A unit of Walgreens Boots Alliance Inc. WBA 3.72% is on the verge of a deal to join forces with a major doctor’s office and emergency center owner in a transaction valued at around $9 billion including debt, according to the latest with the Matter intimates a series of acquisitions by large consumer-facing companies aiming to delve deeper into healthcare.
The drugstore giant’s primary care center subsidiary, Village Practice Management, would partner with Summit Health, parent company of CityMD Emergency Centers, in an agreement that could be reached as early as Monday, the people said.
Health insurer Cigna Corp. is expected to CI -0.65% invested in the combined company, the people said.
There is no guarantee the parties will reach an agreement, people warned, noting that they are still working out the details of an agreement.
Summit Health, which is backed by private equity firm Warburg Pincus LLC, has more than 370 locations in New York, New Jersey, Connecticut, Pennsylvania and central Oregon, according to the company’s website. Current and former doctors also have a keen interest in the business.
Village Practice Management, operating as VillageMD, serves patients in both freestanding practices and Walgreens locations, virtually and at home. In 2021, Walgreens announced it had made a $5.2 billion investment in VillageMD, increasing its stake to 63%. At the time, Walgreens said the investment would help accelerate the opening of at least 600 Village Medical at Walgreens primary care practices across the country by 2025 and 1,000 by 2027.
The anticipated deal follows a series of mergers involving companies like VillageMD and CityMD as major healthcare providers seek more direct connections with patients.
Amazon.com Inc. in July agreed to purchase primary care company 1Life Healthcare Inc., trading as One Medical, for approximately $4 billion. In September, CVS Health Corp. signed an agreement to acquire home healthcare company Signify Healthcare Inc. for $8 billion. Cano Health Inc., which operates primary care centers, has attracted interest from CVS and insurer Humana Inc. in recent months, the Wall Street Journal reported.
Bloomberg reported VillageMD’s interest in Summit Health a week ago.
Walgreens appears to have forestalled a Summit Health sale process that was set to begin next year, according to people, who said the company will conduct bank interviews before receiving any interest from VillageMD.
Warburg Pincus has supported Summit Health since 2017, when the company acquired a stake in CityMD, a large chain of emergency care centers in New York City.
Since then, Warburg has helped the company complete several transformative acquisitions, including the 2019 merger of CityMD and multidisciplinary medical practice group Summit Medical Group.
With more than $85 billion in assets under management, New York-based Warburg is no stranger to healthcare. The Company’s portfolio companies include healthcare IT company Modernizing Medicine Inc. and Ensemble Health Partners, a hospital revenue cycle management company.
—Anna Wilde Mathews contributed to this article.
write to Laura Cooper at [email protected]
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Appeared in the print edition November 7, 2022 as “Walgreens Nears Deal For Urgent Care Firm”.