As retail pharmacy chains continue to push deeper into healthcare services, there's another potential M&A deal on the horizon.
VillageMD, which is majority owned by Walgreens Boots Alliance, is exploring a potential deal to merge with medical practice Summit Health, the parent company of urgent care clinic chain CityMD, Bloomberg reported Sunday.
The acquisition by primary care provider VillageMD of Summit would value the combined entity at between $5 billion and $10 billion, according to Bloomberg, citing people familiar with the matter.
The talks are ongoing and could still fall through, Bloomberg reported, but a deal could happen in the coming weeks.
A Walgreens Boots Alliance spokesperson declined to comment on the report. Representatives for VillageMD and Summit Health could not be reached for comment.
The report comes amid a frenzy of M&A activity in the past two years. Major retailers like CVS, Walgreens and Amazon are ramping up their focus on providing medical services to gain bigger footholds in the healthcare market.
Last year, Walgreens invested $5.2 billion in VillageMD, making it the majority owner with a 63% stake, up from 30% previously. Together, the companies have opened more than 80 Village Medical at Walgreens centers across 12 markets including Arizona, Florida, Texas, Kentucky and Indiana. The companies plan to boost that number to 200 practices by the end of this year.
The company has said it plans to open at least 600 co-located Village Medical at Walgreens primary care practices in more than 30 U.S. markets by 2025 and 1,000 by 2027.
The retail drugstore chain has focused on primary care and home healthcare, buying out its remaining stakes in CareCentrix and Shields Health Solutions.
Drugstore rival CVS Health won the bidding war for home health and technology services company Signify Health and plans to shell out $8 billion to acquire the company. There were media reports last month that CVS Health backed out of talks to potentially buy primary care company Cano Health.
Amazon also plans to buy primary care provider One Medical for $3.9 billion.
A deal to acquire Summit Health would give Walgreens a leg up in the primary care market.
In 2019, Summit Medical Group, a physician-owned and governed multispecialty group, merged with CityMD, a leading urgent care company in New York City. The combined organization, Summit Health, has more than 370 locations in New Jersey, New York, Connecticut, Pennsylvania and Oregon.
Private equity firm Warburg Pincus acquired CityMD in 2017 and assumed a majority interest in Summit after the 2019 acquisition.