On a Tuesday earnings call, Walgreens CEO Tim Wenworth – who took over as the company’s chief leader in October of last year – said the company would be “reorienting” its business to focus on retail pharmacy.

“WBA is reorienting to its legacy strength as a retail pharmacy-led company,” Wentworth said. “This reorientation allows us to leverage our key strategic assets of consumer trust, convenience and relevance. Our position of trust stems from the millions of face-to-face interactions our consumers have with our pharmacy personnel every day, and we will continue to take actions now – and for the long term – to be the first choice for retail pharmacy and health services. Having earned our consumers’ trust – indeed, our reason to exist – we also want to be accessible and convenient, but we need to be appropriately sized.”

Wentworth said that of Walgreens’ over 8,000 stores, around 6,000 are profitable. With that in mind, and in order to be “appropriately sized,” the company is closing a majority of the stores that are not profitable.

That is part of an effort to balance its budget sheet, too. Its reorientation to retail pharmacy follows a strategic review of assets, which took place earlier this year after Wentworth took the helm.

Walgreens has poured over $6 billion into the home- and community-focused primary care provider VillageMD, but has recently reduced the latter’s physical footprint. VillageMD is a part of Walgreens’ U.S. Healthcare segment, which also includes the post-acute care platform CareCentrix.

While health care services and the U.S. Healthcare segment were emphasized as priorities moving forward in 2021 and 2022, Walgreens now appears to be moving away from that – for the most part.

“We believe our reorientation to retail pharmacy has a bright future,” Wentworth said. “We’re engaging in a multi-year program with a long-term goal of an appropriately sized and well positioned fleet of stores, and an industry-leading customer experience in both retail and pharmacy across consumer channels. And we continue to believe that the adjacent strategic businesses in which we’ve invested can incrementally contribute to value creation over the longer term.”

Wentworth also called VillageMD “not a crucial part of the business moving forward.”

Walgreens’ peer, CVS Health (NYSE: CVS), has also experienced financial turbulence of late, after heavily investing in health care services over the last few years. While Walgreens has VillageMD and CareCentrix, CVS Health has Oak Street Health and the home-focused, value-based care platform Signify Health.

Overall, the strategic decision to focus more on health care services after the height of the COVID-19 pandemic has not gone smoothly for either company.

“Many of our actions across this turnaround will take time, but I am confident that we have the right team, the right focus and the right strategy,” Wentworth said.

Overall, Walgreens’ fourth quarter sales increased 6% year over year to $37.5 billion. Fourth quarter operating losses, however, totaled $978 million.

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The biggest retailers were zealous in their pursuit of home-based health care initiatives. But there’s little evidence to suggest that pursuit has been successful, at least thus far.

This week, CVS Health (NYSE: CVS) announced that it was laying off 2,900 workers. Simultaneously, reports surfaced of Glenview Capital – a significant shareholder in the company – emerging as an activist investor.

Reuters then reported that CVS Health is exploring a potential breakup of its business. CVS Health has multiple segments, including retail, pharmacy, insurance through Aetna and health care services.

Health care services is where the company took a stab at home-based health care for the first time. In addition to acquiring the community- and senior-focused primary care provider Oak Street Health for over $10 billion last year, it also acquired the home-focused value-based care platform Signify Health for $8 billion.

“CVS’ management team and Board of Directors are continually exploring ways to create shareholder value,” a CVS spokesperson told Reuters. “We remain focused on driving performance and delivering high quality healthcare products and services enabled by our unmatched scale and integrated model.”

For payers, investors and retailers alike, home-based care looked like a worthwhile frontier to explore during the pandemic. For retailers like CVS Health and Walgreens Boots Alliance (Nasdaq: WBA) specifically, their success administering the COVID-19 vaccine to Americans gave them hope that community-based health care would be a somewhat smooth path forward.

That has not been the case, for Walgreens, CVS Health, or a slew of others.

In this week’s exclusive, members-only HHCN+ Update, I revisit the plight of retailers delving into home-based care, and consider who will be the beneficiaries of health care moving to the home.

Support in the home

The overarching idea is simple. The United States has an aging population, and more seniors than ever want to receive their health care in the home.

Plus, home-based health care tends to be cheaper than facility-based care. Traditional personal care services enable seniors to age in place and prevent further health problems related to activities of daily living struggles. Home health care ensures smooth transitions home from the hospital, keeping patients out of more costly brick-and-mortar settings.

Other home-based care is becoming popular too. Home-based care for younger Americans. Skilled nursing facility care in the home (SNF at Home). Hospital-at-home care. Primary care at home. Oncology care at home. Kidney care at home. In-home health assessments and evaluations.

Broadly, these types of care are more consumer-focused, a departure from the care that forced Americans to uproot their lives for a day, week or even months to receive the health care they needed.

For the sake of designation, I refer to Medicare-certified home health care and personal care services – through Medicaid, private pay or the VA – as “traditional” home-based care services.

As more non-traditional at-home care has proliferated, there was some sense of concern from traditional providers that more cash-strapped entities could disrupt two long standing industries.

That still could be the case, as home health and home care providers tend to be – on average – behind the curve on technology and future-facing business practices.

But in the last quarter of 2024, that disruption doesn’t seem any closer than it did in 2019.

Walmart (NYSE: WMT), which wanted to “support people aging in their homes,” has largely ditched its health care services plan. Amazon launched Amazon Care – which had an at-home care component – and then did away with it shortly thereafter. Best Buy (NYSE: BBY) is still mostly smooth sailing, but it intended from the start to be a technology partner more than anything.

Then there’s CVS Health and Walgreens, which both made massive bets – strategically and monetarily – on health care services.

Both began to shrink their retail footprints, hoping to become more health care providers than corner stores.

Walgreens invested over $6 billion in VillageMD, another home- and community-focused primary care provider. It also acquired CareCentrix, a post-acute technology company. An affiliate of the company was also a significant backer of BrightSpring Health Services (Nasdaq: BTSG), one of the largest home-based care providers in the country.

But then, earlier this year, CEO Tim Wentworth announced that the company would be undergoing a “strategic review of its assets.”

“We are now meaningfully looking at the entire portfolio of assets that we have to ensure that everything we have is going to drive the growth that we aspire to deliver,” he said at the time.

The company shuttered 160 VillageMD locations after aggressively expanding in years prior.

The investment firm KKR also acquired Walgreens’ remaining shares in BrightSpring.

Both CVS and Walgreens have had multiple leaders look over their health care divisions over a short period of time.

While CVS owns Oak Street Health and Signify Health – a similar portfolio to Walgreens’ backing of VillageMD and CareCentrix – it also purchased Aetna for $70 billion back in 2018.

Aetna’s leader was also recently ousted by CVS Health.

While Glenview Capital – the rumored activist investor – said it was not pushing for a breakup of the company, other news outlets reported that CVS’ board has already discussed that option.

Not long ago, CVS Health was considered a potential buyer for some of the remaining standalone home health companies. It had an obvious interest in home-based care, and also owned Aetna. Humana Inc. (NYSE: HUM) and UnitedHealth Group (NYSE: UNH), two of Aetna’s top competitors, own home health assets of their own.

“I think, over time, we’ll look at what other assets [we need],” CVS Health CEO Karen Lynch said in 2023. “As you think longer-term, around the corner, there might be additional opportunities in the home.”

Now that idea appears to be off the table.

Walgreens and CVS Health both wanted to become health care services players, and they are. Thus far, though, they’ve stumbled. They are not yet successful players, nor successful home-based care players.

What it all means

Legacy home-based care providers love the industries they’re in, and they know there’s plenty of future opportunity.

But they also know all the challenges that come along with reaching that opportunity: staffing woes; the delicate intimacy of providing care in the home; turbulent payment environments; and the barriers to growth and scale.

There are over 10,000 home health agencies in the U.S., while there are more than 30,000 home care agencies, according to best estimates.

Consolidation has been projected for more than a decade, but has never come in a significant way.

Payers like Humana and UnitedHealth Group own two of the largest home health companies in the country in CenterWell Home Health and LHC Group. But that still only grants them access to a small slice of the home health pie.

For instance, after UnitedHealth Group acquired LHC Group, it then agreed to purchase Amedisys Inc. (Nasdaq: AMED), another one of the top home health providers. But even with both agencies under its belt, the company will likely have less than 10% of market share in the industry.

There is more startup activity in home health care and home care than ever. A couple of those businesses may have a shot at disrupting.

But, for now, the large health care companies taking a shot at home-based care have failed to make waves.

That could be because of their size, or because of the complexities that come with delivering good home-based care.

Either way, for now, most of the opportunity that lies ahead still remains for the taking. And the legacy operators have as good of a chance as anyone to capitalize.

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KKR is an existing backer of BrightSpring, which had a share price of $13.85 as of market close on Friday.

Based in Louisville, BrightSpring provides home- and community-based pharmacy and health care services for complex populations. It offers home care, home health care and home-based primary care, and has a presence in all 50 states.

The company went public earlier this year.

In 2019, KKR and an affiliate of Walgreens Boots Alliance bought BrightSpring for $1.32 billion. Now, Walgreens is exiting that investment, while KKR is doubling down.

BrightSpring was one of a few Walgreens investments that involved home-based care over the past half decade. It also acquired the post-acute technology platform CareCentrix, and invested over $6 billion in the home-focused primary care provider VillageMD.

Since its IPO, BrightSpring has been focused on an “integrated” approach to home-based care.

“As we’ve been saying, since the IPO, I believe in the next year, we’re really going to start to see the fruits of more and more integrated care in the organization,” BrightSpring CEO Jon Rousseau recently said. “We, obviously, have very clinically appropriate home health to hospice transitions, [and] some personal care being delivered to the same patients, therapy as well, … but we see an opportunity to really increase that in the future. It takes focus, so we’re investing in an integrated care team to do that.”

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Currently, Dr. Shrank is a venture partner with the Bio + Health team of Andreesen Horowitz, a private venture capital firm based in Menlo Park, California. In addition to his role as CMO with Humana, he has served as chief scientific officer and CMO of Provider Innovation at CVS Health (NYSE: CVS). He has also held a position at the Center for Medicare and Medicaid Innovation, a part of the Centers for Medicare & Medicaid Services, as the director of the Research and Rapid-Cycle Evaluation Group.

“Dr. Shrank is a strategic, experienced health care leader, and I am proud to have him on our board as we execute the turnaround plan for our business,” Walgreens CEO Tim Wentworth said in a press release. “As the health care and retail landscapes continue to evolve and we further enhance our focus and sharpen execution, I am confident that his background will help us elevate the value of community pharmacy and unlock opportunities for our long-term strategy.”

Walgreens has aimed its focus at health care services over the past few years, particularly under Wentworth. The company now has its U.S. Healthcare division, which includes the primary care provider VillageMD and the post-acute care platform CareCentrix.

“I am pleased to welcome Dr. Shrank to the WBA Board of Directors,” Walgreens Executive Chairman Stefano Pessina said in the same release. “I look forward to working with Dr. Shrank and know that his clinical and business insights, experience and patient-centric approach will be a strong asset for WBA, driving long-term value for our patients, customers and shareholders.”

Dr. Shrank began his career as a practicing physician at Brigham and Women’s Hospital in Boston and as an assistant professor at Harvard Medical School. He earned his B.A. in psychology from Brown University and an M.D. from Cornell University Medical College. Additionally, he holds an M.S. in Health Services from the University of California, Los Angeles.

“I have seen firsthand the trust and relationship patients have with their pharmacist, and the critical role pharmacies serve as the front door to the healthcare system in most communities,” Dr. Shrank said in the release. “Walgreens and Boots are trusted brands, and I’m honored to have the opportunity to work with leadership and the WBA Board of Directors to advance the company’s vision and strategy to transform healthcare delivery.”

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“We don’t have plans to continue to invest in brick and mortar-owned primary care practices,” Mary Langowski, the president of U.S. Healthcare, said during the company’s third-quarter earnings call on Thursday.

VillageMD is a large primary care provider with a home- and community-based focus.

In 2020, Walgreens backed the company with a more than $1 billion investment. Over the course of several investments, Walgreens has poured more than $6 billion into VillageMD.

In March, Walgreens disclosed that it was planning to shut down 160 VillageMD clinics. The company referred to this as the prioritization of “density in their highest opportunity markets.”

VillageMD also includes Summit Health-CityMD, which the company acquired in 2023.

“We believe in the future of these businesses and intend to remain an investor and partner,” Walgreens CEO Tim Wentworth said during the call. “But as part of our persistent focus on value creation for WBA, we are collaborating with leadership toward an endpoint to rapidly unlock liquidity, enhance optionality and position them for additional growth.”

During the call, Langowski was also quick to point out that the company hasn’t lost its enthusiasm for value-based care.

“We believe strongly … in value-based care as well as in VillageMD and we believe in these businesses and payers believe in these businesses and consumers, frankly, love getting their care in these types of businesses,” she said. “But what we’ve stated, and I’ll say it again, is we’ll be a partner to VillageMD in an ongoing way. We’ll continue to be an investor. What we’re really looking to do is invest in capital-light services to be a broader partner across the industry. With a range of providers and with a range of payers as well as a range of pharmaceutical manufacturers.”

Overall, Walgreens’ U.S. Healthcare segment had Q3 sales of $2.1 billion, an increase of 7.6% compared to Q3 2023. VillageMD brought in sales of $1.6 billion, a 7% year-over-year increase.

“The increase was driven by growth in full risk and fee-for-service lives, partly offset by the impact of clinic closures,” Manmohan Mahajan, global chief financial officer at Walgreens, said.

Wentworth also shared the company’s plans to close shop at several Walgreens locations across the U.S.

“We are finalizing a multifactor store footprint optimization program which we expect will include the closure of a significant portion of these underperforming stores over the next three years,” he said. “Plans to finalize this number are in motion and we will update you in due course. For the remaining portion of this cohort, we are taking action to return them to profitability and deliver an improved customer experience. We will contemplate additional closures if performance does not improve, which includes external factors, such as reimbursement rates.”

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In a recent conversation with Home Health Care News, CareCentrix CEO Steve Horowitz explained the sometimes misunderstood value of home health care.

“You actually want more home health,” Horowitz said. “You want your home health costs to go up. You don’t want to overpay for anything, but you want your home health cost to go up, because it’s a cheaper setting than if you were taking care of the patient in the facility.”

That is a sentiment all home health providers love to hear. It’s the view they want both MA plans and the Centers for Medicare & Medicaid Services (CMS) to take, as opposed to the short-sighted view they’ve taken in the past.

With the home-based care rush behind it, CareCentrix is in a solid position to grow. It’s also now, as mentioned above, a part of Walgreens, which allows it access to far more resources and partnership opportunities.

Horowitz took over as CEO of CareCentrix in October of 2022, after spending the previous decade as the company’s CFO.

He sat down with HHCN to chat about home health care, Walgreens, CareCentrix’s near-term focuses and much more.

Highlights of that conversation are below, edited for length and clarity.

HHCN: Since the Walgreens investment, how have things changed? What have been the positives, and negatives – if there are any?

We’ve been continuing to run our business; we are still a separately run company. And that’s the expectation as we move forward.

What has changed is the way we’re able to collaborate with Walgreens more and start to leverage what they have. The value in that business is amazing. When you think about the trusted consumer brands, you think about 8,000 retail locations in communities all through the country. You think about the expertise in pharmacy and medications, and just the 300,000 employees throughout the world. There’s a lot that we can leverage to help improve our own business and help improve the impact we can have on patients.

And then, correspondingly, what we’re also finding is that there are avenues where we’re helping them improve their business. So, that kind of cross-pollination of ideas and expertise has been really interesting. And I think it has benefited both organizations.

I’m curious about your thoughts on retailers getting into health care and home-based health care services, in general. What’s your view on that trend? 

It’s been a trend, although more recently, it’s been a bit of a trend to go the other way.

I think it’s similar to what a lot of technology companies experienced, when suddenly they all think they’re going to come in and fix health care. I think what ends up making it not work is just that health care is complicated. The technology, in a lot of cases, is not cutting edge. Whether it’s the government running Medicaid, whether it’s health plans running old systems, a lot of the vendors – everybody’s on relatively old technology. And it’s often a complicated, siloed environment that has a lot of regulation. When you put all that out there, none of that’s even important, because it’s all about the patient, and ensuring access to care. And that’s not a scalable technology model.

Learning that always seems easy from a distance. Once you get in, you realize it’s more complicated. 

Walgreens in particular, I think they’re coming in with the right attitude, which is trying to make it work by putting the patient first, which is key. And not taking a one-size-fits-all approach.

What are the top business priorities right now at CareCentrix?

Our top priorities right now are around post-acute care and ensuring that patients have a smooth journey when they leave the hospital. And more importantly, making sure that they don’t end up back in the hospital.

It’s that efficiency, just trying to continue to get efficient in terms of how we operate our business, so that we, in turn, can be even lower cost to our customers. It’s trying to use technology in ways that help us identify the right provider for the patient at the right time. 

Continuing to get better at our product performance is probably what it all boils down to, and making sure that the impact we’re having on the patients that we serve is as big as it can be. Because if we get that right, then costs go down, customers flock to our doors, everybody’s happy. That’s the nirvana of all of this.

And it’s not all about activity, it’s about, did we actually make the patient better off? And again, if the answer is yes, all sorts of good things happen. If the answer is no, then what was the point? Let’s go back and figure it out, so that next time the patient is better off.

From a company in your position, how do you make sure that there’s still seamless transitions, that you’re breaking down barriers in a way that’s beneficial for the patient, knowing that home health providers may be a little bit more specific on who they’re able and willing to take in 2024?

It’s definitely a challenge. I mean, look, we’re here to reduce costs for the health plan. That’s our job.

But what we find is, that doesn’t mean you want to lower costs everywhere else. You actually want more home health. You want your home health costs to go up. You don’t want to overpay for anything, but you want your home health cost to go up, because it’s a cheaper setting than if you were taking care of the patient in the facility. If you can get a patient home, that is clinically appropriate to be home, and you’re getting them the right care at home, they end up in a much better situation. They’re healthier, the recovery is smoother, and the costs are lower.

But to do that, again, you want more of it. So we want to make sure we’re paying a competitive price for that home health care, we don’t want to be in a race to the bottom.

When we try to identify a provider for a patient, 99.97% of the time we find a home health provider for the patient. And we wouldn’t be able to do that if we didn’t have good partnerships with the providers, with the right economics.

We’re always going to pay them less than they want to get paid. And they’re going to make us pay them more than we want to pay them. That’s the balance, and it needs to be a win-win. But it can’t be too low or it doesn’t work. And if we’re paying a reasonable rate, there’s enough supply out there that we haven’t had any trouble. Again, if we push the envelope too hard on the right side, we absolutely have trouble finding nurses out there.

Do you think health plans are now better understanding those cost efficiencies from home health care?

A little bit. And I think as plans keep moving toward risk-based and value-based models, it’s going to become that much more important.

The example I always use is a balloon. If health care costs are a balloon, you can squeeze any part of that balloon and lower costs in that area. I can cut home health costs in a heartbeat, or DME costs, or inpatient utilization. But every time you squeeze it, something else blows up. That’s the hard part, if you think about it only in a silo.

And that’s where I see the health plans starting to move. They’re not looking for just small point solutions, that are risk-based, that are going to solve one piece of the problem. They’re recognizing that, yeah, you may lower my home health cost, but now my readmissions are spiking. I think the plans are absolutely starting to put those pieces together and have a more holistic view.

The goal is to shrink the balloon, and not just squeeze it.

What makes a post-acute provider or home health provider a good partner to work with?

It comes down to that patient focus, and it comes down to the quality.

I’ll use a home health nursing agency, for instance. If they’re sending good quality nurses to provide good care to the patients, and they’re basically doing it as necessary, we’re going to work great together. And they’re going to be happy with the relationship.

If they’re trying to squeeze 10 visits instead of six, trying to maximize dollars, then it becomes a little bit more adversarial, because in those cases where we’re being forced to say no more, anybody who hears no more, it’s going to change the tenor a bit.

Our goal is not to deny claims, and there are plenty of denial shops out there. That’s not us. We do deny claims, but the goal is to get the claims to get the patient the care they need. If the provider has a track record of doing the right thing, we try to get out of the way.

So, in terms of what makes a good provider for us to work with, it’s about if you’re trying to do right by the patient, and in that case, we’ll happily pay you a fair price and try to make things as administratively easy as possible.

Where are the areas you think Walgreens is going to help in the future, specifically?

Things like medication therapy management, medication reconciliations. We do that today. We’ve historically had our nurses do that work with our patients. It is the No. 1 cause of hospital readmissions. It’s a big piece of our readmission avoidance program.

Leveraging Walgreens pharmacists to do those reconciliations and the medication management, their pharmacists are so much better positioned to do that, they have more information, they’re able to not just look at the drugs, but they’re able to provide more guidance. They’re able to identify more issues, they’re able to get the information back to the medical records much easier than we are because they’re already set up to do that. And Walgreens has tens of thousands of pharmacists. Put that all together and that’s a value add for us. 

Another big one is the brand. Walgreens has just one of the most amazing brands out there. Everybody knows Walgreens, everybody trusts Walgreens. When it’s Walgreens calling the patient, our engagement levels with that patient are dramatically better. We’ve always had better engagement rates than the plans. Because as much as everybody likes their health plan, people don’t always trust their health plan. We’ve been able to come as more of an independent outside entity, we get more trust from the patients that way. And Walgreens coming in takes it to a whole other level. That brand awareness and trust is hugely valuable. We’re just scratching the surface on how we leverage that to provide better services.

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“We are now meaningfully looking at the entire portfolio of assets that we have to ensure that everything we have is going to drive the growth that we aspire to deliver,” Wentworth said Monday at the 44th annual TD Cowen Healthcare Conference.

Walgreens, like CVS Health, is betting a lot on its health care services division.

Walgreens’ U.S. Healthcare segment includes the care-at-home solutions platform CareCentrix, along with the primary care provider VillageMD, which it has invested over $6 billion into over recent years.

“In April, we are sitting down with our board and going through a strategic review,” Wentworth said. “There will not be a big bang after that, where we announce and unveil some incredibly new Walgreens. That will be the starting gun for a lot of work that we have to deliver.”

This comes about a month after Walgreens announced that it had a new leader of U.S. Healthcare.

Formerly, Jeff Driscoll – the ex-CEO of CareCentrix – was the head of that segment. Now, Mary Langowski has taken up the reins. Langowski previously served as the CEO of the managed services organization Solera Health. She also spent time at CVS, where she served as the chief strategy and corporate development officer.

“This doesn’t just happen overnight,” Wentworth said. “By and large, the broader set of questions that we’ve got to answer will probably take a couple of years to really begin to show fruit.”

Supplemental benefits

CVS Health has a similar segment to Walgreens’ U.S. Healthcare, which it dubs CVS Healthspire.

That includes Signify Health and Oak Street Health, among other assets.

But Cowhey’s most noteworthy comments – which came on Tuesday at the 45th Annual Raymond James Institutional Investor Conference – were around Aetna and supplemental benefits.

Medicare Advantage (MA) plans have the flexibility to offer supplemental benefits through two pathways: the primarily health-related pathway and the Special Supplemental Benefits for the Chronically Ill (SSBCI) pathway.

A benefit that can be provided through both pathways – and once a reason for much bullishness from personal care providers on MA – is in-home support services (IHSS).

While benefit offerings – and IHSS offerings – steadily rose for a few years, plans pulled back in 2024.

Aetna, which is a part of CVS, has still remained mostly committed to home-based care benefits.

That could change, however.

“What are some of the things that we’re going to need to look at?” Cowhey said. “I think supplemental benefits have to be on that list. I think ourselves – and probably all the industry – are going to have to look at all the benefits across the board and decide where it is that we want to cut. But I know that supplemental benefits will be part of that conversation.”

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Most of note is the leadership change at the top. Walgreens acquired the remaining stake in the home care-focused convener CareCentrix for $392 million in 2022, after an initial investment of $330 million. It then made CareCentrix’s former CEO, John Driscoll, the head of its U.S. Healthcare division.

Setting aside a division for provider services, in general, was a reflection of Walgreens’ bold moves into health care delivery and value-based care. But, particularly after COVID-related sales began to wane as the pandemic’s effects lessened, the company started more heavily focusing on growth within that division.

The transition remains a core part of Walgreens plans, but hasn’t been free from speed bumps.

“We are experiencing a slower profit ramp for U.S. Healthcare,” Walgreens CEO Roz Brewer said last June. “Importantly, we remain committed to our strategy through immediate actions to accelerate our path to profitability and to unlock long-term value. I remain confident in the long-term trajectory of our transformation.”

Brewer herself was replaced last year. After stepping down in September, Tim Wentworth – who had far more health care delivery experience – stepped in. He was previously the CEO of Evernorth, the health care services division of Cigna Group (NYSE: CI).

Now, Driscoll is also stepping away from his role as president of U.S. Healthcare. He is, however, remaining with the company as a senior advisor to both the U.S. Healthcare division and Wentworth.

Stepping into that role is Mary Langowski, who previously served as the CEO of the managed services organization Solera Health. Prior to that, from 2014 to 2016, she served as the chief strategy and corporate development officer at CVS Health (NYSE: CVS).

CVS Health, of course, is also in the midst of transitioning from retailer to health care services company. While Walgreens has CareCentrix and a more than $6 billion investment in the home- and community-focused primary care provider VillageMD, CVS Health has Signify Health and Oak Street Health under its belt.

According to her LinkedIn, Langowski helped “ facilitate the organization’s evolution to a health care company, managed its growth strategy and led the foundational work for the Aetna acquisition.”

In addition to the Langowski hire, Walgreens also announced that interim CFO Manmohan Mahajan has been given the permanent tag. Elizabeth Burger, meanwhile, joined the company as its chief human resources officer.

“Today’s announcement solidifies the leadership team that will carry WBA into its future as we look to expand our reach beyond neighborhood pharmacies into the fastest-growing areas of health care,” Wentworth said in a statement. “We have a strong team with a track record of operational excellence and an unwavering commitment to the execution of our goals. The spirit of this leadership team is one of collaboration, transparency and working effectively together. We share a sharp focus on the important goals in front of us, unlocking embedded profitability and reshaping our healthcare strategy to deliver sustainable value for our stakeholders.”

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CVS Health has CVS Healthspire, and Walgreens has its U.S. Healthcare segment. The company’s top leaders laid out their plans for those business divisions at the annual J.P. Morgan Healthcare Conference Monday.

Specifically, Walgreens new CEO, Tim Wentworth, discussed the U.S. Healthcare segment on the record for one of the first times, and expressed optimism over the synergistic opportunities it can provide.

“There are synergies,” Wentworth said. “When you look at who pays the bills – ultimately, you need to take care of patients, whatever you’re doing – but for me, versioning those assets around a health system, versus a Medicare Advantage plan, versus a large commercial insurer, you would take different aspects [of each].”

Walgreens owns the health-at-home solutions platform CareCentrix, and also has invested over $6 billion into the primary care provider VillageMD.

CVS Health, meanwhile, has the home-based platform Signify Health under its belt, as well as the primary care provider Oak Street Health.

“We’ve been meeting with payers [around], ‘What else could our platform be doing for you?’” Wentworth continued. “And we’ve got ideas, so stay tuned.”

As for further acquisitions in the home in the near-term future, that’s likely not in the cards for Walgreens. It is not “cash rich” enough right now, Wentworth said.

CVS Health, on the other hand, has teased future home-based care acquisitions in the past.

“We said we wanted to drive for primary care, drive in the home and drive for provider enablement,” CVS Health CEO Karen Lynch also said Monday. “And, really, we have accomplished all those by the acquisition of Signify, by the acquisition of Oak Street.”

Lynch mentioned strong management teams, strong tech platforms and strong positions in value-based care as parts of the value-add from Signify Health and Oak Street Health.

In terms of bringing those assets together, she said the company is “well on its way on that journey.”

She, like Wentworth, also mentioned the synergistic capabilities between those assets, as well as between those assets and other parts of the CVS Health business.

“I’m very excited about the synergistic kind of capabilities together,” Lynch said. “With Signify and Oak, with our pharmacies and Signify, with our care management. We have the opportunity to look at product designs and really accelerate growth. So, there’s a massive opportunity in front of us, and we’re already seeing a fair amount of capability set engagement.”

Lynch mentioned that CVS Health is constantly scanning the market to see if there’s something else that would help the CVS Healthspire segment.

But, first, the goal is to get the segment – as it stands right now – on pace to drive growth for the company.

“Our focus right now is getting these assets to really demonstrate that economic flywheel,” she said. “When customers interact with us on multiple touch points, we see higher persistence of those members, and we see better engagement on enterprise lifetime value. And that’s really the goal.”

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On Thursday, the retail giant made it clear that beefing up this arm of its business, and further solidifying its place in the health care sector, is still a priority.

“We are on a path, but we are nowhere near the halfway point of the kind of things that we believe we can do long term to build a really powerful health services company, on the back of and leveraging an excellent community asset that today we call a retail pharmacy,” Walgreens Boots Alliance CEO Tim Wentworth said Thursday during the company’s Q1 earnings call.

Walgreens’ U.S. Healthcare services segment is on the road to seeing significant year-over-year profit improvement.

Walgreens’ involvement in the health care space has meant acquiring or putting its financial weight behind companies like the primary care provider VillageMD and the health-at-home solutions platform CareCentrix.

“VillageMD is rapidly realigning operating costs with sales,” Wentworth said. “The team is executing on several initiatives, from revenue cycle management to procurement with operational actions spanning the organization.”

Wentworth also noted VillageMD’s previously announced plans to exit 60 clinics in nonstrategic markets, in a move to better leverage its footprint. To date, VillageMD has already exited 27 clinics.

Plus, VillageMD has achieved patient panel growth and saw 23% year-over-year growth in full risk lives and 9% growth in fee-for-service volumes.

“Work is underway to implement targeted marketing efforts, leveraging Walgreens’ expertise and patient touch points, and we expect benefits over time as we learn and further develop our provider-based risk strategy,” Wentworth said.

Wentworth pointed out that CareCentrix, along with some of Walgreens other assets, are adding value to payers in areas where they are taking risk.

Overall, Walgreens’ U.S. Healthcare segment had Q1 sales of $1.9 billion, a 95% increase compared to $942 million the previous year. This growth reflects VillageMD’s purchase of Summit Health, as well as growth across all businesses.

First quarter sales were led by VillageMD, with $1.4 billion, and CareCentrix with $340 million.

“The year-on-year increase was driven by growth in full risk lives, better same clinic performance, and increased productivity in the Summit Health multi-specialty business,” Walgreens CFO Manmohan Mahajan said during the call.

Looking ahead, Walgreens has identified a number of key drivers for improving the company’s earnings profile in the second half of the 2024 fiscal year.

One of the key drivers is the company’s faith that its health care services arm will continue to drive growth.

“We expect U.S. Healthcare segment profitability will scale over the balance of the year, mainly driven by benefits from optimizing the clinic footprint, growing patient panels and realigning cost at VillageMD, and growth across all of the businesses,” Mahajan said.

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