walgreens Faces Existential Crisis Following VillageMD Sale, Regulatory Scrutiny
CHICAGO - Walgreens Boots Alliance is undergoing a dramatic restructuring marked by meaningful financial losses, store closures, and a controversial sale of its healthcare division, VillageMD, to Sycamore Partners for $5.3 billion.The moves signal a desperate attempt to stabilize a company struggling to compete with rivals like CVS, Amazon, and Walmart in a rapidly evolving healthcare landscape.
Despite increased sales, Walgreens has been plagued by plummeting profits and mounting debt. The company reported a $8.6 billion loss for full year 2024, a staggering 180% increase compared to 2023’s losses, even with a 6.2% sales growth to $147.7 billion.This financial distress follows years of underperformance, including a third-quarter 2025 loss of $175 million despite a 7% sales increase to $39 billion. The situation has triggered 1,200 branch closures, the cancellation of dividends, and a focus on preserving cash for restructuring.
The VillageMD deal,announced in late 2023,aims to offload a struggling primary care business that failed to deliver anticipated returns. However,the sale is complicated by unprecedented intervention from California Attorney General Rob Bonta,who imposed restrictions preventing Walgreens from selling to large pharmacy benefit managers like CVS Caremark for seven years. Sycamore Partners is also required to maintain all 450+ California Walgreens locations and provide 90 days’ notice before any closures.
these challenges come as competitors aggressively expand their healthcare offerings. CVS has integrated Aetna to become a healthcare giant, while Amazon and Walmart are attracting customers with lower prices. Walgreens’ new CEO, Tim Motz, previously oversaw a significant store closure program at Staples, foreshadowing possibly further cuts. Shareholders may receive up to $3 per share from future VillageMD sales proceeds, but the success of the restructuring remains uncertain and will be closely watched as a test case for private equity involvement in the healthcare sector.
