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Walgreens buys BioScrip's specialty pharmacy unit
February 2nd, 2012
DEERFIELD, Ill. – Walgreen Co. is acquiring the community specialty pharmacy and centralized specialty and mail service pharmacy businesses of BioScrip Inc. for about $225 million.
The companies said Thursday that for Elmsford, N.Y.-based BioScrip, the agreement includes about $170 million in cash at closing and retention by BioScrip of associated accounts receivable and working capital liabilities of around $55 million. Up to an additional $60 million in the purchase price may be payable based on Walgreens' retention of certain business included in the transferred businesses.
With the deal, expected to close by late April, Walgreens will add BioScrip's national community specialty pharmacy network of 30 pharmacy locations in 16 states and the District of Columbia, primarily serving HIV, oncology and transplant patients.
Walgreens also is buying certain assets of BioScrip's centralized specialty pharmacy business and traditional mail-service pharmacy, which dispenses prescriptions for drugstore.com, acquired by Walgreens last June. BioScrip had acquired the drugstore.com pharmacy business in July 2010 and was under a five-year pact with the online retailer to continue marketing the drugstore.com pharmacy.
According to Walgreens, the BioScrip asset acquisition fits its strategy to advance community pharmacy and to bring more specialty pharmacy products and services closer to patients. The deal is also expected to help grow Walgreens' centralized specialty and mail-service pharmacy operations.
"Together, BioScrip's clinically focused community specialty pharmacies and access to additional limited-distribution drug therapies and Walgreens' existing nationwide network of retail and health system pharmacies create a strong network of support for our core drug store business to provide specialty pharmacy solutions to our patients," Walgreens president and chief executive officer Greg Wasson said in a statement.
"Many of our patients will benefit from expanded access to new and limited-distribution drugs for chronic conditions such as HIV, cancer and organ transplant. This acquisition also significantly expands our nationwide reach to an additional half-million patients with chronic and complex health conditions who have strong clinical relationships with their current BioScrip pharmacy," Wasson added.
Plans call for the servicing of the central specialty pharmacy and mail pharmacy businesses — including all contract rights related to the drugstore.com business — to be transferred to current Walgreens facilities, the companies said. After the deal closes, BioScrip will maintain its infusion, home health, pharmacy benefit management and cash card businesses and continue to serve its infusion patient base and managed care customers through existing BioScrip pharmacies.
BioScrip said the sale to Walgreens will enable it to sharpen its focus on and expand its infusion pharmacy and home health services business. The company also plans to use the proceeds from the deal to pay down debt.
"Our specialty pharmacy clinicians have established a respected reputation for high levels of customer service. The recognition of our clinical expertise in complex, chronic programs has resulted in consistent growth of this business. We believe that Walgreens is an ideal home for BioScrip's specialty pharmacy and mail businesses, as it has the resources to support a growing customer base," BioScrip president and CEO Rick Smith stated.
In 2010, BioScrip's most recently completed fiscal year, pharmacy services accounted for about $1.3 billion, or 81%, of the company's $1.6 billion in total revenue and had grown 6.8% for the year. For BioScrip's fiscal 2011 third quarter ended Sept. 30, its most recently completed reporting period, pharmacy services sales rose 4.6% to $344.5 million.
"This transaction [with Walgreens] resulted from the work accomplished through the strategic assessment that we commenced in early 2011," Smith explained. "Consistent with our goal to shift corporate resources to areas of maximum return on investment and long-term growth potential, this important step allows us to concentrate our focus on a market segment in which we have meaningful strengths and distinct competitive advantages. Additionally, the divestiture enables us to remove corporate overhead related to our legacy business."
BioScrip began shifting its business focus toward home health/infusion services with its $375 million deal to acquire Critical Homecare Solutions (CHS), a provider of home infusion and home nursing products and services to patients suffering from chronic and acute medical conditions. The transaction, which closed in late March 2010, created one of the largest U.S. home care providers, according to BioScrip.