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(Bloomberg) -- Walgreens Boots Alliance Inc. is getting advice from Perella Weinberg Partners and AlixPartners for help with its operations and balance sheet relating to its health clinic business VillageMD, according to people with knowledge of the situation.
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It comes as the drug store chain is dealing with mounting liabilities, including a US Department of Justice lawsuit accusing it of filling millions of unlawful opioid prescriptions. The company has been looking to sell non-core assets as it conserves cash.
VillageMD is working with Evercore Inc. and Alvarez & Marsal Inc. for assistance as explores options that include a sale or restructuring of its operations, said the people, who asked not to be identified discussing a private matter.
Walgreens Chief Executive Officer Tim Wentworth reiterated on an earnings call last month that the company plans to divest VillageMD and use any proceeds to reduce debt and improve its balance sheet.
Walgreens “is continuing to work toward executing its stated goal of securing an endpoint for its investment in VillageMD, consistent with Walgreens’ turnaround strategy,” a spokesperson for Walgreens said in an emailed statement. The spokesperson declined to comment on the company’s move to hire advisers.
Representatives with Perella and Evercore declined to comment, while representatives for AlixPartners and A&M did not respond to requests for comment.
Walgreens’ foray into patient care accelerated in 2020 as the company was looking for other ways to make money amid falling pharmacy reimbursements and increased competition in the front of the store from online retailers and discount chains. In 2021, the company bought a controlling stake in VillageMD for $5.2 billion, after disclosing plans the year prior to inject $1 billion into the chain, according to financial filings. In 2023, VillageMD acquired Summit Health-CityMD for $8.9 billion.
Walgreens’ unit that includes the stake in VillageMD among other segments booked an operating loss of $325 million for the three-month period that ended Nov. 30, according to regulatory filings.
Last year, VillageMD defaulted on senior secured debt provided by Walgreens. In August, Walgreens said it would not exercise remedies against VillageMD and instead grant a reprieve, according to financial filings. The company also said it is “actively engaged in discussions with VillageMD’s stakeholders and other third parties with respect to the future of its investment in VillageMD.”