Pharmaca parent Medly files for bankruptcy

BOULDER and WILMINGTON, Delaware – Medly Health Inc., parent company of Boulder-based Pharmaca Integrative Pharmacy Inc., has filed for Chapter 11 bankruptcy protection.

The filing was made Friday in the U.S. Bankruptcy Court for the District of Delaware in Wilmington. The filing requests that bankruptcy petitions for Medly Health and 31 of its affiliates, including Pharmaca, be jointly administered in the petition.

Medly Health reported more than $110 million in secured debt and is seeking the court’s permission to sell its 22-store Pharmaca businesses. The filing listed both assets and liabilities of between $100 million and $500 million.

Brooklyn, New York-based Medly Pharmacy  Inc. acquired Pharmaca in late 2021. 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.

Medly was forced to file for bankruptcy late Friday 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.

The company lists debts including $81 million to affiliates of TriplePoint Capital, $20 million to Silicon Valley Bank, $10 million in trade debt to Cardinal Health and $10 million in secured notes issued to a variety of investors. Medly CEO Richard Willis also declared that it owes about $47 million in trade debt, unpaid salary and other unsecured debt.

“The debtors intend to seek approval of the sale of the four remaining Medly pharmacies’ prescription lists to ensure patients are able to transfer their prescriptions prior to the closing of those stores,” Willis declared. “Second, the debtors will seek approval of bid procedures for the sale of the Pharmaca business line, which includes 22 stores, as a going concern. The debtors have identified a buyer to act as a stalking horse in such sale. The debtors believe pursuing both sales in these Chapter 11 cases is the best path forward and is in the best interests of their estates and creditors.”

MedPharmaca Holdings Inc. has agreed to place a starting $18.5 million bid at a bankruptcy auction for just about all of Medly’s assets, including the Pharmaca stores, but would get a $450,000 breakup fee and up to $500,000 in reimbursed expense if some other bidder wins the auction, according to the bankruptcy filing.

Medly operates 21 pharmacies in nine states, as well as four digital pharmacies and one health-and-wellness store in Seattle. It also owns the e-commerce site. Pharmaca stores in Boulder are at 2700 Broadway and 645 S. Broadway. Another store at 17th and Pearl streets closed in 2020.

Medly is represented by Laura Davis Jones of Pachulski Stang Ziehl & Jones LLP. The case is In re: Medly Health Inc., case number 22-bk-11257.

Source: BizWest

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