Walgreens’ push for comprehensive care is gaining momentum

Walgreens has expanded its push into more comprehensive care with the VillageMD unit’s acquisition of Summit Health-CityMD, another urgent care and primary care chain, in a deal valued at nearly $9 billion.

Walgreens and rival CVS, two retail chains with thousands of locations, have evolved in recent years with a greater focus on overall customer care in an effort to help them avoid chronic illnesses and expensive hospital stays. This goes far beyond their historical focus on in-store sales and prescription writing.

The deal to combine VillageMD and CityMD comes just two months after CVS Health said it would pay about $8 billion to acquire Signify Health, a technology company that sends doctors and other healthcare professionals to their homes to assess their cases and what help they can get. need

Walgreens Boots Alliance, which has a 53% controlling stake in VillageMD, will contribute $3.5 billion in debt and equity to support the deal, which is expected to close in the first quarter of 2023.

As part of what the companies call a “strategic collaboration,” Evernorth, a subsidiary of health insurance giant Cigna Health, is also making an undisclosed investment in the deal and will become a minority owner of VillageMD.

Insurers and employers who must pay medical bills are also paying more attention to overall health.

Walgreens, which has about 13,000 retail pharmacies worldwide, including 9,000 in the U.S., has invested billions of dollars in Village MD and is opening primary care practices near its pharmacies to make it easier for pharmacies and doctors’ offices to work together.

Village Medical provides primary care to patients in its traditional stand-alone practices, through its Village Medical at Walgreens practices, at home and through virtual visits. Chicago-based VillageMD and Village Medical operate in Illinois, Indiana, Michigan, Texas, Nevada, Colorado, Arizona, Florida, Georgia and Kentucky, with more than 1.6 million patients.

Summit Health and CityMD have more than 2,800 providers in more than 370 locations in New York, New Jersey, Connecticut, Pennsylvania and Central Oregon. Summit is in New Jersey.

Walgreens, headquartered outside Chicago, is also developing centers across the United States that use automated technology to fill prescriptions and deliver them to pharmacies, giving pharmacists more time to work with customers.

When Walgreens released details of its annual financial results last month, CEO Rosalind Brewer announced that this was the first year of Walgreens’ “transformation into a consumer-focused health care company.”

Citing the combination of VillageMD and CityMD, Walgreens raised its 2025 U.S. healthcare sales target to $14.5 billion to $16 billion, up from a previous forecast range of $11 billion to $12 billion.

Shares of Walgreens rose more than 2% on Monday.