Walgreens Boots Alliance said Thursday its healthcare business will be profitable by 2024, buoyed by the acquisition earlier this week of home care-centered platform CareCentrix. Walgreens told Wall Street analysts during a fiscal fourth quarter earnings call the division will earn between $7 and $8 billion in 2024 and $11 to $12 billion dollars in 2025, a 20% increase from what the company previously forecast.
“Our healthcare strategy is now coming to light and far from just being in the planning stages,” Walgreens Boots Alliance CEO Roz Brewer told analysts during the call. “It is well underway and can be seen in our best-in-class assets.”
The CareCentrix acquisition is the latest addition to Walgreens’ healthcare segment, which includes in-home and clinic-based primary care provider VillageMD and Shields, a specialty pharmacy. Former CareCentrix CEO John Driscoll recently joined Walgreens as president of the U.S. healthcare segment. He told analysts the task at hand now is to seamlessly integrate the three businesses.
“Together with VillageMD, after a hospital discharge CareCentix will be able to immediately refer a member to a primary care physician when needed and schedule an appointment for follow-up care,” Driscoll explained. “Analysis shows the rapid action can reduce hospital readmissions by up to 20%.”
Driscoll said in the coming months Walgreens will be working aggressively with value-based health plans, including Medicare Advantage plans, to help close care gaps through its integrated healthcare business.
While the company sees the healthcare unit as a huge driver of profits in the coming years, the costs of acquiring CareCentrix and building out of the division were partly blamed on a disappointing fiscal fourth quarter. The company earned $0.80 a share on revenues of $32.4 billion for the quarter compared to $1.17 a share on revenues of $34.2 billion in the same quarter last year. For the full year, Walgreens earned $5.04 a share on $132.7 billion in revenues. The previous year, the company earned $4.91 a share on $132.5 billion in revenues.
Walgreens and CVS Health have both transformed themselves from retail pharmacies to holistic healthcare providers that are driving care into the home. Last month, CVS Health acquired home care tech firm Signify Health for $8 billion.
