UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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| Item 7.01. | Regulation FD Disclosure. |
On November 7, 2022, Walgreens Boots Alliance, Inc. (the “Company”), together with Village Practice Management Company, LLC (“VillageMD”), WP CityMD Topco LLC (“Summit Health-CityMD”), and Evernorth, a subsidiary of Cigna Corporation, issued a press release announcing, among other things, the entry by VillageMD into a definitive agreement to acquire Summit Health-CityMD. In addition, the Company has entered into a definitive agreement and commitment letter with VillageMD for the purpose of funding the acquisition of Summit Health-CityMD through additional equity investments and debt facilities, respectively. Following the transactions, the Company contemplates remaining the largest and consolidating equityholder of VillageMD, with beneficial ownership of approximately 53% of the outstanding equity interests of VillageMD on a fully diluted basis. A copy of the press release is furnished as Exhibit 99.1 hereto.
In connection with the foregoing, the Company announced that it would be discussing the transactions, among other things, at the 31st Annual Credit Suisse Healthcare Conference on November 9, 2022. Slides prepared for the purposes of the conference are furnished as Exhibit 99.2 hereto. A link to the conference presentation will be available on the Company’s investor relations website at: http://investor.walgreensbootsalliance.com.
The information in this Item 7.01, including the exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section. This information shall not be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference to such disclosure in this Current Report on Form 8-K in such a filing.
Cautionary Note Regarding Forward-Looking Statements
All statements in this report that are not historical including, without limitation, those regarding the consummation of the transactions, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words such as “expect,” “will,” “likely,” “intend,” “plan,” “aim,” “continue,” “believe,” “seek,” “anticipate,” “upcoming,” “may,” “possible,” and variations of such words and similar expressions are intended to identify such forward-looking statements.
These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions, known or unknown, that could cause actual results to vary materially from those indicated or anticipated. These risks, assumptions and uncertainties include those described in Item 1A (Risk Factors) of our Annual Report on Form 10-K for the fiscal year ended August 31, 2022 and in other documents that we file or furnish with the Securities and Exchange Commission. If one or more of these risks or uncertainties materializes, or if underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. All forward-looking statements we make or that are made on our behalf are qualified by these cautionary statements. Accordingly, you should not place undue reliance on these forward-looking statements, which speak only as of the date they are made.
We do not undertake, and expressly disclaim, any duty or obligation to update publicly any forward-looking statement after the date of this release, whether as a result of new information, future events, changes in assumptions or otherwise.
| Item 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit | Description | |
| 99.1 | Press Release of Walgreens Boots Alliance, Inc. and other parties, dated November 7, 2022 | |
| 99.2 | 31st Annual Credit Suisse Healthcare Conference Presentation Materials of Walgreens Boots Alliance, Inc., dated as of November 7, 2022 | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL) | |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| WALGREENS BOOTS ALLIANCE, INC. | ||||||
| Date: November 7, 2022 |
By: |
/s/ Joseph B. Amsbary, Jr. | ||||
| Name: Title: |
Joseph B. Amsbary, Jr. Senior Vice President and Corporate Secretary | |||||
Exhibit 99.1
FOR IMMEDIATE RELEASE
VillageMD Acquires Summit Health-CityMD, Creating One of the
Largest Independent Provider Groups in the U.S.
With Investments from WBA and Evernorth, the Combined Company Will Deliver a Unique and
Comprehensive Patient Experience for Optimal Individual and Community Outcomes
CHICAGO; CLIFTON, N.J.; DEERFIELD, Ill. and BLOOMFIELD, Conn. – Nov. 7, 2022 – VillageMD announced today it has entered a definitive agreement to acquire Summit Health-CityMD, a leading provider of primary, specialty and urgent care. The transaction is valued at approximately $8.9 billion with investments from Walgreens Boots Alliance, Inc. (Nasdaq: WBA) and Evernorth, a subsidiary of Cigna Corporation (NYSE:CI).
Together, VillageMD and Summit Health-CityMD will create a multi-payor platform to deliver quality, affordable care for all patients. The combined company leverages 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 multispecialty, connected care. It also enhances WBA’s robust portfolio of leading, integrated healthcare offerings across the care continuum.
Summit Health-CityMD has a strong footprint in the northeast United States and Oregon. Together, VillageMD and Summit Health will have more than 680 provider locations in 26 markets.
“This is an epic milestone in our journey to transform healthcare in the United States. Summit Health-CityMD has been a leader in delivering coordinated, multi-specialty care for decades. We are honored to work side-by-side with their 13,000 strong workforce who are passionately committed to delivering the best outcomes for millions of patients,” said Tim Barry, CEO and Chair of VillageMD. “Both organizations share a deep commitment to keeping our patients and clinicians at the forefront of what we do to best serve them.”
“Summit Health-CityMD and VillageMD are patient-centered and physician-led companies that have complementary offerings and a shared core belief that taking excellent care of the patient will remain the cornerstone of our success,” said Jeff Alter, CEO of Summit Health-CityMD. “Adding our expertise and geographic coverage to VillageMD’s proven value-based primary care approach will enhance the lives of so many patients and physicians across the country, helping to lower healthcare costs and improve the health of our communities. We are incredibly excited about the potential of these combined companies. I would also like to thank Warburg Pincus for their support and partnership, resulting in this exciting new chapter for our company.”
“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,” said Roz Brewer, CEO, WBA. “This transaction accelerates growth opportunities through a strong market footprint and wide network of providers and patients across primary, specialty and urgent care.”
Acceleration of Walgreens Boots Alliance’s U.S. Healthcare Segment
WBA will invest $3.5 billion through an even mix of debt and equity to support the acquisition of Summit Health-CityMD, which drives meaningful synergies and accelerates WBA’s path to profitability for its U.S. Healthcare segment. WBA will remain the largest and consolidating shareholder of VillageMD with approximately 53 percent ownership. The company expects to maintain an investment grade rating.
As a result of the transaction, WBA is raising its U.S. Healthcare fiscal year 2025 sales goal to $14.5 billion to $16.0 billion, from $11.0 billion to $12.0 billion previously. WBA’s U.S. Healthcare segment is now expected to achieve positive adjusted EBITDA by the end of fiscal year 2023. Assuming a Jan. 1, 2023 closing date, WBA is raising the U.S. Healthcare adjusted EBITDA target for fiscal year 2023 to $(50) million to $25 million, from $(240) million to $(220) million previously.
The transaction will be slightly accretive to WBA adjusted EPS in fiscal year 2023, and accretive by $0.07 to $0.11 in fiscal year 2024 and increasing thereafter.
For further details, refer to WBA’s 8-K filing.
Strategic Collaboration with Evernorth
Evernorth, Cigna Corporation’s health services organization that creates and connects benefits, pharmacy and care solutions, is now also a minority owner in VillageMD. The collaboration is part of Evernorth’s commitment to accelerating value-based services that deepen relationships with high-performing primary care physicians and specialists to improve outcomes and lower costs.
“Our collaboration with VillageMD accelerates our efforts to improve the way care is accessed and delivered,” said Eric Palmer, CEO of Evernorth. “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.”
The transaction is subject to the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and other customary closing conditions. It is expected to close in the first quarter of calendar 2023.
About VillageMD
VillageMD is committed to offering high-quality, accessible primary care options for communities across the country through Village Medical. VillageMD partners with physicians to provide the tools, technology, operations, staffing support and industry relationships to deliver high-quality clinical care and better patient outcomes, while reducing the total cost of care. The Village Medical brand provides value-based primary care for patients at traditional free-standing practices, Village Medical at Walgreens practices, at home and via virtual visits. VillageMD and Village Medical have grown to 22 markets and are responsible for more than 1.6 million patients. To learn more, please visit www.villageMD.com.
About Summit Health-CityMD
Summit Health-CityMD helps patients with all of their primary and specialty care needs. Whether it’s getting annual checkups, raising a family, or prioritizing healthy aging, Summit Health works as a team to deliver care that helps patients make the right choices and stay a step ahead of any issues. Exceptional doctors are committed to providing the best care and supporting patients over a lifetime. And if patients ever need urgent care, they can walk right in to CityMD, whose providers are part of the connected care team. Together, Summit Health and CityMD have more than 2,800 providers across more than 370 locations in New York, New Jersey, Connecticut, Pennsylvania, and Central Oregon. To learn more, visit summithealth.com.
About Walgreens Boots Alliance
Walgreens Boots Alliance (Nasdaq: WBA) is an integrated healthcare, pharmacy and retail leader serving millions of customers and patients every day, with a 170-year heritage of caring for communities.
A trusted, global innovator in retail pharmacy with approximately 13,000 locations across the U.S., Europe and Latin America, WBA plays a critical role in the healthcare ecosystem. The company is reimagining local healthcare and wellbeing for all as part of its purpose – to create more joyful lives through better health. Through dispensing medicines, improving access to a wide range of health services, providing high quality health and beauty products and offering anytime, anywhere convenience across its digital platforms, WBA is shaping the future of healthcare.
WBA employs more than 325,000 people and has a presence in nine countries through its portfolio of consumer brands: Walgreens, Boots, Duane Reade, the No7 Beauty Company, Benavides in Mexico and Ahumada in Chile. Additionally, WBA has a portfolio of healthcare-focused investments located in several countries, including China and the U.S.
The company is proud of its contributions to healthy communities, a healthy planet, an inclusive workplace and a sustainable marketplace. WBA has been recognized for its commitment to operating sustainably: the company is an index component of the Dow Jones Sustainability Indices (DJSI) and was named to the 100 Best Corporate Citizens 2022.
More company information is available at www.walgreensbootsalliance.com.
About Cigna
Cigna Corporation (NYSE: CI) is a global health services company dedicated to improving the health, well-being and peace of mind of those we serve. Cigna delivers choice, predictability, affordability and access to quality care through integrated capabilities and connected, personalized solutions that advance whole person health. All products and services are provided exclusively by or through operating subsidiaries of Cigna Corporation, including Cigna Health and Life Insurance Company, Connecticut General Life Insurance Company, Evernorth companies or their affiliates, and Express Scripts companies or their affiliates. Such products and services include an integrated suite of health services, such as medical, dental, behavioral health, pharmacy, vision, supplemental benefits, and other related products.
Cigna’s global footprint spans approximately 30 countries and jurisdictions, and has over 190 million customer relationships throughout the world. To learn more about Cigna®, including links to follow us on Facebook or Twitter, visit www.cigna.com.
# # #
Media Contact:
Molly Lynch
773-505-9719
mlynch@villagemd.com
Kelli Teno
224-237-4526
kelli.teno@wba.com
Joy Lee-Calio
908-977-9502
jleecalio@summithealth.com
Justine Sessions
860-810-6523
Justine.Sessions@cigna.com
VillageMD Acquires Summit Health-CityMD © 2022 Walgreens Boots Alliance, Inc. All rights reserved. Transaction Catapults U.S. Healthcare Segment to Scale and Profit November 7, 2022 Exhibit 99.22.7)
© 2022 Walgreens Boots Alliance, Inc. All rights reserved.
Industry-leading healthcare assets to reimagine care delivery Leading capabilities Integrated Healthcare offering Best-in-class value-based primary care Next generation of specialty pharmacy Outcomes-driven post-acute care Enabling population health >26M Lives under management across portfolio >12K Network of care delivery providers 50 states Reach across care delivery network © 2022 Walgreens Boots Alliance, Inc. All rights reserved. U.S. Healthcare segment Core retail pharmacy Cornerstone of Healthcare portfolio
© 2022 Walgreens Boots Alliance, Inc. All rights reserved. Enhances portfolio of leading assets across care continuum Doubles VillageMD sales and significantly expands addressable market Meaningful synergy opportunities across WBA’s U.S. Healthcare businesses Immediately EPS accretive and accelerates path to profitability for U.S. Healthcare Raising FY25 sales and adj. EBITDA goals for U.S. Healthcare with enhanced visibility Capital efficient investment retains WBA majority control WBA investing $3.5B to support VMD’s $8.9B acquisition of Summit Health-CityMD Transaction catapults U.S. Healthcare segment to scale and profit
© 2022 Walgreens Boots Alliance, Inc. All rights reserved. Multi-Specialty Care ~1,200 total providers 45+ specialties within provider network covering nearly every medical specialty Primary Care ~750 total providers ~600,000 primary care patients ~1 in 6 patients require specialist care Ancillary Services 4 ambulatory surgery centers Centralized lab and pathology services Advanced imaging/interventional radiology Urgent/Acute Care 150+ urgent care locations ~5M urgent care visits annually ~80% cost reduction vs. ER visit 2,700+ providers offering holistic connected care and services Summit Health-CityMD is a leading independent provider in attractive markets Operating at scale in attractive NY/NJ market: CY22 sales of ~$2.9 billion
+ Complementary assets extend reach and advance holistic care delivery Value-based care expertise to accelerate Summit Health transition to risk Summit Health multi-specialty care capabilities expansion to VillageMD Multi-payor platform delivers high-quality affordable care for patients and plans Run-rate synergies of $150 million expected by calendar year 2027 Combination creates unified independent care delivery platform © 2022 Walgreens Boots Alliance, Inc. All rights reserved. 680+ locations across 26 markets ~7M patients, including >125K full risk MA lives 4,100+ providers, including 2,150 PCPs CY23 sales $6.6-$7B with LSD adj. EBITDA margin
© 2022 Walgreens Boots Alliance, Inc. All rights reserved. WBA Investment Expected Closing Transaction VillageMD to acquire Summit Health-CityMD for $8.9B $7.0B equity value with $1.9B of net debt CY23E adjusted EBITDA: $470M (CY19-CY23E CAGR: 39%) Represents 19x projected CY23E adjusted EBITDA excluding synergies WBA investing $3.5B in capital: 50% equity and 50% debt Expectation to maintain investment grade rating WBA remains majority shareholder of VMD, with ownership of ~53% First quarter of calendar 2023 Transaction is immediately accretive to WBA WBA Impact Transaction slightly accretive to WBA adjusted EPS in FY23 Accretive by $0.07-$0.11 in FY24 and increasing thereafter
Raising U.S. Healthcare sales outlook to $14.5-16B in FY25 © 2022 Walgreens Boots Alliance, Inc. All rights reserved. $10.0 - $11.5B $6.5 - $7.3B $14.5 - $16.0B $1.8B U.S. Healthcare Segment Sales Outlook Note: FY23 goal assumes Summit Health transaction close in the first quarter of calendar 2023 $4.9 - $5.3B $7.0 - $8.0B $11.0 - $12.0B Prior Guidance:
U.S. Healthcare Segment Adj. EBITDA Outlook Positive U.S. Healthcare adj. EBITDA exiting FY23, with over $1B of EBITDA by FY25 © 2022 Walgreens Boots Alliance, Inc. All rights reserved. FY22 FY23 Goal FY24 Goal FY25 Goal % of Sales $(240) - $(220)M $125 - $225M $500 - $700M Prior Guidance: Note: FY23 goal assumes Summit Health transaction close in the first quarter of calendar 2023
Highly strategic transaction, generating strong financial returns © 2022 Walgreens Boots Alliance, Inc. All rights reserved. Enhanced scale in primary care, doubling VillageMD sales and creating one of the leading provider networks in the U.S., with density in attractive markets Expanded addressable market with primary care, multi-specialty, and urgent care Significant synergy potential across U.S. Healthcare, reinforcing WBA’s strategic approach across the care continuum Immediately EPS accretive and accelerates profitability for U.S. Healthcare, exiting FY23 with positive adj. EBITDA Raised U.S. Healthcare FY25 sales goal to $14.5-16.0B and adj. EBITDA goal to ~$1.1B with enhanced visibility Structured for maximum impact and flexibility with majority ownership to advance WBA’s healthcare vision
