Decoding PharMerica’s Growth Strategy

How mergers and acquisitions reshaped a company’s position in the pharmacy business

While mergers are normal occurrences in many industries, they are rarer in the health-care world. Regulations and medical policies make them difficult, if not impossible, to pull off.

PharMerica’s merger was one of the rare ones in 2007. Kindred Healthcare’s pharmacy business merged with a subsidiary of AmerisourceBergen to form PharMerica, now the country’s second-largest institutional pharmacy operator.

PharMerica is a unique, niche pharmacy that serves patients who are in long-term care facilities, such as skilled nursing or assisted living. “We would be like a Walgreens pharmacy, except you can’t walk into our pharmacies,” Caneris says. “We dispense prescription medicines in special packaging and deliver from one of our one hundred pharmacies to nursing homes daily.”

To help in that transition, the company hired Tom Caneris, today its senior vice president and general counsel. Caneris was determined to make the new company a leader in supplying medications to nursing homes. The company’s strategy to do so focuses on acquisitions. “We tell our investors that we want to do at least $100 million in pharmacy revenue acquisitions a year, and over the last few years, we have exceeded that to a large extent,” Caneris says. “They can expect that we will be doing that in our core institutional pharmacy business or in specialty pharmacy.”


Louisville, Kentucky-based PharMerica formed in January 2007 when Kindred Healthcare and a subsidiary of AmerisourceBergen merged. PharMerica is the second largest in the institutional pharmacy services market and is a publicly traded Fortune 1000 company. It reports revenues of $1.9B, has a 330,000-customer base, and operates in forty-one US states.

In 2015, PharMerica acquisitions included Integrated Pharmacy Network, a long-term pharmacy based in Midland, Michigan; Luker Pharmacy Management, a provider of comprehensive pharmacy management services based in Texas; and InfusionRx, a provider of home infusion and pharmacy services.

“We are executing a strategy of diversifying from our core business of serving nursing homes and taking that experience and leveraging it into other areas of pharmacy,” Caneris says. “One is home infusion—providing IV-based drug therapy in a person’s home. We are looking to establish a national footprint to be able to provide this service on a really large scale.” The acquisitions of InfusionRx and Alternacare Infusion Pharmacy fall into this category.

Another strategy for the company is to improve its specialty pharmacy operations. Most recently, the company has improved its oncology offerings. PharMerica acquired an interest in Onco360, which is one of only a handful of pharmacies that has access to certain specialty cancer drugs. Since acquiring the company, PharMerica has helped Onco360 increase revenues by 25-30 percent each year. “We looked for a company that was in a high-growth area and used our expertise to really help that company grow,” Caneris says. “It’s grown tremendously since we acquired it.”

With this strategy in mind, Caneris is careful in his due diligence. “We’re looking to make sure companies are being operated well, but in some cases we acquire a company knowing that it wasn’t operated well,” he says. “That’s why we’re buying them, because we know we can take those and add value by doing things differently.”

Not satisfied with the status quo, PharMerica prides itself on looking for ways to bring innovation to the industry. During the last eight years, the company has brought numerous informatics solutions and technology to market. “We are an industry leader in using what’s called automated dispensing machines,” Caneris says. “These are on-site machines we install at the actual locations of our nursing home customers. We stock the machines with medication that allows nurses to take medication directly from the machine after they go through a series of commands. This is just one way we offer our customers better choices.”

PharMerica currently operates approximately one hundred institutional pharmacies, including fifteen focused on infusion therapies and five for oncology medications. The company packages and delivers medications in unit doses—rather than in bulk—to customers in forty-five states. PharMerica also provides consulting and monitoring services of drug usage to help care facilities comply with government regulations.

“Pharmacy is a very regulated industry, so we need to be experts in Medicaid, Medicare, and pharmacy law,” Caneris says. “The laws are constantly changing, so I help the company implement the changes as they occur.”

As PharMerica continues to expand its practice, it doesn’t look like the innovative company will slow down any time soon. “There’s no typical day for me, and I feel very lucky for that,” Caneris adds.