Walgreens Boots Alliance (WBA), through its wholly-owned subsidiary, Walgreen Co, is making a majority investment in Shields Health Solutions, a specialist 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 USD970 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.
“Delivering pharmacy and healthcare services in the local community is one of many ways WBA is working to improve access and health outcomes, as well as to lower the total cost of care,” says Roz Brewer, CEO, Walgreens Boots Alliance. “We’re continuing to make strategic investments in pharmacy and healthcare solutions that can build on our core pharmacy business, and further expand our healthcare reach in communities. The Shields model has shown to improve patient care, and will be complementary to our existing specialty pharmacy offering, further expanding our capabilities to best meet the needs of health system partners and patients.”
Over the last two years, Shields has rapidly expanded its platform, representing more than one million specialty patients across more than 30 disease states, with more than 70 health system partners nationwide.
“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,” says Lee Cooper, CEO, Shields Health Solutions. “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.”
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.
“Our partnership with the Shields Health Solutions management team, Jack Shields and WBA has been outstanding,” says Tom Scully, General Partner, WCAS. Brian Regan, Head of the Healthcare Group and General Partner, WCAS, added, “WCAS has extensive and deep relationships with leading health systems and Shields represents a tremendous example of our ability to successfully partner with them to scale a business.”
The transaction is subject to the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions and is expected to close by the end of the second quarter of WBA’s 2022 fiscal year. Shields’ financials will be consolidated by WBA, with the transaction projected to be modestly accretive in its first full year after completion.
Centerview Partners acted as financial advisor for Shields Health Solutions. Ropes & Gray LLP acted as lead legal advisor for Shields, along with Goodwin Procter LLP and K&L Gates LLP. Sidley Austin LLP acted as lead legal advisor for WBA, along with Weil, Gotshal and Manges and Reed Smith.