Walgreens Boots Alliance (WBA) is exploring the sale of its VillageMD primary care clinics, as revealed in a recent Securities and Exchange Commission (SEC) filing. The company is evaluating options, including a full or partial sale of VillageMD, restructuring, or other strategic opportunities due to the substantial cash demands of ongoing investments in the clinics.
Walgreens has been under financial strain from a shifting retail landscape and increased regulatory challenges, as noted in its Q3 earnings report. The company’s stock has been significantly impacted, hitting a 52-week low of $10.62 on August 5, with shares down about 59% year to date.
The SEC filing also disclosed defaults under the VillageMD Secured Loan, which included a $2.25 billion senior secured credit facility provided by Walgreens in January 2023. The company is in discussions with VillageMD stakeholders and third parties regarding the future of its investment.
On August 8, Walgreens announced the pricing of a $750 million public offering of senior unsecured notes, expected to close on August 12. Proceeds will be used to repay outstanding debt and for general corporate purposes.
Earlier, on August 1, Walgreens sold its remaining unencumbered shares of Cencora, a drug wholesale company, for $818 million. The proceeds are intended for debt reduction and furthering a capital-efficient health services strategy centered around its retail pharmacy operations.
This potential sale of VillageMD comes after CEO Tim Wentworth announced plans during a Q3 earnings call to reduce the company’s stake in the clinics as part of a broader cost-cutting strategy. Walgreens also plans to close up to 25% of its unprofitable retail stores as it seeks to cut $1 billion in costs.
