• by Sarah Mahoney  @mahoney_sarah, August 8, 2024

Walgreens is the latest retailer to bail out of the healthcare biz. The company, which had previously been looking to reduce its ownership stake in VillageMD, now says it is considering unloading the entire business.

“The Company is currently evaluating a variety of options with respect to VillageMD,” Walgreens says in a Securities & Exchange Commission filing dated last week. “These options could include a sale of all or part of the VillageMD businesses, possible restructuring options and other strategic opportunities.”

Shedding the ill-fated acquisition would allow Walgreens, now under new leadership, to retreat from its ambitious dive into healthcare and focus more closely on its retail and pharmacy business. In previous statements, the company has expressed its new commitment to “simplify” its sprawling portfolio.

The Chicago-based retailer acquired VillageMD, an extensive network of primary care physicians, buying a 60% stake in the business for $6 billion in 2021. Roz Brewer, then chief executive officer, said the purchase was an integral part of a larger, more consumer-focused vision: connecting doctors, pharmacists and patients, all within Walgreens' tech platform, moving well beyond the scope of a conventional drugstore.

Brewer left Walgreens last September after a bumpy three years. She was quickly replaced by Tim Wentworth. In March, it announced a $6 billion second-quarter loss due to the acquisition and said it would shutter 60 clinic locations. Last month, Wentworth told analysts that Walgreens was working with Village MD “toward an endpoint.”

Walgreens isn’t alone, CVS, Walmart, Amazon and Rite Aid also sought ways to move into healthcare as Covid reshaped consumer health preferences.

But it turns out that making money in healthcare requires plenty of patients, and creating a steady stream of sick people is beyond the reach of great retail minds. In a rare admission of failure, Walmart shut its 51 clinics earlier this spring and sold off its virtual care unit.

The company, which had begun investing in those clinics in 2019, once believed the clinics would do well by providing vital services in healthcare deserts. “We determined there is not a sustainable business model for us to continue,” Walmart said in that announcement.

CVS has also invested heavily, spending almost $20 billion last year to buy Signify Health and Oak Street Health. CNBC reports CVS has a 63% market share, but it too has hit speed bumps, closing down dozens of more than 1,000 MinuteClinics.