Daily Newsletter

15 September 2023

Daily Newsletter

15 September 2023

Walgreens unveils new healthcare strategy for long-term growth

The consumer-focused healthcare approach includes Walgreens Health and strategic investments to boost healthcare capabilities.

Mohamed Dabo September 14 2023

Walgreens Boots Alliance has revealed a new healthcare strategy aimed at achieving sustainable growth. The strategy was introduced during an investor conference following the announcement of its recent earnings.

At the core of this strategy is the launch of "Walgreens Health," a technology-enabled care model designed to offer personalised healthcare to local communities.

This model will be available in various settings, including in-store, at home, in doctors' offices and through mobile apps. The aim is to work with payors and providers to enhance consumer experiences, improve health outcomes and reduce costs.

Walgreens has also made strategic investments in VillageMD and CareCentrix to bolster its capabilities in primary and post-acute care. These investments will particularly benefit high-risk patients with chronic conditions.

The company has partnered with Clover Health and Blue Shield of California to serve more than two million patients, with plans for further expansion.

Investments in VillageMD and CareCentrix

Walgreens is increasing its ownership stake in VillageMD from 30% to 63%.

This investment will expedite the opening of more than 600 primary care practices by 2025 and 1,000 by 2027. VillageMD currently operates more than 230 practices across 15 markets and has experienced significant growth.

In another strategic move, Walgreens is acquiring a majority investment in CareCentrix, a leader in post-acute and home care services. This investment aims to streamline home care for patients transitioning from hospitals to homes, benefiting health plans, patients and providers.

The transaction is expected to close by the end of WBA's second quarter of FY22.

Cost management and long-term growth

Walgreens also announced the success of its "Transformational Cost Management Programme," which exceeded its goal by delivering more than $2bn in annual cost savings by the end of FY21.

The company now aims to achieve $3.3bn in savings by FY24, thanks to existing and new cost-saving initiatives.

Over the next three years, the company anticipates an annual adjusted earnings per share (EPS) core growth rate of approximately 4%, with steady growth expected thereafter.

This growth will be driven by the Walgreens Health segment, which is poised to contribute significantly to long-term adjusted EPS growth of 11% to 13% beyond FY24.

Traditional AI is here to stay in the retail and apparel space

Initially, retailers used AI for basic tasks, including inventory management and demand forecasting. However, its usage has now become more prevalent in other aspects such as personalized marketing, customer service, pricing optimization, and supply chain management. With the rise of ecommerce and the increasing importance of data-driven decision-making, AI adoption in retail and apparel has accelerated. The industry now relies on AI to enhance the shopping experience, optimize business operations, and gain an overall competitive edge.

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