December 14, 2022 – VillageMD announced today it has entered a definitive agreement to acquire Summit Health-CityMD, a leading provider of primary, specialty and urgent care. The transaction is valued at approximately $8.9 billion with investments from Walgreens Boots Alliance, Inc. (Nasdaq: WBA) and an affiliate of Evernorth, a subsidiary of Cigna Corporation (NYSE:CI).
Together, VillageMD and Summit Health-CityMD will create a multi-payor platform to deliver quality, affordable care for all patients. The combined company leverages VillageMD’s deep expertise in value-based care to support and accelerate the transition to more risk-based care and Summit Health-CityMD’s longstanding and deep expertise delivering multispecialty, connected care. It also enhances WBA’s robust portfolio of leading, integrated healthcare offerings across the care continuum.
Summit Health-CityMD has a strong footprint in the northeast United States and Oregon. Together, VillageMD and Summit Health will have more than 680 provider locations in 26 markets.
WBA will invest $3.5 billion through an even mix of debt and equity to support the acquisition of Summit Health-CityMD, which drives meaningful synergies and accelerates WBA’s path to profitability for its U.S. Healthcare segment. WBA will remain the largest and consolidating shareholder of VillageMD with approximately 53 percent ownership. The company expects to maintain an investment grade rating.
As a result of the transaction, WBA is raising its U.S. Healthcare fiscal year 2025 sales goal to $14.5 billion to $16.0 billion, from $11.0 billion to $12.0 billion previously. WBA’s U.S. Healthcare segment is now expected to achieve positive adjusted EBITDA by the end of fiscal year 2023. Assuming a Jan. 1, 2023 closing date, WBA is raising the U.S. Healthcare adjusted EBITDA target for fiscal year 2023 to $(50) million to $25 million, from $(240) million to $(220) million previously.