VillageMD announced it has entered a definitive agreement to acquire Summit Health-CityMD, a provider of primary, specialty and urgent care. The transaction is valued at approximately $8.9B with investments from Walgreens Boots Alliance (WBA) and an affiliate of Evernorth, a subsidiary of Cigna Corporation (CI). WBA will invest $3.5B through an even mix of debt and equity to support the acquisition of Summit Health-CityMD, which drives meaningful synergies and accelerates WBA’s path to profitability for its U.S. Healthcare segment. WBA will remain the largest and consolidating shareholder of VillageMD with approximately 53% ownership. The company expects to maintain an investment grade rating. As a result of the transaction, WBA is raising its U.S. Healthcare fiscal year FY25 sales goal to $14.5B to $16B , from $11B to $12B previously. WBA’s U.S. Healthcare segment is now expected to achieve positive adjusted EBITDA by the end of FY23. Assuming a January 1, 2023 closing date, WBA is raising the U.S. Healthcare adjusted EBITDA target for fiscal year FY23 to down $50M to up $25M, from down $220M-$240M million previously. The transaction will be slightly accretive to WBA adjusted EPS in FY23, and accretive by 7c to 11c in FY24 and increasing thereafter. 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. It is expected to close in the first quarter of calendar 2023.
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