As Walgreens Melds Doctors And Pharmacies, Prescription Business Takes Off

Walgreens Boots Alliance multi-billion dollar investment in doctor-staffed clinics attached to drugstores is paying off with a boost to the pharmacy chain’s prescription business.

One of the ideas behind building physician-staffed clinics next to Walgreens via its partnership with VillageMD is the ease by which a patient could get its first prescription by walking a few steps next door to get it filled. Not to mention the additional services, consultations and related primary care needs provided by a pharmacist and a doctor all in one location.

Though it’s early in Walgreens rollout of “Village Medical at Walgreens” centers, the company is beginning to disclose financial payoffs.

“We are seeing benefits on the Walgreens side from our partnership with VillageMD,” Walgreens Boots Alliance executive vice president and global chief financial officer James Kehoe told analysts last week on the company’s second quarter earnings call.

“Roughly 50% of patients had co-located VillageMD clinics opt to get their prescriptions filled at Walgreens,” Kehoe added. “VillageMD co-located sites that have been open for over 2 years are driving an incremental 40 scripts per site per day, and this is an increase of 35% versus prior year.”

Walgreens total revenue during the period rose more than 3% to $34.9 billion compared to $33.8 billion in the year-ago period. Pharmacy revenue got a boost from the VillageMD relationship given the loss of sales from COVID-19 vaccinations. Walgreens had “U.S. pharmacy comparable script volume growth of 3.5% excluding immunizations, ahead of expectations and sequentially improving vs. the first quarter of fiscal 2023,” the company said.

Meanwhile, Walgreens is also benefitting more broadly from all the services provided at the VillageMD clinics, which numbered 210 clinics at Walgreens drugstores as of the end of the quarter compared to 94 in the year-ago period.

“VillageMD delivered sales of over $1.1 billion, advancing 30% on a pro forma basis, driven by growth at existing clinics, expansion of the clinic footprint and Summit Health growth,” Kehoe said.

Walgreens-backed VillageMD earlier this year purchased Summit Health-CityMD for $8.9 billion to expand doctor-staffed clinics across the country. That transaction also included investments from Walgreens, which owns more than 50% of VillageMD, and Cigna’s Evernorth Health Services.