Walgreens-backed Village MD to acquire Summit Health-CityMD for $8.9B
The deal is being made with investments from Walgreens Boots Alliance and Evernorth, the health services subsidiary of Cigna.
Photo courtesy of Walgreens
Walgreens' VillageMD has entered into a definitive agreement to acquire Summit Health-CityMD, a provider of primary, specialty and urgent care.
The transaction is valued at approximately $8.9 billion, with investments from Walgreens Boots Alliance and an affiliate of Evernorth, itself a subsidiary of Cigna Corporation. Walgreens Boots Alliance said it would invest $3.5 billion through an even mix of debt and equity to support the acquisition. WBA is the largest and consolidating shareholder of VillageMD with approximately 53% ownership.
Evernorth, Cigna's health services organization that connects benefits, pharmacy and care, will also be a minority owner in VillageMD.
The deal accelerates WBA's path to profitability for its U.S. healthcare segment, the company said. As a result of the acquisition, WBA is raising its U.S. Healthcare fiscal year 2025 sales goal to $14.5 billion to $16 billion, from $11 billion to $12 billion previously.
WBA said its U.S. Healthcare segment is now expected to achieve positive adjusted EBITDA by the end of fiscal year 2023.
The transaction is subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. It is expected to close in the first quarter of calendar 2023.
"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 of WBA. "This transaction accelerates growth opportunities through a strong market footprint and wide network of providers and patients across primary, specialty and urgent care."
WHY THIS MATTERS
VillageMD and Summit Health-CityMD will create a multi-payer platform that leverages value-based care to support and accelerate the transition to more risk-based care.
Summit Health-CityMD has expertise delivering multispecialty connected care. It has a strong footprint in the northeast United States and Oregon. Together, VillageMD and Summit Health will have more than 680 provider locations in 26 markets.
The deal enhances WBA's portfolio of integrated healthcare offerings across the care continuum. It also deepens Evernorth's relationships with primary care physicians and specialists in value-based care.
VillageMD partners with physicians to provide technology, operations, staffing support and industry relationships. The Village Medical brand provides value-based primary care at traditional freestanding practices, at Village Medical at Walgreens practices, at home and via virtual visits. VillageMD and Village Medical have grown to 22 markets.
Summit Health and CityMD have more than 2,800 providers across more than 370 locations in New York, New Jersey, Connecticut, Pennsylvania and Central Oregon.
Walgreens Boots Alliance is an integrated healthcare, pharmacy and retail company with a portfolio of healthcare-focused investments located in several countries, including China and the U.S.
THE LARGER TREND
Walgreens is among major players making moves into primary care and home care.
In October, Walgreens Boots Alliance announced the acceleration of its plans to acquire full ownership of home-coordination company CareCentrix after completing its 55% majority acquisition in August.
In October 2021, Walgreens Boots Alliance launched the new business segment, Walgreens Health. The platform offers care in a store, at home, in the doctor's office or via mobile app.
In September, CVS advanced its care strategy by acquiring Signify and its home health platform for $8 billion. Amazon and UnitedHealth Group were reportedly also bidders.
This week, Walmart Health announced it would open 16 new health centers in Florida by the fall of 2023.
ON THE RECORD
"This is an epic milestone in our journey to transform healthcare in the United States," said Tim Barry, CEO and chair of VillageMD. "Summit Health-CityMD has been a leader in delivering coordinated, multi-specialty care for decades. 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. Both organizations share a deep commitment to keeping our patients and clinicians at the forefront of what we do to best serve them."
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org
