Walgreens acquires $330M stake in home health care firm
The holding company for the Illinois-based pharmacy chain, Walgreens, has made a majority investment in a Connecticut company that coordinates home health care for patients, service providers and insurers.
Walgreens Boots Alliance made a $330 million investment in CareCentrix in return for a 55 percent share of the company and an option to acquire the remainder of the Hartfordbased company.
The deal is expected to close some time before the end of June 2022. Once the investment deal closes, CareCentrix will continue to operate as an independent company under its current executive leadership.
John Driscoll, chief executive officer of CareCentrix, said in a statement Thursday the pandemic “has made it clear that providing care in the home and community is the future of not only post-acute care, but health care more broadly.”
“The home is the last undeveloped frontier in American health care and critical to reversing spiral
ing costs and middling health outcomes,” Driscoll said. “Together, Walgreens and CareCentrix will be able to partner with a wide range of payers to help care for patients from the hospital to the home in a more personalized, engaged, and effective way.”
CareCentrix manages care for 19 million members through a network of about 7,400 provider locations. The company has about 1,750 employees, although a company spokeswoman would not provide details on how many of those employees are based in Connecticut.
Thursday’s announcement of the investment came at the same time as the giant pharmacy chain was announcing the launch of a new business unit, Walgreens Health. CareCentrix will be a part of Walgreens Health as will Chicagobased VillageMD.
Walgreens first acquired a 30 percent ownership stake in VillageMD in 2019 and expanded that to 63 percent on Thursday with a $5.2 billion investment in the company. VillageMD, provides primary care services across 15 markets to more than 1.6 million patients and the new investment from Walgreens will result in the opening of about 600 primary care practices at Walgreens locations in more than 30 markets across the U.S. by 2025.
Roz Brewer, chief executive officer of Walgreens holding company, said the deal with CareCentrix “will advance our capabilities in this important segment for health care delivery, to help address the needs of people living with complex or chronic conditions in the home.”
The deal between Walgreens and CareCentrix, will allow the pharmacists working in Walgreens retail locations to ally more closely with the Connecticut company’s care teams, according to Driscoll. That, in turn, will allow health care that is now taking place in nursing homes and hospitals to be shifted to home care.
The move by Walgreens is somewhat similar to when CVS, the Rhode Island-based pharmacy chain, acquired Aetna in 2019. In both cases, the companies that combined were part of a supply chain that produced a different service that met a common need, a term in microeconomics known as vertical integration.
Services that are delivered in the home following acute care hospital visits represents one of the fastest-growing opportunities in health care, according to CareCentrix officials. Caring for patients from the hospital to the home represents more than $75 billion in annual health care costs for payers, providers, and patients.