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Walgreens to invest $5.2 billion in Chicago-based VillageMD

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CHICAGO - Walgreens Boots Alliance plans to invest $5.2 billion in Chicago-based VillageMD, which provides primary care to patients — the latest move by Walgreens to form partnerships with other companies that get more customers into its stores, even as the retail pharmacy chain continues to cut costs.

The investment will give Deerfield-based Walgreens a majority ownership stake — 63% — in VillageMD. Walgreens previously owned 30% of the company.

Walgreens also announced plans Thursday to try to cut $3.3 billion in costs by 2024, up from an earlier goal of $2 billion by 2022, which the company has already reached.

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Walgreens Boots Alliance plans to invest $2 billion in Chicago-based VillageMD, which provides primary care to patients - the latest move by Walgreens to form partnerships that get more customers into its stores.

Walgreens announced plans last year to open at least 600 Village Medical clinics in Walgreens stores by 2025, and said that this investment will speed up that process. Walgreens hopes to open 1,000 of the clinics by 2027, with half of those in medically underserved communities.

Now, 52 of the clinics are open in Walgreens stores. Patients can get health care through the clinics in-person, at home or through telehealth.

The deal is expected to close by the end of the year, pending the conclusion of a waiting period required under antitrust law.

Walgreens’ work with VillageMD is one of a number of partnerships it’s formed in recent years to get ahead of rapid changes in health care as it works to compete with the likes of CVS Health and Amazon.

In September, Walgreens said it would invest $970 million in Massachusetts-based Shields Health Solutions, which is a company that helps hospitals and health systems with specialty pharmacy services. The investment will give Walgreens a 71% ownership stake in Shields.

Earlier, Walgreens partnered with LabCorp to collect samples in stores from consumers for lab testing, and with Kroger Co., to allow customers to order grocery items online and pick them up at some stores.

Farmers and suppliers across the Midwest are concerned about supply shortages for the Spring 2022 harvest. 

Walgreens has been doing well financially in recent months, as it also works to cut costs. On Thursday, Walgreens reported a strong fourth quarter, topping expectations. For fiscal year 2021, net cash provided by operating activities was $5.6 billion, up $70 million compared with the previous year.

Walgreens has been seeing more foot traffic in stores after seeing many customers disappear during the early months of COVID-19. Walgreens has had many people in its stores seeking COVID-19 vaccines, and gave 34.6 million COVID-19 vaccinations in fiscal year 2021.

Before COVID-19, Walgreens implemented a number of cost-saving measures, as it worked to adapt to changing consumer habits and deal with pressures related to reimbursements for medications.

Walgreens said Thursday it had cut more than $2 billion in annual costs in fiscal 2021, a year ahead of schedule. Walgreens also laid off more than 100 employees in its Deerfield office in October 2019, and has closed more than 200 U.S. stores.

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