Walgreens and Water Street Announce Agreement to Merge Take Care Employer Solutions with CHS to Form a New Worksite Health Company
Walgreens will be a preferred strategic partner with Water Street and will retain a significant minority interest in the new company, while continuing to manage existing Walgreens worksite pharmacies
The new company will include Take Care Employer Solutions’ worksite health and wellness centers and CHS’ worksite health centers
DEERFIELD, Ill., April 03, 2014 – Walgreen Co. (NYSE: WAG) (Nasdaq: WAG) announced today that it has signed a definitive agreement with Water Street Healthcare Partners (Water Street), a strategic investor focused exclusively on the health care industry, in which Water Street will acquire a majority interest in Take Care Employer Solutions, LLC. Take Care Employer Solutions is a Walgreens subsidiary that manages more than 360 worksite health centers nationwide.
Water Street also has signed an agreement to simultaneously invest in CHS™ Health Services (CHS), a premier provider of more than 130 worksite health centers. Water Street will merge Take Care Employer Solutions and CHS to form a new company dedicated to providing worksite health centers that improve the cost and quality of employee health care. The new company will have more than 85 years of combined experience in employer health solutions and will serve more than 200 leading corporations through nearly 500 worksite health and wellness centers located across the country.
“Walgreens, CHS and Water Street share a goal of maximizing employers’ return on their health care investment,” said Dr. Jeffrey Kang, Walgreens senior vice president of health and wellness services and solutions. “This strategic decision to bring together our organizations’ expertise, capabilities and resources to create a leading worksite health and wellness company provides us an opportunity to play an even greater role in improving the cost and quality of workforce health care. Through our continued involvement in the business and as a preferred strategic partner with Water Street, Walgreens expects to accelerate tighter connections with employers – an important stakeholder in the health care delivery system.”
“CHS and Take Care Employer Solutions are both deeply committed to finding new ways to drive positive health care outcomes for our clients and their employees. This merger will provide us with a significant opportunity to transform onsite health care. Together, we will have the experience and resources to create innovative strategies that will improve patient engagement and positively impact health outcomes,” said Stuart Clark, CEO, CHS.
Water Street will own a majority interest in the new company, and Walgreens will own a significant minority interest and have representatives on the new company’s board of directors. The new company will be led by Stuart Clark, CEO. Trent Riley, divisional vice president, Take Care Employer Solutions Group, will serve as COO. The name of the new company will be determined during the integration process.
“We are pleased that Walgreens and CHS have selected Water Street to collaboratively and strategically grow their businesses. We will leverage our team’s experience and network of relationships in health care services to expand the new company’s capabilities and create greater long-term value for the business and clients,” said Steve Cosler, an operating partner with Water Street who has more than 20 years of experience in outsourced health care.
Walgreens will continue to manage its existing worksite pharmacies in collaboration with the new company.
Healthcare Clinic at select Walgreens, with more than 400 in-store clinic locations that formerly operated under the Take Care Clinic name, is not part of this transaction. Walgreens will continue to manage these clinics.
Comprehensive Health Services, Inc. (CHSi), an entity related to CHS that specializes in government contracting health services and logistics, is not part of this transaction. It will remain an independent organization with no changes to its ownership structure or leadership team.
Financial terms of the agreement were not disclosed. Walgreens anticipates the transaction will not have a material impact on earnings per share in fiscal year 2014.
The transaction is subject to satisfaction of regulatory requirements and other conditions, and is expected to close by mid-calendar year 2014. Until the close of the transaction, Take Care Employer Solutions and CHS will operate business as usual and as separate companies.
As the nation’s largest drugstore chain with fiscal 2013 sales of $72 billion, Walgreens (www.walgreens.com) vision is to be the first choice in health and daily living for everyone in America, and beyond. Each day, Walgreens provides more than 6 million customers the most convenient, multichannel access to consumer goods and services and trusted, cost-effective pharmacy, health and wellness services and advice in communities across America. Walgreens scope of pharmacy services includes retail, specialty, infusion, medical facility and mail service, along with respiratory services. These services improve health outcomes and lower costs for payers including employers, managed care organizations, health systems, pharmacy benefit managers and the public sector. The company operates 8,210 drugstores in all 50 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Walgreens also manages Healthcare Clinic at select Walgreens, with more than 400 locations throughout the country.
About Take Care Employer Solutions
Since its formation through the combination of CHD Meridian, Whole Health Management and Walgreens workplace pharmacy operations in 2008, Take Care Employer Solutions has built its business to become the nation’s premier provider of employer-based health care services. Take Care Employer Solutions serves 180 clients across multiple industries, and has more than 360 health centers, pharmacies and fitness centers located across 45 states, the District of Columbia and Guam. Take Care Employer Solutions has received AAAHC Medical Home accreditation, recognizing that all of its primary care worksite health centers meet AAAHC requirements to be considered a patient-centered medical home – embodying best practices and operating in compliance with nationally-recognized standards of care.
Founded in 1975, CHS is one of the largest providers of worksite health centers for employers in the United States. The company operates more than 130 employer-based worksite health centers that focus on patient engagement and behavioral change to improve health and mitigate costs. CHS customizes its programs to align with each employer’s benefits strategy and goals. The company is headquartered in Brentwood, Tennessee.
About Water Street
Water Street is a strategic investor focused exclusively on the health care industry. The firm has a strong record of building market-leading companies across key growth sectors in health care. It has worked with some of the world’s leading health care companies on its investments including Johnson & Johnson, Medtronic, and Gentiva. Water Street’s team is composed of industry executives and investment professionals with decades of experience investing in and operating global health care businesses. The firm is headquartered in Chicago. For more information about Water Street, visit waterstreet.com.
Cautionary Note Regarding Forward-looking Statements: Statements in this press release that are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “expect,” “likely,” “outlook,” “forecast,” “would,” “could,” “should,” “can,” “will,” “project,” “intend,” “plan,” “continue,” “sustain,” “synergy,” ”on track,” “believe,” “seek,” “estimate,” “anticipate,” “may,” ”possible,” “assume,” variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that could cause actual results to vary materially from those indicated, including: the ability to satisfy the closing conditions and consummate the proposed transactions on a timely basis or at all, the ability to achieve anticipated financial results, changes in vendor, payer and customer relationships and terms, and other factors described in Item 1A (Risk Factors) of Walgreens most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q, each of which is incorporated herein by reference and in other documents that Walgreens files or furnishes with the Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, Walgreens does not undertake, and expressly disclaims, any duty or obligation to update publicly any forward-looking statement after the date of this report, whether as a result of new information, future events, changes in assumptions or otherwise.