It looks like Arcadia Resources Inc.’s DailyMed pharmacy business will live on—but under the wing of Walgreen
Co. instead of on its own.
According to a securities filing, Indianapolis-based Arcadia agreed on Dec. 6 to sell DailyMed to Illinois-based Walgreen
for $2 million. The drugstore giant has agreed to pay—and eventually hire—Arcadia CEO Marvin Richardson to keep
running the DailyMed business.
The sale is scheduled to close before April 16. Walgreen’s payment will be used to satisfy the $5 million debt Arcadia
owes to Springfield, Ill.-based H.D. Smith Wholesale Drug Co., its primary supplier of pharmaceuticals.
Richardson could not be reached for comment, but company officials agreed to discuss their plans in January. The securities
filing says Richardson will remain Arcadia’s CEO until Walgreen hires him.
In the meantime, Walgreen will pay Arcadia $25,000 per month to manage the DailyMed business.
Richardson, a graduate of Purdue University, brought a struggling Arcadia to Indianapolis from Michigan in 2007. He had invented
the DailyMed concept—which streamlines the numerous medications taken by aged and chronically ill patients—and
planned to use it to revive Arcadia.
Arcadia signed major contracts with the Indiana Medicaid program and Indianapolis-based WellPoint Inc., but DailyMed’s
growth didn’t take off fast enough for Arcadia to outrun its debts.
In April, $30 million in loans will come due. Arcadia has been trying to sell its remaining business, a home health care
staffing operation that pulls in $80 million per year. But so far, the company has yet to find a buyer and, even if it does,
it does not expect to raise enough money to pay off all its debt.
In June, Arcadia announced that its auditor issued a going-concern warning about the company because
of the debt. The company delisted its stock from the NYSE Amex Equities Exchange in August and now sells
it over the counter.
Acadia had intended to shift its focus exclusively to DailyMed since it launched the service in January 2008. It sold its
home health equipment and industrial staffing businesses in 2009 to help fund DailyMed’s expansion.
In May 2010, Arcadia announced that it expected to add 930 jobs in Indiana by 2013 because of the DailyMed unit. But according
to the company’s annual report released in June, administrative staff at the company's headquarters numbered just
229.
The DailyMed unit saw revenue rise 17.6 percent in the third quarter, to $4.6 million. Arcadia had negative cash flow of
$3 million for the six months ended Sept. 30, but the company said it still had $1.4 million in cash and a line of credit
to work with.
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SOMEONE AT IBJ DO SOME REAL RESEARCH!
They shouldn't be responsible for any debt, other than the $5 million. The other $30 million coming due in April is from the services segment.
the question remains, how much debt/liabilities is Walgreen taking over in addition to the $5m, and did Richardson and Walgreen use Arcadia shareholder money to roll out and test DailyMed on behalf of Walgreen, before now transferring it to Walgreen at the cost of shareholders? see Richardson and Goodall previous employment history with Walgreen, before coming to Arcadia as a hint.
The costly pharma segment was sucking up all the money from the more highly profitable service segment. Now the company is restucturing to profitability with the exit of DailyMed and this is a big positive for shareholders.
Additional positive is having Richardson removed and replaced! The guy only ruined sharheolder value and share price. Before his arrival, the company had same amount of debt, but was worth over $3.00 per share and over $400m in market cap, today the company is worth $0.014 and $2.6m in market cap, which presents a tremendous Buying opportunity here.
Additionally, only $11m of debt is actually secured, with the remained in notes being held by Arcadia shareholders.
The major upward swing is about the begin.