VillageMD Sets To Acquire Summit Health For $9 Billion
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Primary care provider VillageMD has announced plans to acquire care provider Summit Health for $9 billion to expand its operations.
This comes amidst the growing trend of major U.S. firms expanding into the healthcare business this year. Recently, CVS Health Corp announced that it would acquire Signify Health for $8 billion. Earlier in January this year, Amazon announced a $3.5 billion acquisition deal for primary healthcare operator 1Life Healthcare Inc.
The e-commerce giant bought the company for $18 a share in an all-cash transaction. The acquisition has been one of Amazon’s biggest to date, after its $13.7 billion acquisition of Whole Foods in 2017 and $8.5 billion acquisition of MGM earlier this year.
VillageMD To Accelerate Its Goal Of Offering Value-Based Care
Warburg Pincus-backed Summit Health, a private equity firm, operates a physician-run medical group CityMD. It’s an alternative to hospital emergency department visits.
Chief Executive Officer of VillageMD, Tim Barry commented on the development. He stated that the goal is to speed up its path towards value-based care, allowing villages to enjoy the benefits of more integrated multi-specialty care.
The sector is now looking towards value-based care, which deals with reimbursing healthcare providers based on patient outcomes rather than each procedure or test. Both Summit Health and VillageMD will be operating in more than 680 locations.
The Deal Is Expected To Conclude By Q1 2023
According to the announcement, the deal has an equity value of $7 billion. On Monday, Walgreens stated that it will invest $3.5 billion via an even mix of equity and debt to support the acquisition. According to the terms of the deal, both companies expect to complete the acquisition in Q1 2023, which is expected to be the largest shareholder in the company with about 53% stake.
Cigna Corp’s healthcare unit, Evernorth, will also contribute financially to the deal in exchange for a minority stake in the company. Walgreens recently raised its sales goal for fiscal 2025 for the healthcare business in the US o between $14.5billion and $16 billion.
The previous investment goal was between $11 billion and $12 billion. Last year, it raised its stake in VillageMD to 63% from 30% after investing $5.2 billion.
