Health

Walgreens CEO: Technology company could be next acquisition

The Walgreens Boots Alliance is considering an acquisition in technology after a successful year in primary care, specialty pharmaceuticals, emergency care and healthcare.

The Deerfield, Illinois-based pharmacy chain on Thursday said its fiscal year results beat expectations, with CEO Roz Brewer saying the company’s next step could be healthcare technology.

“We’re happy with the assets we have, but we remain committed to our previous conversation that it’s likely our next asset will look like a technical asset,” Brewer told analysts during an earnings call.

What Walgreens decides to invest in next will depend on whether the potential acquisition earns earnings before interest, taxes, depreciation and amortization, Brewer said.

Walgreens has been heavily sourcing its U.S. healthcare division this year and is optimistic about the future. The company said it is raising the division’s sales target for fiscal year 2025 from $11 billion to $12 billion from $9 billion to $10 billion previously.

Its expansion into the industry will help the company better coordinate patient care, said John Driscoll, president of US Healthcare, who took office Tuesday. The division serves 26 million patients through 12,000 providers in each state, he said.

“We are building a nationwide healthcare business that will leverage our entire portfolio to provide better services at a lower cost,” Driscoll said by phone. “And by focusing our portfolio on these high-growth markets, we will accelerate our return on investment and our path to profitability in US healthcare.”

The company said VillageMD, already the largest sales contributor in the segment, is expected to continue to lead the unit’s sales through fiscal year 2025.

Last year, Walgreens invested $5.2 billion in VillageMD to acquire a majority stake. VillageMD, a primary health care company, has opened 82 clinics over the past year, operating more than 340 clinics in 22 countries. VillageMD’s FY 2022 revenue was $1.5 billion.

Emergency medical services company CareCentrix, which Walgreens agreed to acquire outright on Tuesday, is expected to bring in the second-biggest amount of cash for its medical division in the coming years.

Walgreens paid $1.37 billion for the full acquisition of Shields Health Solutions in September. The company said Shields, a specialty pharmacy, generated $286 million in sales during the fiscal year.

Walgreens reported US $622 million in sales for its healthcare segment. The division expects to be profitable by fiscal 2024, executives said.


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