VillageMD to take over Summit Health-CityMD

$8.9 billion deal will join 680 provider locations in 26 markets.

VillageMD has announced it will acquire Summit Health-CityMD in an $8.9 billion deal to create “one of the largest independent provider groups in the U.S.”

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

Summit Health-CityMD has a strong footprint in Oregon and the northeast United States. Combined, 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 Chairman Tim Barry said in a news release. “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,” Barry said. “Both organizations share a deep commitment to keeping our patients and clinicians at the forefront of what we do to best serve them.”

The two are patient-centered and physician-led companies with complementary offerings and a shared core belief in patient care as the cornerstone of success, Summit Health-CityMD Jeff Alter said in a news release.

“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,” 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. health care segment. WBA will invest $3.5 billion through an even mix of debt and equity to support the acquisition, and will remain the largest shareholder of Village MD with about 53% ownership.

As a result of the transaction, WBA expanded its fiscal year 2025 sales goal up to $16 billion, more than the previous goal of up to $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 care continuum,” said Roz Brewer, CEO, WBA. “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’s health services organization that creates and connects benefits, pharmacy and care solutions, will be a minority owner in VillageMD.

“Our collaboration with VillageMD accelerates our efforts to improve the way care is accessed and delivered,” Evernorth CEO Eric Palmer said in a news release. “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.”

The companies announced 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 customary closing conditions. It is expected to close in the first quarter of calendar 2023.