What happened
The CEO of Walgreens Boots Alliance (WBA 0.57%) is departing after less than three years on the job, and investors are not sure what comes next for the embattled company. Shares of the healthcare giant were down by 5.4% as of 12:11 p.m. ET on Friday as investors digested the C-suite news and an earnings warning.
So what
It has been a difficult couple of years for shareholders of Walgreens, with the stock losing more than 50% of its value from its early 2022 level as the pandemic-related surge in health spending has faded into the background. CEO Rosalind Brewer has stated she believes the company's core drugstore business is on the decline, and has used a series of acquisitions to help build its portfolio of urgent care centers and other healthcare-related services.
On Friday, Brewer announced she and the board "have mutually agreed" she would step down as CEO. The one-time Walmart and Starbucks exec will continue to advise the company as it conducts its search for her replacement, and she will work with current board member and interim CEO Ginger Graham in the meantime.
"I leave WBA confident that it is on the track to be a leading consumer-centric healthcare company, serving thousands of communities across the country, especially those that need access to healthcare the most," Brewer said in a LinkedIn post announcing her departure.
In the company's press release announcing Brewer's exit, WBA also said it expects its fiscal 2023 adjusted earnings per share to be "at or near the low end" of its previously stated range, implying flat to sluggish growth. Walgreens' fiscal 2023 ended on Aug. 31.
Now what
We don't know what comes next for Walgreens, but it is pretty clear there are no easy solutions to what ails the company. Brewer's ambitious effort to use buyouts to broaden its reach was a break from the strategy of her predecessor, Stefano Pessina, who emphasized partnerships over acquisitions. Pessina remains executive chairman and is one of Walgreens' largest individual shareholders.
The new CEO, once identified, will have to figure out whether to continue with Brewer's expansion push or break up what has been built in a short amount of time in favor of a new strategy.
With so much uncertainty, there is little reason for investors to jump in here even as the stock sinks lower. For now, it seems safer to watch what happens at Walgreens from the sidelines.
