The year 2024 was a very busy year for specialty pharmacy. So many SP therapies were approved by the FDA that we are still catching up on all the announcements.
What we did NOT see in 2024 was much activity on the business front….. especially SP acquisitions, major expansions, etc. However, days ago, perhaps the biggest story of the year hit the ether….. Walgreens (WAGS) is facing a serious reversal of fortunes to the tune of $billions$ of dollars. The numbers are jaw dropping….. about 10 years ago Walgreens’ market cap was more than $100 billion. They ended the year with a valuation of only $8 billion.
We’ve watched with curiosity the remaking of WAGS over the past decade and much of that transformation came with $billion$ dollar price tags. That spending spree has cost WAGS dearly leading to discussions with at least one private equity firm to form a consortium to take WAGS private.
Current WAGS management has been aggressively cleaning shop including closing underperforming retail stores and whole divisions such as VillageMD. As is typical in these deals, the investors will continue to slash operating costs and sell off assets that are not accretive or simply don’t ‘fit’ in the new company vision.
What might WAGS look like in the wake of a going private?
Only the profitable retail locations will survive.
WAGS will actively partner with third parties to hedge financial exposure.
WAGS will continue to pursue deals with hospitals and health systems, one of the strategies that seem to have been successful over recent years.
WAGS will continue to compete in specialty pharmacy.
Succeeding in specialty pharmacy may not be as easy as it might look.
The acquisition of Shields Health was integral to structure deals with hospitals and health systems around specialty pharmacy. But, once that intellectual property has been transferred, will clients feel the need for those contracts to be renewed?
There are three articles worth reading to get a better lay of the financial landscape that WAGS needs to traverse in coming days.
CLICK HERE to read the Forbes article Walgreens in talks to go private
CLICK HERE to read the Axios article Sycamore Walgreens take private partner
