USA — VillageMD, a home-focused primary care provider backed by Walgreens Boots Alliance, is said to be considering a merger with Summit Health, the parent company of the urgent care clinic chain CityMD.
According to Bloomberg News, the combined companies would be worth US$5 billion to US$10 billion after the merger.
VillageMD, based in Chicago, provides primary care services to over 1.6 million patients in 22 markets through its subsidiary Village Medical. Walgreens has poured billions of dollars into the company in recent years.
Summit Health is a primary and specialty care provider formed by the merger of Summit Medical Group and CityMD in 2019.
The companies are said to be in talks, and a deal could be reached in the coming weeks. However, a source told Bloomberg that negotiations could still fail to produce a deal.
Walgreens Boots Alliance and VillageMD announced a five-year expansion plan in 2020. The partnership would open 500 to 700 Village Medical at Walgreens primary care clinics in more than 30 markets across the United States, with plans to expand further in the future.
With the backing of Walgreens Boots Alliance, VillageMD is undeniably one of the country’s most prominent home-focused primary care providers.
A merger with Summit Health would almost certainly propel the organization to even greater heights, especially at a time when more access to primary care is desperately needed.
Putting things into context, the U.S. falls behind when it comes to primary care access. According to a report from The Commonwealth Fund, adults in the U.S. often don’t have a regular physician, place of care, or a longstanding relationship with a primary care provider.
Moving primary care into the home is one strategy for addressing access to care issues. Furthermore, a merger of this magnitude would expand primary care services, giving more people access to care.
The report comes amid a frenzy of merger and acquisition activity over the last two years. To gain a stronger foothold in the healthcare market, major retailers such as CVS, Walgreens, and Amazon are increasing their focus on providing medical services.
Walgreens invested US$5.2 billion in VillageMD last year, increasing its stake to 63% from 30% previously.
The companies have opened over 80 Village Medical at Walgreens locations in 12 states, including Arizona, Florida, Texas, Kentucky, and Indiana. The companies intend to increase that number to 200 by the end of the year.
The retail pharmacy chain has shifted its focus to primary care and home healthcare, selling its remaining stakes in CareCentrix and Shields Health Solutions.
CVS Health has won the bidding war for home health and technology services company Signify Health and plans to pay US$8 billion for the company.
Last month, media reports stated that CVS Health had withdrawn from talks to potentially acquire primary care company Cano Health.
Amazon, which was also in the running to acquire Signify Health, plans to pay US$3.9 billion for primary care provider One Medical.
A merger with Summit Health would give Walgreens a competitive advantage in the primary care market.
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