Originally published by Fierce Healthcare on October 12, 2022
Walgreens Boots Alliance plans to take full ownership of CareCentrix to push forward its healthcare strategy with a particular focus on primary care, post-acute care and home care.
The drugstore retail giant plans to acquire the remaining 45% stake for approximately $392 million, which is based on the exit multiple agreed to at the time of WBA's initial majority investment announcement in CareCentrix, the company said in a press release.
Last October, Walgreens revealed a $330 million investment in CareCentrix with an option to raise the stake in the future. That deal closed in late August. The full acquisition is subject to limited customary closing conditions and is expected to close by March 2023.
The acquisition strengthens Walgreens' expanding reach in healthcare as it recently bought the remaining stake in specialty pharmacy company Shields Health Solutions for approximately $1.37 billion. Walgreens last year spent $970 million to increase its stake in the company to 71%, according to Reuters, with the possibility of taking full ownership over the pharmacy company.
"We continue to see strong results and potential for growth from our partnership with CareCentrix. Our full acquisition further accelerates our transformation to become a consumer-centric healthcare company, leveraging innovative platforms that extend our capabilities into fast-growing segments of healthcare," said Roz Brewer, CEO of Walgreens Boots Alliance, in a statement. "CareCentrix is key to offering services to our patients at every stage of the care continuum, and to driving long-term, sustainable growth as part of our U.S. Healthcare strategy."
CareCentrix operates in the $75 billion post-acute and home care industry, providing care coordination and outsourced benefit management services. The business will be operated under Walgreens Health.
CareCentrix currently manages care for more than 19 million members through over 7,400 provider locations, offering a suite of services on an integrated basis to support home care models including home nursing, durable medical equipment, home infusion and in-home palliative care. Walgreens executives touted CareCentrix's focus on transitioning care to patients’ homes as a key pillar to support value-based care on behalf of health plans and providers.
In WBA’s fiscal year 2021, CareCentrix delivered pro forma sales of $1.5 billion.
Walgreens' rivals and other disrupters in the healthcare industry also are looking to ramp up their own operations to provide home-based care. CVS announced plans in September to snap up home healthcare company Signify Health for $8 billion, a company sought after by many healthcare and retail companies.
Best Buy shelled out $400 million for Current Health, a care-at-home platform.
The company also announced that John Driscoll, CEO of CareCentrix, will step into the new role of executive vice president and president to lead U.S. healthcare, including Walgreens Health, later this month.
"We are thrilled to be part of WBA’s vision to transform local healthcare and develop new valued-based models," Driscoll said in a statement. "A major component of the future of healthcare is in the home, and CareCentrix is critical to enabling WBA to serve patients wherever and however works best for them."
CareCentrix Chief Financial Officer Steve Horowitz will assume the role of CareCentrix CEO.
Driscoll will oversee U.S. healthcare for WBA as the company expands into larger, faster-growing profit pools that drive synergies across the care continuum including provider enablement and managed service organizations, primary care, population health, home health, post-acute care, specialty pharmacy and retail pharmacy, Walgreens executives said.
U.S. Healthcare encompasses integrations with WBA’s market-leading healthcare partners, including VillageMD, Shields Health Solutions and CareCentrix as well as the organic Walgreens Health business, which focuses on population health through initiatives such as Walgreens Health Corners.
Prior to CareCentrix, Driscoll served as president at Castlight Health, a digital healthcare company, and, before that, as group president for new markets at pharmacy benefit manager Medco.
Driscoll founded and chaired the Surescripts ePrescribing Network. Surescripts has grown from servicing less than 50 million prescriptions in 2005 to more than 1 billion prescriptions today.