With investments from majority owner Walgreens Boots Alliance (WBA) and Cigna subsidiary Evernorth, VillageMD will acquire Summit Health-CityMD, a provider of primary, specialty and urgent care services. Following the $8.9 billion acquisition, which is expected to close in Q1 2023 subject to customary approvals, VillageMD and Summit Health will operate a total of 680 locations in 26 markets.
“Summit Health-CityMD has been a leader in delivering coordinated, multi-specialty care for decades,” said Tim Barry, CEO and Chair of VillageMD in a statement. “We are honored to work side by side with their 13,000-strong workforce who are passionately committed to delivering the best outcomes for millions of patients.” Summit Health and CityMD have more than 2,800 providers across 370+ locations in New York, New Jersey, Connecticut, Pennsylvania and central Oregon.
WBA will invest $3.5 billion with an even mix of debt and equity to support the acquisition, which is in line with the company’s recent aggressive moves further into the healthcare sector. WBA will remain VillageMD’s largest shareholder, with an approximate 53% ownership stake. Evernorth, Cigna Corporation’s health services division, will also become a minority owner in VillageMD.
The Walgreens-VillageMD relationship began in July 2020 with the announcement that the drugstore retailer would open 500 to 700 full-service doctor’s offices in its stores. Walgreens moved into a majority ownership position of VillageMD in October 2021 with an additional $5.2 billion investment.
Walgreens is operating along multiple tracks in healthcare: in April 2022, the retailer announced a partnership with Blue Shield of California to add 12 Health Corner locations in the San Francisco and Los Angeles areas.
Walgreens’ activities are part of the “medtail” movement that has been a strong industry trend for the past several years, and one that hasn’t been confined to pharmacy chains. Developments in 2022 alone include:
- Amazon’s July 2022 acquisition of One Medical was only the latest move by the ecommerce giant into the medical area;
- Dollar General signaled its interest in medtail with the August 2022 appointment of four new members to its healthcare advisory panel; and
- In September 2022, CVS Health paid $8 billion to acquire Signify Health.