Walgreens Shutters 160 VillageMD Clinics after $6 Billion Loss

Walgreens Boots Alliance reported last week that it lost nearly $6 billion in its second quarter as the company struggles with the loss in value of its investment in VillageMD. Walgreens paid more than $5 billion to acquire a controlling stake in the primary care network in 2021. The company posted a steep loss in share price following the release of its earnings report.

Initially, Walgreens had planned to expand VillageMD through hundreds of co-locations inside its existing stores. By 2023, Walgreens had opened more than 200 such clinics.

The company reevaluated its expansion plans in 2023 after its health care division experienced $1.73 billion in operating losses. In late 2023, it announced a $1 billion cost-cutting initiative, which included cuts to its pharmacy division and closures of more than 60 VillageMD clinics. Tim Wentworth, who became Walgreens’ CEO in October 2023, explained that VillageMD’s expansion plan needed to “go on a diet.”

VillageMD, a foundational part of Walgreens' strategy to expand beyond its pharmacy operations, now plans to shut more than 160 clinics — nearly 100 more closures than anticipated in late 2023 — to focus on sites in densely populated areas. This move will increase the number of patients treated by a single doctor.

Walgreens recently underwent significant leadership changes while facing financial challenges on several fronts. In February, the pharmacy chain operator was replaced on the Dow Jones Industrial Average by Amazon and halved its dividend two months earlier to conserve cash as it tries to grow its business.