Walgreens Boots Alliance takes full acquisition of Shields Health Solutions

WBA is acquiring the remaining 30% stake of Shields (approximately 35% on a fully diluted basis) for approximately $1.37 billion.

Sandra Levy

9/20/2022

Walgreens Boots Alliance announced the acceleration of its plans for full ownership of Shields Health Solutions, which is delivering strong financial performance, clinical excellence and value-add contributions to WBA’s business.

WBA has entered into a definitive agreement to acquire the remaining 30% stake (approximately 35% on a fully diluted basis) for approximately $1.37 billion, which is based on the exit multiple agreed at the time of WBA’s 2021 investment in Shields.

Shields, a leader in the large, fast-growing market of specialty pharmacy, is the premier health system-owned specialty pharmacy integrator in the United States. WBA’s full acquisition of Shields from other equity holders (including private equity firm Welsh, Carson, Anderson & Stowe and founder and board chairman Jack Shields) follows the increase of WBA’s stake to approximately 70% in September 2021. The transaction is expected to close by the end of the 2022 calendar year.

“Our full acquisition of Shields will complete another major milestone as part of our consumer-centric healthcare strategy to drive sustainable long-term growth, and we are very pleased with our partnership and integration with Shields,” said Roz Brewer, CEO of WBA. “We can now make further progress on our strategy through Shields’ integrated model, increasing our value to health systems, expanding access to payor partners and supporting improved outcomes and lower costs.”

Shields has continued to rapidly expand its platform, which has a proven track record of improving patient outcomes and lowering total medical expense for health systems and patients. As an accelerator of health system-owned specialty pharmacies, Shields has served more than 1 million patients, with nearly 80 health system partners representing approximately 1,000 hospitals nationwide.

Shields delivered pro forma sales growth of 57% for the first nine months of fiscal 2022, driven by key contract wins, further expansion of existing partnerships and strong executional focus. It will play a central role as Walgreens continues to align capabilities across primary care, specialty pharmacy care, post-acute care and home care.

Shields will continue as a distinct business and brand within Walgreens. John Lucey, co-founder and current president of Shields, will lead the organization as CEO, and current Shields CEO Lee Cooper will take on a new executive role within WBA. Lucey partnered with Jack Shields 10 years ago to start the business and has led its operations for most of that time.

“This transaction validates our tremendous impact to health systems and specialty patients, as well as the consistent growth and innovation the Shields team has achieved over the last decade,” Cooper said. “As an important business within Walgreens, and under John Lucey’s leadership, Shields will be well positioned to continue to scale its unique integrated care model for the benefit of all stakeholders.”

“We’re thankful for the outstanding partnership we’ve enjoyed over the past three years with the Shields management team, founder Jack Shields, UMass Memorial Health and WBA,” said Tom Scully, general partner of Welsh, Carson, Anderson & Stowe. “We greatly appreciate the team’s work to build an awesome company. From day one, it has been a terrific experience working with the Shields and WBA teams.”

Separately, WBA also announced a new leadership structure for its U.S. business segment. Walgreens president John Standley is leaving the company to pursue other opportunities, and the segment will now be organized under two leaders: pharmacy led by Cooper and retail led by Tracey Brown, president of Walgreens retail products and chief customer officer.

Both will report directly to Brewer and serve on the executive leadership team. Cooper has been appointed to the role of executive vice president of Walgreens Pharmacy beginning Oct. 1, and Standley will remain at the company until Nov. 1 to ensure a smooth transition.

“Lee has demonstrated proven success in driving business growth, creating omnichannel customer experiences and building high-performance cultures, and will partner very closely with Tracey, who has made major strides for our company since joining just over a year ago. We are confident that we have the right leadership in place to advance our strategic priorities and be the leading partner in reimagining health care,” Brewer said.

“We are also very grateful to John Standley for his many contributions, and want to thank him for everything he has done for our company and wish him the very best,” she said. “He led the team through a challenging time during the pandemic and was integral to our unprecedented national rollout of COVID-19 vaccines and testing, and to laying the foundation for our transformation to a healthcare company.”

Cooper is a distinguished leader in the healthcare industry. He formerly served as the president and CEO of GE Healthcare, U.S. and Canada, where he led an $8 billion commercial and service organization through a period of steady growth. In that role, he partnered with care providers, healthcare systems and governments to improve healthcare quality, access and affordability. Cooper subsequently joined Welsh, Carson, Anderson & Stowe as an operating partner focused on healthcare investments in 2019 before assuming his role as CEO of Shields in 2020.

“In my new role leading Walgreens Pharmacy, I look forward to leveraging my deep healthcare experience to deliver transformative experiences for Walgreens patients, partners and team members,” Cooper said.

Sidley Austin acted as legal advisor for WBA. Ropes & Gray acted as lead legal advisor for Shields, along with Goodwin Procter and K&L Gates.

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