Walgreens is spending nearly $1.4 billion to buy the remaining stake in Shields Health Solutions that it doesn’t already own as it forges ahead in the fast-growing specialty pharmacy business.
The pharmacy chain expects to close the deal with the rest of the company by the end of the year. Walgreens began building a minority investment in the privately owned Shields in 2019 and that stake reached about 70% last year.
The 10-year-old company helps health systems establish and run specialty pharmacies, which administer medications for people with complex and chronic medical conditions. Headquartered in Stoughton, Massachusetts, just south of Boston, Shields works with nearly 80 health systems representing about 1,000 hospitals across the country.
Insurers and employers see these expensive specialty drugs as a major factor behind rising health care costs and are focusing more on managing or controlling related expenses.
The deal also reflects Walgreens’ expansion outside of its retail stores. The company, with around 13,000 locations worldwide, has moved into areas such as care delivery and trying to free up pharmacists in its stores to do more work answering patients’ questions or helping them monitor their health. .
The company has invested billions of dollars in care provider Village MD and is opening primary care offices next to its pharmacies. The goal is for pharmacies and doctors’ offices to work together to help keep patients healthy.
Walgreens also said Tuesday that company chairman and former Rite Aid Corp. CEO John Standley will leave the company in November “to pursue other opportunities.” He will be succeeded by Shields CEO Lee Cooper and Walgreens executive Tracey Brown. They will handle the pharmaceutical and retail aspects of the business, respectively.
Shares of Deerfield, Ill.-based Walgreens Boots Alliance Inc. fell 1% on Tuesday amid a broad market sell-off.