Walgreens To Reduce Physical Footprint, Continue Health Care Services Focus

Following its move to decrease VillageMD’s physical footprint, Walgreens Boots Alliance Inc. (Nasdaq: WBA) seems to be doubling down on its decision.

“We don’t have plans to continue to invest in brick and mortar-owned primary care practices,” Mary Langowski, the president of U.S. Healthcare, said during the company’s third-quarter earnings call on Thursday.

VillageMD is a large primary care provider with a home- and community-based focus.


In 2020, Walgreens backed the company with a more than $1 billion investment. Over the course of several investments, Walgreens has poured more than $6 billion into VillageMD.

In March, Walgreens disclosed that it was planning to shut down 160 VillageMD clinics. The company referred to this as the prioritization of “density in their highest opportunity markets.”

VillageMD also includes Summit Health-CityMD, which the company acquired in 2023.


“We believe in the future of these businesses and intend to remain an investor and partner,” Walgreens CEO Tim Wentworth said during the call. “But as part of our persistent focus on value creation for WBA, we are collaborating with leadership toward an endpoint to rapidly unlock liquidity, enhance optionality and position them for additional growth.”

During the call, Langowski was also quick to point out that the company hasn’t lost its enthusiasm for value-based care.

“We believe strongly … in value-based care as well as in VillageMD and we believe in these businesses and payers believe in these businesses and consumers, frankly, love getting their care in these types of businesses,” she said. “But what we’ve stated, and I’ll say it again, is we’ll be a partner to VillageMD in an ongoing way. We’ll continue to be an investor. What we’re really looking to do is invest in capital-light services to be a broader partner across the industry. With a range of providers and with a range of payers as well as a range of pharmaceutical manufacturers.”

Source: Walgreens Boots Alliance (Nasdaq: WBA)

Overall, Walgreens’ U.S. Healthcare segment had Q3 sales of $2.1 billion, an increase of 7.6% compared to Q3 2023. VillageMD brought in sales of $1.6 billion, a 7% year-over-year increase.

“The increase was driven by growth in full risk and fee-for-service lives, partly offset by the impact of clinic closures,” Manmohan Mahajan, global chief financial officer at Walgreens, said.

Wentworth also shared the company’s plans to close shop at several Walgreens locations across the U.S.

“We are finalizing a multifactor store footprint optimization program which we expect will include the closure of a significant portion of these underperforming stores over the next three years,” he said. “Plans to finalize this number are in motion and we will update you in due course. For the remaining portion of this cohort, we are taking action to return them to profitability and deliver an improved customer experience. We will contemplate additional closures if performance does not improve, which includes external factors, such as reimbursement rates.”

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