Loblaw Companies (TSE: L) announced Monday that its wholly owned subsidiary Shoppers Drug Mart/Pharmaprix has agreed to acquire Lifemark Health Group, a portfolio company of Audax Private Equity, for an aggregate cash consideration of C$845 million.
Growing Healthcare Footprint
Lifemark is the largest provider of outpatient physiotherapy, occupational therapy, chiropractic, massage therapy, mental health and other ancillary rehabilitation services in more than 300 clinics across Canada.
The acquisition of Lifemark will allow Loblaw to further expand its business as a health services provider, through its network of health and wellness solutions accessible in person and virtually.
With the acquisition of Lifemark, Shoppers adds the largest provider of Canada’s C$11 billion physiotherapy and rehabilitation market to its team of professionals working in pharmacies, medical clinics or healthcare companies, all supported by the digital offering of the PC Health app.
Together, they form a network of thousands of healthcare professionals, each bringing their own but complementary expertise to serve communities from coast to coast.
The acquisition of Lifemark is subject to regulatory approvals and other customary closing conditions. The transaction is expected to close in the second quarter of 2022.
Management Commentary
Shoppers Drug Mart president Jeff Ledger said, “For the past 60 years, Shoppers Drug Mart has played an important role in the health and wellness of Canadians, providing convenient, seamless access to pharmacy and healthcare services in communities nationwide. For Canadians who want to get well and stay well, pharmacy and physical therapy services go hand in hand. Shoppers and Lifemark together make the continuum of care easier for patients.”
Wall Street’s Take
On February 27, Desjardins analyst Chris Li kept a Hold rating on L and set a price target of C$110. This implies 4.1% downside potential.
Overall, Loblaw scores a Moderate Buy consensus rating among analysts based on five Buys and two Holds. The average Loblaw price target of C$114.14 implies 0.5% downside potential to current levels.
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