A company that began as a Baltimore corner drugstore and went on to carve out a multimillion-dollar niche selling pharmaceutical products to prisons, nursing homes and other health care institutions is being acquired by a New York company that provides medical supplies to nursing homes.
The combined company would be one of the nation's largest vendors of drugs and medical supplies in the long-term-care market, officials of the companies said.
The merger of Rombro Health Services Ltd. of Baltimore with a subsidiary of Choice Drug Systems Inc. of Inwood, N.Y., which provides nursing homes with pharmacy-related products, would create a company with $60 million in annual sales.
Choice Drug is hoping to use Rombro's expertise in managed health care to expand its market from nursing homes into correctional facilities and health maintenance organizations. Rombro is hoping to benefit from Choice Drug's ability to raise capital.
Frank Mandelbaum, vice chairman and chief financial officer of Choice Drug, said his company was attracted by Rombro's management experience in markets that are new to Choice Drug. The acquisition of Rombro, structured as a tax-free merger with a Choice subsidiary, is expected to be completed in April, he said.
Rombro, with 265 employees at its 2930 Washington Blvd. location and $28 million in sales last year, will operate as a subsidiary under its own name. No management changes are planned, Mr. Mandelbaum said.
Rombro sells drugs, equipment, and consulting services to nursing homes, prisons, outpatient facilities, and health maintenance organizations. The company operates pharmacies at Sinai and Mercy hospitals and supplies correctional facilities in 15 states.
A subsidiary, Chesapeake Health Care Services, sells software to HMOs and nursing homes nationwide. It is not part of the sale, company officials said.
"We are a niche industry," said Dov Rombro, chief executive officer of Rombro.
He said the merger would allow his company to continue to expand in the burgeoning institutional health care market. The company has grown 30 percent a year for the past 10 years, he said, but lacks capital to move ahead. "We were faced with enormous growth potential," he said.
Rombro Health started with the purchase 30 years ago of MacGillivray's, a corner drugstore at Charles and Read streets, by Mr. Rombro's uncle, David M. Rombro, who is the company's president and a brother of Baltimore Circuit Judge Richard T. Rombro.
The drugstore was sold three years ago to David Rombro's son, Robert, and is not involved in the current sale. The Rombro family has owned various businesses in Baltimore for 100 years, beginning with a dairy farm on Greenmount Avenue.
Choice Drug, with 148 employees, supplies pharmacy services, equipment and drugs to nursing homes, primarily in New York and New Jersey. The company, which trades over-the-counter, earned nearly $1.3 million on sales of $21.2 million in the nine months that ended Nov. 30.
Last year, it raised $3 million in a private sale of stock.