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.