The $10 billion Walgreens take-private deal with Sycamore: what you need to know

March 11, 2025 | by | 1 Comment

Gimlet EyeWalgreens was too big to fail entirely–but made too many mistakes and remained in too many dying segments. The Gimlet Eye credits Walgreens for making a good deal with private equity firm Sycamore Partners before the wheels came off completely, as has happened to all too many retail-based enterprises.

The deal:

  • The equity value will be $10 billion: $11.45 per share in cash that represents a roughly 8% premium to the stock’s closing price on Thursday ($10.63). Of course, with a deal on the table, shares are up today (10 March) and closed at $11.30.
  • There is an up to $3 bonus per share to shareholders when the VillageMD holdings, including CityMD and Summit Medical, are sold, termed “Divested Asset Proceed Right” or “DAP Right”. This assumes that VillageMD will be sold.
  • How Walgreens is positioning it in their release is a total value of $23.7 billion, which would include net debt, capital leases, present value of opioid liability and Everly settlement, less fair value of all equity investments. (Slightly confusing?)
  • Closing is anticipated as Q4 2025, subject to the usual shareholder approvals (minus WBA chair and 10% owner Stefano Pessina as well as shareholders affiliated with Sycamore Partners) and regulatory approvals–a Federal and state-by-state process. Once closed, Walgreens will be private.
  • Stefano Pessina will hold a share in the company. No other transitions are mentioned at this time.
  • Headquarters will remain in Chicago.

Last week’s (and prior) reports of the three-part carveup of WBA’s assets have, so far, not been confirmed. 

Our Readers have been tracking the multiple and cumulative mistakes that Walgreens has made, including:

  • Maintaining an expensive retail footprint…then doubling down on it in 2020 by integrating into their retail footprint a co-located primary care group practice, VillageMD. Then Walgreens backed VillageMD in buying Summit Medical and CityMD. This Editor estimated, based on public information, that Walgreens sank north of $10 billion into VillageMD since their initial investment of $1 billion in 2020 [TTA 22 Feb 2024]. WBA wrote down in their Q2 2024 $5.8 billion of the investment.
    • Retail context: They not only bought Duane Reade in 2010, but also they bought 1,932 Rite Aid stores in March 2018 for $4.38 billion. 
  • It got caught in the Theranos fraud, investing $140 million but able to claw back about $44 million before the collapse.
  • Pulling a fast one on PWN/Everly Health on their Covid testing contract that just cost them $595 million [TTA 26 Feb]
  • Improper dispensing of opioids and other unlawful prescriptions that violated the Controlled Substances Act (CSA). Since Walgreens then sought reimbursement from Federal healthcare programs, they violated the False Claims Act (FCA). This has now resulted in a Department of Justice civil lawsuit filed in the Northern District of Illinois [TTA 24 Jan]. This could be billions in penalties that someone has to pay.
  • Pharmacist labor actions affected Walgreens’ already unsteady pharmacy operation.

One mistake of omission that industry opiners have pointed to was not buying a pharmacy benefit management (PBM) company, although that could be a dodged bullet as PBMs are now under Federal attack.

Too many habits have changed along with their economics. Prior to 2020, only a seer could have truly forecast that retail pharmacies could be displaced as they were by Amazon Pharmacy (which used to be a small player called PillPack), nor CostPlus, Walmart, and the teleprescribers such as Ro and Hims. The pandemic got retail customers accustomed to using online shopping and home delivery for even the smallest of items like toothpaste. Multiple small HBA (health and beauty aids) brands are profitably and directly sold on YouTube and elsewhere. Another nail in retail–shoplifting and related crime drained profit. For shoppers, stores became threatening, not comfortable, places to spend a little time browsing, going in for milk or cough syrup and walking out with cards, printer ink, candy, shampoo, and ice cream. Another change that few mention is how major supermarkets have also added pharmacies along with expanding aisles of vitamins and major brand HBA, at competitive prices.

Unlike CVS, Walgreens stores tend to be (at least locally to this Editor, meaning NY and NJ), barnlike, oddly organized, hard to browse, and harshly lighted locations with a few registers concentrated in a cattle chute design. CVS is generally (not always) easier to browse and slightly better organized especially at checkout with self-check and register options, as is their pharmacy experience. CVS also benefits from having insurer ties and Minute Clinics in many locations.

What’s ahead for Walgreens? Right now, it has 12,500 retail pharmacy locations across the US, Europe and Latin America with 310,000 employees. Neither Walgreens nor Sycamore is talking, which is reasonable, but the Gimlet Eye can make certain educated guesses. Certainly by 2026 there will be major changes in their retail footprint. Their 5,000 scheduled store closures may look miniature compared to what is coming, with the smallest volume or least well located stores going first and likely what is left of Duane Reade closed. Staff will be cut accordingly and one can anticipate difficulties on their pharmacy side which has already seen some unrest in staffing and management. As earlier noted [TTA 4 Mar], expect sell offs or spinoffs of other assets such as CareCentrix, Shields Health Solutions, the 6% left of their Cencora shares, Boots No. 7 beauty, and Boots in the UK.  

It’s hard to be assured that in a year or two, there will be many local Walgreens (or Boots) to run into for a prescription or Band-Aids, given the generally unsuccessful track record of retail PE and the trends noted above. Sycamore Partners in that area is well regarded, especially in how they turned around Staples, Talbots, and others. But given the rabbits-pulled-out-of-hats in how Sycamore put together their funding and debt financing for Walgreens, and the economics of the private equity model of profitability and ROI in covering management fees, debt service, and asset selloffs–it will be an interesting time for those of us who are healthcare observers. CNBC, MedCityNews, Yahoo Finance (CNN)

More on Sycamore’s 83% debt level in financing the Walgreens deal, and what that could mean, here.

This Just In: Walgreens settles PWNHealth/Everly Health arbitration award for $595 million, reduced from $1 billion

February 26, 2025 | by

A golden bird in the hand for PWN/Everly–and presaging something else for Walgreens? Walgreens has decided to settle with PWN/Everly the latter’s recently upheld near-$1 billion arbitration award for $595 million, about 60%. This amount is payable to Everly in a breathtaking two business days.

The arbitration between PWN/Everly and Walgreens charged Walgreens with breach of contract on their Covid-19 testing services agreement, adding in additional violations of the Latham Act on trademarks and more. The arbitrator’s award of $987 million last March was affirmed by the US District Court for the District of Delaware on 11 February. Walgreens declared it would appeal but stated in their SEC filing that any resolution might take up to two years. More details: TTA 12 Feb

Was this a ‘Deal Deal’ as a prelude to a more significant endgame for Walgreens? For this Editor strictly speculating, Walgreens not appealing but settling this quickly, agreeing to pay a reduced amount in record time, may point to something larger. If coupled with the speculated revival of the Sycamore Partners buyout deal [TTA 19 Feb], if Walgreens is actively in sale mode, they want to be as attractive as possible. That means taking off the table ongoing lawsuits and pending settlements that are future obligations–presenting the cleanest picture possible of and reducing their Mound of Misery. Where they can, like with Everly, it’s settling for less now, versus dragging out an appeal for two years that will be more costly to litigate, for example in legal fees and award interest, if almost certainly upheld again. These become future obligations for a buyer and make for more unattractiveness. It also follows on VillageMD/CityMD’s recent settlements with New York State and the Department of Justice [TTA 12 Feb] and state-level opioid settlements, though in January the DOJ filed a civil lawsuit against Walgreens on opioids and other meds violating the Controlled Substances Act [TTA 24 Jan] . Reuters, Crain’s Chicago Business

Mid-week corral: CVS closes Signify Health; Bertolini to lead Oscar Health; ViVE highlights from Wellvana, AWS, Everly Health; Better Therapeutics lays off 35%, CoverMyMeds 815

March 30, 2023 | by

CVS closed its acquisition of Signify Health today. This $8 billion transaction ($30.50/share) adds a network of more than 10,000 clinicians nationally, including the 170-provider Medicare ACO group originally organized by Caravan Health. It was beneficial to the major shareholder group, New Mountain Capital and their investors, which owned 60% of Signify and have a tidily profitable exit. The CVS press release stated that Signify would continue to operate as a ‘payer-agnostic’ business within CVS Health. As earlier stated, Kyle Armbrester, Signify’s CEO, will continue to lead the business. Also Healthcare Dive (updated)

The bulldog engineer of the CVS-Aetna merger, Mark Bertolini, now tapped to head Oscar Health. Bertolini, the former chairman/CEO of Aetna (center), in the past three years since his unwilling (according to him) departure from the CVS board of directors [TTA 6 Feb 2020], has not been idle. From 2022, he was co-CEO of asset management firm Bridgewater Associates, and in the last 18 months, he has been a ‘strategic advisor’ to insurtech Oscar. Now he moves to the CEO office effective next Monday (3 April) and joins their board. Co-founder Mario Schlosser (left) steps back from CEO to president of technology, reporting to Bertolini, and joins the board. Joshua Kushner, a co-founder and major investor (Thrive Capital), as well as executive chairman of the board, is on the right in the leadership picture supplied with the Business Wire release.

Once a skeptic of insurtechs like Oscar, Bertolini by his statements is now a true believer. In a call with investors on Tuesday, he cited their technology that included digitization, individualization, and personal care. A major factor is that consumers are more comfortable since the pandemic with telehealth. Oscar was a pioneer in offering free telehealth with their plans.

Investors have pressed Oscar to get over to a profitable state by next year. Oscar has not been profitable since its 2012 founding by Schlosser, Kushner, and the long-departed Kevin Nazemi. In the time since Bertolini joined as an advisor, they have largely shed their Medicare Advantage business and concentrated on their individual market and ACA plans, which have seen huge growth along with overall record enrollment on the exchanges. But Oscar paused on new ACA signups in Florida and hauled back its glitchy and over-featured +Oscar tech platform [TTA 24 April 2021], which is now available unbundled. 2022 financials were substantially in the red with a loss of $610 million on revenue of $4 billion (Oscar release). However, the news of Bertolini moving to Oscar’s helm was met with a round of investor confidence. Share price moved from Monday’s close of $3.41 to $6.70 midday Tuesday and has largely stayed in the $6.00 range. Oscar release on Business Wire, FierceHealthcare, Healthcare Dive, YahooFinance

ViVE, the digital health spinoff of HLTH, concluded its annual meeting in Nashville this year with an announced attendance of 7,500, including 650 startups, 425 investors, and 330 hosted buyers. The energetic start on Sunday was sadly marked on Monday with the shooting at the local Covenant School where six were killed. Impressions from an anonymous attendee to HISTalk today were that most of the sessions were panels (which gets more people up front, but can be sunk by a dull moderator) versus individual speakers (who can either be fabulous or duds). Content could have been more inspiring and, as usual, many speakers are throwing out headlines for those in media to write about. This Editor has read relatively little so far but more will come this week. Highlights so far:

  • Nashville-based Wellvana Health, which provides technology for healthcare providers and health systems to implement value-based care, raised a stunning Series B of $84 million for a total raise of $140 million. Heritage Group and Valtruis co-led the investment with participation from Memorial Hermann Health System. The funding will be used to expand from its present 22 states and over 100,000 lives. Their current agreements are with multiple payers, Medicare Advantage, and three national contracts for the 2023 ACO REACH model. FierceHealthcare, Mobihealthnews
  • Everly Health is moving beyond its current home testing kits to integrate lab testing with telehealth. This will cover certain conditions, such as COVID-19, flu, sexually transmitted infections (STIs), urinary tract infections (UTIs), thyroid, weight management, and men’s and women’s health. Cost is out of pocket $59 and if insurance covers, $10-50. In its weight management program, Everly will offer GLP-1 drugs, a class of drugs that includes Ozempic and Wegovy, to qualified patients. FierceHealthcare
  • Amazon Web Services (AWS) announced 23 startups for their 2023 Healthcare Accelerator: Global Cohort for Workforce. This year’s accelerator cohort is finding solutions for the healthcare industry in three core areas for healthcare employees: retention, deployment, and training. More on the accelerator here and the list here, including 10 from the UK. FierceHealthcare
  • Health systems are demanding a quick ROI on their digital expenditures, according to a panel of CIOs and digital officers from Providence, Allegheny Health Network, Sutter Health, and Adventist Health. It should not be a surprise to anyone that they are looking for returns in the next year or so–yet are pushing forward with investments because of inflation and increased workforce pressures. FierceHealthcare

Another digital cognitive behavioral therapy trims. Better Therapeutics is reportedly releasing 35% of staff, or 15 people, in yet another cutback of another company in the formerly high, wide, and flying sector. Better specializes in prescription digital therapeutics to address cardiometabolic diseases such as diabetes. Better SPAC’d in 2021 [TTA 8 April 2021] hitting the market at $10.25 and currently trading on Nasdaq at about $0.60. According to their SEC filing, they are trying to stretch remaining cash to reach potential FDA marketing authorization and subsequent commercial launch of BT-001 in Type 2 diabetes. Better is in the same jam as competitors Pear Therapeutics and Akili Interactive, both paring back to the bone and looking for buyers, according to Mobihealthnews. Also LayoffsTracker. 

CoverMyMeds, a division of healthcare giant McKesson, is also laying off 815 by mid-April and closing its Scottsdale, Arizona office. The Arizona office has the company’s patient support center; workers there will be given the option to move to Columbus, Ohio. Other offices including Columbus (Franklinton) and Atlanta will be condensed and space leased out. CoverMyMeds automates the prior authorization process for medications for payers. What is unusual is that the company, bought for about $1 billion in 2017, accounted for $1.1 billion of McKesson’s $70.5 billion in 2022 revenue, and $136 million in McKesson profit–the most profitable of their four divisions. Columbus Dispatch, Layoffs.fyi

Friday roundup: LetsGetChecked buys Veritas Genetics, Everly Health adds CMO, Babylon sends chatbot to Higi, ConcertAI’s $150M Series C, AmplifyMD’s $23M, and two ‘Brights’ raise $155M

April 1, 2022 | by

Home health testing company LetsGetChecked is buying Veritas Genetics and Madrid-based Veritas Intercontinental for an undisclosed sum. Veritas specializes in whole genome sequencing. For LetsGetChecked, they can now build out genomic testing as part of their broad range of at-home test kits and app reporting for a wide variety of wellness, sexual health, and men’s/women’s health. It also opens up targeted panels and tests such as Pharmacogenomics (PGx), cancer screening, carrier screening, and maternal-fetal testing.

LetsGetChecked, based in Dublin and NYC, has raised $263 million to date through a 2021 Series D from investors such as Casdin Capital, HLM Venture Partners, and Optum Ventures. Veritas Genetics and Veritas Intercontinental are very early stage companies HQ’d near Boston with $61 million in funding through several venture rounds. Veritas was founded by Harvard and MIT genomics experts to make genetic testing more available and affordable. The release implied that Veritas principals would be joining LetsGetChecked. The acquisition is expected to close shortly. Release, Mobihealthnews

New CMO at Everly Health.  Liz Kwo, MD will lead their clinical strategy as chief medical officer. A competitor of LetsGetChecked, Everly Health is the parent of direct-to-home testing Everlywell, enterprise-focused Everly Health Solutions, and recently acquired Natalist in the fertility and pregnancy testing area. Comparing the two, LetsGetChecked occupies a more clinical and condition-specific space (e.g. thyroid antibodies, hormones), while Everlywell is positioned in the general wellness testing area, e.g. allergies. Dr. Kwo previously was with Anthem as Deputy Chief Clinical Officer and is an interesting combination of clinician and digital solutions/advanced data analyst. Release, FierceHealthcare

Babylon Health’s recently acquired Higi mobile app now has Babylon’s well-known AI-enabled symptom checking chatbot. Higi’s main business are in-store health ‘stations’ that measure blood pressure, pulse and weight, plus diabetes and heart disease risk through symptom checkers. The integration with the Babylon app also demonstrates for other Babylon partners how their chatbot can be used. Mobihealthnews

ConcertAI, the former Concerto HealthAI, raised $150 million in Series C funding from Sixth Street for a total $300 million and boosting its valuation to $1.9 billion. ConcertAI specializes in life sciences and healthcare enterprise AI and RWD SaaS solutions for use in precision medicine. It has partnered with Pfizer, Bristol-Myers Squibb, and has begun a collaboration with lab-testing giant Labcorp to launch precision oncology studies. Its parent is SymphonyAI, a larger AI company in other areas such as retail. Release, Mobihealthnews, 

AmplifyMD, a telemedicine platform for medical facilities to connect to specialist doctors, raised a $23 million combination Series A/seed round from F-Prime Capital, with the seed co-led by Forerunner Ventures and Greylock. Their target market? Over 3,300 medical institutions with a lack of specialty access, which are often in rural or small regions of the US. Their specialties are cardiology, neurology, psychiatry, pulmonology/critical care, infectious disease, nephrology, and hematology/oncology. Release 

Two mental health ‘Brights’ raise a total of $155 million. Brightline Health, a pediatric mental health company for at-home therapy targeted to kids and teens, raised a $105 million Series C for a valuation of $705 million. The round was led by KKR with current investors GV, Optum Ventures, Oak HC/FT Partners, Threshold Ventures and Blue Cross Blue Shield of Massachusetts. It was co-founded by Livongo veteran Naomi Allen who left Livongo shortly before the Teladoc acquisition. The funding will be used for staffing and to broaden its offerings. Mobihealthnews, Bizjournals, Bloomberg

The other ‘Bright’ spot in mental health company funding is Brightside Health, which raised a $50 million Series B financing round led by ACME Capital and Mousse Partners, for a total of $81 million. Brightside is for adults combining an app-driven mental health assessment, therapist match and connectivity, and automated matching to medication if needed. They market membership to payers, providers, and employers as a benefit. Mobihealthnews, FinsMes