The Top 5 Concerns of a Pharmacy CPA
By Todd S. Eury, Editor in Chief, Pharmacy Podcast Network
I have spent much of my career as a “talking head” for the pharmacy profession. Through thousands of podcast conversations, I have spoken with pharmacists, owners, educators, advocates, policymakers, attorneys, technology leaders—and, importantly, pharmacy-focused accountants.
Those conversations have taught me that an independent pharmacy’s clinical mission cannot be separated from its financial health. A pharmacy can provide extraordinary patient care, employ a trusted team, and serve as a healthcare lifeline for its community, but none of that is sustainable if the business is dispensing prescriptions at a loss.
That is why pharmacy CPAs are becoming some of the most important strategic advisers in community pharmacy.
Sykes & Company, P.A., which specializes in pharmacy accounting and advisory services, consistently emphasizes cash flow, inventory, reimbursement, financial reporting, and strategic planning throughout its articles, educational programs, and podcasts. Its message is timely: pharmacy owners need accounting systems that reveal what is happening inside the business before financial pressure becomes a crisis.
Here are five concerns I believe are keeping pharmacy CPAs—and independent pharmacy owners—awake at night.
1. Cash Flow Is Becoming More Important Than Revenue
A busy prescription counter does not automatically indicate a financially healthy pharmacy. Revenue can look impressive while the pharmacy lacks enough available cash to pay its wholesaler, payroll, taxes, rent, utilities, and other operating expenses.
This is especially dangerous when reimbursement arrives after the pharmacy has already purchased and dispensed the medication. A prescription may generate sales revenue on the income statement while simultaneously draining cash from the bank account.
Sykes frequently stresses the importance of understanding the relationship among cash flow, inventory, reimbursement, and profitability. Its guidance on using prescription audit logs illustrates why owners must look beyond total prescription volume and examine what individual prescriptions contribute—or cost—the pharmacy.
Independent pharmacy best practice begins with a rolling cash-flow forecast, regular review of accounts payable, disciplined monitoring of wholesaler obligations, and a clear understanding of available working capital. Pharmacy owners should know how many weeks of operating expenses they can cover and what financial warning signs require immediate action.
Cash is not merely an accounting measurement. It is the oxygen that keeps the pharmacy open.
2. PBM Reimbursement Can Turn Patient Care Into a Financial Loss
Pharmacy benefit manager practices have created a business environment in which an independent pharmacy may not know its true margin when a prescription is adjudicated. Below-cost reimbursements, contract complexity, network restrictions, payment delays, audit risk, and unpredictable adjustments place enormous strain on pharmacies.
The Federal Trade Commission reported that the largest PBMs generated substantial revenue through markups on specialty generic drugs and examined practices affecting affiliated and unaffiliated pharmacies. The FTC’s findings reinforce what independent pharmacy owners have been saying for years: the system’s economics are often disconnected from the cost of purchasing and safely dispensing a medication. Federal Trade Commission
Sykes has addressed PBM contracts, reimbursement rates, audits, and reform through its publications and Bottom Line Pharmacy Podcast. These are not theoretical policy discussions. They directly affect payroll, staffing, inventory purchasing, business value, and whether a community retains local pharmacy access.
A pharmacy CPA should help owners measure reimbursement by payer, plan, prescription, and drug category. Owners need to identify underwater claims, document recurring losses, understand their contracts, and share credible financial evidence with their PSAO, legislators, professional associations, and advisers.
You cannot fix a loss you have not measured.
3. Inventory Can Quietly Consume the Pharmacy
Inventory is usually one of an independent pharmacy’s largest assets—and one of its largest uses of cash. Poor inventory control can leave thousands of dollars sitting on shelves while the pharmacy struggles to meet immediate obligations.
Sykes has repeatedly connected inventory management with cash flow, gross margin, and pharmacy valuation. Its educational material notes that inventory turns, purchasing discipline, and accurate inventory accounting can materially affect profitability. Sykes inventory and cash-flow guidance
Independent pharmacies should establish purchasing limits, monitor inventory turns, return eligible products promptly, investigate slow-moving items, reconcile perpetual inventory records, and treat high-cost medications with exceptional discipline. Owners must also watch for automatic ordering settings that replenish products faster than patient demand justifies.
Inventory should support patient care. It should not become a warehouse of trapped cash.
4. Owners Need Pharmacy-Specific Financial Statements
Generic bookkeeping is not enough for a pharmacy operating in today’s reimbursement environment. Pharmacy accounting requires an understanding of third-party receivables, inventory, rebates, direct and indirect remuneration, wholesaler purchasing, payer adjustments, clinical-service revenue, payroll, and cost of goods sold.
Sykes’ pharmacy accounting fundamentals emphasize timely financial statements and consistent accounting practices. If the books are months behind—or inventory and receivables are inaccurate—the owner is making decisions through a rearview mirror.
At minimum, an owner should routinely review the profit-and-loss statement, balance sheet, cash-flow statement, gross margin, payroll percentage, inventory turns, current ratio, debt obligations, prescription trends, and profitability by business line.
These reports should not be something the owner sees only at tax time. They should function as the pharmacy’s operational dashboard.
A pharmacy-focused CPA should also help distinguish a tax strategy from a business strategy. Reducing taxable income can be useful, but not if it weakens liquidity, creates unnecessary debt, or encourages purchases that do not generate a return.
5. The Traditional Dispensing Model Is No Longer Enough
Independent pharmacies need to protect the dispensing business while developing additional services that respond to community needs and produce sustainable revenue.
Depending on the pharmacy, that may include immunizations, medication synchronization, adherence packaging, diabetes education, point-of-care testing, long-term care at home, compounding, specialty services, medical billing, cash-based clinical programs, or employer partnerships.
Sykes explores diversification, clinical services, automation, 340B, functional medicine, telehealth, and other growth strategies through its pharmacy consulting media library. The key lesson is that diversification must be measured. A new service is not successful simply because patients like it. Owners must understand its labor cost, equipment requirements, reimbursement, cash cycle, compliance burden, marketing expense, and contribution margin.
This is where the pharmacist’s clinical imagination and the CPA’s financial discipline must work together.
Pharmacy Accounting Is Now a Public Health Issue
When an independent pharmacy closes, a community loses more than a place to fill prescriptions. It can lose vaccination access, medication counseling, adherence support, early intervention, delivery services, and one of its most accessible healthcare professionals.
NCPA reports that pharmacy closures are associated with reduced medication adherence and expanding pharmacy deserts, with disproportionate effects in Black and Latino communities.
That is why accounting strategy matters beyond the balance sheet. Financially sustainable pharmacies strengthen public health. Financially distressed pharmacies are forced to reduce hours, postpone investments, eliminate positions, or close altogether.
My message to pharmacy owners is straightforward: bring your CPA into the strategy room. Do not treat accounting as a once-a-year tax exercise. Review the numbers frequently, connect financial data to pharmacy operations, and insist on advice grounded in the realities of independent community pharmacy.
PBM reform remains essential, but pharmacy owners cannot wait for the policy environment to improve. They need better financial visibility, stronger controls, disciplined purchasing, measurable diversification, and advisers who understand pharmacy.
The future of community pharmacy will be shaped by advocacy, clinical innovation, and public trust—but it will also depend on whether the numbers work.
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