With its latest cloud deal, Microsoft Corp. will gain nearly 400,000 new Office 365 users and a bigger presence in the $3.5 trillion U.S. healthcare sector.

The company today announced that Walgreens Boots Alliance Inc., the largest drugstore chain in the U.S., will move the bulk of its backend technology infrastructure to the Azure cloud platform.

Walgreens also plans to roll out Microsoft 365 to 380,000 of its employees. Microsoft 365 is a collection of subscription packages that each include Office 365, Windows 10, security tools and certain other products.

The agreement will run for seven years. Similarly to the high-profile cloud partnership that Microsoft struck with Walmart Inc. last year, this new deal is poised to extend far beyond Walgreens’ planned adoption of Azure and Microsoft 365. The two companies will launch a collaboration to develop new cloud applications atop Azure.

“Improving health outcomes while lowering the cost of care is a complex challenge that requires broad collaboration and strong partnership between the health care and tech industries,” Microsoft Chief Executive Satya Nadella (pictured, right, with Walgreens CEO Stefano Pessina), said in a statement.

One of the items on Walgreens’ agenda is building a set of consumer-facing healthcare services to help patients with things such as adherence to medication regimens and accessing online care. Another focus area will be chronic disease management. As part of the project, Walgreens and Microsoft will develop an entire suite of applications dedicated to assisting people with chronic conditions.

“Retail pharmacies offer an opportunity to engage with the patient much more frequently than at an office visit,” Forrester Research Inc. senior analyst Arielle Trzcinski told SiliconANGLE. “Chronic-care patients see their pharmacist frequently. I’ve seen figures that indicate the average diabetic patient sees their provider once every six months.”

She added that this gap creates an opportunity for the pharmacist to help monitor the patients’ health and prompt them to get preventative care in the retail clinic or through a virtual care visit. “Using an enterprise health cloud, like Azure, you create a more connected ecosystem so that we can share that data with the patient’s additional providers, track outcomes, and intervene earlier when an issue arises,” Trzcinski said.

In addition to the planned application projects, the collaboration will have a hardware element: Walgreens is planning to launch connected healthcare devices for managing nonacute chronic condition. These devices will use Azure services on the backend, including some of the artificial intelligence and analytics tools available in the cloud platform.

Walgreens will set up “digital health corners” in 12 stores this year to start selling the hardware to consumers. In today’s announcement, Microsoft noted that this aspect of the partnership will involve “new retail solutions,” which could allude to its new store automation initiative.

The company earlier this month teamed up with Kroger Co. to jointly develop a retail technology platform comprised of sensors, connected “smart shelves” and related systems. The firms said they plan to sell the platform to other brick-and-mortar chains. Bringing a company as big as Walgreens aboard would be a major boost for the project’s development.

Like all the other major retailers that have inked cloud deals with Microsoft recently, Walgreens faces rising competition from Amazon.com Inc. The online retail giant’s healthcare ambitions came to the fore last June when it acquired online pharmacy PillPack Inc. for a reported $1 billion. The move triggered a $12.8 billion drop in the combined share value of Walgreens and its two largest competitors.

Photo: Microsoft