Walgreens Boots Alliance, the pharmacy chain operator, announced on Friday that CEO Rosalind Brewer would be stepping down from her position. The departure was described as a mutually agreed decision, although no further details were provided. Brewer, a former Starbucks executive, had been in the top job for less than three years.
During her tenure, Walgreens experienced a significant decline in its share price, which nearly halved as the company attempted to expand its reach as a healthcare provider. In an effort to pivot from its core pharmacy business, Walgreens made a series of deals to delve deeper into healthcare, such as operating doctors' offices and offering additional services.
However, Walgreens' shares have suffered throughout the year, falling by approximately 32% due to a sharper-than-expected decline in demand for COVID tests and vaccines. Since Brewer joined the company in March 2021, the stock has dropped by roughly 47%.
The announcement of Brewer's departure came as a surprise to many, although the underperformance of the stock was not unexpected. Elizabeth Anderson, an analyst at Evercore ISI, noted that the focus on growing the Walgreens Healthcare segment made it sensible for the company to seek new leadership with extensive backgrounds in healthcare services.
Brewer, one of the few black CEOs on the Fortune 500 list, will receive a severance package of $9 million and will remain as a special adviser to Walgreens until February 2024, earning a monthly consulting fee of $375,000.
Ginger Graham, an independent director on Walgreens' board, was named as the interim chief executive while the company searches for a permanent replacement. Brewer will also step down from her seat on the board but will continue to provide advice to the retailer during the transitional period.
Under Brewer's leadership, Walgreens played a significant role in the mass vaccination effort during the pandemic. The company praised Brewer for her ability to quickly implement a vaccine scheduling system, establish a safe operating model for store labor, and develop a plan to ensure vaccine equity.
Additionally, Brewer steered the company through the resolution of litigation related to the opioid crisis. In 2022, Walgreens agreed to pay nearly $5 billion over 15 years as part of a multi-state settlement, and more recently, the company settled a case with San Francisco for approximately $230 million over its distribution of opioids.
Brewer's departure coincides with Walgreens' strategic shift away from retail sales and towards a focus on healthcare services. Neil Saunders, managing director of GlobalData, commented that Walgreens sees healthcare as a lucrative sector and an integral part of its future. However, he cautioned that the new permanent CEO should not disregard the potential for growth in the retail business.
Overall, the news of Brewer's departure has resulted in a decline in Walgreens' shares, which were down more than 4% in Friday's trading. The company expects its full-year 2023 adjusted earnings per share to be at or near the low end of its prior forecast.
The Associated Press contributed to this report.
themes: San Francisco California