The healthcare sector is transitioning to value-based primary care, where care providers are compensated based on patient outcomes rather than each test or procedure, as it helps to reduce costs, in response to the growing cost of living. Growing opportunities in the primary care market are grabbing the attention of non-traditional players. The current year witnessed a trend of non-traditional U.S. companies entering the U.S. primary care market via acquisition strategies. In July 2022, Amazon revealed the acquisition of a primary care operator 1Life Healthcare Inc. worth $3.5 billion. Additionally, CVS Health Corp declared its plan to purchase Signify Health for $8 billion. The entrance of new players is anticipated to propel market competition in the coming years. Furthermore, the non-traditional players are projected to capture one-third of the primary care market by the year 2030.
Walgreens-backed VillageMD is set to acquire primary care provider Summit Health, worth $ 9 billion which includes $7 billion equity value, and $1.9 billion in net debt from Summit Health. Walgreens, the company backing VillageMD, is investing $3.5 billion in the acquisition deal, accounting for 53% of the new company's stake. Walgreens’ intention behind the new investment is aimed to take advantage of Summit Health’s expertise in the primary care sector and increase its sales. Walgreens reported sales of $132.51 billion in 2021. However, the company has raised its sales targets for the fiscal year 2025 from $11 billion to $12 billion to between $14.5 billion and $16 billion, from its U.S. healthcare business.
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