Walgreens Boots Alliance (WBA 0.57%) just created a windfall of $992 million for itself, and there might be other similar paydays on the horizon. But don't place your buy order for the stock just yet. Sometimes, making easy cash can have consequences. And this is arguably one of those times. Here's why.

Why stacking cash is bearish

The way that businesses make money matters. There's not much point in buying shares of an operation that's selling off its productive assets to keep the lights on, because in the future, especially in the long term, it probably won't be able to generate as much revenue or earnings as it did in the past.

Walgreens isn't quite at the point of scrapping its core capabilities for short-term relief from its financial problems, but it seems to be getting closer over time.

With the company selling off $992 million worth of its stake in Cencora on Feb. 7, following another sale of $674 million late last year, investors would do well to pay careful attention to what exactly is going on and why. This move, along with a third $1.6 billion sale of Cencora shares in August of 2023, belies deeper issues that signal caution rather than opportunity.

Management says that the proceeds from the sale of these investments will go toward paying down some of the company's staggering debt load of $34.7 billion. Liquidating marketable securities is a temporary way to offset the fact that its trailing-12-month operating income is deep in the red, with losses of more than $1 billion. Worse yet, in its fiscal first quarter, investors just saw their quarterly dividend fall by nearly half.

It's clear that money is tight for Walgreens right now, and relief might not be in sight despite ongoing efforts to realize cost savings and reduce capital expenditures. Its new healthcare segment, which aims to provide primary-care services from its pharmacies, is anticipated to deliver adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of up to $50 million this fiscal year -- or as low as losses of as much as $50 million.

The fact that management isn't able to give shareholders a real clue about whether the segment will be reporting positive adjusted EBITDA or not isn't a good sign -- such accounting-adjusted figures are almost always more favorable to companies than non-adjusted ones.

What might improve and when?

The point of Walgreens spinning up a new healthcare segment, which competes with CVS Health, is to shore up its slow pace of top-line growth over the last five years.

The catch is that entering new lines of business typically causes profit margins to compress as companies spend on establishing market share, which is what Walgreens is in the process of doing right now. And with growth still slow, and financial flexibility increasingly constrained, the situation will likely take at least another year or so to sort itself out, assuming it does.

So the near-term setup is bearish, to say the least. Still, Walgreens has plenty of assets to sell off, including long-term equity investments like the stocks it sold recently. The market hasn't reacted with extreme negativity to news of its sales, at least not yet. It's feasible that within the next two years, it will return to consistent profitability and hopefully start marking some slightly faster revenue growth.

Until then, keep an eye on its operating margin. It might be recovering from its lows throughout calendar year 2024, but without a return to its pre-pandemic norm above 3%, the company will continue to be in a state of decline wherein it needs to sell assets to survive.

A major pharmacy chain like Walgreens can survive being in that state for a very long time before it collapses, but even betting for it to make a turnaround will be too uncertain until it has some evidence of such a turnaround in hand.