Dive Brief:
- Walgreens is once again laying off corporate employees and juggling its executive roster as the retail pharmacy chain continues to look for ways to cut costs following poor financial performance this year.
- Walgreens is eliminating 267 roles, or about 5% of its corporate workforce, a spokesperson confirmed to Healthcare Dive. The reductions — none of which will affect Walgreens’ stores — are the chain’s second round of layoffs since this spring.
- In addition, Chief Medical Officer Kevin Ban is leaving Walgreens effective immediately after three years at the chain. Ban is the latest executive to be caught up in Walgreens’ C-suite overhaul, after the departure of its CEO, CFO and CIO this year.
Dive Insight:
Deerfield, Illinois-based Walgreens has struggled financially amid the retailer’s larger strategic shift to healthcare services, flagging front-store sales, lower demand for COVID-19 tests and vaccines and strained labor relations with pharmacy staff.
Walgreens laid off 10% of its corporate workforce in May, one month before posting third-quarter earnings results that missed Wall Street expectations. Walgreens cut its 2023 outlook along with the results, causing its stock to plummet.
Walgreens’ stock is down 45% so far this year
Walgreens announced a $1 billion cost reduction plan in October. As part of that plan, Walgreens plans to close 60 medical clinics operated by VillageMD, its network of doctor’s offices, in underperforming markets.
The retailer has invested heavily in VillageMD and its U.S. Healthcare division overall as it looks to build on its traditional pharmacy roots to deliver healthcare services for payers, providers and other healthcare industry clients. Despite revenue growth in U.S. Healthcare, the division has not moved toward profitability as quickly as Walgreens had hoped, spurring the clinic exits.
Walgreens also said earlier this month it wouldn’t pay out bonuses to corporate team members, and would reduce bonuses to pharmacy and store managers, after financial results underperformed expectations.
Ban is the latest Walgreens executive to leave the beleaguered retailer. He joined Walgreens as CMO in January 2020 and helped oversee the retailer’s response to the COVID-19 pandemic. Ban will leave effective immediately, as will Luke Sauter, chief of staff to the CEO, the Walgreens spokesperson confirmed.
Ban will be replaced by Chief Clinical Officer Sashi Moodley, according to Bloomberg.
Walgreens chief executive Roz Brewer unexpectedly left the retailer in September, and was replaced one month later by Tim Wentworth, the former CEO of Cigna’s pharmacy benefit manager Express Scripts.
Walgreens also recently named a new CIO, but has yet to find a permanent replacement for ex-CFO James Kehoe, who left in August.
On Friday, Walgreens also sold $674 million of stock in Cencora, the drug distributor formerly known as Amerisource Bergen. Proceeds from the sale would be used to pay down debt and for corporate priorities, Walgreens said.
