USA—VillageMD, a unit of Walgreens Boots Alliance is set to acquire Summit Health-CityMD, an urgent care provider in a deal valued at US$8.9 billion as the pharmacy chain expands its healthcare footprint.
The combined entity will have 20,000 employees and will be taking care of millions of patients.
Overall, Walgreens Boots Alliance will invest US$3.5 billion in debt and equity, with Evernorth investing an unspecified minority stake in VillageMD.
The deal will also feature investments from health insurer Cigna Corp’s healthcare unit Evernorth, which will also become a minority owner in VillageMD.
VillageMD’s largest consolidating shareholder will remain Walgreens Boots Alliance. Walgreens raised its stake in VillageMD to 53% after it invested US$5.2 billion last year.
As a company, Chicago-based VillageMD delivers primary care services across 22 markets to more than 1.6 million patients through its subsidiary Village Medical.
Walgreens has been one of VillageMD’s chief investors over the years and has injected billions into the company.
Summit Health-CityMD is the result of the 2019 merger of Summit Medical Group and CityMD. The organization provides primary and specialty care.
It has more than 2,800 providers, 13,000 employees, and roughly 370 locations in New Jersey, New York, Connecticut, Pennsylvania, and Oregon.
Ultimately, VillageMD seeks to provide a more comprehensive healthcare model, making Summit Health-CityMD an appealing acquisition target.
The organizations will leverage VillageMD’s massive value-based care capability and Summit Health-multispecialty, CityMD’s connected care delivery model as a merged entity.
After the transaction is completed, VillageMD and Summit Health-CityMD will be a multi-payer platform with over 680 provider locations in 26 markets.
The acquisition of Summit Health-CityMD by VillageMD also allows the company to bring the process of meeting the needs of patients with complex health conditions in-house.
Previously, VillageMD collaborated with local specialists in its respective markets, but this had its drawbacks, according to Tim Barry, CEO and chair of VillageMD.
Also top of mind was increasing access to primary care at a time when the U.S. struggles with this.
“[This transaction] allows us to continue to make the investments that we’ve been making in primary care, and it allows us to accelerate it at an even more significant pace,” Barry said.
Barry pointed out that markets and communities that have a healthier balance of primary care to specialty care have better outcomes and a lower total cost.
Looking ahead, he is excited about the ability to incorporate this multi-specialty model of care in the home.
The announcement is the latest in the healthcare sector in the United States. It follows the US$3.9 billion acquisition of primary-care operator 1Life Healthcare Inc and the US$8 billion acquisition of Signify Health by CVS Health Corp
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