Walgreens buying remaining stake in Shields Health for $1.4 billion

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Walgreens Boots Alliance is speeding up its plans for full ownership of 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 from other equity holders – including private equity firm Welsh, Carson, Anderson and Stowe and Founder and Board Chairman Jack Shields – follows the increase of Walgreens' stake to approximately 70% after spending $970 million last year. The deal is expected to close by the end of this year.

Shields is a health system-owned specialty pharmacy integrator that Walgreens described as having delivered "strong financial performance, clinical excellence and value-add contributions" to its business. It has served more than one million patients with nearly 80 health system partners who represent about 1,000 hospitals across the U.S.

Walgreens CEO Roz Brewer said the full acquisition was a major milestone in the company's "consumer-centric healthcare strategy to drive sustainable long-term growth."

"We can now make further progress on our strategy through Shields' integrated model, increasing our value to health systems, expanding access to payer partners and supporting improved outcomes and lower costs," said Brewer.

WHAT'S THE IMPACT?

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

Shields will continue as a distinct business and brand within Walgreens. John Lucey, cofounder and current president of Shields, will lead the organization as CEO, while current CEO Lee Cooper will take on a new executive role within Walgreens. Lucey partnered with Jack Shields 10 years ago to start the business and has led its operations for most of that time.

"This transaction validates our tremendous impact to health systems and specialty patients, as well as the consistent growth and innovation the Shields team has achieved over the last decade," said Cooper.

LEADERSHIP CHANGES

Separately, Walgreens also announced a new leadership structure for its U.S. 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 Tracey Brown, president of Walgreens retail products and chief customer officer. Both will report directly to Brewer and serve on the executive leadership team. 

Cooper has been appointed to the role of executive vice president of Walgreens Pharmacy, beginning October 1, and Standley will remain at the company until November 1 to ensure a smooth transition.

Cooper formerly served as the president and CEO of GE Healthcare, U.S. 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 LARGER TREND

The announcement marks the second time this month that Walgreens has announced an acquisition. At the beginning of September it completed its majority share acquisition of CareCentrix, a home-centered platform that coordinates care to the home for health plans, patients and providers.

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

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com