Kroger Expands Specialty Pharmacy Biz Via Acquisition

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The Kroger Co. has entered into an agreement for its Axium Pharmacy Holdings Inc. subsidiary to acquire the outstanding shares of Modern HC Holdings Inc., a specialty pharmacy, to create a combined specialty pharmacy that will operate as a wholly-owned subsidiary of Kroger.

“This strategic investment will accelerate the growth of Kroger’s health and wellness business,” said Robert Clark, Kroger’s SVP of merchandising. “Expanding our specialty pharmacy services will provide our customers with greater access to medications we don’t currently dispense and access to additional services without going to another pharmacy.”

Orlando-based ModernHealth is an independent provider of specialty pharmacy services, including IVIG for patients who require IV-based therapies for autoimmune and primary immune deficiency diseases, and comprehensive medication management for HIV, cystic fibrosis, transplant, hepatitis C, rheumatoid arthritis and dermatology.

Merging ModernHealth and Axium into a combined specialty pharmacy should improve purchasing efficiencies and allow the companies to combine each other’s payer strategies to bring down costs. The combination will also allow Kroger’s specialty pharmacy business to expand into new territories in the West and Southwestern U.S., and expand offerings to other states.

“Combining Axium and ModernHealth’s expertise with Kroger’s health and wellness services will allow Kroger to both serve more customers who require complex drug therapies, and deliver those therapies at greater value to customers and insurance payers,” said Clark. “The merger adds IVIG services to Kroger’s specialty pharmacy capabilities, servicing patients who require IV-based therapies for autoimmune and primary immune deficiency diseases, and also expands our ability to serve more patients requiring complex therapies for cystic fibrosis and rheumatoid arthritis.”

“Our partnership with Kroger and Axium will enable us to provide more customers in more places with the critical specialty pharmacy services they need,” said Dom Meffe, ModernHealth’s CEO. “We believe this relationship will create efficiencies, accelerate growth in the high-growth specialty pharmacy market, and improve the overall quality of our combined healthcare services. We are also pleased that this partnership means our business headquarters will remain and grow in Orlando.”

With more than 20 years of experience in the specialty pharmacy space, Meffe will lead the new combined business as CEO after close. Before leading ModernHealth, Meffe was founder and CEO of Curascript Pharmacy, a company he led before selling to Express Scripts.

Axium’s CEO, Mark Montgomery, will help ensure a smooth transition after the merger closes. His future plans will be announced at a later date. Montgomery has been with Axium for 13 years, the last 10 as president and CEO. With nearly 30 years of healthcare leadership experience, he has held instrumental management roles with multiple leading nationwide specialty pharmacy providers.

Headquarters for the combined specialty pharmacy will be located in a new facility under construction in Lake Mary, Florida, with continued support from existing facility locations. The combined organization will employ approximately 800 associates and will continue to operate as an independent company within the Kroger family.

Kroger operates 2,230 pharmacy locations and 195 The Little Clinic locations. Axium, which became a wholly-owned subsidiary of Kroger in 2012, is an independent provider of specialty pharmacy services, offering a range of clinical services to patients with complex chronic conditions.

The transaction is subject to certain regulatory approvals, including from the FTC. Financial terms were not disclosed.

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