Kroger Acquires Chronic Illness Pharmacy, Adds to Healthcare M&A

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The Kroger Co. (NYSE: KR) has acquired Orlando, Florida-based Modern Healthcare, a pharmacy that focuses on complex illnesses, from San Francisco, California-based Altamont Capital Partners for an undisclosed amount.

Altamont acquired Modern’s initial platform in July 2012 and the pharmacy has since grown to the second-largest, independent specialty pharmacy in the United States. Modern’s platform focuses on drug treatments for chronic diseases including: HIV, arthritis, hepatitis C and more. Modern, led by its CEO Dom Meffe, has grown its revenue more than five times since the investment period with Altamont.

Pharmacy and healthcare deals have been picking up recently. In August, the Carlyle Group LP (Nasdaq: CG) agreed to purchase pharmacy benefit manager WelDyneRx; Frazier Healthcare Partners agreed to buy a majority state in Matrix Medical Network for nearly $538 million; and in 2015, CVS Health Corp. (NYSE: CVS) reached a $1.9 billion deal with Target Corp. (NYSE: TGT) for its pharmacies and clinics. Outlook for healthcare M&A is optimistic, according to Mergers & Acquisitions’ Mid-Market Pulse (MMP), a forward-looking sentiment indicator, published in partnership with CT. 

Jeffries LLC, Houlihan Lokey Inc. (NYSE: HLI), and William Blair served as financial advisers for Altamont and Modern. Ropes & Gray LLP served as legal counsel to Altamont, while Bass Berry & Sims served as legal counsel to Modern.

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