Walgreens to invest over $5.5 billion in health services push

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(Businesshala) – Walgreens Boots Alliance Inc said on Thursday it will take a majority stake in two smaller health care providers for about $5.5 billion, as the second-largest US pharmacy chain looks to focus beyond its drugstores.

FILE PHOTO: A Walgreens store is seen in Chicago, Illinois, US February 11, 2021. Businesshala/Eileen T. Messler

Walgreens shares rose nearly 7% to $50.44 in afternoon trading after reporting fourth-quarter results that beat estimates, helped by pandemic-related restrictions at its stores and an easing of COVID-19 vaccine administration.

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The company said it would invest $5.2 billion in VillageMD by increasing its stake reut.rs/3AGlbg2 Up to 63% in a primary care provider. It will also invest $330 million in post-acute and home care provider CareCentrix to take a 55% stake.

Walgreens, which has more than 9,000 drug stores nationwide, said these investments will support its new business unit that will provide pharmacy and primary care services at home, at the doctor’s office and through a mobile app.

Rosalind Brewer, who took over as CEO earlier this year, said the deals would help Walgreens manage rising costs in high-risk patients. “These are the same patients who often come to our stores and visit our pharmacists,” Brewer said.

Walgreens said it expects adjusted earnings growth at constant currency rates to be flat for fiscal year 2022.

The company aims to open at least 600 physician-led primary care clinics in more than 30 US markets by 2025 and 1,000 clinics by 2027.

Walgreens and VillageMD have 52 primary care practice locations, along with pharmacy and doctor offices, and will have more than 80 such locations by the end of this calendar year, the company said.

The company said same-store sales at its U.S. pharmacies grew 8.8% in the fourth quarter, which included an increase of 485 basis points from COVID-19 vaccination.

Excluding items, Walgreens earned $1.17 per share, while Refinitiv IBES estimated $1.02 per share.

Reporting by Dania Nadeem and Leroy Leo in Bengaluru; Editing by Vinay Dwivedi

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