CEO Rosalind Brewer stepped down on August 31 amid the company’s efforts to shift away from pharmacy and retail and move into healthcare, Walgreens announced Friday.
Walgreens executives said they’re looking to replace Brewer with someone who has “deep healthcare experience” as it forges ahead with its plans to transform into a “consumer-centric” healthcare company. Brewer, whose experience is primarily in retail, previously served as COO and Group President of Starbucks as well as President and CEO of Sam’s Club.
The decision was “mutual,” according to Walgreens and Brewer. Ginger Graham, presently lead independent director of Walgreens Boots Alliance (WBA), will serve as the company’s interim CEO while execs search for a permanent replacement.
Brewer also stepped down from her position on the Walgreens board, but will stay on as an advisor for the company until February 2024. She’ll get paid a $375,000 monthly consulting fee to do so, according to an SEC filing. Brewer will also receive a $9 million severance.
Brewer has served as the Walgreens CEO since March 2021 and led the company through the acquisitions of VillageMD, Shields Health Solutions, CareCentrix, and Summit Health-CityMD—all part of the company’s healthcare services push.
“I leave WBA confident that it is on the track to be a leading consumer-centric healthcare company, serving thousands of communities across the country, especially those that need access to healthcare the most,” Brewer wrote in a note on LinkedIn, adding that it was “one of the most difficult notes I have ever written over the course of my career.”
Elizabeth Anderson, a healthcare research analyst at investment banking advisory firm Evercore, wrote in an analyst note obtained by Reuters that the timing of Brewer’s departure is surprising, but the departure itself isn’t, given Walgreens’s focus on its healthcare segment and that Brewer lacks healthcare experience.
“With the increased focus on growing the Walgreens Healthcare segment...it makes sense to retrench and search for a new leadership team with more extensive backgrounds in healthcare services,” Anderson wrote.
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Neil Saunders, managing director of retail research agency GlobalData Retail, told NBC News: “The retail side of the business, where Ms. Brewer has much more experience, is simply not an area that Walgreens wants to pursue as a major growth opportunity.”
Graham’s experience, however, does fit the bill: She’s held several leadership positions across healthcare, including CEO of Amylin Pharmaceuticals and group chair of medtech company Guidant Corporation. Walgreens touted Graham’s experience advising “numerous companies and CEOs on building healthcare businesses.” She’s also been with Walgreens since 2010.
“Ginger is the ideal person to serve as interim CEO, given her leadership experience across multiple segments of the healthcare industry, deep knowledge of WBA, and strong operational skills,” Stefano Pessina, Walgreens executive chair and former CEO, said in a statement.
A less-than-ideal year for Walgreens
Walgreens has had a tough 2023, with shares down more than 32% since the start of the year, according to NBC News. In June, the company reported Q3 earnings that fell below analyst expectations for the first time since 2020, Healthcare Brew previously reported. During the Q3 earnings call, Walgreens executives said they were “disappointed” with the US healthcare segment’s pace toward becoming profitable.
In response, Brewer said the company would increase its cost-cutting initiative to $4.1 billion, up from the previously announced $3.5 billion.
Walgreens also laid off 10% of its corporate workforce, or 504 employees, in May, Healthcare Brew previously reported. Company spokesperson Fraser Engerman told Healthcare Brew at the time that the layoffs were made so Walgreens could focus on growing its healthcare business.
Walgreens EVP and CFO James Kehoe stepped down in July, which combined with Brewer’s departure, could create “some investor unease,” Anderson wrote in the analyst note, Axios reported.
Brewer was one of eight Black CEOs on the Fortune 500 list, and one of just two Black women.