Walgreens Acquired by Private Equity Firm for $10 Billion After $11.7 Billion Losses

Walgreens Boots Alliance, once a retail giant worth $100 billion, has seen a dramatic decline over the past decade. The company's struggles have been attributed to a series of missteps in mergers and acquisitions (M&A), neglect of its retail operations, and a heavy debt burden. In 2024, Walgreens generated non-pharmacy revenue of $27 billion and $89 billion from pharmacy services. However, the company posted a total of $11.7 billion in losses over 2023 and 2024, one of the highest totals among Fortune 500 companies. The losses were exacerbated by the company's inability to manage its retail business effectively, which had slipped due to years of neglect.

In March 2025, Walgreens announced a deal to be acquired by a private equity firm for $10 billion, marking the end of its 98-year history as a publicly traded company. The acquisition is expected to close in late 2025. The company's decline has been marked by a series of ill-advised acquisitions, including the purchase of VillageMD, which resulted in a $5.8 billion write-down. The company has also been weakened by its heavy debt burden and the loss of millions of customers due to a dispute with Express Scripts, a major pharmacy benefits manager (PBM).

Walgreens' troubles began in the early 2010s when it pursued a strategy of expanding its store footprint through acquisitions. The company made a bid to buy Rite Aid in 2015, but the deal was blocked by antitrust regulators. Walgreens was ultimately allowed to buy only 2,100 stores, resulting in a larger store footprint but with significant overlap and cannibalization of sales. The company has since announced plans to close 1,200 stores out of 8,700, a tacit admission that much of the money spent on the Rite Aid acquisition was wasted.

Walgreens' neglect of its retail operations has also contributed to its decline. The company failed to innovate and update its stores, resulting in a loss of market share to competitors such as Ulta Beauty. The company's retail business has struggled for years, and the COVID-19 pandemic provided only a temporary boost in foot traffic. Walgreens' retail business is much more important to its overall success than that of its rival CVS, which has seen improvements in its retail business in recent years.

Walgreens' M&A strategy has also been criticized for its lack of focus on healthcare. The company made a big investment in the health technology company Theranos in 2013, which ultimately failed amid a fraud scandal. In 2020, Walgreens invested in VillageMD, and the next year, it grabbed a controlling stake for $5.2 billion. The company is now trying to offload that network of primary medical care clinics. In 2022, VillageMD paid $9 billion for CityMD, another clinic chain, in a deal that has not paid off. The company's former CEO, Rosalind Brewer, left in 2023, and Walgreens has unwound or is unwinding much of the M&A it has conducted in recent years.

Walgreens' new CEO, Tim Wentworth, has focused on cost-cutting and improving the company's core pharmacy business. He has announced plans to close 1,200 stores over three years and has begun to beef up the company's roster of store brands with 300 new products. The company is also remodeling many drugstores and offering faster delivery than before. On the pharmacy side, Walgreens is trying to squeeze out costs with initiatives like using automated robotic prescription filling. However, the company's heavy debt burden and the potential for additional liabilities from opioid litigation pose significant challenges to its turnaround efforts.

Walgreens' acquisition by a private equity firm is expected to provide the company with the opportunity to fix its many problems away from the scrutiny of Wall Street. The company's new owners will have an enormous amount of debt to manage, and the company will have a smaller margin of error in the near future. However, the acquisition also provides an opportunity for Walgreens to focus on its core business and potentially emerge as a stronger company in the future.