UPDATE: Walgreen To Buy BioScrip's Specialty, Mail-Service Operations For $225 Million
02 Février 2012 - 4:39PM
Dow Jones News
Walgreen Co. (WAG) agreed to buy specialty and mail-service
pharmacy operations from BioScrip Inc. (BIOS) for $225 million, a
deal that will give the company expanded access to new and
limited-distribution drugs for HIV, cancer and organ
transplants.
BioScrip's shares jumped 6.3% to $6.21 in recent trading, while
Walgreen's stock rose 0.3% to $33.32.
The deal nets Walgreen 30 specialty-pharmacy locations in 16
states and the District of Columbia, mainly serving HIV, cancer and
transplant patients. Walgreen will also acquire parts of BioScrip's
centralized specialty-pharmacy business and traditional
mail-service pharmacy business, of which it is a customer through
its drugstore.com division.
The new businesses "create a strong network of support for our
core drugstore business to provide specialty pharmacy solutions to
our patients," Walgreen President and Chief Executive Greg Wasson
said in a statement.
Walgreen, which currently operates 7,818 drugstores across the
U.S. and Puerto Rico and has a market capitalization of about $29.2
billion, and other drugstore retailers are aiming to bolster
pharmacy services as millions of Americans are set to gain more
health-care coverage after a health-care overhaul was passed last
year.
Wasson has touted the role of "community pharmacy," as Walgreen
makes pharmacists more accessible by bringing them out from behind
counters to address customers. Walgreen is also more tightly
integrating retail clinics with pharmacy services.
Meanwhile, BioScrip plans to focus on its infusion pharmacy and
home health services.
During a conference call with analysts, BioScrip President and
Chief Executive Rick Smith said the deal would immediately make the
company's operations more flexible, adding that gross margins after
the deal closes could be in the mid-to-high 30% range. That is far
above the 17.3% margin BioScrip reported for the first nine months
of 2011.
Smith said the deal was the result of a strategic assessment
that BioScrip launched early last year, which observers said was
likely aimed at costs savings and a sharper focus on higher margin
product lines.
The deal value includes $170 million in cash and BioScrip's
retention of $55 million in accounts receivable and working-capital
liabilities. Walgreen may pay up to an additional $60 million based
on the retention of certain business tied to the deal.
Walgreen said the deal will add "modestly" to earnings in the
2013 fiscal year. According to BioScrip interim Chief Financial
Officer M.J. Graves, the business being sold had revenue of $938.5
million during the first nine months of 2011.
The purchase is Walgreen's largest since it closed on a $429
million acquisition of online retailer Drugstore.com Inc. in June.
In early 2010, Walgreen made its largest acquisition ever when it
bought New York drugstore chain Duane Reade for about $620 million
in cash and $480 million in assumed debt.
-By Matt Jarzemsky and John Kell, Dow Jones Newswires;
212-416-2240; matthew.jarzemsky@dowjones.com
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