By 2023, nearly one independent pharmacy closed every day, and similar numbers are expected this year, according to the National Community Pharmacists Association.
If Walgreens Boots Alliance Inc. being bought by private equity firm Sycamore Partners, could have more flexibility by “aggressively” cutting costs to address the sector’s ongoing challenges, according to an industry analyst.
“As a private company, WBA [Walgreens Boots Alliance] “We can have more flexibility to make major changes to the business, in our view, and reduce costs aggressively to try to address recent challenges with pharmacy operating margins and declining sales of over-the-counter products due to increased online competition,” said CFRA Research analyst Paige Meyer.
Meyer maintained his “hold” outlook on the shares, which are down nearly 60% year to date.
WHY ARE MUNICIPAL ORDINANCES CLOSED
The company is in talks to sell itself to a private company, with an agreement expected to be signed early next year, sources familiar with the matter told Reuters. However, Walgreens, which has been working with its advisers for the past several weeks, has also reached out to other potential buyers, sources told Reuters.
Walgreens declined to comment. FOX Business reached out to Sycamore Partners.
A point of sale and a doctor’s sign at a Walgreens store in New York City. (Lindsey Nicholson/UCG/Universal Images Group via Getty Images/Getty Images)
The reported talks come as the company has already been working to restructure its operations under new leadership profitability challenges and rate declines.
In October, the company, which has been struggling to compete with rivals such as Amazon, announced plans to close at least 1,200 stores over the next three years. The move is part of its effort to close a “significant” number of underperforming facilities across the US in response to these challenges.
WALGREENS TO PAY $106.8M IN CLAIMS PAYING TO GOVERNMENT ON UNDISCHARGED CONDITIONS.
Walgreens previously told FOX Business that its retail pharmacy business is central to its business strategy going forward, but that “increasing regulatory and reimbursement pressures are weighing on our ability to cover costs associated with rent, labor, and supply requirements.”
George Hill, managing director and senior equity research analyst at Deutsche Bank, expects more shutdowns in the industry as it works to recover.
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Hill previously told FOX Business that the entire “industry it seemed like the footprints were growing and fast-paced areas the demand for pharmacies was growing.”
| A ticker | Security | Finally | Change | Change % |
|---|---|---|---|---|
| The WBA | WALGREENS BOOTS ALLIANCE INC. | 9.06 | +0.33 |
+3.78% |
There are about 60,000 retail pharmacies in the US Hill said the industry would decide it should be closer to 35,000 or 40,000.
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