A Walgreens split would go against the trend of healthcare consolidation

A division of Walgreens into three companies would depart from the tendency of the healthcare consolidation industry.

A report last week that parent Walgreens Walgreens Boots Alliance would be divided into three businesses would include selling or rotating boots in the UK, which has more than 1,800 overseas shops “ranging from local community pharmacies to major health stores and beauties,” says the company’s website.

In the SH.BA, Walgreens retail pharmacies would also be divided into a different company. And a third company will include the fast -growing pharmacy business, which Walgreens has already highlighted as a $ 24 billion enterprise.

“While the company would initially take on private, Sycamore (partners) plans to divide the three main Walgreens businesses into their units with distinct capital structures,” the Financial Times reported in its four byline history.

News of a possible division of Walgreens come after CVS Health is committed to maintaining all its businesses including its retail pharmacies and increased OAK Street High Health Center. The CVS also owns the third largest health insurance company in AETNA and one of the largest pharmacy benefit companies in the country (PBM) in Caremark. Possessing a health insurer and PBM allows them CVS companies to buy services from its provider’s operations with discounts for health plan registrations, as well as employer and government customers.

“We have the main PBM, the best pharmacy run in this country, an exclusivity preserved through AETNA, and industry health care assets,” the chief executive of CVS David Joyner told Analysts in November in call of the third trimester of the company not long after he replaced Karen Lynch. “Our collection of businesses and omnichannel skills allows us to guide the industry forward with innovative and moving market solutions.”

Over the past decade or longer, Walgreens has resisted to enter the health care business business operating without owning a PBM or a health plan. This, some analysts say, was a strategic mistake.

But Walgreens’ attempt to pack more health care services or attached to its retail pharmacies has been difficult to say at least. Under former executive chief Roz Brewer, Walgreens spent billions of dollars in investing and operating the staff of Villagem staff clinic.

Walgreens invested more than $ 6 billion in Villagemd under Brewer to take a controlling share, but the company has already dramatically scaled to expand the practices and clinics of doctors that the company opened attached to Walgreens. In 2020, Walgreens said he planned to open 500 to 700 “Medical At Walgreens village” doctors -run clinics run by more than 30 US markets over five years, with “the goal of building hundreds more afterwards”.

But the Director General of Walgreens Tim Wentworth, who replaced Brewer in October 2023, said a year ago that Walgreens and partner Villagemd have slowed the openings of the number clinics partially because operators were unable to fill their “patient panels”, which are a certain number of individual patients under the care of a specific provider.

Meanwhile, Walgreens, which has closed shops and cost reduction, reported a net loss of $ 265 million, or 31 cents a action in the first fiscal quarter that ended on November 30 last year. This is compared to a year earlier a year earlier of $ 67 million or 8 cents per share.

Walgreens has not commented on any speculation that the company would be taken private by Sycamore or if any division was in the works. And every Walgreens sale is likely to need the support of the Italian billionaire and former -Ceo company Stefano Pessina, who has a 17% ownership share in Walgreens.

But Walgreens has already sought to sell some healthcare assets such as its shares in Villagem. And the concentration of Wentworth on the company’s return has included debt reduction. Walgreens Stake in Cencora has dropped to 6% from 10% ‘to sell more shares of drug distributors for about $ 300 million.

“Our first quarter results reflect our disciplined execution against our 2025 advantages: retail stabilization by optimizing our trace, checking operating costs, improving the flow of money and continuing to address reimbursement models,” Wentworth said in January. “As our turn will take time, our early progress strengthens our faith in a stable, retail model of pharmacy.”