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Walgreens Hints More Partnerships, Not Big Deals In The Future

Fadu News 2018-10-11 21:18:53

Oct 11, 2018, 09:37am

Bruce Japsen Senior Contributori

Opinions expressed by Forbes Contributors are their own.

Healthcare I write about healthcare business and policy
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Illuminated Walgreens Boots Alliance Inc. signage is displayed outside a store at night in the Hollywood neighborhood of Los Angeles, California, U.S., on Oct. 19, 2017. Photographer: Christopher Lee/Bloomberg

Walgreens Boots Alliance said it’s beginning to implement some of its much-anticipated testing of new retail healthcare and pharmacy concepts from a pilot project laboratory in Gainesville, Florida and other sites to drugstores across the country.

Executives have been launching an array of partnerships that so far have been in the pilot testing phase like a recently announced deal with the big grocery chain Kroger to an arrangement with UnitedHealth Group that began last year to develop urgent care centers next to Walgreens stores in certain markets.

But some partnerships are beginning to expand across the country such as a “self-checkout” system and “express pickup points” that first begin in Gainesville, Florida where Walgreens is testing a variety of concepts. Walgreens President Alex Gourlay said they continue to cycle an array of programs through the testing stores and it will “take some time (for them) to be validated and developed.”

For example, Walgreens said Wednesday it was expanding a collaboration that began last year with diagnostic testing firm LabCorp. to open at least 600 patient service centers at Walgreens stores over the next four years.

The update Thursday on Walgreens strategy comes a day after the U.S. Justice Department gave preliminary clearance to rival CVS Health’s acquisition of Aetna, the nation’s third-largest health insurer.

Walgreens CEO Stefano Pessina said the company isn't ruling out future mergers and acquisitions but they would have to add value. executive vice chairman and CEO said Thursday morning on a 70-minute call to discuss fourth quarter earnings.

Walgreens sales rose nearly 11% to $33.4 billion in the company’s fiscal fourth quarter ended August 31, thanks in part to the addition of hundreds of Rite Aid stores purchased last year. Net income nearly doubled to $1.5 billion, or $1.55 per share in the quarter compared to $802 million, or $1.55 in the year-ago period.

Walgreens purchased 1,932 Rite Aid stores but has closed 458 in the last year as part of a store “optimization” plan that will continue through next year as the stores are integrated into the chain and rebranded as Walgreens. The Rite Aids and three distributions centers were purchased by Walgreens for nearly $4.4 billion in cash.

I've written about health care for three decades, starting from my native Iowa where I covered the presidential campaign bus rides of Bill and Hillary Clinton through the Hawkeye state talking health reform and the economy. I have covered the rise, fall and rise again of hea...

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For more information on healthcare, read Bruce Japsen's book, Inside Obamacare: From Barack And Michelle To The Affordable Care Act.

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