Kroger Co. plans to acquire Axium Pharmacy Holdings Inc., a leading specialty pharmacy.


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Kroger to acquire specialty pharmacy operator

November 15th, 2012

CINCINNATI – Kroger Co. plans to acquire Axium Pharmacy Holdings Inc., a leading specialty pharmacy.

Financial terms of the agreement weren't disclosed. Kroger — the nation's largest supermarket operator and one of the biggest pharmacy retailers — said Thursday that the deal boosts its ability to serve customers needing complex drug therapies as well as to deliver those medication regimens at greater value to customers and insurance payers.

Based in Lake Mary, Fla., Axium provides drug therapies and patient support services to treat chronic, genetic and other complex medical conditions such as cancer, hepatitis C, rheumatoid arthritis, multiple sclerosis and other chronic care conditions.

"Kroger and Axium are a strategic fit as we look to enter the high-growth specialty pharmacy business," Lincoln Lutz, vice president of corporate pharmacy at Kroger, said in a statement.

"The combination of Axium's expertise and Kroger's 1,950 pharmacy locations, 91 Little Clinic locations, and pharmacists who provide health coaching, biometric screening and other wellness services will deliver positive health outcomes for our patients, cost savings for insurance payers and unique services for physicians," Lutz stated.

Plans call for Axium Healthcare Pharmacy to operate as an independent company within Kroger. Through its additional pharmacy locations in Puerto Rico, Tennessee and Mississippi, Axium provides comprehensive specialty pharmacy services to patients throughout the United States and Puerto Rico.

"We are excited to partner with Kroger to deliver specialty pharmacy services to their customers," stated Mark Montgomery, Axium's president and chief executive officer. "We believe this relationship will create efficiencies that will reduce costs, drive growth and improve the overall quality of our combined healthcare services."

Kroger said Montgomery will continue to lead Axium. He has been with the company for nine years, the last six as president and CEO.

"We are very excited to welcome Axium's leadership team and all 160 current associates to the Kroger family," commented Lutz. "Mark and the team have built a great company that is positioned for growth."

Kroger noted that specialty pharmacy represents one of the fastest-growing segments in pharmaceuticals. Revenue for specialty drugs surged to $104 billion in 2011 from $17 billion in 2000 and is projected to climb to $135 billion in 2014, the company reported. Last year, 80% of new drugs approved by the Food and Drug Administration were specialty medications. Currently, more than 700 specialty drugs are in the pipeline for approval.

"This partnership supports Kroger's long-term growth plans," Rodney McMullen, Kroger's president and chief operating officer, stated about the Axium deal.

Kroger is the sixth-largest retail pharmacy operator by dollar volume, with estimated pharmacy sales of $6.97 billion, and by pharmacy count, with 1,950, according to the Chain Drug Review 2012 Annual Report of Retail Pharmacy.

Overall, Kroger has 2,425 supermarkets in 31 states under two dozen banners, including Kroger, City Market, Dillons, Jay C, Food 4 Less, Fred Meyer, Fry's, King Soopers, QFC, Ralphs and Smith's.

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