Medly closure leaves Boulder landlord, employees in lurch

BOULDER — With the bankruptcy, sale and upcoming closure of Medly Health Inc. pharmacies (formerly Pharmaca Integrative Pharmacies), a rare hole could be left, at least temporarily, in one of Boulder’s most iconic shopping plazas.

Steve LeBlang, one of the owners of the Ideal Broadway Shops, told BizWest this week that the closure this month of Medly pharmacy at 2700 Broadway will result in the first vacancy at that location in decades. 

The shop was built in the late 1950s and, according to LeBlang, has since been continuously occupied by a series of pharmacy operators. “It’s never been closed,” he said. 

The Medly closure, which will come as a result of a decision this month by the U.S. Bankruptcy Court for the District of Delaware to allow Walgreen Inc. — the Deerfield, Illinois-based subsidiary of holding company Walgreens Boots Alliance (Nasdaq: WBA) — to pay $19.35 million in cash for Medly’s prescription files, pharmacy inventory and intellectual property, including its trademarks and logos, will also mean about 25 workers will lose their jobs at the Broadway operation, he said. 

“They were very dismayed by what’s going on,” LeBlang said of the employees. “… The sad thing is that it was continuing to be a successful, ongoing business. It was Medly’s other adventures that took them down the tubes.”

Pharmaca was founded in June 2000 in Boulder as the nation’s first integrative pharmacy chain offering traditional pharmacy services alongside natural and complementary health solutions, including natural health and beauty products.

The Medly digital-pharmacy company purchased Boulder-based Pharmaca in June 2021 and rebranded stores, including the Broadway location. The company then filed for bankruptcy two months ago.

At the Feb. 3 bankruptcy auction, Walgreens outbid “stalking-horse” MedPharmaca Holdings Inc. When Medly filed for Chapter 11 bankruptcy protection in December, MedPharmaca agreed to place a starting $18.5 million bid for just about all of Medly’s assets, including the Pharmaca stores. However, the bankruptcy filing said MedPharmaca would get a $450,000 breakup fee and up to $500,000 in reimbursed expenses if some other bidder won the auction.

According to LeBlang, Walgreens has begun informing customers at Medly’s Broadway location that prescriptions will be filled at other nearby stores. 

“Walgreens comes in here with its behemoth corporation, buys all the prescriptions and just shuts the whole thing down,” he said. “… Walgreens thinks it’s a good neighbor, but it just shut down a 65-year-old treasured asset for the city of Boulder.”

LeBlang said the Ideal Shops Broadway owners want a new tenant to take over the 2700 Broadway space as soon as possible because Medly has been released from its lease obligations by the bankruptcy court. “As of March 1, it’s gone — no liability, no responsibility whatsoever,” he said.

The shops have already been contacted by pharmacy companies inquiring about taking over the space, according to LeBlang. 

“We’re going to do our best to get another reputable pharmacy in there.”

Walgreens is the second-largest pharmacy store chain in the United States behind CVS Health Corp. (NYSE: CVS), which also placed a bid for Medly’s pharmacy scripts and other assets, according to bankruptcy filings.

Pharmacist B. Douglas Hoey, CEO of the National Community Pharmacists Association, told Business Insider that drugstore chains often buy prescription files from smaller pharmacies that are going out of business.

According to the bankruptcy filings, Medly had 22 locations, all of which originally belonged to Pharmaca.

Medly filed for Chapter 11 bankruptcy protection on Dec. 9 in the U.S. Bankruptcy Court for the District of Delaware in Wilmington. The filing requested that bankruptcy petitions for Medly Health and 31 of its affiliates, including Pharmaca, be jointly administered in the petition. During a virtual hearing, U.S. Bankruptcy Judge Karen Owens gave Medly interim permission to access half of its $8 million in debtor-in-possession financing, despite concerns expressed at the hearing from Linda Casey, a representative of the U.S. Trustee’s Office, that Medly could end up in default on that financing before the next hearing Jan. 3 if it failed to close on the sales.

Medly was forced to file for bankruptcy after it failed to get a $100 million loan for which it applied last summer. In the court filing, the company said that made it impossible to buy the drugs it needed to fill prescriptions. As a result, it said, more than 20 of its stores closed.

BizWest’s Dallas Heltzell and Chris Wood contributed to this report.

Source: BizWest

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