VillageMD names new president and COO as it shrinks to 620 locations

April 10, 2024 | by

Jim Murray retires from Centene to take the role of VillageMD’s president and chief operating officer. The appointment was effective on 1 April. He will be responsible for leading operations of Village Medical, Summit Medical, and CityMD.  Last October, VillageMD named new divisional heads: Rishi Sikka, MD as president of Village Medical, Dan Frogel, MD as president and chief clinical officer of CityMD, and Becky Levy, JD as president of Summit Health and Starling Physicians.  VillageMD release, Crain’s Chicago Business

As noted previously, VillageMD has been retreating quickly from its aggressive plans circa 2022 for expansion into Walgreens locations to closure of the co-locations and already established free-standing offices. The planned 140 closures are well above the originally estimated 50, then 85 locations, including all in Florida and six in its home state of Illinois. Majority owner Walgreens has already taken a $5.8 billion writedown of its estimated $9-10 billion investment. Industry analyst Brian Tanquilut, a health care services equity research analyst at Jefferies, estimated to Crain’s that VillageMD lost $800 million in 2023.

Jim Murray retired as Centene’s chief transformation officer on 29 March, just in time to move to VillageMD.  His planned retirement was announced by Centene last May. Previously, he had been president and chief operating officer at Magellan Health from January 2020 to its acquisition by Centene in January 2022. Subsequently, Centene sold parts of Magellan such as Specialty Health and Rx. His experience crosses both provider and payer, at Dallas-based PrimeWest Health, the Dallas-based hospital system LifeCare Health Partners, and prior to that, 28 years at Humana, departing as chief operating officer. It does show one how close the circles are at the C-level. St. Louis Today

VillageMD opens the Walgreens purse, set to buy Summit Health for $8.9B

November 9, 2022 | by

Moving from rumor to deal in a New York Minute. Primary care provider VillageMD has moved to a definitive agreement to acquire specialty/urgent care provider Summit Medical in an $8.9 billion deal including debt. This was heavily rumored last week [TTA 1 Nov]

This will create a provider behemoth of 680 provider locations, 750 primary care providers, and 1,200 specialty care providers in 26 markets. The fun facts:

  • VillageMD has 342 total primary care clinics in 22 southern and northeastern markets covering 15 states, with 152 co-located with Walgreens; these will eventually increase to 200.
  • Summit Health has 370 locations in New York, New Jersey, Connecticut, Pennsylvania, and central Oregon. VillageMD and Summit do not overlap (except in NJ) on markets.  
  • VillageMD consists of primarily owned and affiliated primary care practices; Summit Health specialty practices (neurology, chiropractic, cardiology, orthopedics, dermatology) plus 150 CityMD urgent care locations.
  • VillageMD has successfully mastered value-based care models in Medicare and entered advanced Medicare ACO models early and vigorously (Editor’s information). Summit Health presently is primarily is fee-for-service with some participation in value-based programs.

The participation in this one is interesting: 

  • Walgreens Boots Alliance (WBA) will invest $3.5 billion through an even mix of debt and equity 
  • Cigna’s health services organization Evernorth will become a minority owner; the exact percentage is not disclosed at this point
  • It’s not disclosed at this time whether Summit Health’s current majority owner, Walburg Pincus, will retain an interest in the combined companies. 

WBA remains the largest and consolidating shareholder of VillageMD, but with this acquisition, reduces its ownership share from approximately 62-63% to 53%. WBA’s other US non-retail healthcare interests include specialty pharmacy company Shields Health Solutions and at-home care provider CareCentrix.

Based on their release, the acquisition is expected to close in January 2023, subject to the usual Hart-Scott-Rodino Act (HSR) premerger notification and report with the DOJ and the Federal Trade Commission (FTC) that initiates a 30-day waiting period.

Bet on VillageMD and Summit closing deeper into Q1–but closing. This Editor’s over/under is that this is overly optimistic given the current DOJ and FTC’s scrutiny and apparent dislike of healthcare acquisitions, even though the provider groups don’t overlap except in a minor way in NJ. But perhaps Amazon, with a healthcare footprint primarily in pharmacy and shuttering Amazon Care, thought OneMedical would move smartly. CVS thought the same with Signify Health, yet both are on information Second Requests that extend the waiting period. DOJ is after all smarting hard with a Federal District Court nixing their challenge of UHG’s Optum with Change Healthcare, but it’s hard to throw typical antitrust at this one.

Go big or go home, indeed.     Healthcare Dive, Becker’s

VillageMD considering $5-$10B merger with Summit Health provider group: reports

November 1, 2022 | by

Two large provider groups, VillageMD and Summit Health, reportedly are considering a merger. VillageMD, which now is majority owned (62%) by Walgreens Boots Alliance, has 342 total primary care clinics in 22 southern and northeastern markets covering 15 states, with 152 co-located with Walgreens eventually increasing to 200. Summit Health has 370 locations in five states, including specialty practices and CityMD urgent care locations. Summit Health is majority owned by Walburg Pincus.

This reinforces a trend of cross-healthcare sector buys, consolidations, and control. VillageMD’s move from a co-location deal with Walgreens to majority ownership (but controlled by an independent board) was one step starting during the pandemic in July 2020 [TTA article series here].

  • Amazon agreed to acquire OneMedical (1Life) for $3.9 billion at the end of July, and abandon Amazon Care, though now running into FTC/DOJ review headwinds with a second request for information [TTA 15 Sep].
  • CVS Health has made no secret of its desire to acquire primary care, provider enablement, and home health companies (Signify Health, also under DOJ scrutiny), but apparently has abandoned or put on hold a deal with Cano Health [TTA 21 Oct].
  • Walmart continues to go direct by opening full-service clinics, announcing the expansion of 16 based in the Tampa, Jacksonville, and Orlando areas in 2023 (Healthcare Dive, Healthcare Finance News).

Valued at $12.9 billion and with Walgreens’ backing, VillageMD has the ‘go big or go home’ resources to execute Walgreens’ version of this strategy.

Why this very well may happen. The two do not overlap (except in NJ) on markets. VillageMD is primarily owned and affiliated primary care practices; Summit Health specialty practices (neurology, chiropractic, cardiology, orthopedics, dermatology) and CityMD urgent care. VillageMD has successfully mastered value-based care models in Medicare and entered advanced Medicare ACO models early and vigorously (Editor’s information); Summit Health primarily is fee-for-service with some participation in value-based programs. More to come. Bloomberg, Becker’s, and a very big hat tip to research from Jailendra Singh of Truist Securities  (paper here)