There has been scant news over the past year about big moves involving sales and strategic acquisitions in the specialty pharmacy space.
Today my internet news spider searches lit up like a July 4th firecracker.
***Walgreens appears primed to sell off Shields Health… and the number could be $4 billion.***
As you may recall we’ve reported on Shields many times over the years. They offer an off-the-shelf solution for hospitals (their primary customer base) to open their own specialty pharmacies. Once open, Shields also offers ongoing management services. Their income, therefore, is derived from the consulting services to get an operation up and running and then a management fee for day-to-day operations.
Therein is the problem….. the income may be good for a time….. but is it generating the ROI that justifies keeping Shields in the Walgreens toolbox? Consider too…. Once you build the man a boat and then how to fish the fisherman no longer needs to pay someone else for doing what he/she can now do themselves.
If you trade stocks, you should know when it is time to sell a stock (ask any TESLA stock owner)….. especially when Walgreens’ buy-in for Shields was north of a Billion dollars. It is hard to believe that anyone would pay $4 billion….. but there are lots of people with big money and are willing to put it at high risk.
From Walgreens’ perspective, the profit from the sale would far and away be greater than yearly earnings could ever match. Walgreens also seems to need cash to shore up some of its other subsidiaries, especially when lending rates are not attractive.
FORBES and SeekingAlpha both issued reports on the Walgreens deal. It also appears that Walgreens will return to its roots and shore up its own specialty pharmacy which has been overshadowed by the hospital focused strategy Walgreens had embraced.
Walgreens exploring $4B+ sale of Shields Health specialty pharmacy business – report