Walgreens Names Former Healthcare Exec Tim Wentworth New CEO
Key Takeaways:
- Walgreens Boots Alliance chose former Express Scripts CEO Tim Wentworth to be the company’s next CEO.
- Wentworth will begin his tenure as CEO starting on October 23.
- The leadership change comes as Walgreens struggles with declining consumer demand and attempts to expand its healthcare offerings.
Walgreens Boots Alliance, the parent company of Walgreens Pharmacy in the US and Boots in the US, has chosen Tim Wentworth to lead the company as its new CEO.
Wentworth is a healthcare industry veteran, having served as the CEO of specialty pharmacy Accredo and CEO of Express Scripts.
During his time in charge of Express Scripts, Wentworth led the company through a major merger with Cigna, one of the largest health insurance providers in the United States. After the 2018 merger, Wentworth served as chief of Cigna until he retired in 2021.
Wentworth takes charge as Walgreens pivots
Brick-and-mortar retailers, such as Walgreens, CVS, Rite Aid, and Target, have been struggling with reduced consumer demand and an increase in crime. Walgreens recently announced plans to shutter 150 stores in the US by August 2024.
With fewer consumers coming in for vaccines and testing, Walgreens’s revenue has taken a hit, and its third-quarter profits missed expectations for the first time in three years this past June.
As a whole, pharmacies have been struggling with decreased foot traffic since the start of the pandemic, which has led to fewer upsells and impulse purchases from customers on their way to grab their prescriptions. Pharmacies have not been able to make up the difference through online sales due to a lack of unique offerings.
In an attempt to expand into healthcare services, Walgreens acquired Shields Health, a specialty pharmacy, and CareCentrix, a homecare provider. It also invested in VillageMD, a primary care provider.
Given Wentworth’s experience leading healthcare companies, Walgreens is betting on his industry expertise to help Walgreens get back on track.
Investor outlook
Walgreens (NYSE: WBA) has been in a downtrend since 2015, when it hit an all-time high of $97.30, and it hasn’t shown any clear signs of relenting. Despite the CEO announcement, Walgreens stock closed down 0.98% at $22.60 on Wednesday.
However, this doesn’t necessarily mean anything for the long-term future of Walgreens stock under Wentworth’s leadership. According to research by James M. Citrin, investors should generally ignore how a stock reacts to a CEO change. In fact, Citrin found that 59% of stocks that drop on the same day a new CEO is named go on to experience long-term gains, whereas only 55% of stocks that experienced a first-day gain had long-term gains.
Wentworth’s healthcare experience could be enough to get Walgreens back on track, but market factors that are beyond his control, like rising crime and reduced consumer spending, will make it a challenging endeavor.
The bottom line
Walgreens has appointed Tim Wentworth as CEO, in hopes that his healthcare experience will be able to deepen the company’s presence in the sector. Investors reacted tepidly on the day the change was announced, but it’s too early to tell how Wentworth’s leadership will affect Walgreens stock long-term.
