Walgreens buying 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% interest for approximately $137 billion.

The company’s full acquisition of Shields from other shareholders — including private equity firm Welsh, Carson, Anderson and Stowe, and founder and CEO Jack Shields — follows Walgreens increasing its stake to about 70%, after last year $970 million spent. The deal is expected to close by the end of this year.

Shields is a healthcare system-owned specialty pharmacy integrator that Walgreens has described as delivering “strong financial performance, clinical excellence and value-add contributions” to its business. It has served more than 1 million patients, with nearly 80 healthcare system partners representing approximately 1,000 hospitals across the United States

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.”

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“We can now continue to advance our strategy through Shields’ integrated model, increasing our value to healthcare systems, expanding access to payers, and supporting better outcomes and lower costs,” said Brewer.

WHAT IS THE IMPACT

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

Shields will continue to exist as a separate company 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 leadership role at Walgreens. Lucey partnered with Jack Shields 10 years ago to found the company and has managed its operations for most of that time.

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“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,” said Cooper.

LEADERSHIP CHANGE

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 is now organized under two leaders: pharmacy, led by Cooper, and retail, led by Tracey Brown, President of Walgreens Retail Products and Chief Customer Officer. Both report directly to Brewer and are part of the Executive Leadership Team.

Cooper was named executive vice president of Walgreens Pharmacy effective October 1, and Standley will remain with the company through November 1 to ensure a smooth transition.

Cooper was formerly President and CEO of GE Healthcare, US and Canada. He then joined Welsh, Carson, Anderson and Stowe in 2019 as an operating partner, focusing on healthcare investments before assuming his role as CEO of Shields in 2020.

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THE BIGGER TREND

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

The partnership was pursued primarily out of the belief that it would better address the needs of people with complex or chronic conditions in transitioning from hospital. CareCentrix promoted its analytics capabilities with a focus on the transition to home care, which could potentially reduce readmissions to hospital and improve patient satisfaction and outcomes.

Twitter: @JELagasse
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