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Loblaw Cos. Ltd. is buying health clinic owner Lifemark Health Group for $845-million, the company’s largest deal yet to expand its presence in the healthcare services market.

Lifemark, which is owned by Audax Private Equity, has more than 300 clinics across the country providing services including physiotherapy and chiropractic treatments, massage therapy, occupational therapy and mental health care.

The acquisition is part of a larger strategy for Loblaw, which owns the Shoppers Drug Mart pharmacy chain.

“Shoppers over the past couple of years has been really focusing more on becoming a healthcare services company, with the role of pharmacists changing,” Shoppers president Jeff Leger said in an interview on Monday. “We saw that explode during the pandemic with vaccination, testing, but also helping Canadians who didn’t have access to care during that period of time. … We certainly view ourselves as more than a pharmacy.”

The company has in recent years been investing in other businesses in a bid to own a larger piece of the Canadian healthcare market.

For example, Shoppers Drug Mart has experimented with offering services such as cosmetic dentistry and dermatology in some locations, and in the past two years, the company has opened six clinics in Ontario under the Health Clinic by Shoppers brand. In 2016, Loblaw acquired software firm QHR Corp., which offers electronic medical record-keeping for doctors, for roughly $170-million. In 2020, the company invested $75-million for a minority stake in telemedicine provider Maple Corp., a Toronto startup that saw demand spike for its online medical services during the COVID-19 pandemic.

Loblaw’s controlling shareholders, the Weston family, have participated in two financing rounds for Canadian digital health startup League Inc., in 2018 and 2019, through their private holding company Wittington Investments. And in 2020, Loblaw partnered with League to build its PC Health app, which provides services to users such as live chats with registered nurses and “care navigators” providing healthcare referrals. The retailer also tied its PC Optimum loyalty program to the new app, offering points for customers who used it to complete fitness challenges, or who purchased health and wellness-related items such as vitamins and thermometers.

Mr. Leger said there has been “good usage” of the app so far, but did not disclose user numbers. He said the company has seen interest in navigating access to healthcare with digital tools. Lifemark was one of the company’s first partner clinics that allowed appointment booking through the PC Health app.

“We think there’s a really interesting link there with the customers we’re seeing on the pharmacy side,” he said.

For example, pharmacists see many customers who are managing issues with both chronic and acute pain, either with over-the-counter or prescription drugs.

“But we know that sometimes the recovery process can or should require some physiotherapy – I just had some experience with this last summer, with a bike crash,” Mr. Leger said. “There’s an ability for people to get advice from the pharmacy side on using medications, but also maybe transition to services from physio or a kinesiologist.”

The deal is subject to regulatory approvals, and the company expects it to close in the second quarter of this year.

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 4:15pm EDT.

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