News

Walgreens To Shutter In-Store Clinics, Expand into Diet and Weight Loss Business

Walgreens will shutter nearly 40 percent of the clinics in its stores as the drugstore chain cuts costs and shifts to other businesses it believes will draw more people through its doors.

The company said Monday that it will close 150 Walgreens-run clinics by the end of the year, but it will keep open more than 200 that are run in partnership with health care providers.

Drugstore chains like Walgreens started years ago adding small clinics that dole out flu shots and handle relatively minor health issues like sinus infections. But analysts say the chains have struggled to make money off the clinics, which face growing competition from telemedicine services that allow customers to get care through their smartphones.

Walgreens has been focusing more on testing primary care clinics, which offer more extensive care, connected to some of its stores in Kansas City and Houston.

The chain also is working on partnerships with other companies like the grocer Kroger Co. to improve its food offerings. Walgreens said Monday that it also will open 100 locations for the weight-loss company Jenny Craig at stores nationwide, starting in January.

Trending:
Man Uses Roommate's Razor, Days Later He Realizes Horrifying Bacteria Is Rapidly Eating His Face Away

Edward Jones analyst John Boylan said the closing of the clinics is immaterial to the company financially, and he expects the services Walgreens offers at its stores to shift over time.

Walgreens Boots Alliance Inc. runs more than 18,750 stores internationally. That includes 9,277 in the United States, Puerto Rico and the U.S. Virgin Islands.

It has been trimming its total as part of a plan to cut costs. Walgreens has been hit by challenges including reimbursement cuts and lower price increases for branded drugs.

Drugstores also face competition in areas outside their pharmacies from online options like Amazon.com.

Walgreens said Monday that it has raised its annual savings target from its cost-cutting program to $1.8 billion by fiscal 2022, up from a previous goal to exceed $1.5 billion.

In the final quarter of fiscal 2019, Walgreens earnings tumbled 55 percent to $677 million, due in part to charges from its cost-cutting program. Adjusted results totaled $1.43 per share.

Revenue climbed 1.5 percent to $33.95 billion.

The results surpassed Wall Street expectations. Analysts expected, on average, earnings of $1.41 per share on $33.86 billion in revenue, according to Zacks Investment Research.

Boylan termed the quarter good but not great. He said in a research note that Walgreens sales turned out better than expected, and that should continue.

Related:
CDC Postpones Emergency Meeting on COVID Vaccine Complications to Observe Juneteenth Holiday

The analyst said he expects Walgreens to grow its business as health plans narrow the network of pharmacies they cover in exchange for a break on pharmacy costs.

Shares of Deerfield, Illinois-based Walgreens slipped 12 cents to $55.30 in Monday afternoon trading.

The stock had dropped 19 percent since the beginning of the year as of Friday’s close.

Meanwhile, the Dow Jones industrial average, of which Walgreens is a component, has climbed nearly 16 percent.

Truth and Accuracy

Submit a Correction →



loading

We are committed to truth and accuracy in all of our journalism. Read our editorial standards.

Tags:
The Associated Press is an independent, not-for-profit news cooperative headquartered in New York City. Their teams in over 100 countries tell the world’s stories, from breaking news to investigative reporting. They provide content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands.
The Associated Press was the first private sector organization in the U.S. to operate on a national scale. Over the past 170 years, they have been first to inform the world of many of history's most important moments, from the assassination of Abraham Lincoln and the bombing of Pearl Harbor to the fall of the Shah of Iran and the death of Pope John Paul.

Today, they operate in 263 locations in more than 100 countries relaying breaking news, covering war and conflict and producing enterprise reports that tell the world's stories.
Location
New York City




loading

Conversation