VillageMD, a home-focused primary care physician and key investment target of the Walgreens Boots Alliance (Nasdaq: WBA), is said to be eyeing a possible merger with Summit Health.
According to a report by Bloomberg News, the merger would value the combined companies at an estimated $5 billion to $10 billion.
Chicago-based VillageMD, through its Village Medical subsidiary, provides primary care services in 22 markets to more than 1.6 million patients. In recent years, Walgreens has invested billions in the company.
Summit Health is a primary and specialty care provider formed in 2019 through the merger of Summit Medical Group and CityMD. The organization has over 2,800 providers, 13,000 employees and more than 370 locations in New Jersey, New York, Connecticut, Pennsylvania and Oregon.
The companies are rumored to be in talks and a potential deal could be finalized in the coming weeks. However, negotiations still may not result in an agreement, a source told Bloomberg.
In 2020, Walgreens Boots Alliance and VillageMD unveiled a five-year expansion plan. Specifically, the partnership would open 500 to 700 Village Medical at Walgreens primary care clinics in more than 30 markets across the United States, with plans for further expansion thereafter.
At that time, Walgreens Boots Alliance also invested $1 billion in VillageMD. The following year, the Walgreens Boots Alliance pumped an additional $5.2 billion into the company.
With the firepower of the Walgreens Boots Alliance, VillageMD is without a doubt one of the most prominent home-focused primary care providers in the country. A merger with Summit Health would likely take the organization to even greater heights, especially at a time when there is an immense need for greater access to primary care.
For context, the US lags behind in access to basic services. According to a report by the Commonwealth Fund, adults in the United States often do not have a regular doctor, nursing facility, or long-standing relationship with a family doctor.
Residential primary care is one strategy to address these issues of access to care.
Additionally, a merger of this magnitude would further scale primary care services and allow more people to access care.
“[VillageMD] has a great desire to expand primary care at home,” said Dr. Thomas Cornwell, senior medical director of Village Medical at Home, which is part of VillageMD, on Home Health Care News’ Capital+Strategy in March. “And while we’re only a small part of that, we’re the ones who are really targeting the high-cost patients, who have the greatest potential savings, and who we work with.” [home-based care providers] to.”
Aside from the Walgreen Boots Alliance, basic supplies and home care appear to be top priorities for some of the largest retailers.
In September, CVS Health (NYSE: CVS) announced it had reached a definitive agreement to purchase Signify Health (NYSE: SGFY) in an $8 billion transaction. The company is reportedly in talks to acquire Cano Health.
Amazon (Nasdaq:AMZN) — which was also in the running to buy Signify Health — plans to buy primary care physician One Medical (Nasdaq: ONEM) for $3.9 billion.
