Walgreens Reports $2.8B Loss in Q2, Plans Cost-Cutting Measures Amid Privatization Deal

Walgreens Boots Alliance, one of the largest retail pharmacy chains in the United States, reported a substantial loss in its fiscal second quarter of 2025, highlighting ongoing challenges in the retail pharmacy sector. The company's financial results come as it prepares for a significant transition to private ownership.

Q2 Financial Results and Impairment Charges

Walgreens reported a loss of $2.85 billion in its fiscal second quarter, translating to a loss per share of $3.30. This figure, while significant, represents an improvement from the $6.85 loss per share reported in the same quarter of the previous year. The company's sales reached $38.6 billion, marking a 4.1% increase from the year-ago period, driven by growth in both U.S. retail pharmacy and international businesses.

The substantial loss was primarily attributed to $4.2 billion in noncash impairment charges related to goodwill, intangible, and other long-lived assets, particularly in its U.S. retail pharmacy and VillageMD businesses. These charges were partially offset by $1 billion in after-tax gains from asset monetization activities.

Despite the overall loss, Walgreens' adjusted earnings per share of 63 cents surpassed Wall Street expectations of 53 cents, based on a survey of analysts by LSEG.

Strategic Moves and Cost-Cutting Measures

In response to ongoing financial challenges, Walgreens is implementing a series of strategic initiatives aimed at improving its financial performance. CEO Tim Wentworth emphasized that the company is in the early stages of a turnaround plan, acknowledging that "meaningful value creation will take time, enhanced focus and balancing future cash needs with necessary investments."

Key elements of the turnaround strategy include:

1. Store closures: Walgreens plans to close approximately 450 stores throughout 2025, having already shut down 70 stores in the first quarter of the fiscal year.
2. Cost control: The company is focusing on disciplined cost management across its operations.
3. Potential sale of VillageMD: Walgreens is exploring options to maximize the value of its VillageMD unit, which includes VillageMD, Summit Health, and CityMD businesses.

Privatization Deal and Future Outlook

In a significant development, Walgreens announced a $10 billion deal with investment firm Sycamore Partners to take the company private. The transaction is expected to close in the fourth quarter of 2025. As a result of this pending deal, Walgreens has withdrawn its 2025 guidance.

The move to privatization comes as Walgreens faces ongoing challenges in the retail pharmacy industry, including reimbursement pressures and changes in consumer behavior. The company's leadership believes that operating as a private entity will provide greater flexibility to implement necessary changes and navigate the evolving healthcare landscape.

As Walgreens prepares for this transition, it continues to grapple with financial headwinds and operational challenges. The company's ability to execute its turnaround plan effectively while managing the privatization process will be crucial in determining its future success in the competitive pharmaceutical retail market.