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Walgreens reported Q4 earnings on October 12 that fell short of analyst expectations, the first time in nearly a decade the company has had two consecutive quarters with lower-than-expected earnings, according to CNBC.
Walgreens spent its 2023 fiscal year, which ended on August 31, trying to transform from a pharmacy chain into a “consumer-centric” healthcare company, investing roughly $13 billion to build its US healthcare segment. But company executives said during Thursday’s earnings call that they’re “not satisfied” with the return on investment so far.
“Our performance this year has not reflected [Walgreens’s] strong assets, brand legacy, or our commitment to our customers and patients,” interim CEO Ginger Graham said in a statement.
This quarter, the company’s healthcare segment reported $2 billion in sales, up from $622 million in the previous year’s quarter. It also reported a $294 million operating loss—an improvement over the $338 million operating loss the segment reported in the same quarter last year.
But John Driscoll, EVP of Walgreens and president of the US healthcare segment, said during the call that “while we have made progress on the build-out of our healthcare business, we are not satisfied with the near-term returns on our investments. We will continue to grow in 2024, but with a renewed focus on more profitable growth.”
To that end, Driscoll said Walgreens plans to close around 60 VillageMD clinics in the next fiscal year to focus on clinics in more profitable areas. “As we grow, we are constantly evaluating our footprint,” he said.
In August, former CEO Rosalind Brewer suddenly departed the company; Walgreens executives said they wanted someone with more healthcare experience to lead the company, Healthcare Brew previously reported.
The company announced on October 10 that Tim Wentworth, former CEO of Evernorth, Cigna’s health services organization, will take Brewer’s place effective October 23.
Graham said in a statement that Wentworth “brings deep healthcare experience and the skills needed to propel [the company] forward.”
“I have worked with Walgreens as a customer, partner, competitor, investor, and family member, and I understand the challenges ahead for us as well as for the healthcare industry,” Wentworth said in the earnings call, adding that Walgreens “has unique advantages in today’s healthcare environment.”