- Walgreens is doubling its ownership stake in the VillageMD value-based medical network with an additional $ 5.2 billion investment, the pharmacy chain said Thursday.
- The increased investment should accelerate the opening of 600 “Village Medical at Walgreens” primary care offices in more than 30 US markets by 2025 and 1,000 by 2027. More than half of the clinics will be in underserved communities . according to the companies.
- Walgreens expects the deal to close later this year, pending regulatory approval. VillageMD, which will remain an independent company with its own management and board, plans to conduct an IPO in 2022.
Walgreens first announced the partnership two and a half years ago with a five-practice trial in the Houston area, when retail pharmacies began to build medical networks in earnest, codating them to become the primary point of access for consumers to healthcare. health industry.
After a brief pilot test, the companies expanded the partnership in July last year, when Walgreens promised a $ 1 billion investment in Chicago-based VillageMD. before accelerating your investment in January.
Currently, Walgreens and VillageMD have 52 operational co-branded primary care practice locations and plan to have more than 80 open by the end of 2021.
Eight-year-old VillageMD currently operates more than 230 practices in 15 markets, with plans for national expansion. The company has grown rapidly, increasing revenue from $ 217 million in 2017 to $ 1.3 billion forecast for this year.
Thursday’s investment increases Walgreens’ stake in Village MD from 30% to 63% as the leading pharmacy operator looks to increase its presence in the red-hot primary care sector.
Walgreens has been competing with other health-focused retail giants like CVS Health and Walmart for a share of the market. These companies have been quick to build their clinical footprint as consumers, facing skyrocketing healthcare prices even before COVID-19, and seeking convenient and affordable care close to home.
Retail clinics also have the added benefit of leading to increased script writing and in-store sales for their owners, the data shows.
Last September, Walmart partnered with primary care startup Oak Street Health to bring its value-based clinics to Walmart supercenters in the Dallas-Fort Worth area, as the major retailer continues to expand its network of large “superstores. health “in underserved regions.
Meanwhile, CVS Health is on track to run a network of 1,500 HealthHUBS, stores that allocate one-fifth of floor space to health and wellness products and services, by the end of 2021.
But Walgreens emphasizes that it is the first national pharmacy chain to begin building a primary care infrastructure in its retail stores using physicians, rather than nurse practitioners, as a key differentiator for its partnership with VillageMD. The company said its clinics accept most major insurance and will have an out-of-pocket option and a sliding fee scale for the uninsured.
Also on Thursday, Walgreens released quarterly results for its fourth quarter. The Deerfield, Illinois-based operator beat Wall Street expectations in both profit and revenue, though its top line was down slightly year-over-year to $ 34.3 billion.