Walgreens Boots Alliance will invest an additional $5.2 billion in VillageMD, increasing its ownership stake from 30% to 63% as the retailer delves deeper into primary care services. VillageMD will remain a standalone company with its own board and management, with plans to conduct an IPO in 2022.
Walgreens is planning to open at least 600 Village Medical at Walgreens primary care practices by 2025 and 1,000 by 2027, building on the 80 that are expected to open by the end of 2021. The company aims to become the first retailer to offer full-service primary care practices, with primary care physicians and pharmacists co-located in stores, on a national scale.
The Village Medical clinics will open in more than 30 markets, with more than half in medically underserved communities. The effort is expected to increase access to primary care in both urban and rural communities, as more than 75% of Americans live within five miles of a Walgreens.
“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 of Walgreens Boots Alliance in a statement. “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 more than 230 practices across 15 markets, with plans to expand nationally in the future. The company’s revenue has grown from $217 million in 2017 to an expected $1.3 billion in 2021. The investment will help the company expand its offerings to new services, though Walgreens didn’t specify what these may include.
Walgreens initially announced plans to open practices in partnership with VillageMD in July 2020. At the time, the retailer noted that the clinics would be staffed by more than 3,600 primary care providers recruited by VillageMD and also would integrate Walgreens pharmacists as part of the team. The clinics offer comprehensive primary care services through on-site, at-home and 24/7 telehealth options.
The pharmacy giant has been focused on breaking into the value-based primary care market, which is valued as a $1 trillion segment of the overall healthcare system. The retailer also has partnered with Jenny Craig to open 100 weight loss clinics inside Walgreens stores. Additionally, the retailer sold its wholesale business to AmerisourceBergen Corporation for approximately $6.5 billion in January 2021 to let it focus on its core retail pharmacy and related offerings.
Walgreens has a head start over its rivals in this area, but CVS has been making its own moves. In August 2021, CVS launched Aetna Virtual Primary Care, which provides Aetna members with $0 co-pay options for virtual visits and certain in-person services at MinuteClinic and CVS HealthHUB locations. The offering also includes unlimited in-app text or phone conversations with a virtual nurse care team to assist with any follow ups.