On Monday, VillageMD officially confirmed its plan to acquire Summit Health-CityMD. On Wednesday, Walgreens Boots Alliance Inc. (Nasdaq: WBA) — one of VillageMD’s chief inventors — opened up about how the deal fits into its overall strategy.
VillageMD – which has an at-home division, Village Medical at Home – is a primary care provider that has a home- and community-based focus.
“While our existing portfolio of best-in-class assets supports a strong future outlook, the addition of Summit Health — it’s transformational,” Walgreens Boots Alliance CEO Roz Brewer said. “It’s really pushing the business to gain both scale and profit. I want you to think about this investment supporting [VillageMD] and enhancing the value across the full health care business and extending our reach. It ultimately drives strong financial returns for [Walgreens Boots Alliance].”
Brewer made these comments during a presentation at the Credit Suisse Annual Healthcare Conference.
She noted that the deal adds complementary specialty and urgent care capabilities to VillageMD, and creates a multi-payer integrated provider platform.
The deal also expands Walgreens Boots Alliance’s addressable market, more than doubles VillageMD’s sales and adds scale to their proposition.
The company also sees a number of synergy opportunities, Brewer said.
“We project a run rate of $150 million by 2027 through synergies in two ways — improving the risk performance at Summit and cost savings opportunities,” she said. “When you think about that risk performance at Summit, that’s about 60% of that $150 million in 2027, and about 40% of that is cost savings opportunities.”
Overall, Walgreens Boots Alliance believes that Summit Health accelerates the company’s path to profitability for its U.S. health care segment.
Another reason the acquisition is a big boon for Walgreens Boots Alliance is that primary care has been a big part of the company’s strategy.
“We see primary care as a critical linchpin in managing population health,” Brewer said.
The deal, no doubt, enhances Walgreens Boots Alliance’ primary care capability. Brewer noted that the deal expands its total primary care physicians by over 50%.
While Brewer didn’t directly comment on home-based care, it remains a key component of VillageMD’s care delivery model. Upon completion of the transaction, there may be more opportunity for Walgreens Boots Alliance to move further into the home setting.
One of the ways Walgreens Boots Alliance is already shifting further into the home is its acquisition of the health-at-home solutions company CareCentrix. Walgreens Boots Alliance announced it was purchasing the remaining 45% stake in CareCentrix for $392 million last month.
At the time, the company also revealed that CareCentrix CEO John Driscoll was named the executive vice president and president of U.S. Healthcare at Walgreens.
Brewer also touched on Driscoll’s appointment during the presentation.
“It’s exciting to our new growth engine, which is a segment that we’re calling U.S. Healthcare, led by John Driscoll,” she said. “He’s the former CEO of CareCentrix, so we’re glad to have his expertise in aligning with the strategy that we’re in. What’s so exciting about that is we had already been working side-by-side with John and the team at CareCentrix to talk about our three-year plan. It was really almost a natural fit for him to join us inside.”
Companies featured in this article:
