PharmaSoldGuides · For sellers
How much is my pharmacy worth?
A plain-language guide to how pharmacies are really valued in Canada, and why rules of thumb leave owners underpaid.
It's the first question every owner asks, and usually the one they get the worst answer to. A broker quotes a percentage of sales. A friend says "a dollar a script." A chain sends a number with no explanation. None of those tell you what your pharmacy is worth.
Here's how pharmacies are actually valued in Canada, the way a serious buyer and their bank will look at yours.
The short answer
A pharmacy is worth a multiple of the profit it reliably produces for a new owner. In practice that means:
Value = normalized EBITDA × a multiple
Normalized EBITDA is your real yearly profit before interest, taxes, depreciation and amortization, adjusted so it reflects what a new owner would actually earn. The multiple reflects how safe and how durable that profit is.
Sales don't set the price. Profit does. Two stores with $2 million in sales can be worth very different amounts if one keeps far more of every dollar.
Step 1: Find your real profit
Your accountant's statements are built to minimize tax, not to show a buyer what the store earns. So the first job is to normalize them. The most common adjustments are:
- Owner pay. If you work the bench and pay yourself through dividends, a buyer will have to hire a pharmacist to replace you. We subtract a market wage for those hours. If you overpay yourself, we add the excess back.
- One-time costs. A renovation, a lawsuit, a software switch. Costs that won't repeat get added back.
- Personal expenses. A car, a phone plan or family on payroll who don't work in the store.
- Rebates. Generic rebates from your banner or wholesaler are real income, but they're often booked oddly or not at all. We count them at what you actually receive, verified against statements.
- Rent. If you own the building and pay yourself below-market rent, a buyer will pay market rent. We adjust for that.
Step 2: Apply the right multiple
The multiple is where judgment comes in. It goes up when a buyer can count on the profit continuing, and down when they can't. These are the factors that move it most:
| Factor | Pushes value up | Pushes value down |
|---|---|---|
| Prescription trend | Steady growth with a clear cause | Declining scripts, or one unexplained spike |
| Lease | Long term, renewals, assignable | Under 5 years, no renewal, landlord consent unclear |
| Prescribers | Several doctors, signed clinic agreements | One doctor writing most of your scripts |
| Payer mix | Balanced private and cash business | Heavy reliance on one payer or recent audit recoveries |
| Owner dependence | Staff who run the store day to day | Patients who only come for you |
| Records | Clean reports and statements | Numbers the buyer has to take on faith |
A worked example
Here's a simplified version of what we do. The figures are illustrative.
| Profit on the financial statements | $145,000 |
| Add back: owner's personal vehicle and phone | + $14,000 |
| Add back: one-time renovation repairs | + $22,000 |
| Add: generic rebates not shown in income | + $60,000 |
| Subtract: market wage for owner's bench hours not on payroll | − $55,000 |
| Normalized EBITDA | $186,000 |
At a multiple of, say, 5 times, that store is worth about $930,000 before inventory. At 6.5 times it's about $1.2 million. The difference between those two numbers is almost entirely about risk: the lease, the prescribers and how clean the records are. That's why two owners with "the same" store end up with very different offers.
What about inventory?
In most Canadian pharmacy sales, inventory is paid for separately, at cost, based on a count taken at closing. So when you compare offers, check whether the price includes inventory or adds it on top. It can be a six-figure difference.
Why rules of thumb get it wrong
"A percentage of sales" ignores margin. A store with a high share of expensive specialty drugs can have big sales and thin profit. "Dollars per script" ignores rebates, front store, clinic income and rent. Both shortcuts can leave you underpaid, or holding out for a price no lender will finance.
The test that matters: a buyer's bank will check whether the store's profit can cover the loan payments with room to spare. If your price fails that test, the deal won't get financed, no matter what a broker told you.
How to get a real number
We do this for owners at no cost. Send us a few reports under a confidentiality agreement, usually your plan summaries, a recent profit and loss statement and your lease, and we'll send back a written valuation with every adjustment explained. There's no obligation to sell. Many owners just want to know where they stand.