Walgreens-backed doctor-staffed clinic operator VillageMD is buying Summit Health for $8.9 billion to expand doctor-staffed clinics across the country.
The transaction announced Monday will include investments from Walgreens Boots Alliance, which already owns more than 60% of VillageMD, and Cigna’s health services business Evernorth. Primary care provider Summit Health merged with CityMD in 2019 to create a company with more than 1,400 healthcare providers that offer primary, specialty and urgent care.
The companies said Summit Health-CityMD has a “strong footprint in the northeast United States and Oregon.” Combined, VillageMD and Summit Health will have more than 680 provider locations in 26 markets.
“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,” VillageMd chief executive Tim Barry said of the company he runs, which operates more than 250 primary care practices in 22 markets.
The combination comes as Walgreens and rivals CVS Health, Walmart and Amazon push deeper into providing medical care in drugstores and other retail settings.
Walgreens last year invested another $5.2 billion into VillageMD to escalate the rollout of hundreds of doctor-staffed clinics at its drugstores under its fast-growing “Walgreens Health” business. That investment gave Walgreens a stake of more than 60% in VillageMD.
Meanwhile, CVS Health has been doing some wheeling and dealing of its own. Most notably, CVS two months ago beat out Amazon and other companies for the home care company Signify Health for $8 billion. In buying Signify Health, CVS Health is adding to its growing menu of healthcare services that includes more than 9,000 retail drugstores, 1,100 MinuteClinics staffed by nurse practitioners and the nation’s third largest health insurer, Aetna.
“Summit Health-CityMD and VillageMD are patient-centered 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,” said Jeff Alter, CEO of Summit Health-CityMD. “Adding our expertise and geographic coverage to VillageMD’s proven value-based primary care approach will enhance the lives of so many patients and physicians across the country, helping to lower healthcare costs and improve the health of our communities.”
Terms of the transaction call for Walgreens to “invest $3.5 billion through an even mix of debt and equity to support the acquisition of Summit Health-CityMD,” Walgreens said. “Walgreens Boots Alliance will remain the largest and consolidating shareholder of VillageMD with approximately 53 percent ownership.”
Cigna’s Evernorth will be a minority owner in VillageMD. Neither Cigna nor VillageMD would disclose how much Cigna’s Evernorth is investing in the larger primary care company.
“Our collaboration with VillageMD accelerates our efforts to improve the way care is accessed and delivered,” said Eric Palmer, CEO of Evernorth. “Harnessing the breadth of Evernorth’s health services capabilities and connecting them with physicians who provide care in a value-based model like VillageMD, helps more people to get the right care at the right time – driving better health and value.”