Walgreens Boots Alliance Suspends Dividend Amidst Restructuring
Walgreens Boots Alliance (NYSE: WBA) has suspended its quarterly cash dividend to support ongoing restructuring efforts. The decision resulted in an 8% decline in the company's share price during extended trading.
Dividend Suspension Deemed Necessary
"Walgreens' cash needs, including litigation expenses and debt refinancing, were key factors in the decision to suspend the dividend," the company stated.
Analyst Michael Cherny of Leerink Partners described the suspension as "prudent and somewhat overdue," adding that it would enable Walgreens to focus on business recovery. However, he acknowledged that the move may trigger forced technical selling due to the company's reduced income generation.
Other Developments
Walgreens has reportedly been seeking a sale to private equity firm Sycamore Partners and has approached other potential buyers. The company has not commented on these reports.
The dividend suspension follows a lawsuit filed by the U.S. Department of Justice, alleging that Walgreens knowingly filled millions of prescriptions without valid medical purposes. If found liable, Walgreens could face significant civil penalties.
Ongoing Restructuring
CEO Tim Wentworth has implemented several changes, including a $1 billion cost-cutting program and exploring options for non-core businesses, to drive growth and restore investor confidence. Walgreens has also announced plans to close thousands of stores due to low drug reimbursement rates and shifting consumer behavior.