The Walgreens shakeup and belt-tightening continues under new CEO Tim Wentworth–starting at the top. The first company memo that was leaked late Thursday 9 November to Bloomberg (paywalled) announced that Kevin Ban, MD, executive VP and chief medical officer, will depart tomorrow (10 Nov). He will be replaced by chief clinical officer Sashi Moodley, MD, not in the memo but according to Bloomberg‘s sources. Luke Sauter, chief of staff to the CEO, will also be leaving. No date was disclosed. In a separate memo, 5% or 267 of Walgreens’ corporate staff will be laid off across multiple departments at their Deerfield Illinois HQ, no notification or effective date disclosed. Bloomberg confirmed the departures with Walgreens, but no further details were provided. The cuts will not affect call centers, micro fulfillment centers, or stores.
Looking at LinkedIn, Dr. Ban joined Walgreens as CMO in January 2022 from Athenahealth. He replaced Patrick Carroll, MD, who left to take the CMO slot at Hims & Hers. Dr. Ban was promoted to global CMO of Walgreens Boots Alliance and added the EVP title in October 2022, a little over a year ago. Dr. Moodley joined in July 2021 from CareMore Health as WBA’s CCO for US Healthcare. Mr. Sauter, the chief of staff, is a long-time (15+ years) Walgreens executive in multiple positions, including VP of strategy and finance officer after multiple finance positions. He was named chief of staff to previous CEO Roz Brewer in July 2022.
It’s perhaps understandable in a cost-cutting situation that the functions of the CMO and CCO overlap to some degree, and the chief of staff to the CEO is an unusual position in today’s companies. It also demonstrates that Wentworth is willing to distribute at least some of the pain of trimming Walgreens staff and projects as part of the previously announced $1 billion cost reduction plan after a steep fiscal Q4 net loss of $180 million [TTA 18 Oct]. Crain’s Chicago Business is also paywalled but readable in part.
This is a developing story and will be updated with additional information when available.
Update: The 5% corporate layoff, which will affect the Deerfield office, is the second this year. There was a 10% reduction in Chicago and Deerfield in May. 393 were released in August at their manufacturing plant in Edwardsville, Illinois, in anticipation of its closing. Yahoo Finance/Chicago Tribune On Reddit, commenters indicate that marketing and health & beauty departments were the hardest hit. There was also an employee town hall that wasn’t well received.
The Healthcare Dive article published today highlights the 45% drop in share price since January, particularly steep since August, and the struggle to attain profitability in their US Healthcare division, which includes Village MD. The October-announced $1 billion in cost reductions did not buoy stock as hoped, dropping further since then. Walgreens has not replaced the CFO who departed in July.
On Friday 10 November, Walgreens also sold a hefty share of Cencora common stock (the former Amerisource Bergen) in a combination of share repurchase at $250 million and variable prepaid forward transactions starting in Q4 2026 could potentially max out at $675 million. WBA continues to own about 15% of Cencora and remains on its board. Their release explains the financial pretzel, clearly designed to improve liquidity and cash management.
Editor’s Note/Opinion 10/11: For an employer of this size, the layoffs represent an extreme downsizing that indicates several years of overhiring or wrong hiring in pursuit of corporate goals no longer in sight and strategic mistakes (like Theranos so long ago, but biting back with a $44 million settlement to Arizona patients). Some acquisitions may not be working out. Time will tell whether the majority buy-in of Village MD and financing its further acquisitions was smart or foolish, as already the office co-location scheme is being trimmed after little time in place [TTA 18 Oct]. As is true almost 100% of the time, hard times uncover the numerical and compensation bloat at the C-suite and senior level, and many strategic mistakes.
In short, leaving aside the Cencora stock sale to raise cash, drastic cuts like this usually leave an organization at many levels and the survivors staggering for some time. They have to be done with understanding, not blame, that most of those departing weren’t responsible for corporate strategic sins and, yes, mercy on those affected, beyond one line in a press release or a town hall. Circular firing squads don’t help recovery either.
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