Dive Brief:
Walgreens is offloading more shares in drug distributor Cencora as the struggling pharmacy chain looks to generate cash.
The latest sale netted about $300 million for Walgreens, and shrinks the company’s stake in Cencora to approximately 6%, down from 10%, according to a press release on Thursday.
Walgreens said it plans to use the proceeds to pay down debt and invest in other corporate functions, while stressing that the sale has no impact on its partnership with Cencora.
Dive Insight:
Walgreens and Cencora have been working together since 2013, when the drug distributor was still known as AmerisourceBergen. But recently Walgreens has been winnowing its stake in Cencora as the company seeks out funding to meet upcoming debt obligations and improve its operational health following an unsuccessful pivot to health services.
Last summer, Walgreens sold about $1.1 billion in Cencora shares. That followed sales of almost $1.9 billion and $674 million in 2023 and an additional $992 million and $400 million in 2024.
Overall, the deal announced Thursday includes Cencora repurchasing about $50 million worth of its stock from Walgreens, and Walgreens selling about $265 million worth of additional shares. Walgreens also paid $20 million to settle stock transactions early, bringing the company’s total net proceeds to $295 million.
Along with Cencora and other asset sales, Walgreens has also laid off employees and announced plans to close upwards of 1,000 underperforming stores, including locations of VillageMD, the primary care chain it majority owns.
The waning value of VillageMD has been one contributor to Walgreens’ steep recent losses. Walgreens plans to eventually sell its full stake in VillageMD.
Walgreens’ most recently quarterly results showed some progress on a turnaround, despite a steep net loss. Still, the company was reportedly considering a private equity buyout — though a recent lawsuit from the Department of Justice over Walgreens’ role in the U.S. opioid crisis could have scuttled any discussions, analysts say.
