6 Things to Know About Walgreens’ Move Into Health Care
Walgreens is one of the largest retailers in the United States. As growth in the pharmacy industry slows Walgreens is delving deeper into health care, specifically primary care, post-acute care and home care. Walgreens hopes these moves will boost growth over the long term. If you are curious about the moves Walgreens is making to turn itself into a more holistic health care provider then consider these six actions it is taking.
1. In 2021 Walgreens invested $5.2 billion to acquire a majority stake in VillageMD which operates primary care centres. The goal is to open 1,000 clinics by 2027 which will be co-located with Walgreens stores. By doing this Walgreens becomes the first pharmacy chain to offer co-located full service doctors’ offices across the United States. Pharmacists will be able to work with doctors on-site to provide patients with better care.
Co-locating doctor’s offices with Walgreens’ locations will also increase the number of prescriptions that are filled at Walgreens. At locations that are already co-located with a VillageMD, 50% of prescriptions are filled at a Walgreens. This is higher than the 20% share of prescriptions Walgreens fills nationally.
2. Walgreens estimates that by 2025 its healthcare vertical could bring in up to $16 billion. That would represent about 12% of Walgreens’ 2022 revenue of $132.7 billion. “I went deeply into a strategic analysis of what could be next,” said Walgreens’ CEO Roz Brewer. “It was clear to me that, from a strategic standpoint, traditional retail plus the pharmacy business is a very mature business, and at some point we’re going to have to have another way to grow revenue.”
3. Last year, in a deal worth $1.4 billion, Walgreens bought the remaining stake in Shields Health Solutions. Shields Health Solutions provides speciality pharmacy services and has served over 1 million patients. “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 Brewer.
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4. Walgreens also acquired CareCentrix last year for $772 million. CareCentrix offers home healthcare services. “CareCentrix sales will be driven by increased demand to better manage the needs of patients with complex or chronic conditions as they transition-out of the hospital and into other post-acute settings including the home,” said James Kehoe Walgreens’ Chief Financial Officer.
5. Despite Walgreens push into healthcare it is not abandoning its front-of-store general merchandise business. “I believe that the future of care will actually happen in the likes of Walgreens,” says Tracey Brown, president of Walgreens retail and U.S. chief customer officer. “The front-of-store—general merchandise—will still be a part of our footprint and a physical box where you can get what you need from a health care perspective. But what you’ll start to see evolve is our pharmacy and pharmacists’ role, where we’re not just dispensing medicines, but we’re actually providing care.”
“There’s no doubt that people’s habits have changed in recent years because of COVID, and shopper traffic has reduced. But I think the front of the store is just as important because there’s a desire for products and services that are extremely important to taking care of your overall health and well-being,” said Brown.
6. As Walgreens continues its push into healthcare it plans to stop selling cigarettes. “We absolutely are going to get out of cigarettes,” says Brown. “The pivot toward overall health and well-being means we’ve got to get this issue in alignment. But it’s complicated. It’s a process.”