After Billions In Losses, Walgreens Doesn't Want To Own VillageMD

Walgreens Boots Alliance, a prominent pharmacy chain, is planning to reduce its investment in VillageMD, a doctor-staffed clinic operator, due to significant financial losses and a focus on more profitable ventures. This decision comes as the company’s CEO, Tim Wentworth, seeks to improve the drugstore chain’s performance.

VillageMD manages 89 Village Medical at Walgreens clinics and also operates CityMD, an urgent care provider, and Summit Health, a multispecialty medical group. Walgreens currently holds a 53% stake in VillageMD, but this is expected to change as the company plans to “unlock liquidity” and enhance its options for growth.

The investment in VillageMD, totaling over $6 billion, was made under the previous CEO, Roz Brewer. However, the expansion of doctor practices and clinics attached to Walgreens has been significantly scaled back due to difficulties in filling patient panels.

Despite the decision to reduce its stake, Walgreens remains optimistic about the future of VillageMD. The company’s U.S. Healthcare segment, which includes VillageMD, reported a 7.6% increase in sales in the third quarter, led by VillageMD and Shields Health Solutions.

This move by Walgreens comes as other retailers, such as Walmart and Amazon, are also exploring primary care services. While Walmart is closing its Walmart Health centers and selling its virtual care business, Amazon is growing its Amazon One Medical clinics and integrating its Amazon Clinic telehealth business into Amazon One Medical.

CVS Health, another major player in the industry, has acquired Oak Street Health, a primary care provider for seniors, and plans to expand the Oak Street model across the country. Retailers are expected to remain involved in primary care, with Walgreens planning to continue as a partner to VillageMD while focusing on capital-light services.

Mary Langowski, Walgreens’ newly hired head of healthcare services, emphasized the company’s commitment to partnership without excessive investment. She stated, “We’ll continue to be an investor, but what we’re really looking to do is invest in capital-light services to be a broader partner across the industry.”

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