard drink.
Brown-Forman said the effort “aligns with the company’s collaboration with others in the industry to enable consumers to make informed choices about drinking.”
Major brewers last year voluntarily agreed to provide more details on product contents. While industry officials said that the move addressed consumers’ increasing demand for more nutrition information, beverage industry experts also said that the voluntary labeling was designed to preempt government regulation. —Boris Ladwig