4 Insights into Walgreens’ Health Strategy Review

4 Insights into Walgreens’ Health Strategy Review. A soccer field chalkboard with the Walgreens logo in the center. Four hands with blue chalk are drawing up a strategy on the board.

Walgreens recently has undergone significant leadership changes while facing financial challenges on several fronts. The pharmacy chain operator last month 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.

In the roughly four months since new CEO Tim Wentworth took over, analysts have been trying to determine how the company will adjust its long-term vision — particularly since some of its huge investments to grow its health care business have yet to deliver the intended results.

For anyone expecting a major rebranding of the company or a fundamentally new direction in its health care operations, Wentworth essentially had two words to say about it during an interview at the recent TD Cowen Health Care Conference: “Forget it.”

Instead, Wentworth said he and the board will meet in April to conduct a strategic review of Walgreens’ retail, pharmacy and health care business portfolio and to develop a road map for the future. By year-end we should have a clearer picture on how Walgreens will evolve, but Wentworth gave some hints about potential areas of change.

4 Takeaways on Walgreens’ Future Health Care Direction

1 | Relationship-building through the pharmacy will receive greater attention.

Walgreens’ experience in administering vaccinations to scores of customers convinced Wentworth that pharmacist trust can be leveraged further in other ways on behalf of payers to drive engagement and create value.


When the company announced its $1 billion cost-cutting initiative last fall, Walgreens stated that many of the cuts in 2024 would come from retail pharmacy operations. It remains to be seen how this fits alongside the goal of expanding the role of pharmacists in leveraging trusting relationships with customers.

2 | Retail stores will remain central to Walgreens’ strategy.

Even as it continues to close some of its 8,600 retail outlets to reduce costs, Walgreens will be focused on getting its footprint right, Wentworth said. The emphasis will be on what the organization should look like in five years and then reverse-engineer how the footprint needs to change.


Determining which locations will deliver incremental health services and which will be more focused on community pharmacy services will be critical in this process. In talks with its board, Wentworth said the company needs to be clear about its strategy for the front (retail) and the back of the stores (pharmacy and health care).

3 | Getting board alignment on health care assets will be critical.

As part of its review with the board, company leaders will examine Walgreens’ health care assets, including: primary care provider VillageMD; CareCentrix, a post-acute and home care provider; Summit Health/CityMD, a provider of primary, specialty and urgent care; and Shields Health, a specialty pharmacy. The company’s clinical trials division and fulfillment centers also will be scrutinized. This discussion will help shape strategy on how to optimize performance in the markets these companies serve.


While Walgreens remains committed to these businesses and has a strong belief in their value, the scale of some operations will change and some could end up being moved to different areas of the company. Last fall, VillageMD announced plans to close underperforming locations in five markets, including all 58 in Illinois and Florida, as part of a larger cost-cutting initiative. And reports that Shields Health may be sold are untrue, Wentworth said. Instead, Walgreens will focus on optimizing value from the company.

4 | New pharmacy models will be explored.

Earlier this year, Wentworth said the company will examine new pharmacy models as cost-plus drug pricing appears to be gaining momentum. He believes the market, including CVS’ new pharmacy benefit management (PBM) reimbursement model, is responding to what payers want.


Wentworth is encouraged by a recent willingness among PBMs to change the conversation around not just cost-plus drug pricing models, but also to other services that companies like Walgreens can provide to create value for PBMs and payers and that can be bundled. The examples of providing vaccinations, tests and other services demonstrate that retailers can provide these services and get paid a fair fee without “cross-subsidization that distorts the economics for us or the marketplace,” he said.

Learn More

For a deeper dive into how companies like Walgreens, Amazon, CVS Health and others plan to transform health care this year, read Market Scan’s 2024 Health Care Disruption Outlook.

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