Walgreens takes full acquisition of Shields Health for US$1.4B

USA – Walgreens is spending nearly US$1.4 billion to buy the remaining stake in Shields Health Solutions it doesn’t already own as it pushes into the fast-growing specialty pharmacy business.

The drugstore chain hopes to close on the remainder of the company by the end of the year. Walgreens started building a minority investment in the privately held Shields in 2019 and that stake reached about 70% last year.

The 10-year-old company helps health systems set up and run specialty pharmacies, which manage medications for people with complex and chronic medical conditions.

Specialty pharmacies are an increasingly important player in the US health system given the flood of expensive drugs on the market derived from biotechnology.

Such medicines are more complicated than pills and capsules picked up at the corner drugstore and often require specialty administration, refrigeration, package, and patient instructions.

Shields, a leader in the large, fast-growing market of specialty pharmacy, is the premier health system-owned specialty pharmacy integrator in the United States.

Shields has nearly 80 health system partners representing approximately 1,000 hospitals nationwide that serve more than 1 million patients, the companies said. Walgreens made its initial investment in Shields in 2019.

WBA’s full acquisition of Shields from other equity holders (including private equity firm Welsh, Carson, Anderson & Stowe, and founder and board chairman Jack Shields) follows the increase of WBA’s stake to approximately 70% in September 2021.

The transaction is expected to close by the end of the 2022 calendar year.

Insurers and employers see these expensive specialty drugs as a major factor behind rising health care costs and they are focusing more on managing or controlling related expenses.

The deal also reflects Walgreens’ expanding roll outside of its retail stores. The company, with about 13,000 locations worldwide, has moved into areas like care delivery and trying to free up its store pharmacists to work more on answering patient questions or helping to manage their health.

The company has invested billions of dollars in care provider Village MD and is opening primary care practices next to its drugstores.

The goal is to have the pharmacies and the physician’s offices work together to help keep patients healthy.

Walgreens also said that company president and former Rite Aid Corp. CEO John Standley will leave the company in November “to pursue other opportunities.”

He will be replaced by Shields CEO Lee Cooper and Walgreens executive Tracey Brown. They will run the pharmacy and retail sides of the business, respectively.

WBA acquires home-centered platform

In August Walgreens Boots Alliance completed its majority share acquisition of CareCentrix, an independent home-centered platform that coordinates care to the home for health plans, patients, and providers.

The majority investment in CareCentrix accelerates Walgreens Health’s capabilities in delivering health care across a spectrum of settings including primary care, specialty pharmacy care, post-acute care, and home care, the company said.

By bringing together Walgreens trusted health services and community presence with CareCentrix’s technology-enabled, care-at-home solutions, the partnership better addresses the needs of people with complex or chronic conditions as they transition out of the hospital, the company said.

CareCentrix’s advanced data analytics capabilities enable highly personalized care plans to help people transition to the right site of care, prioritizing care in the home when appropriate.

This approach supports both care quality and value by reducing hospital readmissions and improving patient satisfaction and outcomes.

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