Walgreens Acquires Majority Stake in Shields Specialty Pharmacy Care Firm

The international retail pharmacy company Walgreens Boots Alliance is expanding its specialty pharmacy business. In a Sep. 21 press release, the Deerfield, Ill.-based Walgreens Boots Alliance and the Boston-based Shields Health Solutions made a joint announcement about their business transaction. “Walgreens Boots Alliance, Inc. (Nasdaq: WBA) and Shields Health Solutions today announced that WBA, through its wholly-owned subsidiary, Walgreen Co., is making a majority investment in Shields, an industry leader in integrated, health system-owned specialty pharmacy care. WBA’s investment signifies another step the company is taking to accelerate innovative healthcare models for future growth, providing a platform to further develop health system partnerships and coordinate care for those with complex, chronic conditions. The approximately $970 million investment will support the continued growth of Shields’ health system-based specialty pharmacy strategy, and builds on a minority equity investment that WBA announced in July 2019. The new investment gives WBA approximately 71 percent ownership of Shields, with an option to acquire the remaining equity interests in the future. Shields’ other equity holders will also have the option to require WBA to purchase the remaining equity interests, under the agreement,” the press release said.

The press release quoted Roz Brewer, Walgreens’ CEO, as stating that “We’re continuing to make strategic investments in pharmacy and healthcare solutions that can build on our core pharmacy business... The Shields model has shown to improve patient care, and will be complementary to our existing specialty pharmacy offering.” The press release stated that “The transaction is expected to close by the end of the fiscal second quarter of 2022 and is projected to be modestly accretive in the first full year after completion.”

The press release went on to state that, “Over the last two years, Shields has rapidly expanded its platform, representing more than 1 million specialty patients across more than 30 disease states, with more than 70 health system partners nationwide.” And it quoted Lee Cooper, Shields Health Solutions CEO, as stating that “Shields pioneered the integrated, health system specialty pharmacy approach that has quickly gained traction in the industry. In doing so, we have consistently delivered exceptional growth and value through a model that research shows leads to better outcomes and quality of life. WBA’s further investment in Shields is a validation of our proven growth strategy, and we are pleased they will be an even more powerful driver in helping us to broaden and deepen our differentiated model. We will remain focused on driving improved clinical and economic outcomes for our stakeholders: our valued health system partners, our patients most in-need, and our care-focused and talented team.”

The press release added that, “Following the completion of the majority investment, Shields will continue to operate as it does today, managed under current executive leadership and as a distinct brand and entity. The companies will also explore opportunities to scale the Shields business model by adding complementary provider-based services to the portfolio over time. All of Shields’ current investors, including private equity firm Welsh Carson, Anderson & Stowe (WCAS) and founder and Board Chairman Jack Shields, will remain shareholders.”

A report Tuesday by a team of Reuters reporters, including Mrinalika Roy and Amy Caren Daniel noted that “The investment brings Walgreens’ total stake in Shield to 71%, and the company has an option to acquire the remaining equity interests in the future. The Illinois-based company had taken a minority stake in Shields in 2019. Founded in 2012, Shields Health Solutions helps hospitals provide specialty pharmacy services,” the Reuters reporters wrote, adding that “Specialty pharmacies are designed to deliver medications with unique handling, storage and distribution requirements, often for patients with complex conditions such as cancer, multiple sclerosis or rheumatoid arthritis.”

The Deerfield, Ill.-based Walgreens Boots Alliance has a retail footprint of 21,000 locations, a presence in more than 25 countries, and encompasses more than 450,000 employees. As the Wikipedia article on the company notes, “The company was formed on December 31, 2014, after Walgreens purchased the 55 percent stake in Alliance Boots that it did not already own. The total price of the acquisition was $4.9 billion in cash and 144.3 million common shares with fair value of $10.7 billion. Walgreens had previously purchased 45 percent of the company for $4.0 billion and 83.4 million common shares in August 2012 with an option to purchase the remaining shares within three years. Walgreens became a subsidiary of the newly created company after the transactions were completed. As of 2020, Walgreens Boots Alliance is ranked #19 on the Fortune 500 rankings of the largest United States corporations by total revenue. The company is organized into three divisions: Retail Pharmacy USA (Walgreens and Duane Reade), Retail Pharmacy International (Boots and other retail operations internationally), and Pharmaceutical Wholesale (Alliance Healthcare). In fiscal year 2020, the company saw sales of $139.5 billion, up 2.5 percent from fiscal 2019, and saw net earnings decrease to $456 million. The combined business has operations in over 25 countries, as of August 31, 2020. Walgreens had formerly operated solely within the United States and its territories, while Alliance Boots operated a more international business.”