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Walgreens acquires assets of Pharmaca buyer

In a deal that will result in the closure of the former Pharma Integrative Pharmacies, drugstore giant Walgreens has acquired the core business of Medly Health Inc. – the digital-pharmacy company that purchased Boulder-based Pharmaca in June 2021 and then filed for bankruptcy two months ago.

According to a Tuesday filing in the U.S. Bankruptcy Court for the District of Delaware, Walgreen Inc. — the Deerfield, Illinois-based subsidiary of holding company Walgreens Boots Alliance (Nasdaq: WBA) — will pay $19.35 million in cash for Medly’s prescription files, pharmacy inventory and intellectual property, including its trademarks and logos.

In a statement issued Wednesday, Walgreens spokeswoman Kris Lathan said Walgreens will close the Pharmaca locations, which include stores rebranded as Medly Pharmacy at 2700 Broadway and 645 S. Broadway in Boulder. Another store at 17th and Pearl streets closed in 2020. A spokeswoman in the Pharmaca home office in Boulder told BizWest on Thursday that the stores in Boulder will be closed Feb. 25.

“We are pleased to have reached agreement to acquire the pharmaceutical records and other select assets across 22 Pharmaca Integrative Pharmacies and four Medly Pharmacies nationally,” Lathan said. “Although specific store details are being finalized given bankruptcy court’s ruling Tuesday, prescription files and inventory are expected to be transferred to nearby Walgreens by mid-February.”

Lathan said Walgreens will automatically transfer patients’ pharmacy files to a designated Walgreens store, adding that “patients will receive notice about any changes through mail and other means with details about continued access to their prescriptions and other services.”

At the Feb. 3 bankruptcy auction, Walgreens outbid “stalking-horse” MedPharmaca Holdings Inc. When Medly filed for Chapter 11 bankruptcy protection in December, MedPharmaca agreed to place a starting $18.5 million bid for just about all of Medly’s assets, including the Pharmaca stores. However, the bankruptcy filing said MedPharmaca would get a $450,000 breakup fee and up to $500,000 in reimbursed expenses if some other bidder won the auction.

In its bankruptcy filing, Brooklyn, New York-based Medly reported $110 million in secured debt.

Walgreens is the second-largest pharmacy store chain in the United States behind CVS Health Corp. (NYSE: CVS), which also placed a bid for Medly’s pharmacy scripts and other assets, according to bankruptcy filings.

Pharmacist B. Douglas Hoey, CEO of the National Community Pharmacists Association, told Business Insider that drugstore chains often buy prescription files from smaller pharmacies that are going out of business.

According to the bankruptcy filings, Medly had 22 locations, all of which originally belonged to Pharmaca.

Medly filed for Chapter 11 bankruptcy protection on Dec. 9 in the U.S. Bankruptcy Court for the District of Delaware in Wilmington. The filing requests that bankruptcy petitions for Medly Health and 31 of its affiliates, including Pharmaca, be jointly administered in the petition. During a virtual hearing, U.S. Bankruptcy Judge Karen Owens gave Medly interim permission to access half of its $8 million in debtor-in-possession financing, despite concerns expressed at the hearing from Linda Casey, a representative of the U.S. Trustee’s Office, that Medly could end up in default on that financing before the next hearing Jan. 3 if it failed to close on the sales.

Pharmaca was founded in June 2000 in Boulder as the nation’s first integrative pharmacy chain offering traditional pharmacy services alongside natural and complementary health solutions, including natural health and beauty products.

Medly was forced to file for bankruptcy after it failed to get a $100 million loan for which it applied last summer. In the court filing, the company said that made it impossible to buy the drugs it needed to fill prescriptions. As a result, it said, more than 20 of its stores closed.

Medly, founded in 2017, had described itself as the nation’s fastest-growing digital pharmacy.

BizWest’s Lucas High and Christopher Wood contributed to this report.

Source: BizWest