Dive Brief:
- Walgreens has once again cut its stake in drug distributor Cencora as the struggling pharmacy chain looks to boost funding.
- The Illinois-based retailer announced last week it was selling more shares in Cencora for roughly $1.1 billion in proceeds. The sales lower Walgreens’ stake in Cencora to approximately 10% from 12%.
- Walgreens said it will use the money to pay down debt and to fund its operations as it continues to pivot to a health services strategy.
Dive Insight:
Walgreens has struggled amid inadequate reimbursement in its core pharmacy business and rising costs of operating stores. As a result, the company has been swelling its strategic focus beyond drugstores to providing health services building on its drug supply chain acumen.
That strategic pivot has been beleaguered by C-suite turnover and weak investor buy-in. However, Walgreens has forged ahead, laying off a sizable chunk of its corporate workforce and offloading assets, including stakes in home infusion provider Option Care Health and Cencora.
Walgreens and Cencora have been working together since 2013, when the drug distributor was still known as AmerisourceBergen.
However, Walgreens has cut away at its stake in the drug distributor in a series of recent sales, bringing in $1.8 billion and $674 million last August and November and an additional $992 million and $400 million this February and May.
Now, Walgreens has sold all of its remaining shares of Cencora common stock for $818 million, with a concurrent share repurchase by Cencora of $250 million, bringing total proceeds to about $1.1 billion.
The sale will not impact the partnership between Walgreens and Cencora, according to the release.
In June, under new CEO Tim Wentworth, Walgreens announced it planned to close hundreds of underperforming stores, including locations of VillageMD, the primary care chain it majority owns. The waning value of VillageMD has been one contributor to Walgreens’ steep recent losses. Walgreens has also said it plans to reduce its stake in VillageMD.
