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Kroger to buy specialty pharmacy ModernHEALTH

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Business to be combined with Axium in new specialty Rx unit

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CINCINNATI — Boosting its presence in the fast-growing specialty pharmacy arena, Kroger Co. has unveiled a deal for its Axium Pharmacy Holdings Inc. subsidiary to acquire Modern HC Holdings Inc., the parent of pharmacy services operator ModernHEALTH.

Financial terms of the agreement weren’t disclosed. Plans call for Axium and ModernHEALTH to operate as a combined specialty pharmacy subsidiary, Kroger said Wednesday.

Orlando-Fla.-based ModernHEALTH operates three business segments: TLCRx Pharmacy, providing services to rheumatology, dermatology, hepatitis C and cystic fibrosis patients; Biofusion, serving patients needing subcutaneous immune globulin (SCIG) and IV immune globulin (IVIG) for autoimmune and primary immune deficiency diseases; and ModernHEALTH Specialty Pharmacy, providing HIV, transplant and cystic fibrosis therapies as well as home infusion services.

Axium, based in Lake Mary, Fla. and acquired by Kroger in late 2012, provides drug therapies and patient support services for chronic, genetic and other complex medical conditions such as cancer, hepatitis C, rheumatoid arthritis and multiple sclerosis.

“This strategic investment will accelerate the growth of Kroger’s health and wellness business,” Robert Clark, senior vice president of merchandising at Kroger, said in a statement. “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.”

Kroger said the addition of ModernHEALTH will expand its specialty pharmacy business into new areas in the West and Southwest as well as broaden its services to other disease states. The merger of Axium and ModernHealth also stands to yield purchasing efficiencies, enabling the specialty pharmacies to combine each other’s payer strategies to bring down costs, according to Kroger.

“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,” Clark explained. “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.”

A new facility is being built in Lake Mary, Fla., to serve as the headquarters for the merged specialty pharmacy, with current locations providing continued support, Kroger said. The combined organization will operate as an independent company within Kroger.

With about 500 employees overall, ModernHEALTH has locations in New Orleans, Orlando and Addison, Texas (TLCRx Pharmacy); Torrance, Calif. (Biofusion); Southern California (ModernHEALTH Specialty Pharmacy); and Dothan, Ala., and Richardson, Texas (ModernHEALTH home infusion). Axium’s 300 associates serve patients through locations in California, Puerto Rico, Tennessee and Mississippi.

Dom Meffe, chief executive officer of ModernHEALTH, is slated to serve as CEO of the combined specialty pharmacy unit, Kroger said. Before joining ModernHEALTH, the 20-year specialty pharmacy veteran was founder and CEO of Curascript Pharmacy, which was later sold to pharmacy benefit manager Express Scripts.

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

Kroger said future plans for Mark Montgomery, who has served as president and CEO of Axium for the past 10 years, will be announced at a later date. In the meantime, Montgomery will help with the transition following the merger’s completion, according to the company.

The addition of ModernHEALTH builds on Kroger’s growing pharmacy business. The company is the No. 5 retail pharmacy operator by pharmacy sales ($9.6 billion) and No. 6 by pharmacy count (2,231 locations). Kroger also operates The Little Clinic, which has 195 walk-in medical clinic locations.


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