December 3, 2007
By CYRUS LEVESQUE
MIDDLEBURY — Porter Medical Center plans to sell its for-profit pharmaceutical division, Porter Health Systems, to Cobble Hill Holdings, Inc., the parent company of Burlington Drug Company and Dowling Grocery, both of which are pharmaceutical wholesalers.
Porter president James Daily said the agreement ensures that few changes are in store for customers and employees of the pharmacies, which include the Marble Works pharmacies in Middlebury and Vergennes, and the Vermont Mail Order Pharmacy and the New England Mail Order Pharmacy, which sell pharmaceuticals on a retail business by mail order around the region out of the Middlebury office. Porter Health Systems also includes the Medicine Chest medical equipment company next to the Marble Works Pharmacy.
“We are confident that the customers and employees will benefit from this transaction, and that these pharmacies will have access to significant new operational and financial resources,” Daily said.
According to Porter Medical Center spokesman Ron Hallman, day-to-day business of the stores will stay the same for the near future. “The entities will continue to operate as they are,” Hallman said.
The boards of directors of both Porter Medical Center and Cobble Hill Holdings, Inc. have voted to approve the deal, but according to Hallman an appraisal of the value of the businesses is not finished. Mike Mitiguy, president of Cobble Hill Holdings, said they hope to have the deal finalized by the end of the year.
Based in Milton, Cobble Hill Holdings has been owned by the Mitiguy family for over a century. The company does business in Vermont, New Hampshire, Maine, Massachusetts and New York, and Porter’s pharmacies have been one of the largest customers of Burlington Drug Company for several years. Porter Health Systems now has 39 employees, Hallman said, while the Burlington Drug Company employs about 125.
The various branches of Porter Health Systems have worked closely together and Mitiguy said that would continue under the new management. “We’re very interested in maintaining the integrity of that operation,” he said.
Buying Porter’s pharmacies is Cobble Hill’s first retail venture, but Mitiguy said their companies have a hands-on style of business that has prepared them for owning and directly managing stores. Mitiguy said that in addition to pharmaceutical wholesalers, Burlington Drug Co. also works with their customers on other parts of the business, like advertising and how to handle new medications.
“We’ve been dealing with retail, hospital and nursing home businesses and we work closely with our customers, so it’s a business we’re intimately involved in,” Mitiguy said. The company already has an interim manager working at the Marble Works Pharmacy as they get ready for the transition.
Hallman said that Porter Health Systems has been held back in its growth by being part of the Porter Medical Center, partly because of the different missions of both. Being a part of Cobble Hill Holdings should help it expand and become more profitable. “It really needed to grow,” Hallman said. “Cobble Hill has more resources, more expertise to take these businesses forward.”
Porter Health Services has grown quickly, from about $8 million in annual revenue when Porter Medical Center bought the Marble Works Pharmacy in 1995 to about $25 million today, according to Daily. But making a profit on that revenue has become less reliable in recent years as the industry continues to become more complex. “It’s not the cash cow (for Porter) it once was,” Daily said.
Daily said that the various parts of Porter Medical Center had been competing for limited resources, and the sale will let Porter Medical Center focus entirely on the hospital and the Helen Porter Nursing Home. “It’s time for us to get back to basics,” he said.
Mitiguy hopes that under Cobble Hill Holding’s direction, the pharmacies will soon be able to expand, especially in their mail order business. “We feel there are opportunities to take it to a more national area,” he said.
It’s too early for definite plans, but one market they hope to reach is the state of Vermont itself. According to Mitiguy, the state contracts with an out-of-state pharmaceutical company for its own employees’ health care. “We’ve always felt that was wrong,” Mitiguy said.