VillageMD, the primary care disruptor controlled by Walgreens Boots Alliance, is set to acquire physician practice group Summit Health in a $8.9 billion transaction, which in turn will give Walgreens one of the biggest stakes in the combined company.
Under the agreement, Walgreens Boots Alliance, which has a 63 percent stake in VillageMD, will invest $3.5 billion of debt and equity into the combined company.
This will make Walgreens the largest and consolidating shareholder of the combined company with approximately 53 percent stake in ownership after the deal closes, which is expected to take place in the first quarter of 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," Roz Brewer, CEO of Walgreens Boots Alliance, said in an SEC filing. "This transaction accelerates growth opportunities through a strong market footprint and wide network of providers and patients across primary, specialty and urgent care."
This move comes as Walgreens is pushing deeper into healthcare to lessen its reliance on its retail pharmacy business.
Five key things to know about Walgreens' push into healthcare:
- Under Ms. Brewer, Walgreens has added primary care centers to its U.S. retail locations and partnered with health insurers to buy out its remaining stakes in CareCentrix and Shields Health Solutions.
- In October, the company appointed John Driscoll as president of Walgreens' U.S. healthcare unit.
- Last year, the company agreed to double its stake in VillageMD to 63 percent from 30 percent by investing $5.2 billion.
- Walgreens first invested in VillageMD in 2020 with a goal of building as many as 700 primary care clinics inside its pharmacies. Last year, the company said it would increase that number to 1,000 by 2027.
- The Summit Health deal will give Walgreens access to about 750 primary care providers, 1,200 specialty-care providers and roughly 150 urgent care locations throughout New Jersey, New York, Connecticut, Pennsylvania and Oregon.