And the beat goes on……..
We’ve covered the market moves of both CVS and Walgreens as they transition from a pharmacy centric business model to one of health care provider. The cash flow velocity for each related to multiple acquisitions and some divestitures are all seemingly aimed at carving out a huge niche in controlling…. umm we mean providing…. direct health care services to millions of patients nationally.
Let’s start with a quick recap of how Walgreens’ has recently spent upwards of $16 billion ….
- Acquisition of CareCentrix for $700+ million….. CareCentrix coordinates home care for health plans, patients, and medical providers for 19 million patients in the home setting and approx. 7,400 provider locations.
- Acquisition of specialty pharmacy developer / manager Shields Health Solutions for a $1+ billion.
- Acquisition of primary care network VillageMD for $5.2 billion (majority share).
- Sold $1.7 billion in shares of Amerisource Bergen to partially fund the $9billion acquisition of Summit Health-CityMD which operates more than 680 provider locations in 26 markets.
Not to be outdone, CVS announced almost $19 billion in deals……
- Acquisition of home care company Signify Health for $8 billion and
- Acquisition of Medicare-focused primary care provider Oak Street Health for $10.6 billion.
What can one make of all this repositioning?
The legacy pharmacy businesses for each company dovetails well with their healthcare subsidiaries serving as feeders for patient prescriptions….. especially in the specialty medication category.
Second, the market encroachment by hospital / health-system operated retail and specialty pharmacies is mitigated by creating some control over prescribing docs at their subsidiary companies.
And, for CVS, which is also a PBM, the overall environment for PBMs has turned somewhat toxic.
One can only imagine what may be next.
