Walgreens Reports $180 Million Loss Ahead Of New CEO Taking Over

Walgreens Boots Alliance reported a $180 million loss in the company’s fiscal fourth quarter thanks in part to “significantly lower COVID-19 vaccine and testing volumes,” the company said Thursday.

Walgreens net loss in the fourth quarter ended Aug. 31 was $180 million, or 21 cents a share, compared to a net loss of $415 million, or 48 cents a share, in the year-ago quarter. The earnings report comes less than 36 hours after the drugstore giant confirmed former Express Scripts and Cigna executive Tim Wentworth would be Walgreens new CEO. Wentworth begins Oct. 23.

Until this year, COVID-19 related sales of vaccines and tests have been a big money maker for drugstore chains like Walgreens as millions of Americans flocked to their local drugstore for tests, vaccines and booster shots in the fight against the Coronavirus. But such sales are slowing dramatically as Americans return to normal life and the U.S. public health emergency ended in May after more than three years.

Meanwhile, Walgreens is amid a major cost-cutting initiative that should help Wentworth get a jump start on a financial turnaround for the company, which lost more than $3 billion in its fiscal 2023.

Walgreens Thursday attributed the annual loss in part to “opioid-related claims and litigation” as the company settled claims it contributed to the opioid crisis. CVS, Walgreens and Walmart – the nation’s three largest retail U.S. pharmacy chains — agreed in November of last year to pay more than $13 billion in a massive global settlement to resolve claims they contributed to the opioid epidemic.

But Walgreens executives appear ready to turn the page on its fiscal 2023, forecasting a profitable 2024.

“Our performance this year has not reflected WBA’s strong assets, brand legacy, or our commitment to our customers and patients,” said interim chief executive officer Ginger Graham, a company board member who took over as Walgreens top executive following the abrupt departure a month ago of Rosalind Brewer, who stepped down as CEO after less than three years in the role.

“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,” Graham said. “We anticipate seeing the impact of these actions in fiscal 2024, beginning in the second quarter.”

Graham also said Walgreens is “intently focused on accelerating our profitability in the U.S. Healthcare segment,” which reported a $294 million operating loss in the fourth quarter. The healthcare segment includes the company’s Shields Health Solutions, a specialty pharmacy; CareCentrix, a post acute and home care company; and Walgreens stake in VillageMD, which operates physician practices and clinics adjacent to Walgreens drugstores.

Walgreens fourth quarter sales increased 9.2 percent to $35.4 billion, “reflecting sales growth in the U.S. retail pharmacy and International segments, and sales contribution from the U.S. Healthcare segment.”

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