SummitHealth, an entity made up by the combination of Summit Medical Group and CityMD that is a leading provider of primary, specialty and urgent care in New Jersey, will be acquired by VillageMD for $8.9 billion, it was announced Monday morning.
The transaction comes with investments from Walgreens Boots Alliance, an affiliate of Evernorth, which is a subsidiary of Cigna Corporation.
Together, VillageMD and Summit Health will have more than 680 provider locations in 26 markets – with a strong footprint in New Jersey and the Northeast. (Evernorth recently opened a new headquarters in Morris Plains; VillageMD is located in Deerfield, Illinois.)
Officials from VillageMD and Summit Health say the acquisition will create a multi-payor platform to deliver quality, affordable care for all patients as the combined company leverages VillageMD’s deep expertise in value-based care to support and accelerate the transition to more risk-based care and Summit Health-CityMD’s longstanding and deep expertise delivering multispecialty, connected care.
Officials feel it also enhances WBA’s robust portfolio of leading, integrated health care offerings across the care continuum.
Summit Health CEO Jeff Alter said the companies will be better together.
“Summit Health-CityMD and VillageMD are patient-centered and physician-led companies that have complementary offerings and a shared core belief that taking excellent care of the patient will remain the cornerstone of our success,” he said.
“Adding our expertise and geographic coverage to VillageMD’s proven value-based primary care approach will enhance the lives of so many patients and physicians across the country, helping to lower healthcare costs and improve the health of our communities. We are incredibly excited about the potential of these combined companies. I would also like to thank our incredible team of clinicians and support staff for their daily dedication to our patients, and to Warburg Pincus for their support and partnership.”
The transaction will go down like this: WBA will invest $3.5 billion through an even mix of debt and equity to support the acquisition of Summit Health-CityMD, which drives meaningful synergies and accelerates WBA’s path to profitability for its U.S. Healthcare segment. WBA will remain the largest and consolidating shareholder of VillageMD with approximately 53 percent ownership. The company expects to maintain an investment grade rating.
As a result of the transaction, WBA is raising its U.S. Healthcare fiscal year 2025 sales goal to $14.5 billion to $16 billion, from $11 billion to $12 billion previously. WBA’s U.S. Healthcare segment is now expected to achieve positive adjusted EBITDA by the end of fiscal year 2023.
Assuming a Jan. 1, 2023 closing date, WBA is raising the U.S. Healthcare adjusted EBITDA target for fiscal year 2023 to $50 million to $25 million, from $240 million to $220 million previously.
VillageMD Chiar and CEO Tim Barry said it is a monumental day.
“This is an epic milestone in our journey to transform healthcare in the United States,” he said. “Summit Health-CityMD has been a leader in delivering coordinated, multi-specialty care for decades. We are honored to work side-by-side with their 13,000 strong workforce who are passionately committed to delivering the best outcomes for millions of patients.
“Both organizations share a deep commitment to keeping our patients and clinicians at the forefront of what we do to best serve them.”
Roz Brewer, CEO of the Wallgreens Boots Alliance, called it transformative.
“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 care continuum,” she said. “This transaction accelerates growth opportunities through a strong market footprint and wide network of providers and patients across primary, specialty and urgent care.”
Evernorth, Cigna Corporation’s health services organization that creates and connects benefits, pharmacy and care solutions, will also be a minority owner in VillageMD. The collaboration is part of Evernorth’s commitment to accelerating value-based services that deepen relationships with high-performing primary care physicians and specialists to improve outcomes and lower costs.
“Our collaboration with VillageMD accelerates our efforts to improve the way care is accessed and delivered,” CEO Eric Palmer said. “Harnessing the breadth of Evernorth’s health services capabilities and connecting them with physicians who provide care in a value-based model like VillageMD, helps more people to get the right care at the right time – driving better health and value.”