Walgreens boosts home infusion biz

Sunday, May 10, 2009

DEERFIELD, Ill. - Walgreens-OptionCare has picked up the home infusion business of Air Products Healthcare for an undisclosed sum, it was announced last week. The transaction includes 15 locations with 550 employees and about 25,000 patients.

"To find a business of this scale, with this much infusion--it's a great deal for Walgreens-OptionCare," said Michael Patton, a managing director with Boston-based Provident Healthcare Partners, a mergers and acquisitions firm.

Air Products announced in July 2008 that it was selling its U.S. healthcare business. Since then, it has sold its A&J Care locations in New York and its COPD Services locations in New Jersey to Landauer

Metropolitan, and Air Products Seating and Mobility to ATG Rehab.

But, mainly, Air Products has held out for one buyer. Last week's deal represents about 50% of the remaining healthcare business.

"Air Products will still try to sell the rest of them," said Rick Glass, president of Tarpon Springs, Fla.-based Steven Richards & Associates. "They've waited nearly a year (to sell this much), and in the end, they just sold the infusion anyway."

Home infusion has remained a relatively bright spot in an otherwise lackluster market, analysts say. The reason: It's a growing market reimbursed primarily by private insurers.

"Walgreens is viewing this deal as part of a bigger strategy," said Alan Brochstein, president of Houston-based AB Analytical Services.  "There's some Medicare reimbursement risks in this, but overall, (home infusion) is a small part of Walgreens."

Walgreens made a splash in the home infusion market in 2007 with its $850 million acquisition of OptionCare. Since then, it has carefully added several smaller regional companies, most recently in February, when it picked up Tampa, Fla.-based CareMax Medical Resources.

Last week's deal expands the company's home infusion presence in Georgia, western Pennsylvania and the Chicago area. Walgreens also picked up a couple of respiratory/DME businesses in the deal.

"Walgreens-OptionCare is not looking to buy a core RT/DME business," said Patton. "That's not their model, but they will take it when it's connected to a strong infusion business."