Walgreens buys remaining stake in Shields Health for $1.4 billion

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Walgreens Boots Alliance is accelerating its plans to fully own Shields Health Solutions and has entered into a definitive agreement to acquire the remaining 30% stake for about $137 billion.

The company’s full acquisition of Shields by other equity holders — including private equity firm Welsh, Carson, Anderson and Stowe and founder and chairman Jack Shields — follows an increase in Walgreens’ stake to roughly 70% after last year spent $970 million. The deal is expected to close by the end of this year.

Shields is an integrator of health system-owned specialty pharmacies that Walgreens describes as having delivered “strong financial results, clinical excellence and value-added contributions” to its business. It has served more than 1 million patients, with nearly 80 health system partners representing approximately 1,000 hospitals in the US

Walgreens CEO Roz Brewer said the full acquisition is an important milestone in the company’s “consumer-centric healthcare strategy to drive sustainable long-term growth.”

“We can now further advance our strategy through Shields’ integrated model, increasing our value to health systems, expanding access to payer partners and supporting improved outcomes and lower costs,” Brewer said.

WHAT IS THE IMPACT

Shields achieved pro forma sales growth of 57% for the first nine months of fiscal 2022, which Walgreens said was driven by key contract wins and the further expansion of existing partnerships.

Shields will continue as a separate business and brand within Walgreens. John Lucey, co-founder and current president of Shields, will lead the organization as CEO, while current CEO Lee Cooper will assume a new executive role at Walgreens. Lucy partnered with Jack Shields 10 years ago to start the business and has run its operations for most of that time.

“This transaction validates our tremendous impact on healthcare systems and specialty patients, as well as the continued growth and innovation that the Shields team has achieved over the past decade,” Cooper said.

MANUAL CHANGES

Separately, Walgreens also announced a new leadership structure for its US business segment. President John Standley is leaving the company to pursue other opportunities, and the segment will now be organized under two leaders: Pharmacy, led by Cooper, and Retail, led by Tracy Brown, president, Walgreens Retail Products and chief customer officer. Both will report directly to Brewer and participate in the executive leadership team.

Cooper has been appointed to the role of executive vice president of Walgreens Pharmacy effective Oct. 1, and Standley will remain with the company until Nov. 1 to ensure a smooth transition.

Cooper previously served as president and CEO of GE Healthcare, US and Canada. He subsequently joined Welsh, Carson, Anderson and Stowe as an operating partner focused on healthcare investments in 2019 before assuming his role as CEO of Shields in 2020.

THE BIGGER TREND

The announcement marks the second time this month that Walgreens has announced an acquisition. In early September, it completed the acquisition of a majority stake in CareCentrix, a home-based platform that coordinates home care for health plans, patients and providers.

The partnership was pursued largely because of the belief that it would better meet the needs of people with complex or chronic conditions as they leave hospital. CareCentrix touted its analytics capabilities with a focus on the transition to home care, which could potentially reduce hospital readmissions and improve patient satisfaction and outcomes.

Twitter: @JELagasse
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