Walgreens Boots Alliance announced that it is taking a $5.8 billion loss on its VillageMD clinics, which the company purchased a major stake in three years ago.
The company announced in its Q2 earnings report that its operating loss was $13.2 billion for the quarter, a substantial reversal from the $197 million operating income reported during the same period the previous year.
“Operating loss in the quarter includes a $12.4 billion non-cash impairment charge related to VillageMD goodwill, which resulted in a $5.8 billion charge attributable to [Walgreens Boots Alliance], net of tax and non-controlling interest,” the company said in the report.
The loss per share was $6.85 for the quarter compared to earnings of $0.81 per share a year ago.
Despite the dismal results, year-over-year sales were up 6.3% for the quarter to $37.1 billion. Adjusted earnings per share were up 3.4% to $1.20, a reflection of “improved profitability in U.S. healthcare,” the company said.
The company said it is narrowing its fiscal year 2024 adjusted earnings per share guidance to between $3.20 and $3.35, “reflecting a challenging retail environment in the U.S.” among other factors.
Walgreens maintained its U.S. healthcare adjusted EBIDTA guidance of negative $50 million to $50 million.
"We're encouraged by our first quarter of U.S. Healthcare positive adjusted EBITDA and continued topline growth alongside another quarter of strong execution in pharmacy, as we look to re-energize and evolve its impact both at Walgreens and at large. As we continue to operate in a challenging retail environment, we are taking actions to focus on customer engagement and value,” said Walgreens CEO Tim Wentworth.
He added that the company is confident it will reach its goal of “achieving $1 billion in cost savings this year” and will continue the strategic review of its portfolio over the next three months.
“Our team members, led by WBA’s new executive committee with a track record of operational excellence, are powering our progress as we map growth opportunities, aim to create long-term value across our businesses and execute the hard work to simplify and strengthen WBA,” Wentworth added.
Over the last several months, the company’s efforts to cut costs have come in the form of layoffs of more than 1,000 employees, mainly from its corporate workforce, since last year.
In late January, Walgreens Boots Alliance cut 145 corporate workers, and in fall of 2023 the company axed 267 corporate positions. In May of 2023, the company laid off more than 500 high-ranking employees. It also closed an ecommerce center in Illinois last year that resulted in the elimination of some 400 positions.
Walgreens has also cut costs through the closure of dozens of VillageMD clinic locations in Illinois, Florida, and Indiana.
