Harbor Health Acquires 32 VillageMD Primary Care Clinics in Texas

VillageMD, amid a breakup and sale of its primary care businesses, has sold for an undisclosed sum 32 primary care clinics to Harbor Health, a fast-growing startup that operates medical care providers and health insurance plans.

VillageMD, which was sold last month to private equity firm Sycamore Partners in the $10 billion takeover of Walgreens, has hundreds of physician practices, outpatient health centers, urgent care sites and clinics adjacent to Walgreens stores to sell under new ownership.

In Harbor Health, VillageMD’s practices in Texas will have a home under a three-year-old company drawing several new investors to a model executives say they eventually plan to expand outside of the state to both provide and pay for medical care services.

“Our vision is to be the best ‘pay-vider’ in Texas, and this significant acquisition allows us to see that vision more clearly, essentially overnight,” Harbor Health co-founder and chief executive officer Tony Miller said. “With a broader statewide presence, we are now positioned to serve up to 14 million Texans with care and coverage, up from 1.6 million currently. For us, that means more consumers and employers across the state can save money and receive high-quality care.”

Harbor Health says the acquisition has “nearly quadrupled” its “clinical presence, growing from 11 to 43 total clinics and adding more than 80 clinicians to its team of physicians and advanced practice providers,” the Austin, Texas-based company said in a statement. The deal puts Harbor into three new markets: San Antonio, El Paso, and Dallas. Meanwhile, the acquisition also expands its presence in the Austin area.

It’s been a big month for Harbor Health, which earlier said it has raised $130 million in new funding from investors for “expansion in access, service and insurance plans for employers and individuals.” Harbor executives said the money will allow the company to expand “our large employer health insurance plans and launch individual and family insurance plans that will be available on healthcare.gov, the individual insurance marketplace, in November.”

Though the value of VillageMD’s Texas assets being sold to Harbor Health hasn’t been disclosed, Walgreens investors are hoping it was a high price given the financial terms of the company’s sale to Sycamore.

“In addition to their cash consideration of $11.45 per (Walgreens Boots Alliance) share, WBA shareholders will receive one non-transferable right to receive up to an additional $3.00 in cash per WBA share from the net proceeds of the future monetization of WBA’s debt and equity interests in VillageMD, which includes the Village Medical, Summit Health and CityMD businesses,” Sycamore and Walgreens said last month in the press release announcing the close of the company’s sale to the private equity firm.

Last month, a VillageMD spokeswoman said the Chicago-based company’s assets include “more than 130 practices” under the Village Medical brand including about 90 clinics adjacent to Walgreens drugstores. In addition, CityMD has “more than 185 clinics” and Summit Health has “more than 130 locations” while Starling Physicians has “more than 20 practices.”

Harbor Health confirmed Sunday that the 32 site include doctor practices, outpatient clinics and “some are in Walgreens locations.”

Walgreens investment in VillageMD was expensive, and cost the drugstore chain billions of dollars. Under former chief executive Roz Brewer, Walgreens invested more than $6 billion in VillageMD to take a controlling stake.

Walgreens eventually scaled back dramatically on the expansion of doctor practices and clinics VillageMD opened. In 2020, Walgreens said it planned to open 500 to 700 “Village Medical at Walgreens” physician-led primary care clinics in more than 30 U.S. markets over five years, with the “intent to build hundreds more thereafter.” By the time, Walgreens was sold to Sycamore, there were around 90 Village Medical at Walgreens clinics.

Tim Wentworth, who replaced Brewer in October 2023 as Walgreens CEO, said a year ago that the company and its partner VillageMD had slowed the number of clinic openings in part because the operators weren’t able to fill their “patient panels,” which are a certain number of individual patients under the care of a specific provider.

The billions of dollars in losses on the VillageMD investment was largely to blame for a net loss of more than $8 billion for Walgreens fiscal 2024. VillageMD’s founder and CEO Tim Barry left the company last year and a few months after Walgreens disclosed plans to reduce its investment in the primary care company.