The trend: Walgreens contended with significant operational pressures across its retail, pharmacy, and healthcare segments in 2024. In hopes of a financial turnaround, the company turned to a range of cost-cutting measures and is actively exploring all available options, including a possible sale.
Here’s our take on Walgreens’ 3 biggest healthcare moves in 2024:
1. Walgreens announced plans for significant US store closures.
In an interview earlier this year, CEO Tim Wentworth noted that nearly 25% of Walgreens’ 8,600 US stores were unprofitable. As part of an ongoing cost-cutting strategy, the retail pharmacy chain disclosed plans to close 1,200 stores, or about 14% of its physical footprint, over the next three years. Some 500 closures are expected to occur by October 2025.
Why it matters: The retail pharmacy business is facing numerous headwinds, including lower reimbursement rates for filling medications, store theft, lower foot traffic, and increased competition from online players.
Our take: Walgreens will focus on getting its retail pharmacy business back on track. It will need to provide a superior consumer experience that matches the likes of Amazon and other emerging online players in the space.
2. It reduced its stake in VillageMD and is no longer its majority owner.
Walgreens poured over $6 billion into the primary care startup—but that investment turned into a disaster. The retail pharmacy chain recorded a $5.8 billion impairment charge earlier this year related to underperforming VillageMD clinics. Further, Walgreens has said it’s no longer interested in investing in brick-and-mortar medical offices. All told, Walgreens has already shuttered 140 VillageMD clinics and plans to close 20 more.
Why it matters: The retailer is fully changing course on how it wants to deliver patient care, going from committing to in-person health clinics to doubling down on telehealth.
The final word: To that end, Walgreens decided to expand its direct-to-consumer virtual healthcare services to reach consumers in 30 states. The retailer launched Walgreens Virtual Healthcare last year in nine states.
3. Walgreens is considering a sale of the company to a private equity firm.
The announcement comes as Walgreens closes out 2024 with a net loss of $8.6 billion—a 177% YoY increase. Meanwhile, the company’s market value plummeted from over $100 billion not even 10 years ago to under $8 billion today. Per a December WSJ report, Walgreens has been in discussions with Sycamore Partners over a potential deal that could close early next year. Sycamore, which bought Staples in 2017, specializes in retail and consumer investments.
Why it matters: A take-private deal with Sycamore could include a sell off of some pieces of Walgreens’ business, such as Boots, the company's UK pharmacy chain that has been in talks to be sold multiple times over the past few years.
Looking ahead: It would also likely indicate layoffs and an acceleration of its planned store closures—further threatening consumers’ access to needed prescription medications.
This article is part of EMARKETER’s client-only subscription Briefings—daily newsletters authored by industry analysts who are experts in marketing, advertising, media, and tech trends. To help you finish 2024 strong, and start 2025 off on the right foot, articles like this one—delivering the latest news and insights—are completely free through January 31, 2025. If you want to learn how to get insights like these delivered to your inbox every day, and get access to our data-driven forecasts, reports, and industry benchmarks, schedule a demo with our sales team.
First Published on Dec 16, 2024