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.