The Wall Street Journal reports that a unit of Walgreens Boots Alliance "struck a deal to combine with a big owner of medical practices and urgent-care centers in a transaction worth roughly $9 billion including debt, the latest in a string of acquisitions by big consumer-focused companies aiming to delve deeper into medical care.
"The drugstore giant’s primary-care-center subsidiary, Village Practice Management, agreed to acquire Summit Health, the parent company of CityMD urgent-care centers, the companies said Monday."
Context from the Journal:
"Summit Health, which is backed by private-equity firm Warburg Pincus LLC, has more than 370 locations in New York, New Jersey, Connecticut, Pennsylvania and Central Oregon, according to the company’s website. Current and former physicians also own a large interest in the business.
"Village Practice Management, which does business as VillageMD, provides care for patients at free-standing practices as well as at Walgreens locations, virtually and in the home. In 2021, Walgreens said it had made a $5.2 billion investment in VillageMD, boosting its stake to 63%. At the time, Walgreens said the investment would help accelerate the opening of at least 600 Village Medical at Walgreens primary-care practices across the country by 2025 and 1,000 by 2027."
The story notes that insurer Cigna "is also investing in the combined company through its Evernorth unit, which will be a minority owner. Cigna has been expanding its footprint in other health-services businesses through Evernorth, which already includes virtual care and behavioral health, among other areas."
And, of course, "Amazon.com Inc. in July agreed to purchase primary-care operator 1Life Healthcare Inc., which operates under the name One Medical, for about $4 billion. In September, CVS Health Corp. struck a deal to acquire home-healthcare company Signify Healthcare Inc. for $8 billion. Cano Health Inc., which operates primary-care centers, has attracted interest from both CVS and insurer Humana Inc. in recent months."
- KC's View:
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If we accept the notion that food is inextricably linked to our health, then I have to wonder if we're reaching the point where major food retailers are going to start investing in businesses that will give them front line connections to the health care business.
I haven't really thought this though, but … could it be argued that Kroger might've made a more transformational move by acquiring a health care business/insurer than it is making by trying to buy Albertsons?
The Albertsons acquisition probably is more about incremental growth than transformation. Maybe that's enough. Maybe what I'm suggesting doesn't make sense from an operational or strategic point of view. But the ways in which companies are approaching health care, especially on the front lines, clearly is evolving. I wonder if big retailers need to be part of that conversation. (Amazon is. Walmart is.)
Just asking.
