On July 11, Walgreens Boots Alliance shareholders approved a $23.7bn take-private by Sycamore Partners.
But you probably don’t even know the biggest winner in this saga so far.
It’s Warburg Pincus - who quietly walked away nearly three years earlier after one of the most successful exits in its healthcare portfolio (10x+ MOIC).
This is the story of how Warburg built and exited Summit Health, what made the deal work, and why Walgreens is still trying to make sense of it:
1) Betting on CityMD
2) Tuck-Ins and the Summit Merger
3) The Strategic Sale Process
4) VillageMD and Summit Health
5) Reality Hits and the Sycamore LBO
But you probably don’t even know the biggest winner in this saga so far.
It’s Warburg Pincus - who quietly walked away nearly three years earlier after one of the most successful exits in its healthcare portfolio (10x+ MOIC).
This is the story of how Warburg built and exited Summit Health, what made the deal work, and why Walgreens is still trying to make sense of it:
1) Betting on CityMD
2) Tuck-Ins and the Summit Merger
3) The Strategic Sale Process
4) VillageMD and Summit Health
5) Reality Hits and the Sycamore LBO
1) Betting on CityMD
In 2017, Warburg Pincus acquired a majority stake in CityMD, a high-growth urgent care provider in the New York metro area. At the time, the company had 68 locations across New York, New Jersey, and Washington, was generating roughly $240mm in revenue, and had under $40mm in EBITDA. The deal valued CityMD at $596mm, implying a 2.48x EV/revenue multiple and ~15x EV/EBITDA.
Though Warburg wasn’t actively targeting urgent care, it was drawn to CityMD’s aftercare referral model and dense urban footprint. TJ Carella, head of healthcare at Warburg, later said the company was impressed with how CityMD integrated episodic care into the broader healthcare system. The investment is part of a broader trend occurring in PE; by 2024, nearly 17% of urgent care clinics were PE-backed according to the Journal of Urgent Care Medicine.
Warburg had already invested more than $10bn in healthcare by that time, in companies like Alignment Healthcare, Coventry Health Care, and Humana. CityMD was another bet - but one that would evolve significantly.
In 2017, Warburg Pincus acquired a majority stake in CityMD, a high-growth urgent care provider in the New York metro area. At the time, the company had 68 locations across New York, New Jersey, and Washington, was generating roughly $240mm in revenue, and had under $40mm in EBITDA. The deal valued CityMD at $596mm, implying a 2.48x EV/revenue multiple and ~15x EV/EBITDA.
Though Warburg wasn’t actively targeting urgent care, it was drawn to CityMD’s aftercare referral model and dense urban footprint. TJ Carella, head of healthcare at Warburg, later said the company was impressed with how CityMD integrated episodic care into the broader healthcare system. The investment is part of a broader trend occurring in PE; by 2024, nearly 17% of urgent care clinics were PE-backed according to the Journal of Urgent Care Medicine.
Warburg had already invested more than $10bn in healthcare by that time, in companies like Alignment Healthcare, Coventry Health Care, and Humana. CityMD was another bet - but one that would evolve significantly.
2) Tuck-Ins and the Summit Merger
Over the next five years, Warburg transformed CityMD into a much broader platform, investing over $500mm. The firm completed more than ten acquisitions, bringing in urgent care chains, specialty physician practices, and outpatient facilities.
These included FirstMed Urgent Care, STAT Urgent Care, Franklin Immediate, Urgent Care Now, Active Orthopedics, Gotham Gastroenterology, Westmed Medical Group, New Jersey Urology, Long Island Medical Associates, and North Shore Cardiac Imaging.
The most transformative move came in August 2019 when CityMD merged with Summit Medical Group, a large multi-specialty practice. The deal occurred during the pandemic, adding operational complexity.
“Integrating those companies in the middle of COVID was a challenge as we were taking two different cultures,” Carella told Buyouts Insider.
The result was a combined organization with 1,400 providers, more than 6,400 employees, and nearly 200 locations. The strategy reflected a broader shift in healthcare toward care integration. UnitedHealth’s Optum had already acquired MedExpress and added surgical centers and physician groups.
CVS, after acquiring Aetna, announced plans to roll out care centers across thousands of stores. Warburg’s build-out of CityMD-Summit fit the same mold - only faster.
The goal wasn’t just to scale urgent care; it was to create a fully integrated outpatient ecosystem spanning primary, urgent, and specialty care.
Over the next five years, Warburg transformed CityMD into a much broader platform, investing over $500mm. The firm completed more than ten acquisitions, bringing in urgent care chains, specialty physician practices, and outpatient facilities.
These included FirstMed Urgent Care, STAT Urgent Care, Franklin Immediate, Urgent Care Now, Active Orthopedics, Gotham Gastroenterology, Westmed Medical Group, New Jersey Urology, Long Island Medical Associates, and North Shore Cardiac Imaging.
The most transformative move came in August 2019 when CityMD merged with Summit Medical Group, a large multi-specialty practice. The deal occurred during the pandemic, adding operational complexity.
“Integrating those companies in the middle of COVID was a challenge as we were taking two different cultures,” Carella told Buyouts Insider.
The result was a combined organization with 1,400 providers, more than 6,400 employees, and nearly 200 locations. The strategy reflected a broader shift in healthcare toward care integration. UnitedHealth’s Optum had already acquired MedExpress and added surgical centers and physician groups.
CVS, after acquiring Aetna, announced plans to roll out care centers across thousands of stores. Warburg’s build-out of CityMD-Summit fit the same mold - only faster.
The goal wasn’t just to scale urgent care; it was to create a fully integrated outpatient ecosystem spanning primary, urgent, and specialty care.
3) The Strategic Sale Process
By 2022, the combined CityMD-Summit business had stabilized post-COVID and reached nearly $2.9bn in revenue. Warburg began fielding inbound interest but never ran a formal process. “We considered this business as one that would be bought as opposed to sold,” Carella told PE Hub.
Eventually, Warburg struck a deal with VillageMD, a primary care company backed by Walgreens (63% ownership) and Cigna. After more than a year of discussions, the deal was announced in November 2022.
It valued Summit at $8.9bn (3.07x revenue) with a $7bn equity check and $1.9bn in net debt.
Walgreens invested $3.5bn (half in equity, half in debt). Warburg was advised by Goldman Sachs, Barclays, Jefferies, Credit Suisse, and Guggenheim. JP Morgan advised VillageMD. The deal closed in January 2023.
The sale included $1mm in compensation for 650 physicians and managers via rolled equity or cash, and broader financial participation for over 13,000 employees. Warburg reportedly walked away with a multibillion-dollar return.
By 2022, the combined CityMD-Summit business had stabilized post-COVID and reached nearly $2.9bn in revenue. Warburg began fielding inbound interest but never ran a formal process. “We considered this business as one that would be bought as opposed to sold,” Carella told PE Hub.
Eventually, Warburg struck a deal with VillageMD, a primary care company backed by Walgreens (63% ownership) and Cigna. After more than a year of discussions, the deal was announced in November 2022.
It valued Summit at $8.9bn (3.07x revenue) with a $7bn equity check and $1.9bn in net debt.
Walgreens invested $3.5bn (half in equity, half in debt). Warburg was advised by Goldman Sachs, Barclays, Jefferies, Credit Suisse, and Guggenheim. JP Morgan advised VillageMD. The deal closed in January 2023.
The sale included $1mm in compensation for 650 physicians and managers via rolled equity or cash, and broader financial participation for over 13,000 employees. Warburg reportedly walked away with a multibillion-dollar return.
4) VillageMD and Summit Health
The combined VillageMD and Summit Health platform had over 680 locations across 26 markets and employed 20,000 people. Walgreens held a 53% stake and floated the possibility of full ownership in the future.
The deal was positioned as a cornerstone of Walgreens’ transformation into a healthcare delivery leader. The company hoped to steer patients from VillageMD clinics into its pharmacies, increasing script volume and foot traffic.
The acquisition also aimed to strengthen VillageMD’s position in value-based care by broadening its provider network.
Some analysts believed the integration of Summit’s multi-specialty care with VillageMD’s primary care and Walgreens’ retail footprint would create a formidable hybrid model.
Walgreens said it expected to benefit from increased prescription volume and greater stickiness from patients navigating multiple care channels under the same brand.
The company also floated the possibility of expanding the model to operate in-store clinics and to embed Summit/VillageMD care providers across its physical retail footprint.
The combined VillageMD and Summit Health platform had over 680 locations across 26 markets and employed 20,000 people. Walgreens held a 53% stake and floated the possibility of full ownership in the future.
The deal was positioned as a cornerstone of Walgreens’ transformation into a healthcare delivery leader. The company hoped to steer patients from VillageMD clinics into its pharmacies, increasing script volume and foot traffic.
The acquisition also aimed to strengthen VillageMD’s position in value-based care by broadening its provider network.
Some analysts believed the integration of Summit’s multi-specialty care with VillageMD’s primary care and Walgreens’ retail footprint would create a formidable hybrid model.
Walgreens said it expected to benefit from increased prescription volume and greater stickiness from patients navigating multiple care channels under the same brand.
The company also floated the possibility of expanding the model to operate in-store clinics and to embed Summit/VillageMD care providers across its physical retail footprint.
5) Reality Hits and the Sycamore LBO
However, less than a year after the deal closed, VillageMD began underperforming. Walgreens reported a $6bn loss in Q2 2024, largely tied to its healthcare segment. VillageMD alone posted $1.73bn in operating losses. By the end of the year, Walgreens announced a $1bn cost-cutting plan, including the closure of more than 160 VillageMD clinics.
Although VillageMD still operated around 190 clinics by early 2025, the momentum had clearly reversed. While revenue in the U.S. healthcare segment grew 33% to $2.2bn in Q2, the profitability picture remained bleak.
In August 2024, VillageMD defaulted on senior secured debt from Walgreens. Rather than exercise remedies, Walgreens began exploring options - including a potential sale. Discussions with third parties followed as Walgreens worked to mitigate further downside.
In March 2025, Walgreens announced a take-private by Sycamore Partners. The $23.7bn deal included an $11.45 per share base price and a contingent $3 per share kicker tied to the sale of VillageMD. The deal is expected to close by the end of 2025.
Sycamore is best known for retail turnarounds, including Belk which filed for Chapter 11 in 2021. This deal marks its first major step into healthcare. Analysts estimate that 83% of the LBO is debt-financed, giving Sycamore limited room for error.
Walgreens estimates VillageMD could sell for $3.4bn, but some buyers value it closer to $1bn - less than what Warburg sold Summit Health for in 2022. Walgreens now faces the challenge of cleaning up a costly and underperforming healthcare investment, even as its new owner steps in to chart a turnaround.
Meanwhile, Warburg Pincus has already exited. Its investment in CityMD transformed into a national platform through acquisition, integration, and market timing. Warburg Pincus achieved a minimum 11.7x MOIC through this transaction, assuming the initial $596mm investment was completed without debt and the exit equity value was $7bn. With additional leverage, Warburg Pincus likely exceeded a 12x MOIC.
Thus, this LBO stands as a case study in what modern private equity can do when execution and timing align.
However, less than a year after the deal closed, VillageMD began underperforming. Walgreens reported a $6bn loss in Q2 2024, largely tied to its healthcare segment. VillageMD alone posted $1.73bn in operating losses. By the end of the year, Walgreens announced a $1bn cost-cutting plan, including the closure of more than 160 VillageMD clinics.
Although VillageMD still operated around 190 clinics by early 2025, the momentum had clearly reversed. While revenue in the U.S. healthcare segment grew 33% to $2.2bn in Q2, the profitability picture remained bleak.
In August 2024, VillageMD defaulted on senior secured debt from Walgreens. Rather than exercise remedies, Walgreens began exploring options - including a potential sale. Discussions with third parties followed as Walgreens worked to mitigate further downside.
In March 2025, Walgreens announced a take-private by Sycamore Partners. The $23.7bn deal included an $11.45 per share base price and a contingent $3 per share kicker tied to the sale of VillageMD. The deal is expected to close by the end of 2025.
Sycamore is best known for retail turnarounds, including Belk which filed for Chapter 11 in 2021. This deal marks its first major step into healthcare. Analysts estimate that 83% of the LBO is debt-financed, giving Sycamore limited room for error.
Walgreens estimates VillageMD could sell for $3.4bn, but some buyers value it closer to $1bn - less than what Warburg sold Summit Health for in 2022. Walgreens now faces the challenge of cleaning up a costly and underperforming healthcare investment, even as its new owner steps in to chart a turnaround.
Meanwhile, Warburg Pincus has already exited. Its investment in CityMD transformed into a national platform through acquisition, integration, and market timing. Warburg Pincus achieved a minimum 11.7x MOIC through this transaction, assuming the initial $596mm investment was completed without debt and the exit equity value was $7bn. With additional leverage, Warburg Pincus likely exceeded a 12x MOIC.
Thus, this LBO stands as a case study in what modern private equity can do when execution and timing align.
And if you are already in PE and want to leave for the beautiful world of hedge funds -->
https://x.com/Restructuring__/status/1948210480688037929
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