Despite Third-Quarter Losses, Walgreens to Invest $1B to Open Doctors’ Offices at US Stores
DEERFIELD, ILL. — In its fiscal 2020 third-quarter results, Walgreens Boots Alliance Inc. said its performance was “significantly impacted by the COVID-19 pandemic,” causing sales to be roughly $700 million to $750 million lower. The decline is largely attributed to its international stores. In April, sales at Walgreens stores in the United Kingdom were down 85 percent. Deerfield, Ill.-based Walgreens says that pharmacy volume was impacted globally by a drop in doctor visits and hospital patient admissions. Profits were also hurt by a shift to low-margin items and higher supply chain and cleaning costs.
Additionally, Walgreens has announced that it will be the first national pharmacy chain to offer full-service doctor offices co-located at its stores on a large scale, following a trial that began last year. The partnership with VillageMD will create 500 to 700 physician-led primary care clinics in more than 30 markets in the next five years, with the intent to build hundreds more thereafter. The clinics will be staffed by more than 3,600 primary care providers who will be recruited by VillageMD.
Under the terms of the new agreement, Walgreens will invest $1 billion in equity and convertible debt in VillageMD over the next three years, including a $250 million equity investment completed Wednesday, June 8. Of the investment, 80 percent will be used by VillageMD to fund the opening of the clinics and build the partnership. It is anticipated that Walgreens will hold an approximately 30 percent ownership interest in VillageMD at the completion of the investment.