Walgreens acquires I-trax, Whole Health

DEERFIELD, Ill. Walgreens has significantly bolstered its clinic business by acquiring two providers of worksite health centers that will be folded, along with its in-store clinics, into a new Walgreens Health and Wellness division. Leading the new division as president will be Hal Rosenbluth, senior strategy consultant for health care at Walgreens and co-founder and chairman of Take Care Health Systems.

Walgreens has acquired Chadds Ford, Pa.-based I-trax, parent company of CHD Meridian Healthcare LLC, and privately held Whole Health Management in Cleveland. Upon closing of the transactions, Walgreens will have more than 500 worksite and retail health centers in 40 states, including its Take Care Health clinics. The deals, which are subject to regulatory approval, are expected to close within 60 days.

I-trax operates 300 health clinics on corporate campuses and generates $143 million in annual revenues. Through its subsidiaries CHD Meridian Healthcare and ProFitness Health Solutions, I-trax provides worksite health services, including primary and acute care, wellness, pharmacy and disease management services and health and fitness programming, for more than 160 employers including BMW, Eastman Chemical, Horizon Blue Cross Blue Shield of New Jersey, Lowe’s and Toyota.

Whole Health has 69 corporate sites, producing an estimated $35 million in revenue. Founded in 1981, Whole Health provides primary care, urgent care, wellness programs, health coaching and occupational health services for 27 clients.

Walgreens estimates that the current potential market for worksite health centers and pharmacies includes more than 7,600 corporate campuses of 1,000 employees or more.

“The story here is growth, and as these two companies increase their offerings, we can expand our complementary services more quickly and to a larger market,” stated Jeff Rein, Walgreens chairman and chief executive officer. “I-trax and Whole Health also will open the door for us to add worksite pharmacies where they already operate health centers. This is a natural extension of the existing worksite pharmacy services we currently provide for such companies as Sprint, ABX Air and Toyota.”

Under the agreement, Walgreens will buy I-trax for about $278 million in cash, including the assumption of about $18.3 million in net debt. An affiliate of Walgreens will commence a tender offer within 10 business days for all outstanding common stock of I-trax at $5.40 per share.

Terms of the Whole Health Management deal were not disclosed.

“We view these developments favorably, especially over the longer-term. We have, for some time, viewed the corporate market as very fertile ground—combination of corporate clinics and pharmacies promise substantial improvements in service and labor productivity (time away from the office for common ailments should be curtailed) and will serve to strengthen both the Walgreen and Take Care brands,” stated Goldman Sachs analyst John Heinbockel in a research note.

Heinbockel believes that Take Care could ultimately evolve into a business generating $3 billion in revenue and $500 million in EBIT.

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