Walgreen-Boots Alliance to Pursue Smaller Acquisitions in 2023

The Walgreens-Boots Alliance (NASDAQ: WBA) will focus on smaller tuck-in transactions in 2023 as opposed to the multi-billion dollar deals the company pursued in 2022.

Last year, WBA poured money into health care provider investments and acquisitions, including the home-based care platform CareCentrix, Inc. and VillageMD. Those companies both provide palliative care in addition to their other services, and the latter also contracts with hospices through its Accountable Care Organization (ACO). 

The company’s 2023 strategy will shift away from transactions of that magnitude. Though for an organization the size of WBA, “small deal” is a relative term.


“We’re more likely to buy smaller companies with specific color capabilities that we need to advance our organic business,” CFO John Kehoe said in an earnings call. “So we’re not going to go out and do a two or $3 billion acquisition on a health-tech company. We’re likely to be very targeted, and it’ll be in the hundreds of millions not in the billions.”

The Walgreens Boots Alliance is a Fortune 500 health care and retail powerhouse and the parent company of the Walgreens retail pharmacy chain. Like its rival CVS Health (NYSE: CVS), the company has been building up its health care delivery services with an emphasis on primary care and services in the home.

WBA acquired CareCentrix in two phases. Last September, the publicly traded health care behemoth bought a 55% stake in the home-based care platform for $330 million. The following month, the company announced it would acquire the remaining 45% for $392 million. The second transaction is expected to close in March.


The CareCentrix investment allows Walgreens to expand its range of health care services. The company can also leverage the platform to better coordinate those services, including greater integration between their health care teams and their pharmacists.

It also further builds the reach WBA’s U.S. health care business into the home, which the company has identified as a priority.

“Home is an exciting area for us to continue to grow,” Dr. Sashi Moodley, chief clinical officer for Walgreens Health, said at Home Health Care News’ Capital+Strategy event in March. “We want to orchestrate that journey, and we’ll look to partners to be able to play in the different spaces to help us again manage populations from a risk-based perspective, which is the ultimate goal.”

Among those partners is the home-focused primary care provider VillageMD. WBA increased its stake in the company to 63% last fiscal year with a $5.2 billion investment and contributed to VillageMD’s forthcoming acquisition of Summit Health-CityMD, valued at $8.9 billion. Summit recently formed a relationship with the home-based health services company Partners in Care to expand its palliative care capabilities.

Walgreens-Boots Alliance also owns a significant stake in the home health and hospice provider Brightspring Health Services.

The company’s forthcoming pull-back on capital deployment follows an unadjusted loss of $3.7 billion for the first quarter of Fiscal Year 2023, compared to a net income of $3.58 billion the prior year’s quarter.

The company attributed the shortfall to a multi-billion dollar settlement of opioid-related litigation, COVID-19 headwinds and spending on health care provider acquisitions and labor.

But WBA expects its recent investments to pay off in the long term. Following VillageMD-Summit deal, for instance, it increased its health care segment revenue targets to between $14.5 billion and $16 billion for Fiscal Year 2025. The previous target ranged from $11 billion to $12 billion. 

“We are making great progress to accelerate our transformation to health care, most notably in the quarter with the village MD acquisition of Summit health,” WBA CEO Rosalind Brewer said in an earnings call. “At the same time, we’re unlocking value and strengthening the company by simplifying the portfolio.”

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