- Walgreens has invested $330 million to acquire a 55% stake in CareCentrix, a firm that works with health plans to coordinate post-acute care services for plan members, expanding the pharmacy chain's reach in the healthcare sector.
- Walgreens has the option to acquire the remaining interests in CareCentrix in the future. CareCentrix's model works to transition patients from the hospital to their homes.
- Walgreens said it expects the deal to close by the end of its second quarter, subject to regulatory approval.
Executives of the legacy pharmacy retailer announced a new "revitalized strategy" on Thursday during a call with investors. Executives said the company is pushing further into the healthcare sector and to do so is standing up a new business segment, Walgreens Health.
At the core of this new segment are two recent investments that highlight Walgreens' long-term strategy; one focused on primary and the other on post-acute care, management said. Taken together, the two deals position the company to have a hand in providing care along a continuum, a trend many in the sector aim to execute on.
In addition to announcing the majority stake in CareCentrix, Walgreens also announced Thursday it had doubled its stake primary care provider, VillageMD, with a $5.2 billion investment. The infusion of cash will speed the opening of 600 primary care practices at Walgreens stores by 2025, and 1,000 by 2027.
While explaining the bigger pivot into healthcare, Walgreens CEO Roz Brewer told investors the pandemic proved the timing is right for Walgreens' next phase as people increasingly rely on retail pharmacy to manage more of their health needs as traditional care models were obstructed during the pandemic.
The upheaval over the last year and a half has further underscored that healthcare is inherently local, Brewer said, arguing that gives Walgreens, with stores on thousands of corners, the upper hand.
"We have 9,000 of the best locations in the U.S., which gives us a big strategic advantage as we accelerate our journey," Brewer added on the earnings call.
Like many companies before it, Walgreens said it is trying to take out some of the friction for patients and caregivers as they navigate multiple care venues. But beyond the consumer focus, the pharmacy retailer said it wants to partner with providers and payers in an attempt to lower costs, improve care and create aligned payment models.
In explaining the value it brings for such a pivot, Walgreens said it has a special relationship with high-risk patients and those with chronic conditions.
John Standley, president of Walgreens, said the new strategy will have a special focus on these patients, as the frequent healthcare users represent a distinct business opportunity.
"Chronic patients make up 60% of the adult U.S. population, but incur 90% of U.S healthcare costs. And we have more access to those patients than any other provider in the care continuum," Standley said.
But Walgreens isn't alone in its quest to shift healthcare to typically less costly retail locations. Both Walmart and CVS Health are already well underway in standing up primary care services at retail locations across the country.
Even unlikely retailers, traditionally further away from healthcare, like Best Buy and Amazon, continue to bet on healthcare. Just this week Best Buy announced it was acquiring Current Health, which has technology that combines remote patient monitoring, telehealth and patient engagement.