Long-term care pharmacy PharMerica intends to merge with BrightSpring Health Services, a large provider of home- and community-based care. The two companies will be under the private equity ownership of KKR, with an affiliate of Walgreens Boots Alliance (Nasdaq: WBA) holding a minority stake, according to an announcement issued Tuesday.
Full financial terms of the transaction were not disclosed.
Louisville-based PharMerica specializes in serving the long-term and post-acute care spaces, including assisted living and skilled nursing facilities, as well as hospitals. Acquired by a joint venture between KKR and Walgreens Boots Alliance in 2014, PharMerica operates across 96 institutional pharmacies, 20 specialty home infusion pharmacies and five specialty oncology pharmacies in 45 states.
Recently, PharMerica executives stated their intention to aggressively pursue growth in the assisted living arena, and this will not change as a result of this transaction, according to BrightSpring CEO Jon Rousseau, who will lead the combined organization.
“That is certainly a top growth opportunity for the organization,” Rousseau told Senior Housing News.
Home- and community-based care giant BrightSpring Health Services — formerly known as ResCare — is also based in Louisville. It is one of the country’s largest providers of diversified home- and community-based health services, serving seniors as well as a sizable population of non-seniors and individuals with intellectual or developmental disabilities. Home health, hospice and personal care services are among the diverse business lines of BrightSpring, which provides services for roughly 60,000 people daily across 40 states.
In addition to ending long-running speculation that BrightSpring’s private equity ownership group, Onex Corporation, was looking to cash in on its investment, the prospective combination of BrightSpring and PharMerica would potentially create a new post-acute and senior care player capable of managing medically complex patient populations by leveraging each company’s unique strengths.
In general, BrightSpring is aware of the high-need populations it serves and has an overarching, three-pronged approach to care, Rousseau said. Those three prongs are non-clinical day-to-day support services; medical oversight; and “critical ancillary services,” such as pharmacy and medication therapy.
“Those three things need to be integrated and working very well together to deliver optimal outcomes,” Rousseau said. “That’s our strategy. What we’re trying to do is have a class of assets in our target geography to give us that capability set, ultimately working in a highly integrated way to the benefit of our client and the benefit of our company.”
Although many perceive PharMerica as a more facility-focused organization, it is, in reality, “far more diversified,” he also noted.
The combination of BrightSpring and PharMerica is expected to close in the first quarter of 2019, according to the companies. Upon close, the combined enterprise will serve more than 300,000 individuals daily.
PharMerica President and CEO Greg Weishar will transition into a strategic advisor role and remain on the board of directors. BrightSpring and PharMerica plan to continue supporting all operations from Louisville. Branding for the combined entity has not yet been revealed.
Overall, there is “a bit of a gold rush” toward owning assets in the home-based care industry, Stephens analyst Dana Hambly told Home Health Care News.
“PharMerica, presumably, has expertise in medication management and safety, so my guess is the strategy would be to start exporting that knowledge into home care, where more care is being delivered.” Hambly said. “As seniors are typically taking multiple prescriptions, this could also be a way to capture some of that share for the pharmacy.”
PharMerica combining with BrightSpring continues to reshape the rapidly changing pharmacy sector, as CVS Health Corp. (NYS: CVS) completed its nearly $70 billion acquisition of insurance company Aetna Inc. at the end of November.
The deal is also yet another example of companies tying up to control more of the continuum of care. As the U.S. health care system moves increasingly toward managed care models, the idea is that large payers and health systems will prefer to work with partners who have the scale and sophistication to effectively manage large populations of patients and beneficiaries. The trend has been seen in senior living as well, with some providers launching their own insurance plans, for example.
Read more about the BrightSpring/PharMerica merger at Home Health Care News.
Written by Robert Holly