Walgreens Boots Alliance is doing more than expanding again into primary healthcare with its VillageMD unit’s $8.9 billion deal to acquire Summit Health, parent of urgent-care chain CityMD. It’s also creating one of the nation’s largest independent medical provider groups amid shifts in the real estate used in seeing a doctor.

Once completed, Chicago-based VillageMD, the owner of medical practices, would increase its footprint in the Northeast and Oregon. Together, VillageMD and Summit Health will have more than 680 locations in 26 markets, Deerfield, Illinois-based Walgreens said Monday. Summit, headquartered in Berkeley Heights, New Jersey, and CityMD currently have 370 primary, specialty and urgent care sites in New York, New Jersey, Connecticut, Pennsylvania and central Oregon. The sale is expected to close in the first quarter next year.

The acquisition will be financed with investments from Walgreens, which has a controlling stake in VillageMD, and an affiliate of Evernorth, a Morris Plains, New Jersey-based subsidiary of the health insurer Cigna, which is headquartered in Bloomfield, Connecticut. Walgreens has roughly 3,000 locations across the United States, Europe and Latin America.

It’s just the latest drugstore chain, or consumer brand, to expand into the primary healthcare business, with more mergers and acquisitions expected in that industry as Americans age and have more medical needs. Woonsocket, Rhode Island-based CVS Health, for example, in September announced a deal to acquire home healthcare provider Signify Healthcare for $8 billion. This summer, e-commerce juggernaut Amazon said it was buying 1Lifecare Health, a primary care company that operates as One Medical, a turnkey network of 188 primary care clinics across the United States, for roughly $4 billion.

Even brick-and-mortar retail giant Walmart has been increasing its foothold in healthcare, beyond just having pharmacies in its stores. Late last month, it said it would be debuting 16 new health centers in Jacksonville, Orlando and Tampa in Florida, slated to open by next fall. The new state-of-the-art facilities, located beside Walmart Supercenters, will provide a range of healthcare services seven days a week. Launched in 2019, Walmart Health overall has 32 locations in Arkansas, Florida, Georgia, Illinois and Texas.

"From our perspective, this deal will not be the last in the healthcare and retail space," Neil Saunders, managing director at GlobalData, said Monday in a note to clients on the Summit Health transaction. "We expect much more consolidation as big consumer companies look to play a bigger role in looking after the health of their customers."

In the case of the pharmacy chains, they are seeing their store sales squeezed after the boost of the pandemic and are looking for new revenue streams, according to Saunders.

"These dynamics have made the businesses look for other opportunities," Saunders said. "One of these comes from a deeper push into healthcare. As far as retailers are concerned, healthcare is a relatively recession proof, financially lucrative sector which does not always serve customers well. Many — including Walgreens, CVS, Walmart and Amazon — believe that they could do a better job of meeting customer needs."

Walgreens said the combined company created by the acquisition will enhance Walgreen’s "robust portfolio of leading, integrated healthcare offerings." And the deal will leverage "VillageMD’s deep expertise in value-based care to support and accelerate the transition to more risk-based care and Summit Health-CityMD’s longstanding and deep expertise delivering multi-specialty, connected care," according to Walgreens.

“Summit Health-CityMD joining VillageMD is transformational for our U.S. healthcare segment and reinforces our intent to create greater access to quality healthcare across the care continuum,” Walgreens CEO Roz Brewer said in a statement. “This transaction accelerates growth opportunities through a strong market footprint and wide network of providers and patients across primary, specialty and urgent care.”

Walgreens will contribute $3.5 billion through an even mix of debt and equity to support the acquisition of Summit Health-CityMD. Walgreens said it will will remain the largest and consolidating shareholder of VillageMD with roughly 53% ownership. As a result of the transaction, Walgreens is raising its U.S. healthcare fiscal year 2025 sales goal to $14.5 billion to $16 billion, from $11 billion to $12 billion previously.

Earlier this year, VillageMD leased 52,874 square feet in the massive Old Post Office building at 433 W. Van Buren St. in Chicago. That deal included office space for the company’s headquarters and a roughly 4,500-square-foot clinic on the first floor, according to the statement. Walgreens is one of the largest tenants in the 2.5 million-square-foot structure, the world’s widest urban office building.

Last year Walgreens invested $5.2 billion in VillageMD, substantially increasing its stake in the company. At the time, Walgreens said it planned to have VillageMD primary practices within 1,000 of the drugstore giant’s stores by 2027.

Evernorth will be a minority owner in VillageMD as a result of the Summit Health-CityMD transaction.

“Our collaboration with VillageMD accelerates our efforts to improve the way care is accessed and delivered,” Evernorth CEO Eric Palmer said in a statement. “Harnessing the breadth of Evernorth’s health services capabilities and connecting them with physicians who provide care in a value-based model like VillageMD, helps more people to get the right care at the right time — driving better health and value.”

Saunders said the deal makes sense for both buyer and seller.

"For Walgreens, Summit Health is a natural extension for its VillageMD business and will help it quickly expand its primary care operations across several states including New York, New Jersey, Connecticut, and Pennsylvania," he said. "This includes the CityMD urgent-care centers that Summit acquired back in 2019. Although, unlike Village Medical, many of these locations will not be next to Walgreens stores, the retailer will be able to create close links through prescription services and centralized buying of medical supplies. From the perspective of Summit Health, Walgreens can help reduce costs through its enormous buying power and will present growth opportunities as it looks to expand the network of locations."

But Saunders did cite a caveat.

"However, while there is logic in a deal, Walgreens will need to persuade physicians, who own a large interest in the business, of its merits," he said.

Summit Health was created through the 2019 merger of Summit Medical Group and CityMD.

Walmart’s foray into primary healthcare included opening six health clinics in Florida this year, and the additional ones will bring the total footprint to 22 centers across the Sunshine State.

“As the population in Florida continues to grow at more than double the rate of the rest of the United States, so does the need to increase access to quality health care,” Dr. David Carmouche, senior vice president of healthcare offerings at Walmart, said in a statement. “With these 16 new Walmart Health centers across the state, even more Floridians will have easy access to a wide range of high-quality health services at convenient hours and easy to understand prices.”

The first Florida centers are saving Floridians time with wait times at about half the U.S. average, according to Walmart. More than 96% of patients reported that they “felt cared for” and nearly half of all appointments are for primary and chronic condition care. The new sites will be open by fall 2023.