Home health helped to bolster Walgreens Boots Alliance in the first quarter of fiscal 2023 as the company struggled with a $3.7 billion loss to settle opioid-related claims and litigation.
The full acquisition of home care unit CareCentrix and specialty care provider Summit Health, along with the expansion of primary care provider VillageMD tees Walgreens up for robust growth for the remainder of the year, CEO Rosiland Brewer told analysts during an earnings call Thursday.
“Our healthcare strategy is coming to life with all of our best-in-class assets, which had a combined 38% sales growth in the quarter,” Brewer said during the call.
Walgreens and CVS Health — the two largest U.S. retail pharmacies — are both transforming themselves into holistic healthcare firms that are aggressively driving care into the home. CareCentrix, Summit Health, and VillageMD are key components of that strategy.
Walgreens announced last October it would fully acquire home care firm CareCentrix. Less than a month later it announced plans to buy Summit Health, a provider of primary, specialty and urgent care services through VillageMD. Walgreens will close on both units early this year. VillageMD, which provides in-home and facility-based medical care, expanded to nearly 400 stand-alone clinics and 200 co-branded Walgreens clinics at the end of 2022.
CVS Health has pursued a similar strategy, adding tech-enabled healthcare platform Signify Health to its stable of business units which also include Aetna and Minute Clinics.
While Walgreens turned up the heat on acquisitions at the end of 2022, Chief Financial Officer James Kehoe told analysts the company would be taking a breather on large acquisitions for the remainder of the 2023. However, Kehoe said Walgreens might consider smaller acquisitions.
“We are more likely to buy smaller companies with capabilities that we need to advance our organic business,” Kehoe said. “We are not going to go out and do a $2 billion or $3 billion acquisition on a health tech company. We are likely to be very targeted in the hundreds of millions.”
The quarterly loss Walgreens reported Thursday for the quarter ending Nov. 30, 2022, was due to a one-time $5.2 billion settlement to resolve opioid litigation. Excluding the charge, the company reported fiscal first quarter adjusted net earnings of $1.16 a share on $33.4 billion, versus $1.68 a diluted share on revenues of $33.9 billion during the same period in 2021.
