Walgreens is all set to move into healthcare

October 25, 2022 : Walgreens Boots Alliance is doubling down on its great healthcare bet as the pharmacy giant upped a long-term sales mark for its growing healthcare business and expressed its objectives to become a leader in the American medical technique.

The company has spent the last few years building out the business it calls its U.S. Healthcare, which includes everything from the clinics it operates through its majority stake in VillageMD to Shields. This specialty pharmacy services health systems.

Walgreens is “well underway in our transformation to a consumer-centric healthcare company,” Walgreens CEO Rosalind Brewer told investors during an earnings call Thursday.

The U.S. Healthcare business unit generated $622 million in sales in the fourth quarter of the year and a total of $1.8 billion for fiscal 2022. But Walgreens said it expects a significant increase in sales out of this business within the next three years. It raised the sales target for its healthcare business unit to $11 billion to $12 billion in fiscal 2025, up from $9 billion to $10 billion. Walgreens said it also expects the business to be profitable by fiscal 2024.

The company’s stock was up 5.7% in Wednesday afternoon trading.

Walgreens has made three deals key to its healthcare strategy: Shields; VillageMD, with which it currently operates 342 VillageMD clinics and 152 co-located clinics; and CareCentrix, which provides home-health services like nursing, infusion, and palliative-care services. The company stated earlier this week that it plans to take full ownership of CareCentrix, spending another $392 million.

“We’re building a nationally scaled healthcare business, which will leverage our complete portfolio to deliver better care at lower costs,” John Driscoll, the new head of the U.S. Healthcare business unit and former CEO of CareCentrix, notified investors. “And by concentrating our portfolio on these higher-growth markets, we will accelerate the return on our investment and our way to profitability in U.S. Healthcare.”

Walgreens isn’t the only pharmacy chain growing into uncharted parts of the U.S. healthcare system. CVS Health Corp., which since 2018 has possessed the health insurer Aetna, is also the biggest provider of retail health services in the nation. It recently obtained home health provider Signify Health for $8 billion and is reportedly considering an acquisition of Cano Health Inc., another home-health provider. You can get an X-ray, dental work, or a physical at Walmart Health.

All three companies have announced plans to use their stores and clinics as clinical-trial sites within the last year.

Walgreens shares are down 36.1% this year, while the standard S&P 500 has fallen 24.9%.