Walgreens and Village®
Walgreens Boots Alliance said Thursday it has agreed to become the majority owner of VillageMD as it opens hundreds of doctor’s offices with the primary care company.
As part of the deal, the drugstore chain will invest $ 5.2 billion in VillageMD. This will increase Walgreens’ stake from 30% to 63%. VillageMD will remain an independent company with its own management and board of directors.
Walgreens said it expects the deal to be done by the end of this year, pending regulatory approval.
The investment is part of Walgreens’ larger effort to transform its stores into healthcare destinations that not only fill prescriptions, but also have doctors who can write them and provide other types of care, such as annual reviews. The company is accelerating its plan to open Village Medical clinics in existing Walgreens pharmacies. The goal is to have at least 600 primary care clinics in more than 30 U.S. markets by 2025 and 1,000 by 2027.
Walgreens CEO Roz Brewer said in an interview with CNBC’s Bertha Coombs that clinics will simplify patient care. She said Walgreens and VillageMD will have pharmacists and doctors working together. They will have access to the same technological platform that collects medical records. And they’ll be in a convenient location, a short walk or drive away.
“Your doctor recommendations are shared directly with the pharmacist,” Brewer said. “I think it’s a game-changer when you think about what we’re capable of doing.”
Most clinics will be approximately 3,300 square feet, almost one-quarter of the average pharmacy size of 13,500 square feet.
Walgreens has approximately 9,000 stores in the United States, and over 75% of Americans live within five miles of one. Brewer said he plans to use this imprint to reach people who have few or no doctors nearby. He said he plans to open more than half of his VillageMD clinics in urban neighborhoods and rural communities that are medically underserved.
Walgreens and VillageMD said doctors’ offices would accept different types of health insurance and offer a chargeable option for patients, as well as a sliding scale for people who don’t have insurance.
With the move, Walgreens is following in the footsteps of its competitors, including CVS Health and Walmart. Many CVS stores already have a MinuteClinic, which administers vaccines and offers urgent walk-in care appointments. CVS is also turning more stores into HealthHub, which offers a wider range of medical services, such as sleep apnea screening and diabetes management. Walmart is opening a growing number of primary clinics with a low-cost model, but so far they are concentrated in Georgia, Florida, and the Chicago area.
Walgreens and VillageMD have already opened 52 primary care clinics and have 33 more on track to start by the end of the calendar year. The company first announced the partnership in 2019 and decided to expand its efforts after a pilot of five clinics in the Houston area.