VillageMD takes over Summit Health-CityMD

An $8.9 billion deal will join 680 vendor sites in 26 markets.

VillageMD announced it will acquire Summit Health-CityMD in an $8.9 billion deal to create “one of the largest groups of independent providers in the United States”

The company announced the agreement with investments from Walgreens Boots Alliance Inc. (WBA) and a subsidiary of Evernorth, a subsidiary of Cigna Corp.

Summit Health-CityMD has a strong presence in Oregon and the Northeastern United States. Together, VillageMD and Summit Health will have more than 680 provider locations in 26 markets, according to the companies’ announcement.

“This is an epic milestone in our journey to transform healthcare in the United States,” VillageMD CEO and President Tim Barry said in a press release. “Summit Health-CityMD has been a leader in providing coordinated, multi-specialty care for decades.

“We are honored to work side-by-side with their 13,000 passionate employees who are passionately committed to delivering the best outcomes for millions of patients,” Barry said. “Both organizations share a deep commitment to keeping our patients and clinicians at the forefront of what we are doing to serve them better.”

Both are patient-centric, physician-led companies with complementary offerings and a shared core belief in patient care as a cornerstone of success, Summit Health-CityMD Jeff Alter said in a press release.

“Adding our expertise and geographic coverage to VillageMD’s proven value-based primary care approach will improve the lives of so many patients and physicians across the country, helping to reduce healthcare costs.” and improve the health of our communities,” Alter said. “We are incredibly excited about the potential of these combined companies.”

WBA said the move will accelerate its path to profitability for the company’s U.S. healthcare segment. WBA will invest $3.5 billion through an equal mix of debt and equity to support the acquisition, and will remain Village MD’s largest shareholder with an approximate 53% stake.

Following the transaction, WBA expanded its fiscal 2025 sales target to $16 billion, higher than the previous target of $12 billion.

“Summit Health-CityMD joining VillageMD is transformational for our U.S. healthcare segment and reinforces our intent to create greater access to quality healthcare across the continuum of care,” said Roz Brewer, CEO of WBA. “This transaction accelerates growth opportunities through a strong market presence and an extensive network of providers and patients in primary, specialty and urgent care.”

Evernorth, Cigna’s health services organization that creates and connects benefits, pharmacy and healthcare solutions, will be a minority owner of VillageMD.

“Our collaboration with VillageMD accelerates our efforts to improve how care is accessed and delivered,” Evernorth CEO Eric Palmer said in a press release. “Harnessing the breadth of Evernorth Health Services capabilities and connecting them to physicians providing care in a value-based model like VillageMD helps more people get the right care at the right time, which which improves health and value.

The companies announced that the transaction is subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other terms of usual closing. It is expected to close in the first quarter of calendar year 2023.

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