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LEROY PHARMACIES, NYC NINE-STORE CHAIN, AIMS AT AIDS PATIENTS

Executive Summary

LEROY PHARMACIES, NYC NINE-STORE CHAIN, AIMS AT AIDS PATIENTS and the critically ill market by piggybacking pharmacy services with home medical equipment operations, the New York City-based drugstore chain noted in a recent filing with the Securities & Exchange Commission. The filing details the chain's $ 3.2 mil. initial public offering. "The company believes that its ability to deliver both home medical equipment and pharmaceuticals is of particular importance to the to the critically ill, who need large doses of pharmaceuticals not widely used by the general population," the filing states. "This integration . . . gives the company a competitive advantage over other medical equipment suppliers in the New York City area." The chain's expanding home health care business is based on government and private insurer reimbursement policies that favor home health care over extended hospitalization, an aging U.S. population and a growing number of AIDS patients in the New York area. Leroy Pharmacies currently operates nine outlets -- eight in Manhattan, one in the Bronx -- and has plans to open two additional Manhattan locations within 18 months after the offering. Home health makes up a relatively small part of Leroy's total business. The filing notes that home health comprised 5% of the chain's $ 23.2 mil. revenues in 1987 and 7.7% of the $ 13.4 mil. sales volume reported for the first six months of 1988. The company earned $ 456.000 and $ 301,000 for the 12-month and six-month periods, respectively. In addition, Leroy noted, current home medical equipment customers have not been, for the most part, customers of the drugstores. Through its Accuhealth subsidiary, the chain has contracts with five hospices in the New York area and is an "approved provider" of home health services for 20 New York City hospitals. Expansion of Accuhealth following the offering will include a move into the areas of total parenteral nutrition and apnea monitoring. "The company plans to market its TPN and pediatric critical care through contracts with services which connect and maintain the intravenous lines and apnea monitoring equipment," the filing states. "The company also expects that these businesses will be dependent upon referrals from hospitals, ouptatient services and other extended care facilities." The company follows a neighborhood drugstore concept under which store layouts, shelf space allocations and merchandising displays are based on the purchasing patterns of a given community. Stanley Lepelstat is the chain's founder and chairman. The 700,000 unit common stock/warrant offering, which is being managed by Whale Securities, will reduce Lepelstat's equity in the chain from 93% to 56%.

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