Walgreens’ VillageMD in $9 billion deal to buy Summit Health-CityMD
Walgreens Boots Alliance’s push into more comprehensive health care has taken on new momentum.
Primary care provider Village MD, which is majority-owned by Walgreens, has agreed to buy Summit Health-CityMD in a deal valued at approximately $8.9 billion. In addition to CityMD urgent care centers, Summit Health operates independent physician-run medical groups.
As part of the deal, Walgreens will invest $3.5 billion through an even mix of debt and equity. The drug store and healthcare company will remain the largest and consolidating shareholder of VillageMD, with an approximate 53% stake. Walgreens plans to
open more than 600 Village Medical primary care centers at Walgreens locations by 2025, and 1,000 by 2027.
Also taking a stake in the deal is Evernorth, Cigna Corp.’s health services organization which creates and connects benefits, pharmacy and care solutions. It will be a minority owner in VillageMD. The deal follows CVS Health’s recent $8 billion buyout of Signify Health.
Together, VillageMD and Summit Health will have a presence in more than 680 locations.
“Summit Health-CityMD joining VillageMD is transformational for our U.S. Healthcare segment and reinforces our intent to create greater access to quality healthcare across the care continuum,” said Roz Brewer, CEO, Walgreens. “This transaction accelerates growth opportunities through a strong market footprint and wide network of providers and patients across primary, specialty and urgent care.”
The combined company will leverage VillageMD’s expertise in value-based care to support and accelerate the transition to more risk-based care and Summit Health’s longstanding and deep expertise delivering multispecialty, connected care, the two companies stated. It also enhances Walgreens’ robust portfolio of leading, integrated healthcare offerings across the care continuum.
“Summit Health-CityMD and VillageMD are patient-centered and physician-led companies that have complementary offerings and a shared core belief that taking excellent care of the patient will remain the cornerstone of our success,” said Jeff Alter, CEO of Summit Health-CityMD. “Adding our expertise and geographic coverage to VillageMD’s proven value-based primary care approach will enhance the lives of so many patients and physicians across the country, helping to lower healthcare costs and improve the health of our communities.”
As a result of the transaction, Walgreens is raising its U.S. healthcare fiscal year 2025 sales goal to $14.5 billion to $16.0 billion, from $11.0 billion to $12.0 billion previously.