Walgreens Boots Alliance partners with KKR on PharMerica acquisition, settles with Theranos
DEERFIELD, Ill. — Walgreens Boots Alliance has had a busy week.
As a minority investor, the company on Wednesday announced that it had formed a new company with KKR, through which the two acquired institutional pharmacy company PharMerica. The all-cash transaction is valued at roughly $1.4 billion and will make PharMerica a private company.
“This is an opportunity to expand into a growing segment, and to do so through a national footprint,” Walgreens Boots Alliance co-COO Alex Gourlay said. “As the healthcare landscape and patients’ needs continue to change, this is another way we can support quality, affordable patient care.”
The buying price represents $29.25 in cash for each share of PharMerica common stock upon closing of the transaction, and marks a 17% premium on the stock’s closing price on the last trading day before the announcement.
“PharMerica is an innovative leader in the institutional pharmacy industry,” Jim Momtazee, head of KKR’s health care investment team, said. “KKR and Walgreens Boots Alliance are excited to partner with PharMerica’s management and employees to build upon the company’s successful foundations and accelerate its future growth.”
The announcement of the PharMerica acquisition and Walgreens’ involvement came the day after Theranos announced that it had settled with the company for an undisclosed amount, resulting in Walgreens’ lawsuit against Theranos being thrown out. Walgreens brought the $140 million suit against Theranos in November, alleging breach of contract. Theranos operated wellness centers within Walgreens that offered blood tests whose accuracy were called into question by the Wall Street Journal.
Walgreens terminated its relationship with Theranos last June — a day after Theranos acknowledged to Walgreens executives that more than 10% of the test reports provided to Walgreens customers who used Theranos' services had to be voided. The voided reports totaled 31,000. Before the termination of their agreement, by the fall of 2015, Theranos Wellness Centers were located in 41 Walgreens locations, one in Palo Alto and another 40 in Arizona.
Cardinal Health delivers solid Q4, full-year results amid generics pricing pressures
DUBLIN, Ohio — With its pharmaceutical segment seeing growth from both increased distribution customers and strong specialty performance, Cardinal Health delivered a 5% revenue increase for the fourth quarter and a 7% increase for the full-year. The company’s full-year revenue totaled $130 billion and its Q4 revenue hit $33 billion.
"While these last 12 months were clearly a dynamic period in healthcare and certainly presented challenges for our fiscal 17, it was also a year in which we took important actions to strengthen our market positioning, grow our scale, add new, long-term drivers of growth, and improve the overall balance of our integrated portfolio," Cardinal Health chairman and CEO George Barrett said.
In Q4, the company’s pharmaceutical segment increased its revenue 5% to $29.6 billion. Cardinal Health attributed the growth to more pharmaceutical distribution customers and growth in its Specialty Solutions business. The segment’s profit, however, decreased 7% to $505 million, which it said was driven by generics pricing and Cardinal Health’s continued investment in its Pharmaceutical IT platform.
For the full-year, the segment grew its revenue 7% to $116.5 billion, with profit falling 12% to $2.2 billion. Cardinal Health attributed the segment’s profit downturn to generics pricing and the loss of Safeway and reduced levels of branded drug price appreciation, though both to a lesser extent. In both Q4 and the full year, these downturns were partially offset by strong performance of Red Oak Sourcing.
The company’s medical segment in Q4 saw revenue grow 6% to $3.4 billion, with a profit increase fo 13% to $138 million. For the full-year, the segment’s revenue grew to $13.5 billion — a 9% increase over the same period last year — and its profit grew 25% to $572 million.