Walgreens Boots Alliance and VillageMD are expanding their partnership with a $1 billion deal in which between 500 to 700 primary care offices will be opened in Walgreens' drug stores over the next five years. After that the plan calls for hundreds more to be built.
The offices, which will be located in more than 30 US markets. will be staffed by more than 3,600 primary care providers recruited by VillageMD. More than 50% will be located in Health Professional Shortage Areas and Medically Underserved Areas/Populations, as designated by the US Department of Health and Human Services. There will also be 24/7 care available via telehealth and at-home visits.
This nationwide rollout follows a trial with five in-store clinics in the Houston, Texas area, which opened last November.
Stefano Pessina, executive vice chairman and CEO of the Walgreens Boots Alliance called these clinics "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."
Most of the clinics will be approximately 3,330 square feet each, with some as large as 9,000 square feet.
Under the terms of the new agreement, 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.
Of Walgreen's investment, 80% will be used by VillageMD to fund the opening of the clinics and build the partnership, including integration with Walgreens digital assets.
Assuming full conversion of the debt, it is anticipated that Walgreens will hold a 30% ownership interest in VillageMD by the end of the investment.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
