Walgreens Boots Alliance Enlists Advisors for VillageMD Operations and Balance Sheet
Walgreens Boots Alliance Inc. has reportedly engaged Perella Weinberg Partners and AlixPartners to provide guidance on its operations and financial stability related to its health clinic subsidiary, VillageMD. This move comes amid legal challenges and mounting liabilities for the drug store chain.
VillageMD, which Walgreens acquired a controlling stake in for $5.2 billion in 2021, has been exploring options including a sale or operational restructuring. The company is working with Evercore Inc. and Alvarez & Marsal Inc. in this process.
According to sources, Walgreens CEO Tim Wentworth plans to divest VillageMD to reduce debt and strengthen the company's financial health. Walgreens has stated that it is committed to finding an endpoint for its investment in VillageMD, consistent with its overall turnaround strategy.
Representatives from Perella and Evercore declined to comment, while spokespeople for AlixPartners and A&M did not respond to requests for comment.
Walgreens' expansion into patient care has been driven by declining pharmacy reimbursements and increased competition. In 2023, VillageMD acquired Summit Health-CityMD for $8.9 billion. However, the recent purchase has contributed to operating losses for Walgreens' VillageMD unit.
VillageMD also defaulted on senior secured debt provided by Walgreens last year. Walgreens subsequently granted a reprieve and initiated discussions with stakeholders regarding the future of its investment in the company.
The potential restructuring or spin-off of VillageMD coincides with interest from private equity firm Sycamore Partners to potentially acquire Walgreens. Concerns about Walgreens' cash flow have been heightened by a recent court ruling ordering the company to pay $988 million as part of an arbitration process.