Walgreens is spending nearly $1.4 billion to buy the remaining stake in Shields Health Solutions it doesn’t already own as it pushes into the fast-growing specialty pharmacy business.
The drugstore chain hopes to close on the remainder of the company by the end of the year. Walgreens started building a minority investment in the privately held Shields in 2019 and that stake reached about 70% last year.
The 10-year-old company helps health systems set up and run specialty pharmacies, which manage medications for people with complex and chronic medical conditions. Shields, based in Stoughton, Mass., just south of Boston, works with nearly 80 health systems that represent about 1,000 hospitals nationwide.
Insurers and employers see these expensive specialty drugs as a major factor behind rising health care costs and they are focusing more on managing or controlling related expenses.
The deal also reflects Walgreens’ expanding roll outside of its retail stores. The company, with about 13,000 locations worldwide, has moved into areas like care delivery and trying to free up its store pharmacists to work more on answering patient questions or helping to manage their health.
The company has invested billions of dollars in care provider Village MD and is opening primary care practices next to its drugstores. The goal is to have the pharmacies and the physician offices work together to help keep patients healthy.
Walgreens also said Tuesday that company president and former Rite Aid Corp. CEO John Standley will leave the company in November “to pursue other opportunities.” He will be replaced by Shields CEO Lee Cooper and Walgreens executive Tracey Brown. They will run the pharmacy and retail sides of the business, respectively.
Shares of Walgreens Boots Alliance Inc., based in Deerfield, Ill., slipped 1% Tuesday amid a broader market sell-off.