Walgreens Boots(WBA.US) May Sell All of VillageMD

Walgreens Boots (WBA.US) said it was considering selling all or part of its stake in VillageMD, its primary care provider, as part of an assessment of its investment in the company. Walgreens added that a restructuring plan and other strategic opportunities were also being discussed.

VillageMD is a core part of Walgreens Boots’ expansion beyond traditional pharmacy, and the company has already planned to close many underperforming clinics to cut costs.

Walgreens Boots also said in a filing with the SEC that it was weighing several options “given the significant cash needs of VillageMD both currently and in the future.” The company’s chief executive, Tim Wentworth, had mentioned plans to sell down its stake in VillageMD as early as the end of June.

Additionally, Walgreens Boots reached a forbearance agreement with the company on Wednesday over $2.25bn in loan guarantees it had provided to VillageMD, as it discussed the future of its investment in the primary care provider with its stakeholders and other third parties.

Walgreens Boots shares jumped 15 per cent after the earnings report, which included a mixed third-quarter performance and a downgrade in its 2024 outlook, as well as a warning that it might close underperforming US stores.

“We continue to face a challenging operating environment, including ongoing pressure on US consumers and the impact of recent market dynamics, which are eroding pharmacy margins,” said chief executive Tim Wentworth.

Shares of Walgreens Boots fell as low as $10.62 on Aug 5, down 58 per cent this year. They were trading at $10.78, down 1.19 per cent at the time of writing.