Walgreens continues its big bet on healthcare, VillageMD clinics

Walgreens reaffirmed its commitment to becoming a fully integrated healthcare company on Wednesday, showing off its latest Village Medical at Walgreens primary care location in suburban Chicago.

The practice in Elk Grove Village, Illinois, is among 200 locations Walgreens has co-located with its stores across a dozen states. John Driscoll, president of Walgreens’ U.S. healthcare division, said the company plans to add Village Medical at Walgreens clinics where there is population density and where opportunities exist for primary care physicians and pharmacists to collaborate more closely on patient care.

Related: Walgreens bets big on VillageMD as it expands healthcare services

Walgreens moved aggressively into healthcare services under former CEO Roz Brewer, who stepped down earlier this month as the company's U.S. healthcare services segment has struggled to gain traction. A search is underway for a permanent CEO.

While Driscoll admitted these are complicated times for Walgreens, he said the board of directors and executive team are not changing the strategy for the healthcare unit.

“Our bet is this model will win in the communities we are in,” Driscoll said.

The Village Medical at Walgreens clinics are adjacent to the retail pharmacies but operate separately and are staffed by physicians 7 days a week. Patients can receive care for a variety of illnesses, including chronic conditions, and can also get lab work such as blood draws done onsite. Walgreens pharmacists and the physicians collaborate on patient medications.

By the end of the year, Walgreens also plans to increase the number of micro fulfillment facilities that serve its pharmacies to 19, from the current 11 locations. The automated facilities supervised by pharmacists are able to fill approximately 50,000 maintenance medications that are delivered to Walgreens stores across two to three states.

The retail pharmacy chain bought a majority stake in VillageMD late in 2021 for $5.2 billion. Last year, it bought the remaining stake in specialty pharmacy company Shields Health Solutions for $1.37 billion and the remaining stake in home care platform CareCentrix for $392 million. Earlier this year, VillageMD acquired urgent care and specialty care provider Summit Health-CityMD for $8.9 billion. 

Walgreens' U.S. healthcare services unit reported a $172 million operating loss in its fiscal third quarter ended May 31 and a $483 million year-to-date operating loss.

“I can’t speak to financial performance, but I can tell you the growth is there,” Driscoll said. “At the same time, we just have to do a better job delivering results and we own that.”