Walgreens Jump-Starts ‘Walgreens Health’ by Investing $5.5 Billion in VillageMD, CareCentrix

Walgreens Boots Alliance (Nasdaq: WBA), the holdings company for pharmacy store giant Walgreens, announced two major investments in home-based care on Thursday. The investments kick off its new long-term growth strategy.

The first is a $5.2 billion investment in VillageMD to advance an already significant partnership that began in 2019. Walgreens is also betting big on CareCentrix, a health-at-home solutions company, with a $330 million investment.

“Community pharmacy is a natural partner to what we’re doing, which is to shift more care to the home and community,” CareCentrix CEO John Driscoll told Home Health Care News. “From the beginning, Walgreens was really excited about the opportunity to enhance the role of pharmacists in helping patients to heal and age at home.”


Hartford, Connecticut-based CareCentrix manages care for 19 million members through its network of more than 7,400 locations in over two dozen states.

The Walgreens investment now gives the company majority ownership of CareCentrix. Walgreen owns 55% of the company at an $800 million valuation, net of debt, with the option to purchase the remaining equity interests down the line.

“In support of the launch of Walgreens Health, we continue to make strategic investments in pharmacy and health care solutions that can improve care coordination and health outcomes, while lowering overall costs,” Walgreens Boots Alliance CEO Roz Brewer said in a press release. “CareCentrix’s suite of home care solutions will advance our capabilities in this important segment for health care delivery, to help address the needs of people living with complex or chronic conditions in the home.”


The investments in CareCentrix and VillageMD come as Walgreens unveils a new “consumer-centric health care strategy to drive sustainable, long-term profitable growth.” Broadly, Walgreens is looking to become a powerhouse in local clinical care services, while simultaneously strengthening its partnerships with payers, providers and patients.

On its end, the investment will allow CareCentrix, among other things, to closely align the role of the community pharmacist with the company’s care teams, according to Driscoll.

“It also gives us the benefit of a balance sheet and a portfolio of other service assets at Walgreens Health that we can work with to help enhance delivering more care from nursing homes and hospitals where appropriate — to the community,” he added.

The partnership between Walgreens and CareCentrix began taking shape over the course of the past 12 months. The two companies had long been in talks about a potential investment and a close partnership.

“The Walgreens leadership team couldn’t be more passionate and supportive of the  CareCentrix mission of delivering more personalized care, leveraging analytics, and engaging patients and their families to help them heal,” Driscoll said. “I think Walgreens has become increasingly focused, particularly during COVID, on delivering more care in the community.”

Driscoll believes that CareCentrix has the ability to shift roughly 10% to 15% of the care that currently takes place in nursing homes and hospitals into the home and community.

So far, CareCentrix has been able to reduce the total cost of care for its members by 20%. This includes a more than 11% decrease in emergency department usage and a 23% decrease in skilled nursing costs, according to the company.

Brewer joined Walgreens from Starbucks in January.

Doubling down on VillageMD

In a move to advance its strategic position in the delivery of value-based primary care, Walgreens also announced its additional investment in VillageMD.

Chicago-based VillageMD, through its subsidiary Village Medical, provides primary care services across 15 markets to more than 1.6 million patients.

Overall, the investment bumps up Walgreens’ ownership stake in VillageMD from 30% to 63%.

Under the terms of the deal, VillageMD will remain a standalone company, with its own board and management. Additionally, the company has plans to conduct an IPO in 2022.

The additional injection of funds will fuel the opening of roughly 600 Village Medical at Walgreens primary care practices by 2025 in more than 30 markets across the U.S. The company has plans to reach 1,000 by 2027.

“The best health care is deeply rooted in local communities, and Walgreens is committed to expanding convenient access to high-quality and affordable health care services to our patients and customers in our neighborhood locations,” Brewer said in a separate statement. “VillageMD is a leader within the fast-growing, value-based primary care segment with high rates of patient satisfaction and a talented management team who share our strategic vision of the central role that primary care can serve to improve patient outcomes and lower costs.”

Walgreens’ investment in VillageMD has its roots in a partnership that began in 2019. At the time, the companies teamed up on a trial launch of five co-located practices in the Houston area.

Last year, Walgreens and VillageMD revealed a five-year plan to expand the retailer’s full-service physician services at its stores. This plan included a $1 billion equity and convertible debt investment into VillageMD over the following three years.

“Over the past two and a half years, we have worked side-by-side with Walgreens to create an integrated primary care and pharmacy model that accomplishes one primary goal: better patient care,” Tim Barry, CEO and chairman of VillageMD, said in a statement. “[Walgreens’] investment supports our ongoing commitment to providing the highest quality health care to all patients, including many people who don’t currently have convenient access to a primary care provider.”

Currently, Walgreens and VillageMD have 52 co-located primary care practice locations.

Additionally, the partnership between the two organizations makes Walgreens the first national pharmacy chain to offer full-service primary care practices with primary care physicians and pharmacists co-located at its stores, according to a press release announcing the news.

“In the strategic conversations that we had with Walgreens, we recognized that both companies have a strong orientation to make a difference in the local community,” VillageMD’s Barry told HHCN in March. “And we said, ‘It should be us, it should be our organizations who kind of lead the way and go into these medically underserved communities and bring a solution that ultimately will allow people to live better lives.’ So we feel really good about what we’re doing.”

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