Walgreen's long-term care pharmacy locations in Colorado, Texas, Florida, Georgia, and Maryland are traded for Omnicare infusion business.
Omnicare, I may have read is in the PBM business also, Trading the infusion business, which in a very competitive service at the community level... for long term maintenance medications comes with a very high failure risk.. in retention of physician referrals for IV business. With Walgreens clinics impacting physician revenues (or not) this may not be favorable to the infusion revenue and IV referrals going forward. On a side-note Clinics that are developed by those with extensive experience in this area of medical services are financially successful.
Who at Walgreens thought of this, I think this was a poorly thought out strategy. Like DNA test Kits. And I am sure CMXgen as well as anyone else who has had the pleasure of being in the Healthcare industry would agree. Growth by Retail is the only direction this management knows how to engage in. I have seen the sum of the parts in medical care being greater than the whole, and in Walgreens case.. not understanding the Medical Services Industry Complex has given any retailer the options to enter this sector.
Go for the easy money, flu shots, Payor Contract and PBM's networks, and don't offer any flu-shot gift cards,or DNA test kits.
HI is one of the business I have experience in, as well other private medical services in the fortune 500, The landscape is filled with companies that have sold after going into the HI business.. It can take years after a acquisition to increase revenues, it is nothing like the retail pharmacy business. And yes gold is there after years of hard work with individuals of talent and dedication. Large Chain Drug stores revenue is made up of goverment programs Medicare and Medicaid(State lower income health Insurance) Talk about being on the public dole, and working hard.
Good luck in your patient bonding and Investing in this sector.
September Core numbers for Walgreens will show the results of their business plans.
I have considered the HI business for myself here in Chicago. Basically, it breaks down to 8 to 12K revenue per patient, with GM in high single digits. Compare this to retail pharmacy where the average rev per script and GM per script is under immense pressure. I had a lady in my pharmacy ask questions about profit and I illustrated the profitabilty example with her scripts, and she understood retail pharma isnt what most think. CVS just buys better and continues to go upstream whereas WAG just sits there waiting. This patient received a letter from CVS stating she would only be allowed at CVS. (remember back when WAG tried to fight CVS), however CVS did not send letters to patients telling them they would be able to go to WAG. I explained the situation that she could go anywhere and was surprised!! I think WAG will continue to take hits, the HI business is not a bad business, it is profitable and I imagine WAG is doing a good job with it (top line and bottom line). HI is an expensive business to get into and this should keep smaller players from getting in for sometime. Total US mkt is somewhere around 10B, and I wouldnt be surprised if WAG makes up 15% or so now. Keep in mind WAG can continue to do this for a long time, its not a company worth investing in, but if you are an employee its good job security. I continue to look at SXCI and ESRX for investments.