Walgreens buys $970M majority stake in specialty pharmacy company Shields Health

Give and take concept on black background

Give and take concept on black background

Walgreens Boots Alliance will pay $970 million for a majority stake in specialty pharmacy business Shields Health Solutions. Per the terms of the deal, Walgreens would have a 71% stake in the company, and the option to buy the remaining equity interests in the future.

Walgreens first bought a minority stake in Shields in 2019. The Stoughton, Mass.-based company works with hospitals to stand up specialty pharmacy programs. It currently has 70 health system partners, accounting for more than 1 million specialty patients.

“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 a news release. “The Shields model has shown to improve patient care, and will be complementary to our existing specialty pharmacy offering, further expanding our capabilities to best meet the needs of health system partners and patients.”

Earlier this year, Shields bought its biggest competitor, ExceleraRx. With the acquisition, Walgreens said the companies would look for opportunities to continue to grow its business by adding more provider-based services to its portfolio.

The specialty pharmacy business will keep its current leadership and brand, as well as all of its current investors, including private equity firm Welsh Carson, Anderson & Stowe. Founder and Chairman Jack Shields will also remain a shareholder of the company. Per the terms of the agreement, Shields’  shareholders can require Walgreens to purchase the remaining equity interests.

The deal is expected to close by the second quarter of the company’s fiscal 2022, and Walgreens said it expects it to be “modestly accretive” in the first year.

Earlier this year, the company sold the majority of its pharmacy wholesale unit, Alliance Healthcare, to AmerisourceBergen, saying it would use the proceeds to pay down debt and boost its strategic investments.

Walgreens is also taking another crack at primary care through a partnership with VillageMD. It plans to invest $1 billion in equity and debt into the company over the next three years, and open 500 to 700 primary care clinics attached to its stores in the next five years.

Photo credit: crazydiva, Getty Images