Retail pharmacy chain Walgreens Boots Alliance (NASDAQ:WBA) has agreed to acquire the remaining 30% stake in specialty pharmacy operator Shields Health Solutions for $1.37 billion. WBA already owns roughly 71% of Shields through its last purchase of about $970 million in 2021.
The deal is expected to close by the end of this calendar year. WBA has slowly increased its stake in Shields since 2019 and sees great value in its business. Shields provides premier health-system-owned pharmacy services for severe illnesses and diseases.
Notably, Shields said its revenue has grown by approximately 57% in the first nine months of 2022. This was achieved by winning new contracts, expanding business with existing clients, and solid execution.
Commenting on the deal, Roz Brewer, CEO of WBA said, “Our full acquisition of Shields will complete another major milestone as part of our consumer-centric healthcare strategy to drive sustainable long-term growth… 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.”
Leadership Changes on Acquiring Shields Health Solutions
The current President and co-founder of Shields will assume the role of CEO of Shields as a separate business unit under Walgreens.
Meanwhile, WBA has also announced certain leadership changes in its U.S. business. John Standley is stepping down as Walgreens’ president. The Walgreens business will be split into two segments. Pharmacy will be headed by Lee Cooper, the current CEO of Shields. The Retail segment will be led by Tracey Brown, President of Walgreens Retail Products, and chief customer officer.
Is Walgreens Boots a Buy?
Wall Street analysts are cautious about the future trajectory of Walgreens Boots Alliance. On TipRanks, WBA stock has a Hold consensus rating. This is based on nine Buys and one Sell rating during the past three months. Nonetheless, the average Walgreens Boots Alliance price target of $43.70 implies an impressive 28.6% upside potential to current levels.
WBA stock has lost 33.8% so far this year. The company is facing multiple lawsuits owing to its alleged involvement in opioid cases. Similarly, its decision to spin off the UK-based Boots pharmacy chain did not materialize due to a lack of suitable buyers and was hence dropped. All these factors have caused analysts and hedge funds to remain on the sidelines.
