Walgreens Boots Alliance is investing $1 billion in a Chicago-based primary care startup as the pair plan to open at least 500 clinics at stores in more than 30 U.S. markets.
The deal expands on the Deerfield-based drugstore chain’s partnership with VillageMD, which started with five in-store clinics in the Houston area.
At the 500 to 700 new “Village Medical at Walgreens” clinics set to open in the next five years, with plans to build hundreds more, Walgreens pharmacists will be an integral part of the care team, the companies said in a statement today. The clinics, staffed by VillageMD, will accept a range of health insurance plans and more than half will be in areas where there’s a shortage of medical professionals. The model also will offer services around the clock virtually and in the home.
VillageMD, led by co-founder and CEO Tim Barry, aims to help doctors and patients better manage chronic conditions to improve clinical outcomes and control costs. It has grown rapidly in the past several years—snapping up physician groups and entering into partnerships such as this one.
“This rollout is a major advancement of one of Walgreens Boots Alliance’s four key strategic priorities, Creating Neighborhood Health Destinations,” Walgreens CEO Stefano Pessina said in the statement. “These clinics at our conveniently located stores are a significant step forward in creating the pharmacy of the future, meeting many essential health needs all under one roof as well as through other channels.”
Walgreens will invest $1 billion in equity and convertible debt in VillageMD over the next three years—including a $250 million equity investment to be completed today—with the expectation that it will eventually hold about a 30 percent ownership interest in the startup, according to the statement. VillageMD will use 80 percent of the funds to execute the expanded partnership.
Most of the clinics will be about 3,330 square feet, with some as large as 9,000 square feet, using existing space in each store, the statement says.
With more than 1,000 clinics in nine states, VillageMD and its subsidiary Village Medical manage $4 billion in total medical spend.
The deal comes as rival CVS Health plans to expand its own primary care presence, opening new HealthHubs in its stores through 2021. The HealthHub model offers an expanded range of health services aims to help patients better manage their health between doctor visits.