Walgreens continues to grow infusion business

DEERFIELD, Ill. - Walgreens in September quietly rolled up another handful of home infusion pharmacies.

In a swap with Covington, Ky.-based Omnicare, Walgreens swapped its long-term care pharmacy business for OmniCare's six infusion locations. Terms of the deal were not disclosed.

While such a swap is unusual, it made sense for both companies, said Michael Patton, a managing director with Boston-based mergers and acquisitions firm Provident Healthcare partners. Omnicare is the largest long-term care pharmacy provider, while Walgreens OptionCare is the largest home infusion provider, he said.

"In order for Walgreens to get the long-term care pharmacy business where they want it to be they would have had to put in a lot more dollars," he said. "It made more sense to continue to expand infusion (instead)."

That's just what Walgreens has been doing. Since June 2007, when Walgreens acquired Buffalo Grove, Ill.-based OptionCare for $850 million, the company has continued to acquire home infusion providers, typically smaller, regional players, like Tampa, Fla.-based CareMax and the home infusion division of Air Products, both in 2009.

"I believe that they are making these ancillary investments to be a more complete healthcare provider and leverage their brand, their stores and their distribution," said Alan Brochstein, president of Houston-based AB Analytical Services, an investment research firm. "It's clearly not a key focus of the company but rather an incremental move."

Walgreens now operates approximately 100 home infusion locations in more than 35 states. The Omnicare infusion locations are in Maryland, Nevada, Virginia, Pennsylvania and California, and will eventually transition to the Walgreens name.