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Walgreens Boots Alliance Inc (Nasdaq: WBA) will invest $5.2 billion in primary care provider VillageMD as part of the pharmacy chain’s plan to open more co-located practices within its drugstores across the US.
The investment announced Thursday increases the Deerfield, Illinois-based chain’s stake in VillageMD to 63% from the 30% it acquired in July 2020.
After the transaction’s expected close by the end of this year, VillageMD will remain an independent company with its own management and board. According to the companies, VillageMD is planning an initial public offering sometime next year.
Walgreens’ is part of a broader strategy to transform its stores into healthcare destinations that not only fill prescriptions, but also offer access to doctors for checkups and other types of care.
After first striking a partnership in 2019, Walgreens and VillageMD have opened 52 primary care clinic locations and have an additional 80 on track to start by the end of the calendar year.
The latest investment will accelerate the opening of at least 600 VillageMD clinics in more than 30 US markets by 2025 and 1,000 by 2027.
“Walgreens’ partnership with VillageMD will lead to a significant increase in access to primary care in underserved urban and rural communities – more than 75% of Americans live within five miles of a Walgreens,” the companies said.
Walgreens’ chief executive officer Roz Brewer told CNBC that most of the clinics will be about 3,300 square feet — nearly a quarter of the average store size of 13,500 square feet.
The locations will also accept different kinds of health insurance and offer an out-of-pocket payment option, as well as a sliding scale for those who do not have health insurance, Brewer said.
Walgreens’ retail pharmacy rivals CVS Health and Walmart have also made moves to enter value-based primary care, one of the fastest-segments of the healthcare industry, and have both launched their own in-store clinics.
In a statement Thursday, VillageMD’s chief executive officer and chairman Tim Barry said, “Over the past two and a half years, we have worked side-by-side with Walgreens to create an integrated primary care and pharmacy model that accomplishes one primary goal: better patient care.”
“WBA’s investment supports our ongoing commitment to providing the highest quality healthcare to all patients, including many people who don’t currently have convenient access to a primary care provider,” Barry stated. “This expanded partnership helps us accelerate our mission to deliver the best healthcare in the world.”
Walgreens’ announcement on Thursday came alongside its fiscal fourth-quarter results, which beat expectations on earnings and revenue. Pharmacies saw a boost from COVID-19 vaccines and testing, as well as a rebound in demand for over-the-counter medications.
For the quarter ending Aug. 31, Walgreens reported adjusted earnings per share of $1.17, beating the $1.02 expected by analysts. The company posted $34.26 billion in revenue, edging the consensus forecast of $33.30 billion.
Source: Equities News