We own a significant position in Walgreens Boots Alliance, Inc. to enjoy an 11% dividend yield, and a chance to earn capital gains resulting from their expected turn-around. We are on the earnings call as we write this blogpost. By Jeffrey Cohen, Principal Investment Advisor CEO Tim Wentworth, Walgreens, Strategic Comments
In the short term, Walgreens built financial momentum around cash flow. Strategic focus on retail pharmacy legacy business, and trust with consumers. Accessible and convenient, but downsized from 8,000 stores to closer to 6,000 profitable stores. They will accelerate by closing 1,200 stores over the next three years, which is a healthier store base. This should improve responsiveness in their retail business. They will re-deploy staff / employees to other stores, minimal layoffs. Walgreens to promote their own "owned" brands to promote their positioning with consumers, especially in women's health. Rightsize their focus on national brands, with greater strategic partnerships. From a financial perspective, they will monetize their non-strategic assets and use those proceeds to reduce net debt. This includes equity investments and Village MD. They also need to improve their profit margins on retail sales. That is a focus. PBMs and reimbursement approach: Fairness in reimbursement rates to maintain presence in American communities. Some PBMs are considering to adjust reimbursement to 'grow together.' Rational reimbursement to align with value provided by pharmacists. Broaden and deepen the services they perform and bill for to improve pharmacy economics. 2025 will be an important year for setting a new baseline to grow the size and value of the business. Storms affected 1,500 stores, and all but 16 are back online from the two hurricanes. CFO Comments
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Stock Market BLOGJeffrey CohenPresident and Investment Advisor Representative Archives
January 2025
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