The news: Walgreens-backed VillageMD is in talks to acquire medical group Summit Health in a deal that would value the combined companies at between $5 billion and $10 billion, according to a Bloomberg report.
Breaking down the players: Both organizations have accelerated their healthcare businesses.
Why the merger makes sense for Walgreens: We see the CityMD urgent care arm of Summit Health as being particularly attractive, given how much care is shifting toward outpatient settings. This trend is being driven by consumers seeking convenient and affordable care.
Walgreens’ big-picture healthcare play: Hospitals, insurers, and provider groups are looking to capitalize on the shift to outpatient care through M&As.
Retail health clinics, primary care practices, and urgent care centers all fill the demand for accessible care, and each in their own way serves as a first step into the healthcare system. If the deal with Summit Health does go through, Walgreens would have all bases covered—including home health, as it now has full ownership of CareCentrix.
It wouldn’t surprise us to see Walgreens parlay these moves into a virtual health acquisition. The company acknowledged in its last two quarters’ earnings calls that it could soon strike a deal for a health tech-enablement asset.
This article originally appeared in Insider Intelligence's Digital Health Briefing—a daily recap of top stories reshaping the healthcare industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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