Five Numbers to Check In Your Pharmacy’s Financials

Close your financial statements and answer five questions. What was your revenue last month? What percent of it went to cost of goods sold? What percent went to payroll? What did the business net after your own pay? How many days of expenses does your cash cover?

All five come from your monthly financial statements. You don't need a special report. You need to know them well enough to say them without looking.

A note on comparisons first. The benchmarks below come from the 2025 NCPA Digest, which reports 2024 averages for independent community pharmacies. If you compound, your numbers may be different. Independent pharmacies are not alike, so the best comparison is your own history. Set each number next to the same month last year and next to the last three months.

1. Total revenue, next to your gross profit

Revenue tells you how much came in. It does not tell you how much stayed. The NCPA Digest shows average pharmacy sales hit a 10-year high in 2024 while gross profit margin fell to a 10-year low. Look at revenue and gross profit dollars together each month. If revenue rose and gross profit dollars did not, the added sales came in at low margins.

2. COGS margin

COGS margin is your cost of goods sold divided by revenue. Gross profit margin is what is left, so a COGS margin of 81.8% means a gross profit margin of 18.2%. The NCPA average for 2024 was 81.8%. In 2015 it was 77.7%.

Small moves add up. On $5 million in sales, one point of COGS margin is $50,000 a year. If your number moves a point or more from your own prior months, look at drug mix, reimbursement rates, and purchasing.

3. Wage margin

Wage margin is payroll divided by revenue. The NCPA average for 2024 was 10.6%. Also divide payroll by gross profit. At the NCPA averages, that comes to about 58%. Revenue moves with drug prices, so gross profit gives you a steadier base. If payroll takes a growing share of gross profit, payroll is growing faster than what the pharmacy earns.

At those averages, payroll and COGS leave 7.6 cents of each sales dollar for rent, insurance, utilities, every other expense, and profit.

4. Net income after your own pay

Net income is what the business kept. It only means something if it reflects a market-rate salary for your work. If you pay yourself through distributions, your statements can show a higher net income than the business earned. Ask your CPA what your net income would be after a market-rate salary, and track that number.

5. Cash on hand, in days

Find your cash balance on your balance sheet. Then look at your monthly expenses, not counting drug purchases. That means payroll, rent, insurance, and the other bills below gross profit on your income statement. Divide that monthly total by 30 to get your daily cost. Divide your cash by the daily cost to get your days of cash. For example, a pharmacy with $75,000 a month in expenses spends $2,500 a day. With $150,000 in the bank, it holds 60 days of cash.

Here's what we like to see as an accounting firm that works with pharmacy owners every day: 60 to 90 days. Under 30 days is a warning sign. Reimbursements can arrive late, and payroll and your wholesaler do not wait.

Pull your cash on the same day each month, since reimbursement timing moves it from week to week.

Where to start

Write these five numbers down for each of the last three months. The direction they move tells you more than any average. If one moved the wrong way and the reason isn't clear, bring it to your CPA. You can also bring it to us.

Check out our article: Why Closing the Month Correctly Protects Your Tax Return

If you have questions about this topic, speak with your CPA or accountant. And if you need guidance or a second opinion, you’re always welcome to contact us.