With $9 Billion Deal, Walgreens Really Wants To Be Your Doctor

In the latest massive healthcare merger, Walgreens’ VillageMD announced a $9 billion deal to acquire Summit Health-City MD. If approved, the combined Summit and VillageMD will have over 680 provider locations, operating in 26 markets, making it one of the largest care providers in the U.S.

The deal, in partnership with an affiliate of Cigna, also better positions Walgreens in the retail industry’s healthcare land grab. CVS Health recently spent $8 billion to acquire Signify Healthcare, a home healthcare company. In July, Amazon spent $4 billion to add One Medical. And Walmart continues to expand its healthcare offerings.

Parent company Walgreens Boots Alliance is set to invest $3.5 billion in the merger, in an even mix of debt and equity. And it will remain the largest shareholder of VillageMD, owning about 53%.



Evernorth, a subsidiary of Cigna, becomes a minority shareholder.

The merger aims to create a multi-payer platform that combines VillageMD’s expertise in value-based care to “support and accelerate the transition to more risk-based care,” it says in its announcement. And Summit Health-CityMD also has deep knowledge in multispecialty, connected care.

In its announcement, Walgreens calls the merger an “epic” development, adding that Summit’s 13,000 employees will help it improve affordable, high-quality care.

Observers note it will substantially increase Walgreens’ clout in the healthcare universe. “In response to waning COVID-19-related sales and pressure on its retail business due to declining foot traffic, this acquisition represents yet another example of Walgreens turning its strategic focus toward healthcare services,” writes Julie Utterback, a senior equity analyst who follows the company for Morningstar.

Combined with VillageMD’s other recent acquisitions, including Shields Health Solutions and CareCentrix, the purchase “will accelerate a path to more risk-based care while providing geographic expansion.”

As a result, Walgreens expects revenues of between $14.5 billion and $16 billion in its healthcare segment in fiscal 2025, up from the current forecast of $11 billion to $12 billion.

“Although not directly mentioned as a strategic focus, we may see a positive impact on the company’s retail pharmacy segment, too,” she says. “As the VillageMD unit sees more patients and writes more prescriptions, Walgreens stores may have the opportunity to benefit from a more durable customer base and even extend its own healthcare services portfolio.”

Summit, which provides primary, specialty and urgent care, has a strong presence in Oregon and the Northeast. It’s backed by Warburg Pincus, a private equity firm.

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