Walgreens Unit to Buy Summit Health in Roughly $9 Billion Deal, Including Debt

A unit of Walgreens Boots Alliance Inc.

WBA 3.76%

It struck a deal to combine with a big owner of medical practices and urgent-care centers in a transaction worth roughly $9 billion including debt, the latest in a string of acquisitions by big consumer-focused companies aiming to delve deeper into medical care.

The drugstore giant’s primary-care-center subsidiary, Village Practice Management, agreed to acquire Summit Health, the parent company of CityMD urgent-care centers, the companies said Monday, confirming an earlier report by The Wall Street Journal.

Health insurer Cigna Corp.

CI 1.01%

is also investing in the combined company through its Evernorth unit, which will be a minority owner. Cigna has been expanding its footprint in other health-services businesses through Evernorth, which already includes virtual care and behavioral health, among other areas.

Shares of Walgreens were up about 4% on the news.

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 physicians also own a large interest in the business.

Village Practice Management, which does business as VillageMD, provides care for patients at free-standing practices as well as at Walgreens locations, virtually and in the home. In 2021, Walgreens said it had made a $5.2 billion investment in VillageMD, boosting 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 deal follows a string of mergers involving companies such as VillageMD and CityMD as big healthcare providers seek more direct connections with patients.

Amazon.com Inc.

in July agreed to purchase primary-care operator 1Life Healthcare Inc.,

which operates under the name One Medical, for about $4 billion. In September, CVS Health Corp.

struck a deal to acquire home-healthcare company Signify Healthcare Inc. for $8 billion. Cano Health Inc.,

which operates primary-care centers, has attracted interest from both CVS and human insurer Inc.

in recent months, The Wall Street Journal has reported.

Walgreens has pre-empted a sale process for Summit Health that was set to kick off next year, according to people familiar with the matter, who said the company was about to interview banks before it received interest from VillageMD.

Summit Health has been backed by Warburg Pincus since 2017, when it took a stake in CityMD, a large chain of New York City urgent-care centers.

Since that time, Warburg has helped the company complete multiple transformative acquisitions, including the 2019 merger of CityMD and multi-speciality medical-practice group, Summit Medical Group.

New York-based Warburg, which has more than $85 billion in assets under management, is no stranger to healthcare. The firm counts healthcare-IT business Modernizing Medicine Inc. and Ensemble Health Partners, a revenue-cycle management business for hospitals, among its portfolio companies.

Write to Laura Cooper at laura.cooper@wsj.com

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Appeared in the November 7, 2022, print edition as ‘Walgreens Nears Deal For Urgent Care Firm.’


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