Amid losses, Walgreens announces $1 billion in cuts and closing unprofitable clinics
Financial challenges in the coming year include lower volumes of COVID-19 vaccinations and testing, company says.
Photo: Courtesy Walgreens
Walgreens Boots Alliance has plans to cut over $1 billion in 2024 and to shutter 60 healthcare clinics in unprofitable markets.
The company reported fourth quarter operating losses of $450 million, compared to $822 million operating losses during the fourth quarter of 2022.
Net loss in the fourth quarter was $180 million compared to a net loss of $415 million in the year-ago quarter.
WHY THIS MATTERS
The company plans cost reductions of at least $1 billion and lowering capital expenditures by approximately $600 million in 2024, interim CEO Ginger Graham said Thursday, during the earnings call.
Financial challenges in the coming year include lower volumes of COVID-19 vaccinations and testing and shifting consumer spending patterns, the company said.
Walgreens said it is mandating company leadership return to the office.
The company announced the appointment of Tim Wentworth as chief executive officer, effective October 23. Wentworth replaces Roz Brewer, who left in September. Graham, who serves on the Walgreens Boots Alliance's Board of Directors, has been serving as interim CEO.
Graham released this statement on Thursday: "Our performance this year has not reflected WBA's strong assets, brand legacy, or our commitment to our customers and patients. In just six weeks, we have taken a number of steps to align our cost structure with our business performance, including planned cost reductions of at least $1 billion, and lowered capital expenditures by approximately $600 million. We anticipate seeing the impact of these actions in fiscal 2024, beginning in the second quarter. We are also intently focused on accelerating our profitability in the U.S. Healthcare segment."
Walgreens stock rose on Friday.
CFO Manmohan Mahajan, interim Global CFO, said fourth quarter sales of $2 billion reflect the acquisition of CareCentrix and the acquisition of Summit Health by VillageMD, as well as growth in all businesses.
The company reduced debt by $2.6 billion in fiscal '23, he said.
THE LARGER TREND
Walgreens dispenses over a billion prescriptions annually across its retail and specialty pharmacies. An estimated 78% of Americans live within five miles of a Walgreens or a Duane Reade store and 58% of consumers are likely to visit a local pharmacy as the first step for a non-emergency health need, the company said.
Earlier this week, Walgreens announced it would offer direct-to-consumer virtual services starting later this month.
Walgreens pharmacy staff reportedly walked off the job this week over concerns about working conditions. The exact scale of the pharmacists' protest was unclear, according to AP. Organizers estimated that more than 300 Walgreens locations - out of nearly 9,000 nationwide - were affected by walkouts planned for Monday through Wednesday, the report said, though a company spokesperson said "no more than a dozen" pharmacies experienced disruptions.
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org
