The news: Walgreens-owned VillageMD and Cigna’s health services division Evernorth struck a deal Monday to acquire multispecialty physician group Summit Health, the parent entity of urgent care provider CityMD, for $8.9 billion. The transaction is expected to close in Q1 2023.
Key terms of the deal include:
What the deal means for Walgreens: Though its ownership stake in VillageMD has been diluted some, Walgreens is still the largest shareholder of the combined entity.
Last week, we broke down the then-rumored deal with a focus on Walgreens’ big-picture healthcare plan to capitalize on the shift away from hospital care by being a point of entry for patients through multiple outpatient channels such as home health, primary care, and urgent care.
What the deal means for Cigna: Health insurers are increasingly buying or investing in medical practices. This control helps them rein in the costs of services that they’re liable for when providers deliver care. Cigna needed a physician practice footprint to keep up with rival players who already have one.
How about other retail health players? CVS and Walmart obviously weren’t part of this acquisition, but as retail clinic competitors of Walgreens, they’ll still feel the ramifications.
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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