walgreens Faces Existential Crisis Following VillageMD Sale, Regulatory Scrutiny
CHICAGO โ-โฃ Walgreens Boots Alliance is undergoing a โฃdramaticโค restructuring markedโ by meaningful financial losses,โฃ store closures, and a controversial sale of its healthcare division, VillageMD, to Sycamoreโ Partners โฃfor $5.3 billion.The moves signal a desperate attempt to stabilize a company struggling to compete with rivals like CVS, Amazon, โand โWalmartโฃ in โฃa โrapidly โevolving โhealthcare landscape.
Despite increased sales, Walgreens has been plagued by plummeting profits andโค mounting debt. The company reported a $8.6 billion loss for fullโฃ year โ2024, a staggering 180% increase comparedโค to 2023’sโ losses, even โฃwith a 6.2% sales growth to $147.7 billion.This financial distress followsโค years of โคunderperformance, including โa third-quarter 2025 loss of $175 million despite a 7%โ sales increaseโ to $39 billion. The situation has triggered 1,200 branch closures, the cancellation of dividends, and a focus on preserving cash forโฃ 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 preventingโ Walgreens from selling to large pharmacy benefit managersโ like CVS Caremark for seven years. Sycamore Partners is also required โto maintain all 450+ California Walgreens locations and provide 90 โdays’ notice โขbefore any closures.
these challenges comeโฃ as competitors aggressively expand their healthcare offerings. CVS has integrated โฃAetna to become โa healthcare giant, while Amazon and Walmart areโฃ attracting customers with lower prices. Walgreens’ newโฃ CEO, Tim Motz, previously oversaw a significant store โคclosure programโ at Staples, foreshadowing possibly further cuts.โ Shareholdersโค may receive up to $3 per share from future VillageMD sales โคproceeds, but the success of the restructuring remains uncertain and willโ be closely watched as a test case โfor private equityโ involvement in theโค healthcare sector.
