Walgreens Execs: Healthcare Push On Target
The leaders of Deerfield, Illinois-based Walgreens Boots Alliance say their work to build a $10 billion primary, home and post-acute healthcare business by 2025 remains on track despite regulators delaying their $330 million majority-stake investment in CareCentrix.
Speaking to analysts and investors after reporting their fiscal second-quarter results last week, CEO Roz Brewer and CFO James Kehoe said the CareCentrix delay – the deal is expected to close later this year – isn’t affecting the growth outlook at primary care provider VillageMD and specialty pharmacy Shields Health Solutions. Those businesses, they said, rang up revenues of $527 million in the three months ended Feb. 28 – $446 million from VillageMD, $81 million from Shields – but lost $77 million from operations after adjustments.
The executives early this year said they expect to end 2022 with their Walgreens Health group (including CareCentrix) generating sales of at least $1 billion per quarter as they add VillageMD clinics and Health Corner population health management locations. For the latter, the company has announced partnership deals with payers Blue Shield of California and Clover Health and Brewer said a third contract signed recently will be made public soon. The company’s year-end goal is to have 2 million lives under management.
“Shields is probably substantially ahead of the original plan we have in mind and Village is very much on the track. And we can't get involved in anything CareCentrix is doing right now because the acquisition hasn't closed, but our understanding is they're doing quite well as well,” Kehoe said on a conference call. “The more we get our arms around this and the more we get into it, the more we're convinced these are very easily achievable targets.”
Over time, Brewer, Kehoe and their teams plans to have nearly half of all of Walgreens’ roughly 9,000 U.S. stores will have either a Health Corner or Village MD operation inside their walls. Along the way, Walgreens also plans to have its pharmacists move further into primary care and testing as they have started to do during the COVID-19 pandemic.
“I really think that's a pretty sizable addressable market today,” Walgreens President John Standley told analysts. “That's honestly largely moved out of primary care physicians anyway and gone into convenient care. […] There's a real opportunity in our business to have a really convenient solution.”
Overall, Walgreens Boots Alliance posted a net profit of $883 million on sales of nearly $33.8 billion. Helped by the administration of 6.6 million COVID vaccines and a digital media business launched a year ago that is running ahead of leaders’ expectations, adjusted operating income rose 35% to more than $1.6 billion. Shares of the company (Ticker: WBA) fell about 1% to $43.40 on April 4. They have fallen about 8% over the past six months.
