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Walgreens Boots Alliance Invests $5.2B in VillageMD

October 14, 2021

Walgreens Boots Alliance has agreed to make an additional investment in VillageMD to advance its strategic position in the delivery of value-based primary care, a $1 trillion, fast-growing segment of the healthcare system.

The $5.2 billion investment will accelerate the opening of at least 600 Village Medical at Walgreens primary care practices in more than 30 U.S. markets by 2025 and 1,000 by 2027, with more than half of those practices in medically underserved communities. Walgreens’ partnership with VillageMD will lead to a significant increase in access to primary care in underserved urban and rural communities – more than 75 percent of Americans live within five miles of a Walgreens.

The investment increases WBA’s ownership stake in VillageMD to 63 percent from 30 percent. VillageMD remains a standalone company, with its own board and management, and the company plans to conduct an IPO in 2022.

Through its partnership with VillageMD, Walgreens is the first national pharmacy chain to offer full-service primary care practices with primary care physicians and pharmacists co-located at its stores all under one roof at a large scale.

“The best healthcare is deeply rooted in local communities, and Walgreens is committed to expanding convenient access to high-quality and affordable healthcare services to our patients and customers in our neighborhood locations,” said Roz Brewer, CEO, Walgreens Boots Alliance. “VillageMD is a leader within the fast-growing, value-based primary care segment with high rates of patient satisfaction and a talented management team who share our strategic vision of the central role that primary care can serve to improve patient outcomes and lower costs.”

VillageMD currently operates over 230 practices across 15 markets, with plans to expand nationally over time. The company has experienced rapid growth, increasing revenues from $217 million in 2017 to $1.3 billion expected in 2021.

“Over the past two and a half years, we have worked side-by-side with Walgreens to create an integrated primary care and pharmacy model that accomplishes one primary goal: better patient care. WBA’s investment supports our ongoing commitment to providing the highest quality healthcare to all patients, including many people who don’t currently have convenient access to a primary care provider,” said Tim Barry, CEO and chairman of VillageMD. “This expanded partnership helps us accelerate our mission to deliver the best healthcare in the world.”

VillageMD delivers high-quality primary care and an outstanding experience to patients, and enables physicians to transition from traditional fee-for-service to risk-based care models. Its physician-led care teams include pharmacists, nurses, lab techs, behavioral health specialists and other types of providers with a national network of clinical best practices to help provide coordinated, personalized care for each patient.

With this investment, VillageMD can accelerate its strategy of providing comprehensive, coordinated care through a primary care model, including expansion into broader service lines. Village Medical at Walgreens locations accept a wide range of health insurance options. Patients may access care and support through in-person, at-home and telehealth visits.

WBA and VillageMD have 52 co-located primary care practice locations currently open, and will have more than 80 open by the end of this calendar year. The companies first announced a partnership in 2019 with the trial launch of five co-located practices in the Houston area. Following the highly successful pilot, the companies expanded the partnership in July 2020, followed by an announcement in January of this year when WBA accelerated its investment.

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 and is expected to close by the end of calendar 2021. VillageMD’s financials will be consolidated by WBA.

Sidley Austin LLP acted as lead legal advisor for WBA, along with Weil, Gotshal & Manges LLP. Latham & Watkins, LLP acted as lead legal advisor for VillageMD.

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