Walgreens Reports Narrower Than Expected Loss Ahead Of Takeover
Walgreens Boots Alliance Thursday reported a narrower-than-expected $178 million loss in its third quarter as the struggling pharmacy chain nears the end of its long run as a publicly traded company.
Walgreens fiscal third quarter results for the period ending May 31 of this year come as the company works on completing its sale to the investment firm Sycamore Partners for more than $10 billion. That deal, announced in early March, faces a special meeting of shareholders on July 11 to vote on approving the sale
Though sales rose 7% to $39 billion, the company lost $175 million, 'a decrease of $519 million compared to net earnings of $344 million' in the year-ago period thanks largely to 'prior year after-tax gains related to fair value adjustments on variable prepaid forward derivatives and a partial sale of the company's equity method investment in Cencora, and higher tax expense in the current quarter.' Cencora is the large drug distributor that Walgreens owns a minority stake in and has been gradually selling.
The Sycamore deal, which pays $11.45 per share — 29% above the December stock price — comes after years of Walgreens' pharmacy closings and plummeting stock in part due to a disastrous rollout of clinics attached to stores.
Walgreens chief executive officer Tim Wentworth said third quarter results 'reflect continued improvement in our U.S. Healthcare segment and benefits from our cost savings initiatives, while we continued to see weakness in our U.S. front-end sales.'
Walgreens said U.S. Retail Pharmacy segment sales rose nearly 8% to $39.7 billion compared to the year-ago quarter. Within that business, however, retail sales decreased 5% and that spilled onto adjusted operating income which decreased 30% to to $350 million from $501 million in the year-ago quarter.
'We remain focused on our turnaround plan, which will require time, disciplined focus and a balanced approach to manage future cash needs with investments necessary to navigate an evolving pharmacy and retail environment,' Wentworth said.
Sycamore, a private equity firm specializing in consumer, distribution and retail-related investments, also agreed to 'one non-transferable right" to receive up to $3 in cash per Walgreens Boots Alliance share 'from the future monetization of WBA's debt and equity interests in VillageMD, which includes the Village Medical, Summit Health and CityMD businesses,' the companies said of Walgreens' primary care businesses. The total value of the deal, including the $10 billion in equity value, is more than $23 billion when debt and other items are included, the companies said.
Walgreens third quarter results were much improved over its second quarter when the company in March reported a $2.8 billion loss thanks to a large impairment charge related to its struggling doctor-staffed clinic investment in VillageMD.
The Sycamore deal comes after Walgreens, which had a market value of more than $100 billion a decade ago, undertook the failed VillageMD in-store clinic rollout that led it to close hundreds of stores to reduce debt and stem financial losses.
Under former chief executive Roz Brewer, Walgreens spent billions of dollars investing in and operating physician-staffed clinic operator VillageMD.
Walgreens invested more than $6 billion in VillageMD under Brewer to take a controlling stake, but the company has already scaled back dramatically on the expansion of doctor practices and clinics the company opened. In 2020, Walgreens said it planned to open 500 to 700 'Village Medical at Walgreens' physician-led primary care clinics in more than 30 U.S. markets over five years, with the 'intent to build hundreds more thereafter.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
10 minutes ago
- Yahoo
Shenandoah investigates financial mismanagement
Shenandoah borough officials have made inroads in their ongoing investigation of alleged financial mismanagement. Over the past few months, Shenandoah has taken measures to investigate claims of mismanagement presented by Borough Manager Mike Cadau, who was hired in January and found what he says are financial improprieties and misappropriation in the way previous borough administrators did business. On Monday, Cadau announced that officials from the Pennsylvania Auditor General's office will visit borough hall in September to conduct a comprehensive audit of the borough's Liquid Fuels account. Cadau has previously shared that he believes Shenandoah misappropriated funds from that account for projects not typically associated with it. The Department of the Auditor General, Cadau said, 'has been following what's been happening (from media reports), and they want to come in and they want to take a look at our Liquid Fuel accounts.' Also, Cadau said that he will join council president Joseph R. Boris and the borough's forensic auditor, Joseph Yanushefsky, at a meeting with the Internal Revenue Service in Wilkes-Barre on Aug. 25. Cadau said they were summoned by the IRS to go over an ongoing forensic audit led by Yanushefsky, whom the borough appointed this spring. At the meeting, they are expected to examine issues such as 941 forms, 1099 forms and pensions that the borough has provided over the years, Cadau said. Shortly after he was hired in January, Cadau described the borough as being in a 'very difficult' situation due to funding mishaps over the past two years. In May, the borough council appointed attorney Maria Casey as special counsel to help investigate the alleged mismanagement. At the July meeting, Cadau told council members that the Pennsylvania Office of Attorney General also will lead a criminal investigation into the matter. Other business Council members discussed an ongoing effort to repave several streets in the borough. After the successful curb-to-curb paving job done on five streets last year, the borough plans to pave five more by the end of November, Boris said. Boris said the borough will first repave North Jardin and Market streets, which will cost nearly $100,000 combined. Community Development Block Grant funds of $70,000 will be used to pay for those projects, with the remainder coming from interest received through the sale of the Municipal Authority of the Borough of Shenandoah, Boris said Tuesday. M&J Excavation Inc. of Bloomsburg has been tapped as the contractor for the two streets. The contract will be tentatively awarded at the Aug. 27 county commissioners meeting, Boris said. Also on Monday, Boris announced that attorney Shane Hobbs has resigned as the borough's solicitor. He read Hobbs' resignation letter, in which Hobbs stated that recent challenges — notably, his accepting a part-time job as a Schuylkill County Public Defender — resulted in his decision to leave. 'It was a pleasure working with you all,' wrote Hobbs, who served as solicitor since January 2024. Following Hobbs' decision, Boris said, council members interviewed a candidate, James E. Crossen III, of the Pottsville law firm Williamson, Friedberg & Jones. Council members appointed him as the new solicitor Monday. Council members also approved the hire of a new full-time secretary, Nazareth Perez. Solve the daily Crossword
Yahoo
10 minutes ago
- Yahoo
HelloFresh To Settle Consumer Protection Lawsuit With $7.5 Million Deal
HelloFresh To Settle Consumer Protection Lawsuit With $7.5 Million Deal originally appeared on L.A. Mag. HelloFresh, the world's largest meal kit delivery service, has been ordered to pay a $7.5 million settlement in a lawsuit co-led by the Los Angeles County District Attorney's Consumer Protection Division and the Santa Clara County District Attorney's Office. Allegedly, the company misled its customers, failing to adequately give notice to subscribers of continuing charges to their accounts. In a news release published by the Los Angeles County District Attorney's Office, the civil complaint detailed a list of alleged offenses, including negligence to 'Clearly and conspicuously disclose its subscription terms before collecting payment,' as well as failure to 'Offer an easy-to-use mechanism for cancellation.' Included in the release was a statement given by District Attorney Nathan J. Hochman, declaring, 'We will aggressively pursue enforcement when businesses take advantage of consumers by failing to clearly disclose subscription terms, obtain proper consent, or provide a fair way to cancel. Consumers have a right to know what they're signing up for, and they deserve better. Digital deception is still deception under the law.' The law in question refers to the California Automatic Renewal Law, which requires businesses to receive consumers' consent to automatic renewal and repeated service offers. District Attorney Hochman went on to thank the Consumer Protection Division and members of the California Automatic Renewal Task Force (CART), as well as applauding Deputy District Attorney Duke Chau: 'He and his team worked tirelessly with the Santa Clara County District Attorney's Office to secure a result that holds a major corporation accountable and delivers restitution to consumers. Their commitment to fairness and justice is what makes this outcome possible.'Filed in the Santa Clara County Superior Court, Judge Daniel T. Nishigaya ruled on Monday that HelloFresh was required to pay $6.38 million in civil penalties, $120,000 in investigative costs, and $1 million in restitution for impacted did not admit liability in the settlement, denying any wrongdoing and maintaining their commitment to customer transparency, underscoring their cooperation in the investigation and their compliance in settling amicably. This story was originally reported by L.A. Mag on Aug 19, 2025, where it first appeared. Solve the daily Crossword
Yahoo
10 minutes ago
- Yahoo
Target, Lowe's, TJX earnings, July FOMC minutes: What to Watch
Here's what investors are watching on Wednesday, August 20. On the earnings front, retailers continue to release results with TJX (TJX), Lowe's (LOW), and Target (TGT) set to release their quarterly reports. Investors will get additional commentary from Federal Reserve officials, with Fed Governor Christopher Waller and Atlanta Fed president Raphael Bostic set to deliver remarks. The minutes from the July FOMC meeting are also set to be released. To watch more expert insights and analysis on the latest market action, check out more Market Domination Overtime. Time now for what to watch Wednesday, August 20th. Gonna start off on the earnings front. More reports from the retail sector coming in on Wednesday, including TJX, Lowe's and Target. Lowe's announced results for the second quarter before the markets open and it was expecting its same store sales to rise about 1% in Q2. This coming after rival home improvement retailer Home Depot reported earnings on Tuesday, maintaining its full-year forecast amid an improving rate environment. Taking a look at the Federal Reserve, we're going to be getting some more commentary from a couple Fed officials on Wednesday. This is coming after comments from Fed Vice Chair for Supervision, Michael Bowman, on Tuesday. Bloomberg asking Bowman about her interest in taking on the role of Fed chair, and Bowman deflecting, saying quote, "I'm really focused on the job that I'm doing." And sticking with the central bank, the Fed releasing minutes for July's FOMC meeting, where the central bank held interest rates steady. The minutes giving us more insight into a divided Fed's thinking as it prepares for its next meeting on interest rates in September.
