Kroger Acquires Modern HC Holdings from Axium Pharmacy Holdings to Create a Combined Specialty Pharmacy

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

"This strategic investment will accelerate the growth of Kroger's health and wellness business," says Robert Clark, Kroger's senior vice president 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."

ModernHEALTH, based in Orlando, Fla., is an independent provider of specialty pharmacy services. The company employs approximately 500 associates who provide comprehensive 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.

Kroger operates 2,230 pharmacy locations and195 The Little Clinic locations. The company's pharmacists also provide health coaching, biometric screening and other wellness services designed to deliver positive health outcomes for patients. Axium, which became a wholly-owned subsidiary of Kroger in 2012, is one of the nation's largest independent providers 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.

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 disease 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," says 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."

ModernHEALTH is comprised of several business segments that provide highly-specialized services, including: TLCRx Pharmacy, with locations in New Orleans, Orlando and Addison, Texas, primarily providing services to patients in Rheumatology, Dermatology, Hepatitis C and Cystic Fibrosis; Biofusion, based in Torrance, Calif., serving patients requiring Subcutaneous Immune Globulin (SCIG) and IV Immune Globulin (IVIG) for autoimmune and primary immune deficiency diseases; ModernHEALTH Specialty Pharmacy, with two sites in Southern California, focusing on HIV, Transplant and Cystic Fibrosis therapies; and two home infusion pharmacies in Dothan, Ala., and Richardson, Texas.

Headquartered in Lake Mary, Fla., Axium employs 300 associates who provide a range of clinical services to patients with complex chronic conditions through locations in California, Puerto Rico, Tennessee and Mississippi. 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 numerous other chronic care conditions.

Headquarters for the combined specialty pharmacy will be located in a new facility under construction in Lake Mary, Fla., 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.

"Our partnership with Kroger and Axium will enable us to provide more customers in more places with the critical specialty pharmacy services they need," says 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 over 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.