Shields Health to sell stake to Walgreens and Welsh Carson for up to $900 million

Jack Shields, CEO of Shields Health.Shields Health Solutions

At the end of 2011, Jack Shields stepped down as president of his family’s successful business, which runs Shields MRI, to pursue a new venture: providing speciality pharmacy services to health networks. It was a risky move, but it paid off, with Shields Health Solutions growing to 500 employees and about $500 million in revenue.

Shields is now getting some help to take the Stoughton company to the next level, announcing Wednesday that he will sell equity stakes to investment firm Welsh, Carson, Anderson & Stowe and drugstore giant Walgreens Co. Shields said in an interview that he plans to use most of the new capital to expand, with the workforce expected to double in a year, but he and other existing investors will get a payout.

Terms of the agreement were not disclosed, but the investment, for about half the company, is valued at between $850 million and $900 million, according to a person with knowledge of the deal. Shields and his management team plan to stay in place after the transaction is completed in the current fiscal quarter.

“Our guys have a lot of smarts and hearts,” Shields, 58, said. “Having unlocked a lot new opportunities, [the new investors] wanted management to stay on.”

Shields Health Solutions, based in Stoughton, has established onsite pharmacy programs at more than 35 health networks with some 250 hospitals across the country, including UMass Memorial Medical Center and New York Presbyterian. The pharmacies, which are owned by the hospital systems, focus on specialties such as oncology, neurology, rheumatology, and diabetes.

The company helps its hospital clients integrate the clinical care of patients with their drug treatments. The goal is to improve care and reduce costs, in part by eliminating pharmacy benefit managers, which administer prescription plans for insurers, employers, and Medicare plans.

Welsh Carson is a New York-based private equity firm focused on health care and technology. Its health industry investments have included Bausch & Lomb and National Dentex. Walgreens is part of Walgreens Boots Alliance, which also owns a pharmacy benefits manager that serves 17 Blue Cross Blue Shield organizations, 200 pharmacies located at heath care providers, and a specialty infusion company.

“They also bring a lot of buying power,” Shields said

Before starting the company in 2012, Shields was president of medical imaging company Shields Health Care Group for 20 years. Shields Health Care was founded by his father, the late Thomas F. Shields, and is now run by his brother, Thomas A. Shields. Jack Shields’ decision to launch a startup created a dispute within the family over whether he could run both companies, according to a person close to the family. Jack Shields went out on his own, but he is still a shareholder of Shields Health Care. The family remains close, the person said.