Behind the Numbers: Walgreens’ Identity Crisis — What’s Next for the Pharmacy Giant?

Summary

Behind the Numbers: Walgreens’ Identity Crisis — What’s Next for the Pharmacy Giant?

Podcast: Behind the Numbers: An EMARKETER Podcast
Host: Marcus
Guests: Rajiv Leventhal (Senior Analyst, Digital Health), Zach Stambor (Senior Analyst, Retail)
Release Date: March 24, 2025

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Introduction

In the March 24, 2025 episode of EMARKETER’s "Behind the Numbers" podcast, host Marcus delves into the tumultuous journey of Walgreens Boots Alliance. Joined by senior analysts Rajiv Leventhal and Zach Stambor, the discussion navigates through Walgreens' declining performance, strategic missteps, and the broader challenges facing the retail pharmacy industry.

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Walgreens' Performance and Background

Marcus opens the conversation by highlighting Walgreens' stark financial decline. “Walgreens’ shares are down 45% in the last 12 months,” he notes. Rajiv corroborates this by stating, “the stock's down 76% over the last five years,” emphasizing the severity of the downturn since its peak valuation of $100 billion in 2015 (02:55).

Despite its pervasive presence across the United States, Walgreens has struggled to maintain profitability, culminating in a nearly $9 billion net loss in fiscal 2024 (04:45). This decline has positioned Walgreens as the worst-performing stock in the S&P 500 for 2024, prompting its acquisition by private equity firm Sycamore Partners (04:15).

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Reasons Behind the Decline

1. Failed Investments in Retail Health (60%)

Rajiv attributes the lion’s share of Walgreens’ troubles to its unsuccessful foray into retail health services. “I’m assigning 60% blame to Walgreens' failed investments in retail health,” he explains (05:08). Walgreens ventured into healthcare delivery by investing approximately $6 billion into Village MD, aiming to integrate primary care clinics within its stores. However, the initiative faltered due to poor patient recruitment and challenges in attracting qualified medical personnel. The resulting $6 billion loss from Village MD significantly impacted Walgreens' financial health, ultimately leading to its acquisition by Sycamore Partners (06:43).

2. Declining Front Store Sales (30%)

The second major factor is the downturn in front store sales. Marcus highlights a significant decline in foot traffic, with consumers shifting their purchasing habits online. “People have started to turn to online channels for their everyday household items,” he observes (10:28). Zach adds that convenience-driven shopping has been undermined by higher costs and the competitive pricing of online retailers like Amazon and big-box stores such as Walmart. “When people are feeling super pressed and cost-conscious, they’re pulling back on discretionary spend,” Zach notes (11:35).

Additionally, Marcus points out the impact of locked-up inventory on consumer convenience. “Secure cases can cause sales to drop 15 to 25%,” referencing research from Joe Bidano of Indy Me (12:05). The inconvenience of accessing products discourages in-store purchases, further driving consumers online.

3. Challenges in the Pharmacy-Only Business (10%)

The final segment of the blame pie focuses on the pharmacy operations. Rajiv explains, “Pharmacy benefit managers have been lowering the reimbursement rates to pharmacies,” which has squeezed Walgreens' profit margins (13:25). This reduction in reimbursements makes certain medications financially unviable to stock, impacting overall profitability. Zach echoes this sentiment, emphasizing that the traditional pharmacy business model is under immense pressure, leading to store closures and decreased margins (14:41).

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Industry-Wide Challenges

The issues Walgreens faces are not isolated. Marcus cites a study by USC and UC Berkeley indicating that about one-third of U.S. retail pharmacies have closed since 2010, with independent pharmacies being twice as likely to shut down as chains (10:28). The broader industry trend includes a decline in the number of drugstores across 41 of 50 states between 2019 and 2021, signaling systemic challenges in the retail pharmacy sector (09:39).

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Future Outlook for Walgreens

1. Shift to Smaller Store Formats

Looking ahead, both analysts agree that Walgreens is pivoting towards smaller, pharmacy-centric store formats. Rajiv mentions, “Walgreens is expanding the number of smaller format stores that are really designed around medications and healthcare products instead of the front store items,” indicating a strategic shift to focus on core competencies (21:37). These smaller stores, typically less than 1,000 square feet, aim to enhance efficiency by minimizing real estate costs and concentrating on prescription and health-related products.

Zach adds that this move may involve experimenting with different store concepts, such as integrating beauty and personal care, to diversify revenue streams without overextending (22:20).

2. Impact on Patient Care and Health Access

A significant concern raised during the discussion pertains to the potential impact of store closures on healthcare access. Marcus cites Jenny Guadamas, assistant professor at UC Berkeley, highlighting that “closures of pharmacies may widen health disparities in access to prescription and other essential pharmacy services” (24:30). This underscores the societal implications of Walgreens' restructuring, particularly in underserved areas where pharmacies are critical for medications and health consultations.

Rajiv responds by noting that Walgreens is mindful of these disparities and is strategically placing smaller, medication-focused stores in areas with limited pharmacy access to mitigate negative health outcomes (25:52).

3. Private Equity’s Role and Strategic Direction

With Sycamore Partners poised to acquire Walgreens, the analysts discuss the typical private equity approach of streamlining operations and divesting distressed assets. Rajiv predicts that while the core U.S. pharmacy business will remain intact, non-profitable segments like Village MD and Shields Health Solutions will likely be sold off (23:43). Zach concurs, emphasizing that private equity will target Walgreens' less profitable divisions to stabilize the company (22:52).

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Conclusion

As Walgreens navigates its identity crisis, the shift towards smaller, pharmacy-focused stores represents a strategic attempt to salvage its foundational business amidst a challenging retail environment. The acquisition by Sycamore Partners may provide the necessary restructuring to stabilize operations, albeit with potential implications for healthcare access in vulnerable communities.

Marcus wraps up the episode by thanking Rajiv and Zach for their insightful analysis, highlighting the ongoing transformation within Walgreens and the retail pharmacy industry at large. The discussion underscores the importance of adapting to evolving consumer behaviors and the critical role pharmacies play in the broader healthcare ecosystem.

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Notable Quotes:

• Rajiv Leventhal (05:08): “I’m assigning 60% blame to Walgreens' failed investments in retail health.”

• Zach Stambor (11:35): “When people are feeling super pressed and cost-conscious, they’re pulling back on discretionary spend.”

• Marcus (12:05): “Secure cases can cause sales to drop 15 to 25%.”

• Jenny Guadamas (24:30): “Closures of pharmacies may widen health disparities in access to prescription and other essential pharmacy services.”

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Stay informed and ahead with EMARKETER’s "Behind the Numbers" podcast, available Monday through Friday on all major podcast platforms.

Transcript

[Marcus]

Struggling with out of stocks, phantom inventory or lack of shelf data. Well, if you are, Traxx's signal based merchandising is designed to give real time visibility into what's happening in stores and on shelves so you can take action when and where it matters the most. Head to Traxx, that's T R a x retail traxretail.com eMarketer and click the get started button in the top right hand corner. Today or tomorrow. Yeah. Hey gang. It's Monday, March 24th. Rajiv, Zach and listeners, welcome to the behind the Numbers show, an E marketer video podcast made possible by Tracks. I'm Marcus. Today we'll be discussing Walgreens. For the conversation, I'm joined by two people, both senior analysts. One of them covers digital health, but based in New Jersey. It's Rajiv Leventhal.

[Rajiv Leventhal]

Hey, Marcus, how you doing? Good to be here.

[Marcus]

Hello, sir. Good to see you. And the other covers retail. For us living in the Chicago area, it's Zack Stambor.

[Zach Stambor]

Hey, guys.

[Marcus]

Hello. Today's fact. So I did the most walkable cities recently and Paul Werner started talking about bikes for some reason because he's a nightmare. And but then I got curious. I was like, well, what are the most bikable cities in the world? So I found an article from Wired and they have, they have it in here. So the research was done. Let's see. So that a lot of. There's a lot of ingredients that kind of go into ranking the most bikeable cities in the world. Share of trips taken by bike, reducing car speed limits to make it safer for bikes. Car bicycle bridges, better bike signage, protected cycling lanes, bike parking, et cetera, et cetera. So it's not just how much do people get on a bike per day or how many people do that. It's a bunch of things. Number one in the world. Any guesses, gents?

[Zach Stambor]

Amsterdam.

[Marcus]

Number two, Amsterdam falls to second. I think in terms of the number of trips taken by bike in it's, it might be first. It's hard to get clear data on the number of trips taken across different cities, but in terms of all of the things that go into it, because two thirds of trips to work or school are by bike. So very bikable. But in terms of all the other elements, infrastructure, et cetera, it's second. It's close to it though, geographically.

[Zach Stambor]

Copenhagen. Yes, there we go. Yeah.

[Marcus]

Well placed.

[Rajiv Leventhal]

Yeah.

[Marcus]

Copenhagen In Denmark, nine out of 10 people own a bike and there are five times as many bikes as cars on the street, according to the cycling embassy of Denmark. Copenhagen, number one, Amsterdam, number two, Utrecht in the Netherlands, number three. Then it goes Antwerp, Strasbourg, Bordeaux, Oslo, Paris, Vienna and Helsinki round out the top 10. And this is in the world. They just all happen to be in Europe. New York made the top 20 back in 2011. So it's been a while. God knows how, but never again. Yeah, not even close. I think Vancouver, Montreal, 18th in 2019. So that's the highest in terms of North America. Vancouver, right behind that. I'll play Canada. Anyway, today's real topic, Walgreens identity crisis. So Walgreens Boots alliance says has agreed to be acquired by private equity firm Sycamore Partners as the struggling retailer looks to turn itself around after years of losing money, notes the Associated Press, its shares are down 45% in the last 12 months. Rajeev, you were noting that that makes it the worst performing stock in the S&P 500 in 2024. If you look at the last five years, the stock's down 76%, which might be surprised to learn because Walgreens stores are everywhere. So it seems like they're doing okay. Walgreens started back in 1901 when Charles R. Walgreens senior purchases a Chicago drugstore where he works as a pharmacist to start the Walgreens chain, a Reuters article notes. Within 25 years they had 100 stores and the year after that, 1927, they went public. By 2015, they were valued at $100 billion. That number now sits closer to just 10. Down, down 90%. Over 90% since its peak in 2015. Walgreens net loss in fiscal 2024 was nearly $9 billion. That's a loss of 180% year on year increase. So things are not going well. We're going to figure out why. Rajiv, I'll start with you. Blame pie. Make a pie chart of reasons. 3, 3 max why Walgreens went from pharmacy behemoth to distressed retailer. As Reuters puts it.

[Rajiv Leventhal]

I'm assigning 60% blame to Walgreens is failed investments in retail health. 30% blame goes to declining front of store sales decline and then 10% I'm assigning to just the pharmacy only business. So 60, 30, 10. Okay, so I'll start with the 60% is obviously the biggest one. I feel like the average consumer and maybe even the average listener to this part of this podcast might not be too familiar with all of the health care delivery and primary care type investments and acquisitions Walgreens has made over the last several years. But it's contributed to its downfall, I think more than any other single element. So shortly after Covid, Walgreens and other retail pharmacies too. But Walgreens kind of got this impression that they could be a medical care service destination for patients. And I think a big part of that was because they were a go to location for Covid related medical services. Right. Like a lot of people got tests and vaccinated Covid vaccines at Walgreens pharmacy. So people started to become a little bit more comfortable with the idea of, well, if I'm getting a COVID test and a COVID vaccine, maybe I could go. Maybe, maybe I'm good with going to like a retail like pharmacy location for other non emergent type type medical care. Right. So what Walgreens did right after that was invest about $6 billion into a primary care company called Village Maryland.

[Zach Stambor]

Right.

[Rajiv Leventhal]

And its plan for Village MD was to open a bunch of primary care clinics around the country. Right. But co locate a lot of them either in Walgreens stores or adjacent to Walgreens pharmacy stores as well. It did not work out. Village MD badly struggled to attract patients and recruit doctors to work for them. And the investment just ended up being a disaster last year. Just to give you some numbers, last year Walgreens, which was the majority owner of Village MD, but not the whole owner, they recorded a 6 plus billion dollar loss related to the Village MD investment. Walgreens is health care services segment lost, recorded a $14 billion loss last year. Much of that related to Village MD. And I think it's the biggest reason why Walgreens kind of had, was forced to sell itself to a private equity firm because it invested so much money into the retail health care, you know, medical care concept that it just could not execute on. So I'm giving that one 60%.

[Marcus]

So is that, is this a referendum on retail clinics? Because could you, so could you quickly define a retail clinic for, for our listeners?

[Rajiv Leventhal]

I think so, yeah. So you know, in cvs like minute clinics and Walgreens has had similar type of initiatives. They've been around for years and the idea is to kind of like stick them in the back of a drugstore and just provide really like low acuity type care for patients, whether that's, you know, someone coming in for a cough or wanting to get like a throat culture, like, like something like that. Some of these locations hire like nurse practitioners, some hire actually physicians.

[Marcus]

Yeah. Our numbers suggesting that retail clinic patients are going in the wrong direction. So they had doubled from 44 million to 84 million, 2017-20. Obviously it was the pandemic in there, which Rajee's been talking about, giving people more of an incentive to go get the vaccinations. And then, oh, I'm here, I can do other things. But since then they've been on a staircase downwards, falling to 73 million. Next year, we believe that would be 10 million less than its peak. So.

[Rajiv Leventhal]

And when you consider all the closures that are expected and will probably ramp up with the sale, I think those numbers are going to go down even more because, you know, you mentioned that the top Marcus, that Walgreens still does have all these stores everywhere, but. But they're on track to close about 15% of them. And I think after this sale goes through, assuming it does, Sycamore Partners, the private equity company, is probably going to close even more and probably accelerate the timeline. What do we know about PE firms? They kind of want to chop down what's unprofitable. And Walgreens CEO last year said that about 25% of its drugstores in the US are not turning a profit.

[Marcus]

Yeah, yeah, They've been closing stores for a while already. Right? A thousand stores they've closed in recent years. You mentioned that 14% of their stores they're planning to close still. That's about over a thousand, I think 1200 of their 8500 US locations. So it's a lot of closures. When you look at the industry as a whole, though, I saw a study from USC and UC Berkeley. They were saying about 1/3 of US retail pharmacies have closed since 2010. Independent ones, twice as likely to close as chains. But between 2019 and 2021, the number of drugstores declined in 41 of 50 states. So this has been an industry wide thing that Walgreens obviously is a massive part of.

[Rajiv Leventhal]

Definitely. I think that's a good segue into the rest of the blame pie. Okay, so we got. So I'm giving 30% to decline in front of store sales. And you know, I'm sure Zach is more well versed in this than I am, but so what we do know is that people have started to turn to online channels for like their everyday household items for snacks, for greeting cards, the things that companies like CVS and Walgreens were used to selling and successfully selling for so long. So people are, you know, cost conscious. Consumers are going to find the best deal and they're going to online merchants like Amazon and those declining front of source sales, I think. And you know, Reduced foot traffic, I think is certainly affecting retail pharmacy, all retail pharmacy chains, but, but Walgreens for sure.

[Marcus]

So Zach, what, what's going on there? Because there's this kind of age old line. About 90% of Americans live within 10 miles of a Walmart store. Last year, nearly 80% of Americans lived within 4, 5 miles of a Walgreens owned pharmacy. You think that would be a good thing for sales?

[Zach Stambor]

So Walgreens are very convenient, but at this moment in time, when people are feeling super pressed and cost conscious, they're pulling back on discretionary spend. And so they're not going to Walgreens because you don't go to Walgreens for a deal. You go because it's convenient. And so they're just deciding to go online to Amazon or go to Walmart or go someplace where you can get stuff for cheaper.

[Marcus]

The other part of this as well is people complain about everything being locked up when you go to some of these pharmacies. And I found some research. I was thinking, okay, how big of a deal is that statistically? There's some research from Joe Bidano, CEO of anti theft tech company Indy Me. Secured cases can cause sales to drop 15 to 25%. So a very big deal, it would seem.

[Zach Stambor]

Also, it makes it so it's not convenient. Right. So, right. Walgreens whole value proposition is that it's convenient that everybody is so close to a Walgreens. I looked on the map and I have six Walgreens stores within three miles of my house. So they're very convenient. But if the stuff is locked up and I have to wait for somebody to open up the case that I can buy body wash or deodorant or whatever it is, then it isn't convenient. I could just as easily pull out my phone and buy it online.

[Marcus]

Yeah, yeah, they're looking for convenience and they're also looking for it not to be too expensive. It's obviously a very inflationary driven climate at the moment. And you mentioned people going online, people buying from big box retailers instead. And so, yeah, the prices as well, I think have been turned people off somewhat. So, Rajeev, sorry, 10% left. What do we have?

[Rajiv Leventhal]

Okay, so that's just the, the pharmacy business. And I'm kind of separating pharmacy from retail pharmacy here. So like, retail is front of store. Pharmacy, right, is just, you know, behind the pharmacy counter. 10% for, you know, the pharmacy behind the counter separate from retail, front of store. So for, for years, pharmacy benefit managers, which are the middlemen in between drug manufacturers and pharmacies, they negotiate the deals that pharmacies get for when they dispense medication to a patient. They've been. And pharmacies get paid when they do that. So they've been lowering the reimbursement rates to pharmacies such as Walgreens, but independent pharmacies even more. But, but bigger chains too, including Walgreens. And that's made it difficult for Walgreens to turn a profit on certain medications. Some they'll, they'll even, they've acknowledged this are like too expensive to stock because they don't get reimbursed enough for dispensing. So you know, that's, that's been a little bit of a, of a headwind for sure. But to me, not quite as much as what's going on in the front of the store and what's going on with their, their healthcare delivery investments and acquisitions.

[Marcus]

Yeah, yeah. So they're getting paid less by pharmacy benefit managers payers every year to dispense the same amount. Same, same prescription.

[Zach Stambor]

Yeah. So I have a very similar pie, but I used much bigger buckets. Okay. So 50% is just the business model itself. So the pharmacy benefit managers being a prime example of I, I think the lower reimbursement rates is one of the reasons that Walgreens has looked for growth elsewhere via these acquisitions. So that's the big piece. And you've seen their gross margins just go straight down to the right. Covid was a brief reprieve, but then once we went back to normal, it went straight back down down into the right. And so the business model is just not working. And it goes back to what you were saying just a few moments ago, where the drugstore pharmacy business model overall is really under pressure. I think it's 3,000 plus pharmacies have closed since 2019, which is just a clear indication that what the old ways of operating no longer work. So I think that's half the other half is, are just store related challenges. So one big piece of that is they're just over stored. Like I said, I have six stores within three miles of my house. That's way too many. It just doesn't make any sense. Some of them you can explain. This is why this one's here and this is why this one's there. But by and large you just have way too many stores to, to operate.

[Marcus]

Yeah. And some people might be thinking, oh well, how much does it matter? Because people I'm sure, buy a lot of this online anyway. Not so much the case M3MI Kantar Media Healthcare research data where US adults purchase their prescription medications is from. Last year 88% said in store pharmacy compared to 34% who said online pharmacy. So having a pharmacy nearby is important.

[Rajiv Leventhal]

And yeah, it's interesting, like you could select obviously multiple answers that don't equal 100. But the fact that 34% have tried an online pharmacy in the last year, whether that's Amazon, whether it's CVS online or Walgreens online, I think it's pretty significant. That's a large number and I think a growing one in terms of the people who are at least kind of familiar with and are trying out an online pharmacy for their medications.

[Marcus]

Yeah, please, please.

[Zach Stambor]

Oh, I totally agree. I think especially for those medications that are recurring prescriptions, once you go online, you're almost never going to go back. It's the one offs where, yeah, you want to go somewhere close where you can just pick it up on your way home or whatnot. But those recurring prescriptions are obviously shifting online and I think that's only going to accelerate.

[Rajiv Leventhal]

Yeah, the one caveat could. I agree. The one caveat is like, I think there is still a large cohort of people who like to talk to the pharmacist. You know, they walk into the pharmacy of a question and this doesn't, by the way, always have to apply to prescription medications. When we'll get into, we'll get into what the future could look like. But over the counter medications too, right? You ever walk into a pharmacy and you have some symptoms but you're not exactly sure what medication to take, you ask the pharmacist, hey, what do you recommend? These are my symptoms. So yeah, a little trickier to conduct some of those conversations through digital channels.

[Marcus]

Yeah, I feel like more and more people are probably doing that, especially as they become disillusioned with the health care system overall and trying to get an appointment with a primary care physician. And yeah, I'm sure that's happening even more so now than it ever has done. Zach, you said there are a few install challenges.

[Zach Stambor]

Yeah. So the other piece is just the customer experience. So one is locked up inventory, another is just staffing. So if you have to, if there's a long line to talk to the pharmacist, you're not going to be able to talk to the pharmacist. And so there's no value in going to the store. And so if it's a frustrating experience, people are just going to go elsewhere.

[Marcus]

Yeah. So let's have a look at what's next. We talked about the overall industry struggling and it's true. CVS health shares down 43% last year, but they've spiked this year. They're up like 50%. So it's been quite the rebound for them. But then Rite Aids, they obviously filed for Chapter 11 recently as well. So, so not, not a lot of folks in this space doing phenomenally well. What's next for Walgreens? Rajiv, in your opinion, where do they go from here?

[Rajiv Leventhal]

So I, I think Walgreens is pharmacy business. Again, pharmacy only, not pharmacy plus. Retail is going to be just fine. People always will need their medications. Now they might not always need to go into a Walgreens store to fill them, but they will always need their medications. The prescription drug market is a massive market in the U.S. cVS and Walgreens are 1 and 2 respectively in prescription drug sales. Right. Walgreens generated over $100 billion in prescription drug sales last year. Okay. So there's a lot of money to be made. The model just has to change. The retail plus pharmacy model as we know it, which relies heavily on consumer customer traffic in the front of the store that needs to be tweaked or modified or overhauled. Pick, pick the word you want. But I think that as consumers do turn to online channels, fewer need to go to Walgreens to get their, their household items and snacks. Right. I think that we're going to see kind of a changing store format. And we actually saw this just last week. CVS said that it's piloting a new concept where they're only going to sell medications, which is prescription medications behind the pharmacy and over the counter medications. And they're not going to sell any snacks, they're not going to sell any of the front of the store items. And so what this means is, is much smaller stores, right? It's, it requires much less real estate to only have medications and, you know, health and wellness type products. Right. So I think that could end up being a efficiency driver for retail pharmacies in the future. Walgreens is, has quietly been testing something similar over the last couple of years and they said last year that they're going to expand the number of smaller format stores that are really designed around medications and healthcare products instead of the front store items. I just think that's a, a clear indicator that they know they can't compete in the, the world of, you know, convenience and, or retail convenience, brick and mortar like they used to.

[Marcus]

And these are much smaller stores. These are less than 1,000 square feet. So that's less than half the size of the typical cvs.

[Rajiv Leventhal]

Right, right. And I think, I think it's. And whether, whether this model specifically takes off or it's a mix of this and something else, we'll see like moving a lot of their services online. I think that's got to be a big part of it, improving the online experience for customers. But I think it's like a, this is an acknowledgment of what we've been saying a little bit that medications are the steadier business compared with, you know, the front of the store.

[Marcus]

Yeah. It's 80 of the company's sales last year from the pharmacy department. So that.

[Rajiv Leventhal]

Right.

[Marcus]

That makes a lot of sense. Small store formats. Zach, is that, is that where Walgreens goes from here or somewhere else?

[Zach Stambor]

Well, I think it's. There's going to be a lot of experimentation. So I think that's one path I could see them experimenting with like beauty and those sorts of personal care stuff because that has been a pretty solid area. I also just think like what's ahead is probably like this company is, does not look like this company like it's going to be broken up into pieces. Right. It's private equity. A private equity company is going to do what a private equity company is going to do.

[Marcus]

Yeah, yeah, it's. They say that they, there's some talk that they want to go private. Obviously help takes a lot, a lot of the pressure off from shareholders and they can focus on what they want to focus on without a bunch of the voices in the room. There are the kind of three parts to it we've been kind of talking about all, all episode. You've got the kind of US pharmacy chain, you've got the, the US Healthcare services part, that's the specialty pharmacy business, Shields Health Solutions and then VillageMD, their primary care provider, they bought them or invested in that Rajiv was talking about. And then home care company care centrics. And that's the second part, those pieces. And then the third part is their international piece, UK based health and beauty retailer Boots, which is huge in the country, the biggest one by far. So they've got those three pieces that they could play with slash breakup.

[Rajiv Leventhal]

I think they're going to hold on to the US Pharmacy business. They've made some comments that indicate they've got to right size this business segment and figure out, as we've discussed, experiment with a couple of different concepts or formats or tests that some will work, some might not work, but the retail pharmacy business, I'd be very surprised if they didn't hold on to that. Whereas like Village MD and the health care services side, that's a distressed asset that I think is just going to be sold off. I mean as I mentioned, they're losing billions on on that. So I think that's where like the private equity company will come in and get rid of it.

[Marcus]

But then the knock on effect from that. Rajiv, which I was reading one of your articles about patient care could get a lot worse.

[Zach Stambor]

Right.

[Marcus]

Jenny Guadamas, assistant professor at the University of California Berkeley School of Public Health said, quote, our findings suggest that closures of pharmacies may widen health disparities in access to prescription and other essential pharmacy services such as vaccinations and pharmacist prescribed regimens, including contraceptives, medications for HIV prevention and treatments for opioid use disorder. Close quote. This has to have a knock on effect into. If you got get rid of a lot of pharmacies, some people have a lot in their area, others don't. And so this could have a significant effect on the health of society. No.

[Rajiv Leventhal]

Yeah. And that's why I think the big question is where are these closures occurring? But if you look at what CVS did with these, again, only a few for right now, but they're open in a few of these smaller format stores that are focused on medications. They specifically said they're going to focus on areas where there isn't as great pharmacy access. Right. So and, and specifically in areas where, you know, they've done the research and they see that people are actually going to Walmart or online for everyday household items, front and store items. But there isn't as much of access to to pharmacies and that's where some of these smaller format medication focused stores could open up and could hopefully prevent the issue that you bring up.

[Marcus]

Yeah. You had cited you saying there's some studies that found patient care, patient safety suffers when private equity companies acquire hospitals, nursing homes, medical centers, etc. So it's not a good sign. The deal from Sycamore Partners, the acquisition of Walgreens expected to close in Q4. If everything runs according to plan for them, that's what we've got time for for this episode. Thank you so much to my guests for hanging out with me today. Thank you. First to Rajiv.

[Rajiv Leventhal]

Thanks Marcus. Have a good time.

[Marcus]

Yes, sir. Thank you to Zach.

[Zach Stambor]

Yeah, thanks for having me.

[Marcus]

Yes, indeed. And thank you to the whole editing crew. Victoria John Lance and Danny Stewart runs the team and Sophie does our social media. Thanks to everyone for listening in to the behind the Numbers show. Any marketer video podcast made possible by Tracks Wednesday, you can hang out with Sarah Lebo as she goes through March's Most Interesting Retailers of the Month list.