Walgreens Boots Alliance is investing $970 million to acquire a majority stake in a specialty pharmacy company, building on an earlier minority equity investment.
The infusion gives Walgreens 71% ownership of Stoughton, Mass.-based Shields Health Solutions, which partners with hospital systems to optimize pharmacy operations and coordinate care for patients with complex conditions, according to a joint statement from the firms today.
“We’re continuing to make strategic investments in pharmacy and healthcare solutions that can build on our core pharmacy business, and further expand our healthcare reach in communities,” Walgreens CEO Roz Brewer said in the statement.
The deal follows the Deerfield-based retail giant’s accelerated investment in primary care provider VillageMD to open up to 700 clinics at its stores in the next four years.
But it’s not the only retail pharmacy betting big on healthcare. CVS health is launching HealthHubs to offer an expanded range of healthcare services. And Walmart is rolling out Walmart Health centers, in addition to a partnership with Oak Street Health, a Chicago-based network of primary care centers.
Shields, which will continue to be managed by its current executive leadership team, has about 70 health system partners nationwide, representing more than 1 million patients with more than 30 medical conditions, today’s statement says.
Here’s how the model works: Shields provides hospital-owned pharmacies with access to specialty medications and financial support for patients. It also works closely with insurers to ensure patients have access to the drugs they need. In exchange, Shields collects fees and a share of the profits.
Evercore ISI analysts estimate Shields currently has $600 million to $650 million in annual revenue. Walgreens reported $139.5 billion in revenue last fiscal year.
Walgreens will have an option to acquire the remaining equity interests in the future. It also could be required to purchase the remaining interests by other stakeholders, including private-equity firm Welsh Carson, Anderson & Stowe.
Walgreens' “further investment in Shields is a validation of our proven growth strategy, and we are pleased they will be an even more powerful driver in helping us to broaden and deepen our differentiated model,” Shields CEO Lee Cooper said in the statement.
The transaction is expected to close by the end of February 2022, according to the statement.
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