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Walgreens-owned VillageMD weighs deal for Summit

Oct 31, 2022
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Illustration: Gabriella Turrisi/Axios

Walgreens-owned primary care giant VillageMD is weighing a merger with Warburg Pincus-backed Summit Health, a multispecialty care provider, Bloomberg reported.

Why it's the BFD: As the primary care wars rage on, established players are already thinking about how to capture more of the market. A merger with Summit would increase patient access for VillageMD (and Walgreens) exponentially.

Details: The combined entity could be valued at between $5 billion and $10 billion, Bloomberg reports.

  • Summit, also the parent of urgent care network CityMD, has more than 370 locations that offer myriad specialty care.
  • An agreement could be reached in the coming weeks, Bloomberg reports, cautioning talks could still fall apart.

What they said: Eagle-eyed readers will recall VillageMD CFO Ross Levine's comments at the Axios BFD just last week: "Primary care companies are getting large enough, with enough lives that they'll say, 'Let's start bringing these specialties in-house.'"

Catch up quick: Walgreens initially invested in VillageMD in 2020, aiming to build as many as 700 primary care clinics in its pharmacies.

  • Last year, Walgreens bumped its stake in VillageMD to 63% from 30% with a $5.2 billion investment in the company, announcing plans to increase to 1,000 clinics by 2027.
  • Meanwhile, Summit was formed in 2019, when multispecialty practice Summit Medical Group merged with urgent care platform CityMD. At the time, the combined platform was reportedly set to generate $200 million in pro-forma EBITDA.

💭 Our thought bubble: A successful transaction could pivot market attention toward Duly Health and Care (fka DuPage Medical Group), which has been held by Ares Management since 2017.

  • Ares paid $1.45 billion for Duly, which now has over 150 loca­tions.

The bottom line: Market competition is heating up and Walgreens and Amazon are staking their claim in primary care — while CVS has yet to make a definitive move.

VillageMD and Walgreens declined to comment to Axios. Summit and Warburg did not respond to Axios' request for comment.

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