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Walgreens Expands Focus on Medical Care With VillageMD Deal

By Howard Smith – Jul 8, 2020 at 6:05AM

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Walgreens will open hundreds of full-service doctor offices inside its stores.

Walgreens Boots Alliance (WBA 1.14%) announced today that it is partnering with primary care medical clinic operator VillageMD to open between 500 and 700 new full-service doctor offices in Walgreens stores over the next five years. The companies also say they plan to expand that to hundreds more after the five-year rollout. 

VillageMD, headquartered in Chicago, operates over 1,000 primary care clinics in nine markets across the U.S. Its subsidiary, Village Medical, already has a relationship with Walgreens. In November 2019, Village Medical opened its first full-service clinic at a Walgreens in Houston. Under the new agreement, Walgreens will invest $1 billion in VillageMD over three years through equity and convertible debt, including a $250 million investment immediately. 

A pharmacist filling out a form behind the counter

Image source: Getty Images.

The companies say that, of the Walgreens investment, "80 percent will be used by VillageMD to fund the opening of the clinics and build the partnership, including integration with Walgreens digital assets." The clinics will utilize existing store space and will also offer retail products to customers. Most will be about 3,300 square feet, or about 25% of a typical Walgreens store size. 

VillageMD will recruit the more than 3,600 primary care providers that will staff the clinics. More than half will be located in areas designated as medically underserved or where there is a shortage of medical professionals.

Walgreens CEO Stefano Pessina said the partnership is "a significant step forward in creating the pharmacy of the future, meeting many essential health needs all under one roof." If the debt investment is fully converted, at the completion of the investment, Walgreens will have approximately a 30% ownership interest in VillageMD.

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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