Walgreens Sale To Pe Firm Is ‘less Likely’

In December, word spread that Walgreens Boots Alliance Inc. (Nasdaq: WBA) was reportedly considering selling itself to the PE firm Sycamore Partners. A month later, experts believe that the heat on these talks have died down.

Though WBA struggled throughout 2024, a sale to Sycamore is now unlikely, executives indicated.

“Walgreens’ Q1 2025 earnings report solidifies that the company’s turnaround is officially underway following an incredibly difficult 2024 where it finished as the S&P’s worst-performing stock of the year,” Emarketer analyst Rajiv Leventhal told Forbes. “And CEO Tim Wentworth’s comments on being committed to a retail pharmacy-led operating model that will drive long-term value indicate that the rumored sale to PE firm Sycamore Partners is less likely.”

At Walgreens, a different sale is top of mind. The company is still in the process of selling VillageMD, and evaluating options for Summit Health+CityMD.

“We are encouraged by the leadership of new CEO health care veteran, Jim Murray,” Tim Wentworth, CEO of Walgreens said Friday during the company’s first quarter earnings call. “To be clear, our ultimate intent to exit is unchanged, and we remain committed to redeploying any proceeds to reduce our net debt and improve the health of our balance sheet.”

Last summer, Walgreens made it clear that it would not continue to invest in its brick and mortar primary care practices.

Walgreens first backed VillageMD in 2019. Over the years, through several investments, the company’s stake in the primary care provider ballooned to more than $6 billion. VillageMD also includes Summit Health+CityMD, which the company purchased in 2023.

Walgreens continues to move forward with its plan to shut down thousands of stores.

“As a reminder, we have a lot of experience with store closures — having closed about 2,000 locations over the past decade,” Wentworth said. “That said, to handle the stepped up pace for the next three years, we’ve assembled a dedicated team to focus exclusively on the end-to-end process to improve upon our historical results. This team has already sequenced the next approximately 450 store closures, and at this point, we have a high degree of confidence in the execution of this process through the end of 2025. Naturally, we expect our future footprint to support stronger performance.”

Overall, Walgreens’ U.S. Healthcare segment had Q1 sales of $2.2 billion, compared to $1.9 billion in Q1 2024. VillageMD brought in sales of $1.6 billion and grew 9% year-on-year, despite the impact of clinic closures.

This increase was driven by growth in full risk lives and fee-for-service revenue, Manmohan Mahajan, executive vice president and global CFO of Walgreens, noted.

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