Walgreens unit VillageMD to acquire Summit Health for $8.9B
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VillageMD, majority owned by drug store chain Walgreens Boots Alliance (NASDAQ:WBA), announced an agreement to acquire the health care provider Summit Health on Monday in a deal valued at approximately $8.9B, with investments from Evernorth, the PBM unit of Cigna (CI).
With the deal expected to close in the first quarter of 2023, Walgreens (WBA) also raised its fiscal 2025 sales guidance to $14.5B â $16.0B from $11.0B â $12.0B.
Assuming the deal closes on Jan. 03, the company expects its U.S. Healthcare to generate positive adj. EBITDA by the end of fiscal 2023. Walgreens (WBA) also revised the FY23 adjusted EBITDA guidance for the division to $(50)M - $25M, from $(240)M to $(220)M previously.
Walgreens (WBA) expects the deal to be slightly accretive to its adjusted earnings in FY23 and add $0.07 to $0.11 per share in FY24 before increasing thereafter. 
The private equity firm Warburg Pincus is a major investor of Summit Health, the parent company of CityMD, which provides primary, specialty, and urgent care in over 370 locations such as New York, New Jersey, and Connecticut.
âSummit Health-CityMD joining VillageMD is transformational for our U.S. Healthcare segment and reinforces our intent to create greater access to quality healthcare across the care continuum,â Walgreens (WBA) Chief Executive Roz Brewer.
Walgreens (WBA) expects to fund the acquisition with a mix of debt and equity in equal propositions and intends to retain its investment grade rating.
The transaction will mark the latest deal-making in the primary care space, if finalized. In September, Walgreensâ (WBA) rival CVS Health (CVS) agreed to acquire home-healthcare provider Signify Health (SGFY) for about $8B in cash.