Shares in Walgreens Boots Alliance Inc (NASDAQ:WBA, ETR:W8A) tanked overnight in the wake of news the pharmacy chain plans to close a significant number of its US pharmacies due to mounting challenges in its retail business.
CEO Tim Wentworth indicated that the current pharmacy model is unsustainable, citing ongoing issues such as reduced reimbursement rates from pharmacy benefit managers.
During an investor call, Wentworth revealed that 25% of American retail stores are not contributing to operating income, prompting the decision to close many underperforming locations. Walgreens operates over 8,700 retail locations in the States, with over 2,100 at risk of closure.
The company also lowered its financial outlook for 2024, forecasting earnings between $2.80 and $2.95 per share, down from previous expectations of $3.20 to $3.35 per share.
Over the first nine months of fiscal 2024, Walgreens reported an operating loss of $13.1 billion, compared to $6.4 billion in the same period in 2023. This includes a $5.8 billion noncash goodwill impairment charge related to VillageMD.
The stock fell 22% on Thursday and is down 54% in the year to date.