Walgreens combines VillageMD and CityMD in $8.9 billion deal

video

FOX Business Flash top headlines for November 7

Check out what’s clicking on FoxBusiness.com

Walgreens and Evernorth announced on Monday a definitive agreement to acquire Summit Health-CityMD with the intent to merge it with Walgreen's existing division VillageMD. 

The combination of VillageMD and Summit Health-CityMD will create a primary care platform with extensive geographical coverage.

The deal comes in the wake of rival CVS Health announced it's decision to acquire Signify Health for $8 billion announced two months ago.

 Summit Health-CityMD will add over 680 locations in 26 markets to VillageMD's primary care network. Summit Health-CityMD currently has locations in New York, New Jersey, Connecticut, Pennsylvania as well as Central Oregon, which it will add to VillageMDs 22 markets encapsulating 1.6 million patients.

People wait on a line at a CityMD Urgent Care location on Nov. 17, 2020, in the Forest Hills neighborhood of the Queens borough of New York. (AP Photo/Frank Franklin II, File) (AP Newsroom)

J&J TO BUY ABIOMED IN $16.6B DEAL TO BOOST CARDIOVASCULAR BUSINESS

Walgreens CEO, Roz Brewer said the deal, "is transformational for our U.S. Healthcare segment and reinforces our intent to create greater access to quality healthcare across the care continuum," and that, "This transaction accelerates growth opportunities through a strong market footprint and wide network of providers and patients across primary, specialty and urgent care."

Walgreens will fund it's part of the deal with $1.75 billion in equity and $1.75 billion in debt for a total contribution of $3.5 billion to the deal.

GSK VACCINE FOR OLDER ADULTS GRANTED FDA PRIORITY REVIEW

With the announcement of the deal Walgreens update it's U.S. Healthcare sales goal from $14.5 billion to $16.0 billion. Walgreens U.S. Healthcare business also announced that it now expects to achieve positive adjusted EBITDA (Earnings, Before, Interest, Tax, Depreciation, and Amortization), by the end of fiscal year 2023. 

Evernorth, Cigna Corporation's health services subsidiary will be a minority owner in the new VillageMD. 

The transaction is subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. 

The deal is expected to close in the first quarter of calendar 2023.

Image 1 of 2

Indianapolis – Circa June 2017: Walgreens Retail Location. Walgreens is an American Pharmaceutical Company XIII | iStock

CLICK HERE TO GET THE FOX BUSINESS APP

Source: Read Full Article