Walgreens faces steep losses as buyout approaches

In the United States, Walgreens Boots Alliance Inc. has faced significant challenges as it navigates a buyout deal with the private equity firm Sycamore Partners, which was agreed upon in March 2025. This impending acquisition occurs amid a series of financial struggles for the drugstore chain. In its recently concluded fiscal second quarter, Walgreens reported a loss of $2.85 billion, which, although considerable, was an improvement from the $5.91 billion loss reported in the same quarter the previous year. The company's adjusted earnings for that period were 63 cents per share, which surpassed analysts' expectations for 53 cents per share based on projected revenues of approximately $38 billion. However, actual sales were recorded at $38.59 billion, reflecting a 4% increase compared to the same period last year. Despite the encouraging sales figures, Walgreens continues to grapple with ongoing operational issues. The company has highlighted difficulties such as lower prescription reimbursements and increasing operational costs, which have been detrimental to profitability. A key aspect to note is the performance of its VillageMD clinic business, which, although it delivered a less severe impact on the company's finances in this quarter, still struggled to attract patients, an aspect that has led Walgreens to reevaluate its business strategies. The company has also taken steps to manage these losses by cutting costs and closing unprofitable store locations, Notably, the fiscal second quarter saw Walgreens' established U.S. pharmacy sales rise by 12%, driven in part by increased prescription volumes. In contrast, retail sales within their pharmacies dropped by about 3%. The company reiterated its commitment to restructuring and adapting to changing market conditions, emphasizing the need to remain competitive in an industry marked by rapid shifts. Walgreens also announced the suspension of its quarterly dividend, a move that ends a 90-year tradition of providing shareholder returns through regular dividend payments, reflecting the severity of its current financial scenario. Amid these developments, Walgreens opted to withdraw its annual financial forecast and did not conduct a conference call with analysts following the release of these results, a departure from typical practices that indicates uncertainties surrounding the company's future. Following this news, Walgreens shares saw a minor increase of 19 cents to a trading value of $10.90, even as broader market conditions showed a rally following a period of losses.