Walgreens Boots Alliance has agreed to fully acquire specialty pharmacy company Shields Health Solutions for $1.37 billion, the organization announced Tuesday.
In September 2021, Walgreens spent $970 million to become a majority stakeholder in Shields, and the organization now plans to purchase the remaining 30% stake from other equity holders. The transaction is expected to close by the end of 2022.
Acquiring Shields, which works with 80 health systems nationwide and represents more than 1 million patients with complex conditions, is an opportunity for Walgreens to further invest in the fast-growing specialty pharmacy market, a Walgreens spokesperson said in a statement.
“Our vision for WBA’s specialty pharmacy offering is to be the leader for seamless specialty patient care,” the spokesperson said. “Delivering pharmacy and healthcare services in the local community is one of many ways we’re working to improve access and health outcomes, while also lowering the total cost of care.”
Shields operates on an integrated model, working with insurers and hospital-owned pharmacies to ensure patients have access to specialty medications and financial support.
The company will continue to be a distinct business within Walgreens, led by co-founder and current president John Lucey, who will become Shields’ CEO. Lee Cooper, who is currently Shields’ CEO, will lead Walgreens’ pharmacy segment starting Oct. 1.
This agreement is the latest of Walgreens’ efforts to diversify its health segment services in pharmacy, primary care, post-acute care and technology, according to the company. Over the past year, Walgreens has spent more than $5.5 billion in deals to become majority owner of the primary-care startup VillageMD as well as the home health benefit management firm CareCentrix.
Between McKesson planning to acquire Rx Savings Solutions and the Federal Trade Commission launching an investigation into major Pharmacy Benefit Management companies, there has been a lot of activity in the prescription drugs space, said Marissa Moore, health tech investor at OMERS Ventures.
With specialty pharmacy medication in particular becoming a driver of rising healthcare costs, Moore said it’s no surprise that companies are investing in managing and controlling these expenses.
But the ways of the past - focusing exclusively on price – aren’t producing material savings.
Rather than focusing solely on drug pricing, companies are beginning to combine data analytics, patient education and utilization management strategies as a way to save costs, she said.
“That integrated approach is the heart of Shields’ model and a big reason why Walgreens went with Shields,” Moore said.
During its third quarter of fiscal 2022, which ended May 31, Walgreens generated $32.6 billion in revenue—down 4.2% from the previous year. Health and wellness sales increased 7.9%, in part driven by at-home COVID-19 tests, and cough, cold and flu products.