- Walgreens-backed VillageMD is exploring a merger with medical practice Summit Health, the parent company of CityMD, according to a Bloomberg report.
- Acquiring Summit would value the combined company between $5 billion and $10 billion, Bloomberg said, citing unnamed sources familiar with the deal.
- Talks are ongoing and could still fall through, but a deal could emerge in the coming weeks.
Walgreens has been pushing deeper into the healthcare space beyond its core drugstore business, creating a U.S. healthcare division comprised of VillageMD, specialty pharmacy company Shields Health Solutions and at-home care provider CareCentrix, along with other health arms. Walgreens expects the division to reach profitability in 2024, CEO Roz Brewer told investors earlier this month.
Walgreens doubled its ownership stake in VillageMD a little more than a year ago with an additional investment of $5.2 billion in the primary care services provider, increasing its stake from 30% to 63%. Walgreens plans to build 1,000 primary care clinics inside its pharmacies by 2027 in partnership with VillageMD.
Summit Health was created in 2019 through the merger of Summit Medical Group and CityMD, a urgent care provider in the New York metro area. The provider has more than 370 locations in New Jersey, New York, Connecticut, Pennsylvania and Oregon, according to its website.
It’s currently owned by New York-based private equity firm Warburg Pincus, which acquired CityMD in 2017 and took a majority stake in Summit following the merger.
The report comes amid a frenzy of M&A activity in the primary care space, including Amazon’s $3.9 billion purchase of One Medical in July and CVS Health’s deal to acquire Signify Health for roughly $8 billion last month.
CVS was also reportedly in exclusive talks to purchase primary care provider Cano Health, though the two have tabled discussions, leading Cano’s stock to plummet earlier this month.
Walgreens and Warburg Pincus declined to comment for this story. VillageMD and Summit did not respond to a request for comment by time of publication.