Walgreens suspended its cash dividends paid on a quarterly basis, according to a company press release. The decision aims to strengthen its balance sheet and improve free cash flow, the company said.
On the heels of the announcement, common stock fell around 8% after hours to $10.57 for a market cap of $9.9bn.
The issuer’s $750mn 8.125% unsecured notes due 2029 last traded above par today. The $872.3mn 4.8% unsecured notes due 2044 last traded 75.25, up from 74.75 on Jan. 28, according to trade data.
The retail pharmacy company’s cash flow is expected to dip into negative territory during fiscal 2025 amid unfavorable reimbursement dynamics, as well as softer consumer demand with increased competition. Opioid litigation settlement costs add another layer of risk to the balance sheet, which features $4.6bn of bond and loan maturities for 2025 and 2026, not including the undrawn $2.25bn revolver due next year, as LFI reported.
The company was recently hit by a new opioid lawsuit filed by the US Justice Department, claiming the pharmacy chain operator knowingly filled unlawful prescriptions, further exacerbating the opioid epidemic in the US.
The full press release reads:
DEERFIELD, Ill., Jan. 30, 2025 – Walgreens Boots Alliance, Inc. (Nasdaq: WBA) today announced that its board of directors is suspending the company’s cash dividend historically paid to stockholders on a quarterly basis, as management continues to evaluate and refine its capital allocation policy consistent with the company’s broader long-term turnaround efforts.
This change in capital allocation is aimed at strengthening WBA’s balance sheet by reducing debt over time and improving free cash flow, as the company works toward achieving a retail pharmacy-led turnaround underpinned by a sustainable economic model. The company’s cash needs over the next several years, including with respect to litigation and debt refinancing, were important considerations as part of the decision to suspend the dividend.
WBA leadership remains focused on successfully executing against its strategic priorities and maintaining financial discipline, which it believes will deliver sustained value creation over the long term.
