Walgreens Falls on Payout for Majority Stake in VillageMD By Investing.com

© Reuters.

By Dhirendra Tripathi

Investing.com – Walgreens stock (NASDAQ:) fell 3.5% Thursday on concerns it’s paying too much for an additional stake in primary-care provider VillageMD.

Walgreens will invest $5.2 billion in VillageMD to raise its shareholding to 63% from 30%, a stake that cost it not more than $1 billion less than a year ago.

VillageMD company expects to clock $1.3 billion in revenue in 2021.

With the help of the acquisition, the pharmacy chain aims to offer full-service primary care practices with physicians and pharmacists all under one roof at a large scale. VillageMD will open clinics inside Walgreens stores.

The purpose is to open at least 600 Village Medical at Walgreens primary care practices in more than 30 U.S. markets by 2025 and 1,000 by 2027, Walgreens said in a note.

VillageMD currently operates over 230 practices across 15 markets. Walgreens and VillageMD have 52 co-located primary care practice locations, and will have more than 80 open by the end of this calendar year, the note said.

The acquisition overshadowed the company’s fourth-quarter results beating estimates.

Fourth-quarter sales increased about 13% from last year, to $34.3 billion, driven by 13.5 million Covid vaccinations it provided, almost double the approximately 7 million it had estimated for the August quarter.

The current quarter will be looking at strength from booster doses for adults that have been approved and a likely nod for vaccination in younger children.

Adjusted earnings per share came in at $1.17.