VillageMD, Summit Health-CityMD Share Strategy Behind $8B Deal

The Walgreens-owned primary care company entered a definitive agreement last week to acquire SummitHealth-CityMD.

VillageMD, a Walgreens-owned primary care organization, has penned a deal to acquire primary care and urgent care organization, Summit Health-CityMD.

The $8.9 billion deal, first announced last week, will include a $3.5 billion investment of an even mix of debt and equity from Walgreens Boots Alliance (WBA), which has a 63% ownership stake in VillageMD, to support the acquisition.

Additionally, Evernorth, a subsidiary of Cigna Corporation that creates and connects benefits, pharmacy, and care solutions, will invest in VillageMD and become a minority owner, in an effort to commit to the acceleration of value-based services.

The combined organization will have more than 680 provider locations across 26 markets, creating a multi-payer platform that leverages VillageMD's value-based care expertise and Summit Health-CityMD's primary and multispecialty care expertise.

HealthLeaders reached out to VillageMD and Summit Health-CityMD about what this acquisition will mean for patients and how this deal plays a role in their overall strategy.

"Both VillageMD and Summit Health-CityMD have a shared goal of providing excellent patient experiences while reducing the total cost of care. As part of VillageMD's value-based care model, physicians and APPs work to see their patients at the right time, when they need it, and how they need it. VillageMD’s integrated care model also yields a reduction in patient hospital readmission when a patient sees their providers at the right cadence," the organizations said in a joint statement.

"For Summit Health-CityMD, the integration will support and accelerate its path into value-based care, building on its mission to provide leading primary, specialty, and urgent care while also driving clinical outcomes and cost savings. For VillageMD, it supports the overall mission to transform the way health care is delivered in the United States and in areas like the Northeast and Central Oregon where Summit has a strong presence."

Pending regulatory approval, the deal is expected to close during the first quarter of 2023. "For the foreseeable future, we will continue to operate as separate companies and focus on ensuring a successful transition for employees, physicians, and patients," the organizations said.

Immediately following the acquisition announcement, Moody's Investors Service placed Walgreens' ratings under review for downgrade, due to the investment being financed by cash on hand and debt.

Additionally, only a week after the acquisition announcement, Walgreens and Village MD announced that the organizations opened the first Village Medical at a Walgreens primary care practice in Las Vegas, with more locations scheduled to open in the market by the end of the year.