Walgreens (NASDAQ: WBA) majority-owned VillageMD has announced it is acquiring Summit Health-CityMD to create one of the largest independent provider groups in the US.
The deal announced on Monday is worth US$8.9 billion, and will expand the nation’s second-largest pharmacy store chain Walgreen’s reach into primary, specialty and urgent care.
Together, VillageMD and Summit Health-CityMD will set up a multi-payor platform offering quality and affordable care for all patients.
VillageMD chief executive officer and chair Tim Barry said it was the perfect opportunity to help grow the company’s health-care footprint.
“This is an epic milestone in our journey to transform healthcare in the United States. Summit Health-CityMD has been a leader in delivering coordinated, multi-specialty care for decades,” he said.
“We are honoured 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 merged in late 2019. The combined entity has more than 13,000 employees and operates across more than 370 locations.
Once the current takeover is complete, VillageMD’s deep expertise in value-based care will be used to support and accelerate the transition to more risk-based care and Summit Health-CityMD’s longstanding and deep expertise delivering multi-specialty, connected care.
Together, the combined company will have more than 680 provider locations.
Ongoing efforts to grow US healthcare sector
The latest announcement form VillageMD is the most recent bid to grow the nation’s healthcare sector, following the US$4 billion acquisition of 1Life Healthcare and CVS Health’s US$8 billion buyout of Signify Health.
In light of the deal between VillageMD and Summit Health, Mr Barry said both companies share a similar goal.
“Both organisations share a deep commitment to keeping our patients and clinicians at the forefront of what we do to best serve them,” he said.
Summit Health-CityMD chief executive officer Jeff Alter also spoke of the enormous upside the deal brought with it.
“Summit Health-CityMD and VillageMD are patient-centred and physician-led companies that have complementary offerings and a shared core belief that taking excellent care of the patient will remain the cornerstone of our success,” he said.
Mr Alter added that the company’s “expertise and geographic coverage” would suit VillageMD’s proven approach to enhance customers lives across the country, creating lower cost healthcare outcomes its patients.
Walgreens prioritises its growing healthcare segment
Walgreens’ chief executive officer Roz Brewer said the deal would offer growth opportunities for one of the nation’s leading providers of pharmaceutical needs.
“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,” she said.
Walgreens, will invest US$3.5 billion to support the purchase of Summit Health-CityMD, accelerating its plans to cash in on its US Healthcare segment.
Post acquisition, Walgreens will remain Village MD largest shareholder with its 53% interest.